India's Container Traffic Boom: Implications for Trade and Economy

India’s container traffic has witnessed remarkable growth in recent years, setting the stage for a transformative era in the nation’s trade and economic development. This surge is not merely a reflection of increased global demand but a testament to India’s strategic initiatives aimed at reshaping its logistics and trade infrastructure. Targeted policy reforms, extensive public and private investments, and a commitment to modernisation have collectively driven growth, resulting in significant improvements in port infrastructure, supply chain efficiency, and India’s overall trade competitiveness.

Rising container traffic

India's maritime trade landscape has evolved rapidly, and container traffic is at the core of this transformation. India's container throughput has risen significantly in the last decade with average annual growth of 6–8% in container volumes, driven by increasing imports and exports, improved port capacities, and strategic policy measures.

Source: Ministry of Shipping, *Until June 2024

Container traffic in India has increased consistently over the past eight years from 8.20 (‘000 TEU) in FY16 to 12.28 (‘000 TEU) in FY24. The increase in containerisation—the shift from bulk cargo to containerised shipping—reflects India’s expanding role in global trade.

India’s major container ports, including Jawaharlal Nehru Port Trust (JNPT), Mundra, and Chennai, serve as critical gateways for trade. JNPT, often referred to as the crown jewel of India’s port infrastructure, is the largest container-handling port, managing nearly half of the country’s container volume. Its strategic location near Mumbai, state-of-the-art facilities, efficient logistics networks, and continuous capacity enhancements have made it a preferred choice for exporters and importers. Mundra Port, driven by private investments, has rapidly gained prominence, while Chennai Port caters significantly to southern India’s trade. Together, these ports anchor India's growing container traffic.

Technical advancements driving container traffic

• Port modernisation and expansion
  • Automation and equipment upgrades: Ports like JNPT and Mundra have implemented automated ship-to-shore cranes, rubber-tired gantry cranes (RTGCs), and other advanced handling systems to improve operational efficiency. These technologies allow for quicker loading and unloading of containers, reducing vessel turnaround times.
  • Deeper berths and larger vessel handling: As part of the Sagarmala initiative, Indian ports are deepening their berths to accommodate larger container vessels, which are becoming the industry norm due to economies of scale. For example, Mundra Port has developed world-class capabilities to handle mega container ships efficiently.
  • Inland waterways development: Ports are being integrated with India’s inland water transport network under the Sagarmala initiative to support multimodal transport systems, reducing the load on road and rail networks.
• Deployment of digital solutions
  • Port Community System (PCS) 1x: This integrated digital platform acts as a one-stop solution, enabling seamless communication between all stakeholders in the maritime supply chain, including shipping lines, port authorities, customs officials, and freight forwarders. Its features include real-time tracking of cargo, e-invoicing, and automated documentation, significantly reducing manual errors and procedural delays.
  • RFID and Geofencing Technologies: Radio Frequency Identification (RFID) tags allow for precise, real-time tracking of cargo movement, while geofencing helps in monitoring the entry and exit of cargo and vehicles within port premises. These innovations lead to faster cargo clearances and reduced bottlenecks.
  • AI and predictive analytics: Indian ports are beginning to adopt AI-based systems for predictive maintenance of equipment and demand forecasting. These tools help in resource optimisation, reducing downtime and operational costs.
  • Blockchain for supply chain transparency: A few pilot projects are testing blockchain to create immutable records of cargo transactions, improving trust and reducing fraud in international trade.
• Intermodal connectivity
  • Dedicated Freight Corridors (DFCs): The Western Dedicated Freight Corridor (WDFC) connects the ports of Gujarat and Maharashtra to the industrial hubs of Northern India. These corridors are equipped with electrified tracks capable of carrying double-stacked containers, reducing transit times by up to 40–50%.
  • Inland Container Depots (ICDs) and Multimodal Logistics Parks (MMLPs): The development of ICDs near major industrial zones provides direct connectivity to ports, reducing costs associated with last-mile delivery. MMLPs, planned under the Sagarmala initiative, integrate road, rail, and water transport to streamline logistics.
  • Seamless rail-road integration: Improved road networks and the electrification of railways around major ports ensure uninterrupted container movement. Enhanced rail connectivity has also led to the introduction of dedicated container trains, which are cost-effective and environmentally friendly.
• Private investments and Public-Private Partnerships (PPPs)
  The Indian government’s emphasis on private sector engagement has significantly boosted port infrastructure development through PPPs. Leading players like Adani Ports and DP World have invested heavily in container terminals, advanced technologies, and logistics hubs, with Mundra Port emerging as a major container-handling facility. PPP models, such as Build-Operate-Transfer (BOT), have facilitated the development of greenfield projects like Krishnapatnam and Dhamra and the modernisation of brownfield ports like Ennore and Kandla, enhancing capacity and efficiency. Additionally, private players are adopting sustainable practices, including solar power and energy-efficient systems, aligning with global environmental standards.

Drivers of container traffic growth

• Rising export-import activity
  • India’s merchandise exports have been steadily growing, reaching US$ 39.2 billion in October 2024 from US$ 33.43 billion in October 2023. This increase is driven by sectors like automotive, electronics, textiles, and pharmaceuticals, all of which benefit from containerised shipments. The rising demand for these goods internationally has contributed to the steady growth in container traffic.
    
    Source: PIB
  • India's import dependency for critical components—such as electronics and machinery—has further contributed to inbound container traffic. This is reflected in the rising import value, from US$ 63.86 billion in October 2023 to US$ 66.34 billion in October 2024.
• Shifts in global supply chains
  • The global supply chain realignment, prompted by factors like the US-China trade war and COVID-19, has positioned India as an alternative manufacturing hub. Major multinationals have diversified their supply chains by setting up operations in India, thereby boosting export volumes and driving higher container throughput.
  • India’s Production-Linked Incentive (PLI) schemes, particularly in sectors like electronics, pharmaceuticals, and textiles, have driven manufacturing exports, further supporting the containerisation trend.
• E-commerce and consumption growth
  • The boom in e-commerce, particularly during and after the pandemic, has amplified demand for imported consumer goods, significantly boosting container traffic. Goods such as electronics, fashion items, and household appliances, typically transported in containers, have seen higher demand.
  • Moreover, as demand for faster delivery and inventory stocking rises, retailers are increasingly utilising containerised shipping to manage supply chain efficiency.

Economic implications of the container traffic boom

• Trade competitiveness and export growth
  Increased container traffic improves trade competitiveness by lowering per-unit shipping costs. With improved container handling capacity, Indian exporters can better meet international demand and respond to price competition. The reduction in logistics costs allows Indian goods to be priced more competitively in global markets, enhancing India’s export profile.
• Boost to manufacturing sector and employment
  The surge in container traffic supports manufacturing expansion by facilitating efficient import of raw materials and export of finished goods. This is particularly critical for sectors reliant on global supply chains, such as electronics and automotive. As container volumes grow, ports and logistics sectors generate substantial employment opportunities in warehousing, transportation, and ancillary services.
• Increased revenue for ports and logistics companies
  Higher container volumes translate to increased revenue for port operators, logistics providers, and shipping companies. Ports like Mundra and JNPT benefit from higher terminal handling charges (THC), as well as fees for storage, cargo transfer, and value-added services. For logistics providers, growing container volumes enhance demand for freight forwarding, cold storage, and warehousing, thereby strengthening their revenue base.
• Environmental and sustainability impact
  The adoption of larger vessels and more efficient port operations reduces emissions per container, contributing to a lower environmental footprint. In line with global sustainability goals, Indian ports are incorporating green initiatives such as the use of electric cranes and reducing diesel consumption. The increased use of rail in container transport—through initiatives like DFCs—also contributes to sustainability by lowering the carbon footprint compared to road transport.

Wrapping up

India's container traffic boom reflects a robust trade and economic landscape that is increasingly integrated into global markets. While challenges remain in the form of logistics costs, congestion, and regulatory inefficiencies, the country's commitment to modernising port infrastructure and fostering seamless connectivity indicates a promising trajectory. With continued policy support and investments, India is poised to harness the full potential of its container traffic growth, fostering trade competitiveness, boosting the manufacturing sector, and contributing to the nation’s overall economic prosperity. This boom in container traffic represents not only a shift in the way India manages its trade but a vital transformation for the country’s position in global trade networks.