India’s Container Cargo Growth Set to Moderate Amid US Tariffs

Post by : Armust Desk

India’s container cargo sector, a crucial part of the country’s trade and shipping industry, is expected to experience a moderate slowdown in growth this fiscal year. According to a detailed report by CareEdge Ratings, the imposition of new tariffs by the United States on several key Indian export products is likely to affect growth in certain industries, including home textiles, gems and jewellery, shrimp, engineering components, and specialty chemicals. While the overall trade environment remains positive, these tariffs are expected to slow the pace at which container cargo volumes expand.

Projected Growth for FY26

Despite the challenges, India’s container cargo volumes are still expected to grow in the upcoming financial year. CareEdge Ratings has projected an approximate 8% growth in container traffic in FY26, which would take the total volume to nearly 380 million metric tonnes (MMT). This increase is expected to be supported by several key developments within the country’s port and logistics infrastructure.

Firstly, the expansion of port capacities across major hubs is expected to play a significant role in accommodating larger shipments efficiently. Modernisation projects at key ports are being implemented to ensure smooth operations, reduce congestion, and enhance the handling capacity for both domestic and international cargo.

Secondly, transshipment activities, which involve transferring goods from one vessel to another at intermediate ports, are expected to increase. This trend helps ports generate higher traffic and revenue, as well as strengthens India’s position as a regional maritime hub.

Lastly, the commissioning of the Western Dedicated Freight Corridor (DFC) is expected to bring substantial improvements to the movement of container cargo. The corridor, designed to facilitate faster and more efficient transport of goods by rail, will connect major industrial regions to ports, reducing transit times and logistics costs. Collectively, these initiatives are anticipated to support overall growth in container trade, even in the face of external challenges.

Challenges Weighing on Growth

Despite these positive factors, several obstacles continue to affect the sector. Rising insurance premiums for shipping goods are making cargo transportation more expensive for exporters and importers alike. Shipping rates remain volatile, with fluctuations linked to the Shanghai Freight Rate Index (SCFI), which measures container shipping rates across global trade routes. Extended transit times, often caused by congestion at major ports or disruptions in global shipping lanes, also remain a challenge. These factors could limit the pace at which container volumes expand, even with infrastructure improvements in place.

Impact of US Tariffs on Indian Exports

A major factor affecting container cargo growth is the imposition of tariffs by the United States. Washington announced a 25% tariff on certain Indian goods, effective from August 7, 2025. Furthermore, an additional 25% penalty tariff was introduced for trades linked to Russia, effective August 28, 2025. As a result, the total effective tariff on some Indian products has risen to 50%.

This increase in tariffs may make Indian goods less competitive compared to products from other Asian nations, potentially leading to reduced demand in key export markets. Industries such as textiles, garments, gems, seafood, engineering goods, and specialty chemicals, which rely heavily on exports, are expected to be the most affected.

It is worth noting that while the US accounts for about 20% of India’s total exports, its share in sea-based trade (excluding electronics) is around 5%. This means that although the tariffs will have an impact, the direct effect on overall container port volumes may be somewhat limited. Nevertheless, sectors that heavily depend on US imports may face significant challenges in maintaining market share.

Regional Geopolitical Risks

India’s port operations are also vulnerable to regional geopolitical tensions. For instance, Gujarat’s ports saw a 6% decline in cargo volumes in May 2025 due to heightened tensions between India and Pakistan. Such events highlight the sensitivity of the shipping sector to regional political conflicts and international relations.

Geopolitical risks can disrupt supply chains, delay shipments, and increase operational costs for ports and exporters. This adds another layer of complexity to the container cargo business, which is already navigating challenges such as fluctuating freight rates, rising insurance costs, and new trade tariffs.

Past Performance and Resilience

Despite these challenges, India’s container trade has shown strong performance in recent years. In FY25, India’s ports handled a total of 351 MMT of container cargo, reflecting an 11% growth over the previous year—significantly above earlier projections. Over the past three years, the sector has maintained a healthy compound annual growth rate (CAGR) of around 8%.

This growth has been driven by strong domestic and international demand, the rebuilding of inventories after disruptions, and increased containerisation of goods. Even amid challenges such as disruptions in global shipping routes, including the Panama Canal and the Red Sea, India’s container trade has continued to show resilience. The steady growth of container traffic underscores the importance of India’s ports in facilitating global trade and supporting the domestic economy.

Future Outlook

Looking ahead, the US tariff measures are expected to have a stronger impact on export-heavy sectors such as textiles, garments, gems, shrimp, and specialty chemicals. These sectors may need to explore alternative markets, improve cost efficiencies, or enhance product competitiveness to cope with the new trade barriers.

On the positive side, strong domestic demand and ongoing infrastructure expansions, including port modernisation and dedicated freight corridors, are expected to partially cushion the impact of tariffs on overall container volumes. India’s ports continue to play a vital role in connecting domestic industries to international markets, and their ability to adapt to changing trade dynamics will determine future growth.

Experts believe that while container cargo growth may moderate slightly in FY26, the sector’s long-term prospects remain positive. Continuous investments in port infrastructure, efficient logistics, and strategic trade planning will ensure that India maintains its position as a key player in global shipping and container trade.

India’s container cargo sector is facing a complex mix of opportunities and challenges. While US tariffs and regional geopolitical tensions may slow the pace of growth, strong domestic demand, expanding port capacities, and improved logistics infrastructure provide a robust foundation for continued expansion. The coming years will test the sector’s resilience, but strategic planning and investment can help India’s ports maintain steady growth and strengthen the country’s role in international trade.

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