Shiprocket expands into marine freight amid global disruptions

The global shipping industry is navigating turbulent waters as global disruptions have made marine freight a necessary alternative. Ongoing geopolitical instability, particularly the Ukraine conflict and Middle Eastern tensions, has led to significant disruptions in global trade routes, compelling companies like Shiprocket to rethink their strategies.

“Right now our business, when you talk about e-commerce, is all built on air freight. We're formally launching marine as a product now only because of the global disruption that's happened,” says Akshay Ghulati, CEO of International Shipping at Shiprocket.

The company’s move comes in response to rising air freight charges, which doubled at the onset in just 45 days, turning profitable operations into loss-making ventures.

He highlights the challenges faced due to geopolitical instability, saying, “We went from a profitable business to a massive loss-making business. Air freight costs went from ₹250 per kg to nearly ₹400 per kg, which is not economically viable.”

Originally, the company began its cross-border division in February 2020, and immediately, the lockdown happened in March 2020. "While it was a massive disruption, the domestic business was thriving," says Ghulati. This pivot allowed the company to stabilise and regroup.

Challenges

However, there are limitations to marine freight as well, especially for smaller shipments. “Marine is usually 20% of the price of air freight, but it's not accessible for low-weight shipments,” he says.

"Shipping via marine is no longer a very viable channel for e-commerce because now the ships have to go around the Cape of Good Hope, which adds 10 days to the shipping timeline from India to the U.S.," explains Ghulati. As a result, many businesses are reluctant to rely on marine shipping unless they can afford to block their inventory for extended periods, leading to an increased reliance on air freight.

To address this, Shiprocket is innovating by offering marine freight services for shipments as small as 5 kg, a significant reduction from the industry norm of 500 kg.

Shiprocket's marine freight service, currently in the pilot phase with 8-10 customers, will formally launch in September. This timing is crucial as Indian exporters rush to meet peak demand, ensuring their goods reach Amazon and Walmart warehouses before the holiday season. “We’re using this time to get feedback and refine our service,” the CEO adds.

The company’s approach to marine freight includes collaboration with major shipping providers in UAE, Hong Kong, and China to offer competitive rates and efficient service. Despite geopolitical complexities, this strategic expansion into marine freight is expected to provide Shiprocket’s merchants and customers with a more viable logistics solution in a disrupted global market.

“Tough times make you stronger. The innovations we’ve achieved in the last three months would have taken a year under normal circumstances. We’re now able to offer solutions that better align with the current global logistics landscape,” shares Ghulati.