Chennai: The Chennai Port Trust would be the main loser in the wake of the South Korean auto major Hyundai’s decision to stop exporting cars from India to Europe, as it would lead to a reduction of nearly 60,000 cars annually in throughput from the city port.
As Chennai port handles most of Hyundai’s car exports, this move may have a significant impact. According to Rakesh Srivastava, senior vice-president, marketing and sales of Hyundai Motor India Ltd, the company has stopped exports to Europe as that market is now being catered by its sister plant in Turkey. The Korean car major has decided to cut down overseas shipment from its Chennai plant to 1.9 lakh units this year from 2.53 lakh units last year. Shipping out cars is part of the business strategy and currently the ratio of exports to domestic sales is 40:60, he said.
Commenting on the move, MCCI logistics committee chairman J. Krishnan said Hyundai’s plan is in adherence to the new global manufacturing strategy of nearshoring than offshoring. “Earlier, Asian countries had the advantage of lower labour and production cost, but today there is none,” he added.
Transit time to and from Chennai has largely increased now and the main line vessels call only five times a week instead of the daily call. “Vessels are now sailing at 13 knots speed instead of 18 knots to cut fuel costs. So it gets cheaper and quicker to move cars from nearby cities instead of Chennai,” he added.
After it was forced to stop handling coal and iron ore by the Madras high court, Chennai port has been under severe financial pressure. However, Chennai Port Trust chairman Atulya Misra put up a brave face when he told Deccan Chronicle that the port would use the space vacated by Hyundai to handle exports of other car firms.
“We have been facing huge pressure in providing space for exports. If Hyundai gives place, we can spare that area for Ford, Nissan, Ashok Leyland and Caterpillar,” he added.
