There is no denying that the world as we know it is in a turmoil, with severe sanctions imposed on Russia and several towns and cities closing down in China on account of rising COVID cases. This then begs the question of how importers and exporters are managing the situation?

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India imports around $8.5 billion worth of goods from Russia and about $2.5 billion worth of goods from Ukraine (as of 2021). Separately, many of the affected Chinese areas are tech-heavy importers and exporters. Also, both container and other freight rates have been rising over the past two years, about 4-5 times higher than what they were in 2020 or late 2019.

To shed light on the situation, CNBC-TV18 spoke to Ajay Sahai, Director General & CEO, Federation of Indian Export Organisations (FIEO), who said that trade with Russia and Ukraine has almost come to a standstill. Concerns around SWIFT ban and lack of certainty on how long other banks in Russia will remain unsanctioned have been playing a huge role in determining current and future course of action. However, traders are trying to find ways and routes to resume trade with Russia, he said.

He said, "Virtually, the export-import has stopped. Some consignments have been routed through International North–South Transport Corridor (INSTC) route, but the frequency of shipment is very irregular. We have huge concerns with regard to the payment which has been stuck up after this SWIFT ban has come and of course, we are exploring the possibility of not only getting those payments, but also continuing with our trade with Russia. A couple of solutions have already been made, but it is almost a complete halt of trade with Russia and Ukraine."

Coming to China, Sahai said that there are concerns regarding trade with China due to COVID. However, he does not think there will be much disruptions when it comes to management of inventory.

He said, "We are having a lot of concerns with regard to our trade with China. But so far, I think the bigger problem is in Schengen province and the Shanghai port, and it may impact a lot of electronics imports, which are happening."

"I have been given to understand that they have the inventory for next two to three months. But if the disruption continues a little longer, we may have some challenges, and therefore alternative option needs to be explored. But as of now, I am not looking into any kind of disruption so far as the management of inventory is concerned for exports," he added.

On supply side disruptions, Sahai does not expect freight rates to come down any time soon. He also added that container shortage may persist for some time.

“We were expecting that freight rate will become somber from the second quarter of 2022 but with this new development of Russia-Ukraine war, we are not expecting freight to come down and container shortage may still continue," Sahai said.

"That is why we have proposed to the government that at least for the MSMEs if some kind of freight subsidy is given it will help them. We are seeing its impact on low value high volume cargo and definitely this is something which is affecting the bottom lines of lot of companies,” he added.

Watch the video for the full interview.