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Freight rate analysis for Indian shippers reflects easing signs on some trades

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MUMBAI : An analysis of container freight rates on trades out of India in recent weeks suggests a market correction on the horizon, at least on some routes, though the prices continue to stay at levels way above what shippers had incurred a year earlier.

Average rate levels for India-Europe cargo – both westbound and eastbound – have seen no changes this month, compared to March. Those from JNPT/Nhava Sheva or Mundra to Felixstowe in the United Kingdom have remained at around US$8,000/20-foot container and US$8,500/40-foot container from end-March through April.

For ex-West India-to-Rotterdam, rates have stood at about US$7,500 and US$8,000, respectively.

Additionally, eastbound rates are at the same levels as they were at the end of March — at around US$2,300/20-foot container and US$2,500/40-foot container for cargo shipped from Felixstowe/Rotterdam to West India.

With increased capacity, rates on intra-Asia trades have begun to see a declining trend.  From West India to South China, rates are now at US$550/20-foot box and US$800/40-foot box, down from US$750 and US$1,100 in March, while for Central China, rates have dropped to US$450 and US$650, from US$600 and US$900.

For South China-West India, 20-foot/40-foot rates are now hovering at around $2,100 and US$3,900, compared with $2,400 and $4,500 in March. Similarly, for Central China-West India, rates have slipped to about US$2,300 and US$4,100, from US$2,900 and US$4,900 a month earlier.

“While a certain amount of dip every year after 31 March is normal, due to the financial year-end shipments having been effected by then, in the current scenario, the stabilisation of the rates has also been due to the steps taken by the shipping lines to assist the trade,” said Sunil Vaswani, Executive Director at the Container Shipping Lines Association (CSLA) in India.

CSLA noted that such efforts, which included increased empty repositioning and new capacity additions, have helped increase the overall vessel loading capacity from India by approximately 33,000 TEU per week.

At the same time, carriers are able to maintain their pricing power on India-US trades that generally work around annual service contracts with cargo owners or forwarders. India-US East Coast spot rates have moved up to US$10,700/20-foot and US$13,200/40-foot, from US$9,000/20-foot and US$11,200/40-foot a month earlier.

For bookings to US West Coast, Indian shippers have seen average rates increase to US$12,300/20-foot and US$15,200/40-foot, from about US$9,750 and US$12,000 during March, market sources said.

“Space is increasing to US West Coast and South America West Coast. Hence, rates will likely stabilise to these destinations as well,” carrier sources said.

Container xChange, an equipment management platform, has also reported a general decline in average prices of all types of boxes in India’s larger cargo locations, such as JNPT/Nhava Sheva, Mundra and Chennai, since mid-January, after having peaked in August/September last year.

“However, the prices are much higher than the prices from January 2021 (40% higher in Chennai, 36% higher in Nhava Sheva and 36% in Mundra for 40-foot HC — high-cube containers),” said Container xChange, which pointed out that the average prices have increased by 41% from US$1,341 on 1 January 2021 to US$2,269 as of 23 April 2022 at the port of Nhava Sheva for 20-foot dry cargo container.

Christian Roeloffs, Founder and CEO of Container xChange, noted, “The crisis in Colombo, a major transshipment hub for Indian cargo, has led to more traffic of containers at the Indian ports.”

“For India to leverage the opportunities presented by the global supply chain dysfunction, it is important to improve the cargo handling capabilities at India’s ports, build stronger hinterland transportation and must attempt to bring down the logistical costs,” added Roeloffs.

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