The Hindu Business Line : IPBC member lines to hike rates from June, July

Explaining the rationale for a rate increase, IPBC Conference member lines said they were facing increases in costs due to an all-time high charter rates and a worldwide shortage of containers.

New Delhi , May 3

MEMBER lines of the India Pakistan Bangladesh Ceylon (IPBC) Conference will hike rates from June 1 for cargo starting from ports North of Mumbai/JNPT, and from July 1 for those originating from ports South of Mumbai/JNPT as part of a rate restoration initiative (RRI).

The proposed rate increase will be $150 per twenty-foot equivalent units (TEU) and $300 per forty-foot equivalent units (FEU) from June 1 for cargoes emanating from Mumbai, JNPT, NSICT, Kandla, Mundra, Pipavav, Karachi and all other ports within this zone to the UK, North Continent, Scandinavian, Baltic and Mediterranean Ports, the IPBC Conference has said in a notice to the trade. The increased rates will remain valid up to August 31.

Similarly, from July 1, the IPBC Conference has decided to increase the rates by $250 per TEU and $500 per FEU for cargoes originating from Kolkata, Chennai, Tuticorin and Kochi ports, to the UK, North Continent, Scandinavian, Baltic and Mediterranean Ports. The rate hike in this zone will be valid up to September 30.

The rate increases forms a quarterly RRI being implemented by the IPBC Conference as part of their business plan for 2004. The last RRI was implemented from March 1 and April 1 for Zones I and II, respectively.

The member lines will implement further increases during the year in both the zones and these will be intimated in due course, the IPBCC notice disclosed.

Further, the High Cube additional rate for both the zones will also be increased by $250 per container with effect from June 1. This is the additional freight levied by the lines for giving extra space in a container having a height of more than the normal 8 feet.

In addition, as part of the Business Plan, IPBCC member lines will keep ancillary tariff items such as special equipment additionals, transport additionals and surcharges, under review.

Explaining the rationale for a rate increase, IPBC Conference member lines said they were facing increases in costs due to an all-time high charter rates and a worldwide shortage of containers. Besides, they were dogged by delays and congestion having a detrimental effect on their ability to operate efficiently.

The IPBC Conference comprise CMA CGM, Contship Containerlines, Ellerman, Evergreen, Hapag-Lloyd, K Line, Lykes Lines, Mac Andrews & Company Ltd, MISC, Maersk Sealand, Norasia Container Lines Ltd, Pakistan National Shipping Corporation, P&O Nedlloyd Ltd, Rickmers Lines, Safmarine, Shipping Corporation of India, UASC, Yang Ming Line and Zim Navigation.

"The proposed rate increases is only an effort on the part of shipping lines to get some additional freight in a market flush with cargo. But, whether the lines get the increase or not depends on the trade and the market. It is purely a demand and supply situation," an IPBC Conference official explained.

"However, when the cargo volume dips, competition will intensify with a large number of shipping lines chasing the same cargo, forcing the freight rates down," the official stated.

The Rate Restoration hikes will be implemented till such time the shipping lines recover at least the minimum tariff of $1,550 per TEU that was effected way back in 1985. "Currently, the freight levels paid by the shippers hover between $900 and $1,000 per TEU, which is only about 55 per cent to 60 per cent of the tariff rate effective 1985," the official said.