The Hindu Business Line : Container freight rate to select destinations to rise

STARTING October 1, container freight rates from ports of Kochi, Chennai, Tuticorin, Kolkata and Haldia to the UK, North Continent, Scandinavian, and Baltic and Mediterranean ports will increase by $150 per TEU (twenty-foot equivalent units). This follows a Westbound rate restoration announced by member lines of India-Pakistan-Bangladesh-Ceylon (IPBC) conference.

The freight hike comes at a time when Christmas and New Year shipments to Europe have started. The current freight rate to some of European ports, including UK, Antwerp and Hamburg, ranges between $1,000 and $1,250 a TEU, said an industry source.

The IPBC, which has 18 member lines, including Shipping Corporation of India, A.P. Moller-Maersk Sealand, P&O Nedlloyd and Evergreen Marine, said reasons for the rate restoration include large increase in costs due to higher vessel charter rates and worldwide shortage of containers.

The charter rates for a 2,500 TEU vessel is between $30,000 and $35,000 a day, which is about three times more than the rates prevailing in 2000 and 2001, an industry source said.

On shortage of containers, the source said that globally there is a supply and demand crisis, with abundant cargo available, but there is lesser space on ships. For Indian exporters, the problem is that all mother vessels (connecting major international ports) from Far East to Europe are sailing full and space is not available when these vessels come to Colombo, which is the major transhipment port for Indian cargo to Europe. Chinese exporters are filling up these ships with huge volumes of cargo, and Indian exporters often pay a higher rate to get a slot in the mother ships at Colombo, the source said.

Some of the major commodities from India to Europe include leather garments (mainly to Germany, France and Italy) and textiles (to the UK, France and Germany), the source said.

From Chennai port, about 45 per cent of the total container throughput is for Asia/South East Asia, 25 per cent to Europe, 20 per cent to the US and the rest is shared among other destinations, including Africa and Australia. The Chennai container terminal handled 4.25 lakh TEUs during 2003-04.