The Hindu Business Line : Low export volumes drive down container freight rates

The freight for a twenty-foot equivalent unit (TEU) to Singapore and Port Klang, Malaysia has dropped to $80, and some of the carriers accept even lower rates, according to shipping industry sources.

Three months ago, rates to Singapore and Port Klang were $150-160 a TEU, and a year ago, the rates were $250-$275 due to heavy agro-produce shipments, a source said.However, this year, the export of agro-products, including maize, was poor compared to last year. Commodities such as groundnuts and onions have been moving out of Chennai to Singapore and Port Klang. "The rate drop is not only in Chennai, but also for the entire country," said a source.

Rates to Australia dropped to around $1,800 a TEU compared to $2,800 a few months ago. In the last few months, imports have exceeded exports at Chennai port. For instance, out of the total 2.67 lakh TEUs handled between January and May 2005 at the Chennai container terminal, imports were 1.37 lakh TEUs, while exports were 1.28 lakh TEUs and a few hundred restows (empty boxes repositioned), according to information provided by the private operator, Chennai Container Terminal Ltd.

Out of the total volume, 20-25 per cent of the boxes go to Singapore and Port Klang for distribution locally. Rates have not varied much for Europe and the US over the last three months.

The rates for some of the US ports are $2,300-2,400 for a TEU and $3,500 for a forty-foot equivalent unit (FEU). Ships are sailing full due to the withdrawal of the garment quota from January this year. Rates to Europe are around $1,000 a TEU and $1,800-2,000 an FEU, a source said.

The Colombo market is based purely on supply and demand. If a certain line or a non-vessel operating common carrier (NVOCC), which books space on steamships in large quantities at lower rates and sells space to shippers in smaller amounts, have excess inventory, then they book into Colombo. Generally, less than container load in FEUs moves in large numbers to Colombo, the sources said.

A newsletter circulated by a logistics company, quoting the Commerce Ministry's data, said that from April 2004 to February 2005, the year-on-year growth of agricultural and allied products exports slowed down to 7.2 per cent and was valued at $7.1 billion.

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