The Hindu Business Line : IPBCC member lines to enforce westbound rate restoration

Kolkata June 7 The member lines of the India/Pakistan/Bangladesh/Ceylon Conference (IPBCC) are to enforce the westbound rate restoration from July 1, second time in the current year, but whether the move will succeed is anybody's guess.

Westbound covers the trade route from India, Pakistan, Bangladesh and Sri Lanka to the UK, Continent, Scandinavian, Baltic and Mediterranean ports.

The scepticism is because the present market dynamics do not guarantee IPBCC what its member lines reportedly aim to achieve.

As early as March this year, IPBCC notified that its members wished to implement a rate restoration in the westbound trade as they faced considerable increases in costs and delays and the congestion continued to have a detrimental effect on the ability of the carriers to operate efficiently. The total restoration proposed thus was $600 per TEU and $1,200 per FEU to be implemented in three stages - May 1, July 1 and September 1 - at the rates of $200/TEU and $400/FEU each stage.

Accordingly, the rates were hiked by $200/TEU and $400/FEU from May. However, as the shipping sources point out, it will be a rash to claim that the shippers have been paying at the enhanced rates since May. "The rate restoration drive is more of a theoretical exercise than anything else because the rates these days are determined by the free interplay of market forces driven by supply and demand situations and not by diktat from the chambers," observe the sources.

For example, the freight may rise in a situation of slot shortage in mainline vessels even when there is no conference proposal for freight increase.

In the present market condition, it is, therefore, extremely difficult to ensure that all the member lines are strictly following the rates dictated by IPBCC.

The suspicion is that many of them may not. Which also explains why the basic market rates continue to be lower than what they would have been had the proposed rates been enforced in full. To the basic freights rates are added bunker adjustment factor, currency adjustment factor security charges and terminal handling charges.

The shipping sources, however, concede that the IPBCC diktat at least sets the benchmark. "While full implementation of the proposed increases is out of question, some increases are unavoidable and to that extent we stand to benefit," the sources add.

The member lines of IPBCC include ANL Singapore Pte Ltd, CMA CGM, CSAV Norasia Lines, Evergreen, Hamburg Sud, Hapag Lloyd, K Line, MacAndrews, Maersk, Rickmers Linie, Safmarine, Shipping Corporation of India, United Arab Shipping, Yang Ming Line and Zim.