The Hindu Business Line : Container freight rate to Europe to rise $250-300 from July 1

Chennai, June 26 Container freight rate to Europe from India will increase by 75-80 per cent from July 1 following a ‘rate restoration’ programme announced by various shipping lines. The increase will range between $250 and $300/TEU (twenty-foot equivalent unit).

Maersk Line, world’s largest container shipping company, will increase its freight rate from India to Europe by $250/TEU (twenty-foot equivalent unit) and $500/FEU (forty-foot equivalent unit). The increase will take effect from July 1 and will be valid till the end of August. Thereafter, the rates will be reduced by $100/TEU and $200/FEU, it said.

Similarly, Hapag Lloyd has announced that it will increase the rate to Europe by $300/TEU from July 15. Announcements from other shipping lines are expected soon, trade sources said.

“The increase is for all cargo in the Asia-to-Europe trade. Rate increases are necessary to continue to operate our services with the high level of reliability…,” Maersk Line said.

“Despite steps being taken to highlight the precarious situation of trade between the Indian sub-continent and Europe, recent attempts to restore some normality to the debilitated rate levels have not been as successful… maintaining an extensive liner network will become unsustainable if income levels cannot be improved,” said Hapag Lloyd to its Indian customers.

“While the increase will help shipping lines to meet the operational cost, it will be a huge burden on exporters who are already facing a huge financial crunch due to the global slowdown,” said an official of a Custom House Agent representing an exporter.

Rates plummet

Freight rates to Europe have plummeted in the last 18 months. An exporter can today send a twenty-foot box from India to Europe for $400 compared to the $1,000 he paid 18 months ago. A year ago, the rate dropped to nearly $700/TEU, and from then on declined to reach $350-400.

From Chennai port, about 45 per cent of the container throughput is for Asia/South-East Asia, 25 per cent to Europe, 20 per cent to the US, and the rest to other destinations, including Africa and Australia, sources said.

Related Stories:
CMA CGM announces rate increases on Asia-Europe trade