The Hindu Business Line : IPBC shipments to Europe — Tea shippers unhappy over increase in freight costs

THE member lines belonging to IPBC (India/Pakistan/Bangladesh /Ceylon) Conference, serving the trade route between the Indian sub-continent and the UK/Europe, have slapped a currency adjustment factor at the rate of 7.3 per cent of the basic freight on all shipments to Europe from September 1 and propose 6.83 per cent from October 1.

The tea industry has expressed its reservations about these charges.

First, according to tea industry sources, the basic freight rates for all destinations have been rising for some time, hitting hard the tea shippers and any further rise in freight cost in whatever form, therefore, is unwelcome. Second, as it is pointed out, the tea exports are mostly transacted on the basis of forward contracts executed prior to commencement of the tea season and shipments take place in stages throughout the season. These forward contracts have costs incorporated in pricing. Any rise in shipping freight, either by way of CAF or BAF (bunkering adjustment factor), during the season therefore will hit hard the shippers as these will not be covered by the contracts which, once finalised, remain valid for a given period of time.

The IPBC Conference members, however, have expressed their inability to do anything in this regard pointing out that CAF and BAF being variable are examined on monthly basis and the revision is effected if and when the situation so warrants.

The members, however, do not agree with the shippers' contention that the basic freights have been steadily on the rise for some time. As they point out, there will be no upward revision of the freight already agreed in respect of shipments of tea containers from Kolkata/Haldia to UK/Continent despite the announcement of a rise in basic freight in the form of RRI (rate restoration initiative) of $150 per TEU from October 1. The basic freight finalised at the beginning of the tea season will remain unchanged till the end of the season.

Meanwhile, total shipments of tea for exports through Amingaon (Guwahati) inland container depot (ICD) till September 1 were 629 TEUs in nine rakes. Of these, 508 TEUs were for the UK/Continent ports and 121 TEUs for non-UK/Continent destinations. SCI, which offers sailings only to the UK/Continent ports, has so far handled 335 TEUs. However, it also handled 24 TEUs for Colombo, the only non-UK port it serves. P&O handled the largest number of boxes for non-UK/Continent destinations, 31 TEUs, followed by K Line, 26 TEUs, SCI and Maersk, 24 TEUs each and APL 16 TEUs.