The Hindu Business Line : Shippers ride the US wave

THE GOING has been good for Indian shippers to the US with Christmas and New Year despatches in full swing. Exports to the US this year through the Chennai port are expected to be around 60,000 TEUs (twenty foot equivalent units) compared to 43,000 TEUs last year, according to industry sources.

US retailers such as Wal-Mart, Gap and JC Penney have increased their offtake from India this year. Besides textiles, there has been increase in the shipment of granite, leather and tyres, a source said.

However, various problems in the US have affected the supply chain, resulting in delays in cargo delivery.

It started with congestion in the US mainline and inland ports a few months ago followed by Hurricanes Katrina and Rita. Some of the shipments, especially garments, which constitute nearly 25 per cent of exports from Chennai, have been waiting outside the US ports for quite a while, the source said.

The biggest problem now for shippers seems to be high fuel cost. Last year the shipping lines' top priority was infrastructure and congestion issues in the US. This year, however, it is the high fuel cost, said an official of a major shipping line.

Container shipping lines in the Transpacific Stabilisation Agreement (TSA) recently warned Asia-US shippers that the runaway fuel cost poses critical operating and financial difficulties for the trade despite fuel surcharges already in place. The TSA is a voluntary discussion and research forum of 13 major container shipping lines serving the trade from Asia to ports and inland points in the US.

Fuel is currently the No 1 fixed cost component of a scheduled vessel sailing, and the average price of marine bunker fuel at the nine loading points used by most lines in the trans-Pacific trade lane has risen to $344 a tonne from $198 at the beginning of 2005, according to the TSA Web site.Highway diesel fuel used by trains and trucks for US inland inter-modal moves increased to $2.85 a gallon from $1.96, and much of this increase has been passed on to ocean carriers in the form of rail and trucking fuel surcharges.

Ports and terminal operators have also raised their rates or imposed surcharges to recover costs associated with running yard equipment, the TSA said.

The TSA members include American President Lines, Kawasaki Kisen Kaisha, CMA-CGM, COSCO Container Lines, Mitsui O.S.K. Lines Ltd., Evergreen Marine Corp. (Taiwan) Ltd., Nippon Yusen Kaisha, Hanjin Shipping, Orient Overseas Container Line, Hapag Lloyd Container Line, P&O Nedlloyd/B.V.Hyundai Merchant Marine and Yangming Marine Transport Corp.

Following a 15.2 per cent cargo growth in the Asia-US container market in 2004, the first quarter 2005 cargo volumes grew by 11.1 per cent over the same period in 2004 to nearly 1.3 million 40-foot containers, according to the TSA Web site.

China's government has forecast a 50 per cent cargo growth through mainland ports over 2005-10, with Shanghai alone growing to 20 million TEUs annually by 2007 from 14.5 million; much of this is cargo bound for the US.

Information available on the Web site of a major shipping line says that Asia to US (eastbound) cargo movement in July was 11 lakh TEUs, up 16.3 per cent compared to July 2004 and up 8.3 per cent over June 2005. In the reverse direction (westbound) the movement was 3.63 lakh TEUs in July 2005. The imbalance ratio (westbound/eastbound) for July 2005 was 32.7 per cent, the Web site said.

China and Hong Kong together shipped 71 per cent of US-bound cargo and received 50 per cent of the cargo from the US.

According to an industry source in Chennai, even now there is a similar trend with China dominating the eastbound traffic filling up most of the ships sailing to the US.

Focus India

GLOBAL shipping lines have realised the importance of India and are reserving more space on ships for Indian shippers, according to an industry source.

A couple of years ago, it was difficult for Indian shippers to get adequate space on mother ships at the transhipment ports of Singapore, Colombo or Salalah. The focus then for the lines was entirely on China due to the high volume.

However, today, these lines have realised that in the long term India would be an important market, the source said.

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