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Ocean freight rates on the India-Europe sector have hit the rock bottom, forcing vessel operators to cut service or reduce sailing frequencies.
Shipping agents here say that the economic slowdown in Europe has affected cargo volume on the sector, widening the demand-supply gap in shipping capacity. Added to this was the stagnant export from China and the deployment of larger vessel by some lines. This has led to a situation of “too many ships chasing too little cargo”.
There has been a 60 per cent fall in container rates over the past six months, according to Prakash Iyer, President of Cochin Steamer Agents Association. From $1,000 per TEU, the rates have come down to $400 per TEU.
The developments in Greece and other Euro zone economies have weakened freight rates and if these extremely uneconomic rates continue, many shipping lines may be forced to wind up operations, he told Business Line.
The drop in volume has also reflected in lower container throughput and capacity utilisation at major transhipment terminals such as Colombo, Singapore and JNPT in India.
The falling rates will have a direct impact on the charter markets and stagnant exports from China also have affected empty container market, forcing companies to surrender containers back to lessees, he said.
Several shipping lines operating service to Europe sector have already gone for tie ups and consortium arrangements to cut cost of operation, Iyer said, citing the LP-6 consortium comprising NYK, MOL, APL, Hapag Lloyd, OOCL and Hyundai.
“We have faced a similar situation in 2008, but there were sufficient volumes during the period. However, the present situation has affected not only rates but volumes too especially to Europe-Med ports”, he said. Though the rates to US markets also started sliding by 30 per cent, it is quite stable with enough volumes, he added.
Some of the lines are now targeting markets in Africa, Russia and the US through discount offers to push up the trade. It may be good for shippers in India as the rates have never been so low for them. But exporters and importer should realise the reality and support shipping lines. Otherwise in the long run, they will not have adequate shipping service, he added.
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