Freight Rates for Principal Ocean Trades Out of India Remain on the Decline

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Note: There appears to be no immediate end to the decline in freight rates on the major trade lanes from India, as head-haul volumes for container carriers continue to be constrained, according to industry

There appears to be no immediate end to the decline in freight rates on the major trade lanes from India, as head-haul volumes for container carriers continue to be constrained, according to industry observers.

Spot rates for the India-US East Coast route have plummeted below $3,000 per TEU, down from over $10,000 three months ago in July. Similarly, rates on India-Europe routes have halved in just two months, falling to around $2,000 per TEU from $5,000 in August.

These declines in rates for carriers occur despite ongoing capacity issues caused by sporadic sailing disruptions. For instance, Singapore-based ONE is currently facing vessel availability challenges on its weekly rotation for the independent WIN service between India and North America.

A representative from ONE stated, “We need to deploy a few more vessels to service routes via the Cape of Good Hope and to address some terminal issues.”

Nonetheless, freight forwarders anticipate that rates for bookings to the US and Europe will continue to decrease through December, at least, before any signs of a reversal emerge.

Meanwhile, the new Gemini alliance between Maersk and Hapag-Lloyd is set to launch in early February, and industry observers are closely monitoring how these capacity adjustments will influence the market share dynamics among major carriers.

Currently, there is a silver lining for carriers involved in the India-Africa trade, which primarily focuses on agricultural exports. Ocean rates from Indian ports to Africa have recently strengthened due to increased volumes, following the government’s decision to abolish or reduce export taxes on certain agricultural products, such as rice. This week, it was announced that the 10% export tax on Indian parboiled and husked (brown) rice has been eliminated.

Major carriers in the India-West trade include CMA CGM and Maersk.

However, the overall export outlook remains bleak. While outbound merchandise trade by value experienced a modest rebound last month, increasing by 0.5% year-on-year after a 9% decline in August, new government data indicates ongoing challenges.

“The persistent disruptions in international trade, along with volatility in crude and metal prices, have significantly impacted the value of exports,” said Ashwani Kumar, president of the Federation of Indian Export Organisations (FIEO).

In light of continued demand pressures, exporters represented by FIEO have urged the government to provide greater relief through trade finance options to help mitigate the challenges affecting trade flows.

“Despite the considerable efforts by the exporting community to boost exports, trade finance challenges remain a major barrier for micro, small, and medium enterprises, significantly affecting the competitiveness of Indian products in global markets,” Mr. Kumar added.

Meanwhile, India is preparing for the arrival of Cyclone Dana, expected to make landfall late Thursday on the east coast of India and the southern coast of Bangladesh.


 
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