High marine freight hits engineering exports

High ocean shipping freight is curbing export potential of engineering goods from India.

Exporters are paying about $ 400 extra per container vis-à-vis their peers in China while exporting to the US which accounts for lion's share of engineering export.

In absence of a transshipment port on the east coast and clogging at JNPT, Mumbai, the domestic industry has to depend on feeder vessels to take their cargo to Singapore or Colombo.

The containers are then loaded on mother vessels there for final destinations. While the freight rates are equal for all containers from transhipment port onwards, the charge of feeder vessels and the demurrage for likely rollover at the port are adding to the cost of Indian exporters. The domestic industry blames the absence of a strong national flag bearing carrier for this situation.

"China has shipping lines like Cosco who are giving competitive rates to its local industry. Since we do not have any, the foreign lines are jacking up rates at will," Rakesh Shah, chairman of Engineering Export Promotion Council (EEPC), said.

The problem is compounded for the engineering sector in particular because shipping lines are unwilling to take up heavy cargo. A container stuffed with casting items weighs about 26 tonne while for other export items like garments, handicraft a container weigh about 10 tonne.

Naturally, shipping line prefers lighter cargo so that they can stuff more container in the ship. Some lines even limited the tonnage of a container.

"As a result, exporters are losers. In case of low value items, the margin is eroded due to freight disadvantage," Ravi Sehgal, regional chairman of EEPC pointed out. The counter the situation, the Council has mooted the idea of a shipping regulator to arrest the rising freight rate. It has put forward the idea to ministry of commerce which is yet to endorse the proposal.

However, EEPC is confident of reaching the target of $12 billion exports set for the current financial year despite the shipping problem.

"We have already registered a growth of 24 per cent between April and September, 2004, and will easily reach the target of $12 billion," Shah noted.

Meanwhile EEPC is also trying to make inroads into China. It will send a 15-member delegation to China in February-March, 2005. It would visit Beijing, Shanghai and Gonzhow and try to find items, which could be exported from the country. At present, export to China is almost negligible.