Sea freight rates to drop by 10-15%

Shippers of the country have a reason to rejoice as the ocean freights, in all key routes, are set to drop by 10 to 15 per cent in the next three months.

The decline in the freight rates is mainly due to oversupply of container shipping services.

With more container shipping services in the offing, key routes such as India-Europe, India-US East Coast and India-Far East will take a further plunge in freight rates.

"This will benefit Indian corporate houses which are exporting or importing in huge volumes. Small and medium sized exporting houses are also likely to benefit by this freight rate drop," an industry analyst said.

The freight rates on the India-US East Coast sector has already dropped by 25 per cent to $1,350 per twenty foot container against $1,800 six months ago. The rates on the India-Europe routes have also dropped by 26 per cent to $550 per twenty foot container against $750 six months ago.

"There was a terrible freight rate dip on the India-Far East sector. All the three main routes are set to witness a further 10 to 15 per cent fall in freight rates. Interestingly, more shipping firms are planning to start new services from India despite tremendous pressure on their margin," an executive from a leading ship agent house said.

The Synthetic Rayon Textiles Export Promotion Council (SRTEPC) Executive Director K Vijaya Mani said, "More and more services are welcome as it will further lower freight rates," he said.

India's exports during November 2006 stood at $9.68 billion, a healthy 57 per cent increase on year-on-year basis, as compared to $6.16 billion in the same month last year.

For instance, French shipping major CMA CGM led consortium will shortly start a new service, named EPIC II, connecting Europe and Pakistan from India.

Emirates Shipping Lines, apart from its recently launched services, is also planning to start new services to Europe from India. Indian PSU firm Shipping Corporation of India (SCI) is also exploring options to start additional services to China.

Meanwhile, United Arab Shipping Company (UASC) has started a new service, called SINA, linking South East Asia and the US East Coast. Japanese company Mitsui OSK Lines (MOL) has also launched a container shuttle service between India and Singapore.