Timer charter rates (chartering a ship on a daily basis) for cape size vessels have dropped to $21,000 (around Rs 10.5 lakh) a day from $1,70,000 (Rs 85 lakh) in the last three months due to the continued slowdown in the global financial markets that resulted in a significant crash of the dry bulk market.
Similarly, rates have plummeted for Panamax and Handymax vessels too. This has resulted in shipping companies withdrawing their vessels from major trading routes including from Indian waters.
For instance, the number of vessels calling at the Chennai port came down to 179 in October from 185 in August 2008.
In the process, iron ore exports have been badly hit. Between July and October this year, iron ore exports through the country’s major ports dropped to 20.394 million tonne (mt) compared with 26.245 mt for the same period last year, a drop of over 22 per cent. In October alone, the drop was 39.44 per cent at 4.968 mt (8.204 mt), according to industry representatives.
Panamax vessels are also facing a similar crisis. Rates for one-year timer charter dipped to $11,000 (Rs 5.5 lakh) a day compared with $63,000 (Rs 31.5 lakh) two months ago. According to shipping companies, keeping the ships idle is the only option in the current scenario. The companies are now entering into slot purchase agreements to ease their burden.
Liquefied natural gas (LNG) tankers transporting spot shipments of the fuel have also seen their rates drop by around 46 per cent during the last one year. Daily rates to rent an LNG carrier have fallen to $43,000 (Rs 21.5 lakh) from $79,000 (Rs 39.5 lakh) in August. According to reports, 19 LNG vessels with a capacity of 147,000 cubic metres each were anchored due to lack of cargo.
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Likewise, charter rates for Handymax vessel, with 1,700 twenty foot equivalent units (TEU) capacity, dropped to $10,000 (Rs 5 lakh) in November from $12,000 (Rs 6 lakh) in September, a drop of 17 per cent. On the other hand, rates for sub-Panamax with a capacity of 2,000 TEU dropped 25 per cent to $12,000 (around Rs 6 lakh) from $16,000 (Rs 8 lakh) during the same period.
According to shipping companies, around 200 cape size vessels are idle. The Asia-Europe (mainly connecting Indian ports) sector’s freight rate is effectively zero other than bunker and other surcharge amounts. The situation is likely to continue till the second quarter of 2009, they added.