Shipping freight charges drop

Average spot shipping freight rates in the tanker segment have dipped as refiners in western nations have stored enough crude for the upcoming winter season and the climate playing its natural role.

According senior executives at shipping companies, western refiners have already received adequate supplies of crude for the upcoming winter season and the expectation of a mild winter this year has led to a reduced demand for tankers to carry crude from the Middle East.

In tanker segment the loss was clearly felt. In the VLCC sector "� ships used for transporting crude oil from the Middle East to refiners across the globe "� the average spot rate in October 2006 was $39,600 per day compared with $57,332 per day in Q2 FY 07, said analysts. Freight rates in this segment averaged $ 51, 200 per day in October 2006.

It is learnt that Indian shipping companies have entered into long-term pacts to overcome the weakness in spot tanker rates.

Also in the Suezmax segment "� ships used to transport products for relatively shorter journeys "� the average spot freight rates was $42,738 per day in October 2006 compared with $ 44, 628 per day in Q2 FY 07, said analysts. Freight rates in this segment were at $49,107 per day in October 2005.

However, in the dry bulk segment, which forms a small part of total fleet capacity for Indian players, the average spot freight rates improved.

For instance, the Baltic Dry Index averaged 4,029 levels in October 2006 compared with 3,595 levels in Q2 FY 07. This index averaged 3,180 levels in October 2005.

This current strength in the Baltic Dry Index is attributed to strong Chinese demand for transporting finished steel product exports to EU and the US, coupled with its demand for iron ore imports.