Freight rates take a plunge across east coast

Freight rates from ports on India's east coast to the United States have decreased by $500 per TEU (20-ft equivalent unit) owing to an increase in the shipping capacity.

Similarly, the freight rates to the Middle and Far East ports and to the transshipment port of Singapore have also come down by $100 per TEU and $90 per TEU respectively. The trend is expected to continue for the next two to three months, according to the shipping industry.

In response to a prediction made a year ago that there would be a 16 per cent surge in maritime exports traffic, more number of vessels were introduced by Indian shipping companies.

But the forecast failed to match the demand and the increased number of vessels turned out to be a major reason for the declining freight rates.

Freight rates to the US have come down from $2,000 to $1,500 per TEU, whereas the rates to Middle Eastern countries have tumbled to $350 from $450 per TEU. The freight rate to the Singapore port have come down to a low of $60 from $150 per TEU. However, the rates to the European ports remain stable at $700-$800 per TEU and $1,300- $1,400 per FEU (forty equivalent unit).

Meanwhile, the freight rates to Colombo have increased to $450 per TEU from $400 per TEU. The industry sources attribute this to the increase in the port handling charges in Colombo which went up by $100 from $85 to $185.

This might not affect the freight rates to Colombo on a long-term basis, sources added.

A few freight services introduced recently are "� Sinaservice, a consortium of KLine, YMC, UAC and Hanjin shipping lines and Hyper Galx, another service, a consortium of NYK, OOCL, Emirates and TSC Linux. Maersk Sealand came up with a couple of services like MECL1 and MECL2.

The freight rates are expected to increase during the Christmas season, but the current decline in the rates is mainly due to the increase in the overall shipping capacity, industry sourced said.

According to analysts, ships embarking from the east coast ports carry a larger number of containers, roughly about 8,000 to 9,000, compared with 1,000 to 2,000 containers a decade ago.