Sea freight rate to China falls 65%

Freight rates between India and China have dropped by more than half following introduction of express services between the two countries by leading international container shipping liners.

Global shipping companies such as Maersk Sealand, K Line, Wan Hai Lines, Mediterranean Shipping Company (MSC), Hyundai, CMA CGM, Norasia, Hanjin, MISC, and Evergreen, besides the Shipping Corporation of India, are among those that have recently introduced express services between India and China.

As a result, freight rates have dropped by 65 per cent in the last six months, while sea cargo has grown by a staggering 30 per cent this year.

For instance, the current freight charge to ship a 20-foot container from Mumbai to Shanghai is just $100, as compared with $300 six months ago. "Despite the growth, more services are planned on this route," said SCI Director Sudhir S Rangnekar.

"Shipping majors are keen to start more services, but no berths are available at Indian ports," said a representative of an international shipping line. Jawaharlal Nehru Port Trust (JNPT) Chief Manager R T Revankar accepted that the port was getting more requests for berths for India-China services.

"Though freight rates are headed southwards, international shipping companies are planning to start more services. The catch of the India-China trade is the volume of business and maximum utilisation of containers," said a source in Wan Hai Lines.

"Shipping companies subsidise transport of cargo to China in order to make use of containers, which would otherwise lie unused and attract ground rent in India," a source in another international shipping line said.

Shipping companies have been confronted with a serious problem in doing business with China: the liners go empty or with very little load to China but return packed after picking up manufactured goods for other parts of the globe.

The companies have now found a way to address the problem. Express liners carry raw materials from India to China and bring back finished products to India.