News / Indian exports struggle as transhipment feeder rates to Colombo surge

Photo: Sri Lanka Ports Authority

Container shipments from South India are reeling under the pressure of elevated feeder rates for Sri Lanka’s Colombo port, which handles the majority of Indian transhipment trade.

Feeder slot rates ex-Chennai to Colombo have more than doubled in the past few weeks, shooting up to $400 per teu, according to industry sources.

“There is a scramble for feeder space to Colombo,” one Chennai-based ship agent told The Loadstar. “Available feeder sailings have dropped.”

That’s because several operators, including Unifeeder (now known as Shipping Solutions), have relocated vessels away to other lucrative tradelanes, including the Middle East.

Southern India exporters/importers heavily rely on transhipment via major Asian hub ports, so any feeder rate surges inflate their ultimate freight costs.

Additionally, feeder vessels are facing longer turn times at Colombo, due to a tighter window situation from increasing ad-hoc calls as mainline carriers seek alternate ports to offload Middle East cargo.

Colombo is also handling additional transhipment volumes for Bangladesh and Pakistan, due to the disruption across Persian Gulf hubs.  Salalah had been key for these regions.

That volume upswing has created some congestion risks for Colombo, according to industry sources.

“Jaya Container Terminal (JCT) is facing more capacity pressures than other Colombo terminals,” said one industry source in Colombo.

Container handling at Colombo reached a new recent high of some 763,000 teu in March, up from 636,000 teu in February.  Transhipment trade in March accounted for some 648,000 teu, compared with 528,500 teu in February, data shows,

Colombo added significant box-handling capacity recently, following the launch of Adani Ports’ phase 1 operations of its Colombo West International Terminal (CWIT) and the addition of a third berth at the Sri Lanka Ports Authority (SLPA)-owned East Container Terminal (ECT).

“With the third berth now in service, throughput volumes are expected to accelerate materially, strengthening Colombo’s standing as a principal transhipment centre serving the Indian subcontinent, the Bay of Bengal and east–west mainline services,” SLPA noted.

“Extending over approximately 1,300 metres, the Colombo East Container Terminal adds substantial quay length and deepwater capability to the port of Colombo, allowing it to accommodate large mainline vessels with minimal tidal constraints,” it added.

Container booking rates from India to China have also moved into positive territory because of the altered supply-demand situation.

Chennai-Shanghai/Tianjin rates are now in the region of $400 to $500 per 40ft, data shows.

Industry sources have attributed that flip from negative to positive in carrier quotes to a dip in capacity and higher Indian exports to China.

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