News / Container lines hope for intra-Asia boost as ex-India rates continue slide

PIL

Container lines – predominantly those operating on China-India trades – are cementing their networks to prepare for a potential intra-Asia market resurgence.

But there seems no respite in sight from the rate slide they have seen across all trades out of India over the past year.

Average contract freight rates, from India to China and other intra-Asia ports serving as intermediate points for subcontinent cargo, have bottomed-out, according to local freight forwarder sources.

Booking rates for containers from Nhava Sheva/Mundra (West India) to Shanghai and Hong Kong have sunk to about $10/teu, while for Yantian, although rates stand at $100/teu, that’s a steep fall from end-June/early-July’s $175. For West India-Singapore, carriers are accepting cargo at as low as $5/teu, say sources.

And carrier contract prices for regular customers on the India-Europe tradelane have hit new lows of about $500/teu for Felixstowe or Rotterdam.

However, thanks to recent GRI attempts, India-US trade has been an outlier, although the gains might be shortlived. Carriers on the tradelane have made a 10% rate recovery, on average, over the past few weeks, market data shows.

To put that in perspective, average booking rates from Nhava Sheva/Mundra to US east and west coast ports have increased to about $1,500/teu, from the $1,400 carriers were quoting in early July.

But with the slumping Indian export trade, exacerbated by the steepest monthly fall of 22% in June, carriers are facing serious difficulties filling their ships, forwarder sources told The Loadstar.

According to government estimates, India’s core export commodities, like gems and jewellery, textiles and leather goods, are under serious stress in the face of the demand headwinds plaguing larger economies.

However, a report by market intelligence service provider CRISIL notes that India’s exports have recently faced even stronger headwinds from sluggish demand in the Asia-Pacific (APAC) region than from the western economies.

CRISIL says Indian exports to APAC slid 11.3% year on year in fiscal 2022-23, while those to the US and EU were up 3.1% and 15.2%, respectively.

The report says: “The share of APAC in India’s goods exports has been on the decline since the pandemic onset in fiscal 2021 — this could perhaps suggest a structural shift.”

But it warns: “That said, a slowdown in China’s exports and domestic demand could indirectly hit India’s exports to the broader APAC region, as China is deeply embedded in global value chains, particularly within the region.”

Meanwhile, for niche intra-Asia liners, the frenzied network push is, arguably, being driven by new growth strategies, as sourcing out of Asia sees more movement towards South Asia, including Vietnam and India. There is a general belief that this diversification presents an opportunity for carriers to generate additional volumes on the back of expanded market reach.

Pacific International Lines (PIL), Evergreen and Regional Container Lines (RCL) have been at the vanguard of that effort, opening new strings and upgrading routings.

“Today, apart from fast transit times, our customers also require more comprehensive coverage,” said Tonnie Lim, chief trade officer at Singapore-based PIL, highlighting recent service enhancements.