News / Freight rates on major ocean trades out of India continue to slide

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There seems to be no immediate halt to the freight rate slide on the larger tradelanes out of India, as head-haul volumes for container carriers remain increasingly tight, say industry observers.  

Spot rates on the India-US east coast trade have plunged below $3,000 per teu from a high of more than $10,000 three months ago in July.  

And rates on India-Europe routes have more than halved in two months, down to about $2,000 per teu from $5,000 in August.  

These rate setbacks for carriers come despite steady capacity problems from sporadic sailing disruptions. For example, Singapore-based ONE has been facing vessel availability issues on its weekly rotation for its independent WIN service between India and North America.  

A ONE source said: “We need to deploy a few more vessels to call via the Cape of Good Hope and to deal with some terminal issues.” 

Still, freight forwarders expect rates for bookings to the US and Europe to further soften through December, at least, before some signs of a reversal are seen.    

Meanwhile, the new Gemini alliance, between Maersk and Hapag-Lloyd, is due to begin from early February and industry observers are closely watching how capacity adjustments will impact the market share dynamics for major carriers.  

For now, market sources are reporting a silver lining for carriers operating on India-Africa trade, predominantly targeting agricultural exports.  

Ocean rates from Indian ports to Africa have significantly strengthened in recent days due to volume pickups, after the government abolished or lowered export taxes on some agricultural products like rice, according to sources. The 10% export tax applied on Indian parboiled rice and husked (brown) rice has been scrapped, said an official announcement this week.  

“The duty exemption has boosted exports,” an agri goods trader told The Loadstar.  

Leading carriers on India-West trade include CMA CGM and Maersk.  

But the overall export outlook is not so rosy at the moment, even as outbound merchandise trade by value moderately rebounded last month, up 0.5% year on year, after a 9% decline reported for August, new government data shows.  

“The ongoing international trade disruptions along with the volatility in crude and metal prices have played a key role in bringing down the value of exports to some extent,” said Ashwani Kumar, president of the Federation of Indian Export Organisations (FIEO).  

Amid persistent demand pressures, exporters through FIEO have been pressing the government to extend greater relief in the form of trade finance options to overcome the challenges plaguing trade flows.  

“In spite of so much hard work by the exporting community in [pushing] exports, the challenges with regard to trade finance still remain the key barrier for the micro small-to-medium enterprises, as it is really impacting the competitiveness of Indian products in the global markets,” Mr Kumar added. 

Meanwhile, India is bracing for incoming cyclone Dana, which is expected to make landfall late on Thursday on India’s east coast, and the south coast of Bangladesh.