News / Freight rates out of India on the rise after record export figures

Freight rates are rising again in India, following a record-setting month for exports and knock-on effects from global Covid disruption.

Exports tallied $37bn for the first time in December, up 37% year on year, and for the first nine month’s of the financial year, passed $300bn for the first time.

According to a report by local investment firm Motilal Oswal, India’s container volumes increased 9% last month, however, “growth could have been better, but was negatively impacted by the container shortage and elevated sea freight rates”.

Now, with a third Covid wave under way threatening further lockdowns, the report adds: “Freight rates may soften over the near term as the slowdown in activity due to Covid-19 may impact volumes.”

India’s ocean freight rates have already increased by up to 15% this month on the back of port congestion and bottlenecks in the US, Europe and China, according to local media. For example, the average price of a 40ft container from Chennai was $5,100, while the prices from Mundra and Mumbai were $4,900 and $4,850, respectively.

According to one Chennai-based forwarder, finding shipping space is still a challenge, with carriers restricting bookings to the US, Canada and Europe.

“Rates are fluctuating and still on the high side,” he noted. “Ten days days advance booking notice is required for container releases. And the US west coast is still a major problem, due to the port congestion – there’s a minimum 20 days waiting time in outer anchorage.”

Indeed, Ashish Asaf, CEO of SA Consultants & Forwarders, said the US port congestion could drive another uptick for airfreight, as experienced in September. He told The Loadstar: “The ship logjam at US ports has induced another wave of supply imbalances and India will not be an exception as we move in a connected world.

“We are soon approaching the Chinese new year holiday, increasing numbers of companies will face the effects of this logjam and opt for airfreight as a quick and reliable way to fulfil delivery deadlines.”

It’s currently a challenge finding airfreight capacity to the US and Europe, he added, with rates sitting at $10.50 and $4.50 per kg, respectively.

Furthermore, Mr Asaf predicted, the airfreight market would likely maintain its high demand throughout Q1, peaking in March.

“However, this may dwindle a bit, depending upon the call by the government to open the skies to normal flight plans, in the wake of the new version of the pandemic,” he added.