Financial Daily from THE HINDU group of publications
Thursday, Mar 27, 2003
Financial Daily from THE HINDU group of publications Thursday, Mar 27, 2003 |
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Logistics
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Shipping Freight rates to US, Canada set to soar Raja Simhan T.E.
CHENNAI, March 26 SHIPPING freight rates from India to the US and Canada are likely to shoot up by over $1,000 per TEU (twenty-foot equivalent units) and about $1,200 per FEU (forty-foot equivalent unit) from June 1. The proposed hike includes a general rate revision (GRR) from May 1, peak season surcharge (from June 1) and bunker surcharge, shipping line sources said. The proposal was approved at a recent informal meeting of the shipping lines operating between Asia and the US, and a formal announcement is expected soon, they added. According to the sources, the proposed GRR to the US East/West/Gulf coast ports would be $525 per TEU and $700 per FEU. For the US inland points, the GRR would be $675 per TEU and $900 per FEU. Further, a peak season surcharge (PSS) planned by the lines from June 1 for the US East/West/Gulf ports would be $225 per TEU and $300 per FEU. The bunker surcharge planned would be $230 per TEU and $260 FEU, according to the sources. They also said that the GRR proposed was to bring back the freight rates to over $2,600 per TEU, which was prevailing about a year ago. Today, the freight rate to US East Coast is about $1,600 per TEU, while that to the West Coast is about $1,400 per TEU. "A huge increase is proposed, and the customers will have no choice but to accept it. The customers also understand the problems of the shipping lines, which are taking boxes at an abysmally low freight rate. Without such an increase the lines would be out of business," said an official with a shipping line. About a decade ago, the freight rate to the US from India was over $4,000, which came down to half that amount five years ago and has since been coming down steadily, he added. The peak season surcharge to the US would be implemented between June and September, when Christmas shipments start moving out. The surcharge is a premium intended to cover higher equipment positioning, vessel chartering, load and route planning, terminal staffing and other contingency costs associated with the peak shipping season, the sources said. During May-September each year, exports from Asia to the US go up as US retailers bring in merchandise for the holiday shopping season. Vessels typically operate at or near capacity. From India, about 19 per cent of exports to the US go through the Indian east coast ports and nine per cent through the west coast ports. Similarly, nine per cent of imports from the US are from the west coast and 21 per cent from the east coast. From Chennai, garments account for 35 per cent of the exports, followed by granite (12 per cent), reefer (five per cent) and general cargo (five per cent), sources said.
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