Bangalore: Daunted by falling volumes, ocean carriers are likely to attempt recovering operating costs by hiking rates of cargo shipped in containers to the US starting May.
Beginning 1 May, Maersk Line, the world’s biggest container shipping firm, has announced a general rate increase of $260 (Rs13,000) for a 20ft loaded container and $325 for a 40ft loaded container.
Falling volumes: A file photo of Jawaharlal Nehru Port in Mumbai. Export volumes from India to the US this past year have dipped sharply on account of the downturn in the global economy. Ashesh Shah / Mint
Maersk runs two weekly direct services to the US, one from Jawaharlal Nehru Port near Mumbai and the other from Chennai port.
“To continue to ensure we invest in the future of the trade, Maersk Line is announcing rate hike which will apply to dry cargo originating from Indian ports to all destinations in the US and Canada,” the shipping firm said in a statement.
Currently, it costs about $1,300-1,400 to transport a loaded 20ft container from India to the US.
“Many carriers are raising rates from India to US because the lines are not able to fully recover operating costs at current freight levels,” said S.H. Lee, managing director at the India unit of South Korean firm Hanjin Shipping Co. Ltd.
CMA CGM SA, the world’s third biggest container shipping line, German carrier Hapag-Lloyd AG and Hanjin Shipping Co. Ltd are also raising rates to the US, said a person familiar with the development. He declined to be named as these carriers are yet to make official announcements.
As per the US Ocean Shipping Reform Act, most container cargo shipped from Asia, including India, to the US is covered by 12-month agreements that start 1 May.
Besides Maersk Line, another consortium comprising Hapag-Lloyd, CMA CGM, NYK Line and the Orient Overseas Container Line Ltd together run a direct weekly service called Indamex to the US.
Volumes from India to the US this past year have dipped sharply on account of the downturn in the global economy, said Sanjay N. Tejwani, director, ocean freight, DHL Lemuir Logistics Pvt. Ltd.
Tejwani said container shipping capacity from India to US has remained stable in the past couple of years. “As a result, rates have not fallen drastically in the past four to six months compared to rates on the Europe trade, which has seen deployment of new services and capacity increases on existing services,” he said.
However, Apurva Jasraj, partner at Mumbai-based freight broking firm M. Jasraj and Bros., said: “In fact, the cargo volumes to the US have dropped by at least 30-40% on a year-on-year basis.”
The waning demand for goods from India to the US had forced a group of container shipping firms to shut down their direct weekly service to the US.
The SINA service was run by a consortium comprising United Arab Shipping Co., K Line, Hanjin Shipping and Yang Ming Marine Transport Corp.
Instead, these partners have started a new service called MINA from January that hauls container cargo from India to US via Europe.
Falling US and European consumer spending has hit export-oriented Asian economies.
Globally, about 485 ships with a capacity of about 1.42 million standard containers, or 11% of global capacity, are idling at ports, according to Paris-based container industry database AXS-Alphaliner.