Mumbai: The cost of shipping goods from India to Europe is set to rise by $200 (Rs7,860) per 20-foot equivalent unit, or TEU, and $400 per 40-foot equivalent unit, or FEU, from 1 February.
It is a significant increase as it currently costs about $1,400 for shipping a TEU from India to any one of the European ports such as Felixstowe, Southampton, Tillbury, Hamburg, Rotterdam, Antwerp and Zeebrugge.
A group of 19 container shipping firms, known as the India, Pakistan, Bangladesh, Ceylon (IPBC) Conference, that operates services between Europe and the Indian subcontinent, have announced their decision to implement the rate hike, which will remain valid at least until 31 March.
The London-based IPBC Conference said further rate increases will be enforced from 1 April and 1 June, the quantum for which will be announced in due course, the group said in a statement.
A TEU is the standard size of a container and is a common measure of capacity in the container business. An FEU is double the size of a TEU.
A liner conference, such as the IPBC Conference, is a group of container shipping firms offering equitable freight rates, standardized shipping practices and regular scheduled services between designated ports.
Member lines of such conferences agree on freight rates irrespective of market conditions, a decision that is acted upon by all the members.
The IPBC conference members include ANL, CMA CGM, Hamburg Sud, Hapag-Lloyd AG, K-Line, MacAndrews and Co. Ltd, Maersk Line, MISC Berhad, CSAV Norasia Liner Services, Rickmers, Safmarine Container Lines NV, Shipping Corp. of India Ltd (SCI), United Arab Shipping Co., Yang Ming Line and Zim Integrated Shipping Services Ltd.
“It’s been a bumper year for container shipping firms operating services to Europe, both in terms of volumes and freight rates,” said an official at state-owned SCI, a member of the IPBC Conference, which runs a weekly service to Europe called the Indian Subcontinent Europe Service, or ISES, alongwith Zim, Yang-Ming Lines, MISC and K-Line.
This service connects India’s biggest container port—Jawaharlal Nehru Port—with European ports such as Barcelona, Felixstowe, Rotterdam and Hamburg.
India’s container cargo trade to Europe has grown by 25% in 2007 over the previous year.
“The rate increase is being done to offset the adverse impact of rising operating costs on account of bunker (fuel) prices and congestion and delays at ports,” the SCI official said.
The rate increase comes a few months ahead of the disbanding of the IPBC Conference. It will cease to exist from October as the European Commission has decided to repeal the anti-trust immunity given to such conferences or groups operating from Europe.
Liner conferences were given antitrust immunity under the Shipping Act of 1984, a US congressional legislation that set regulations for the ocean transport industry that has been adopted by other countries or groups of countries.
India’s antitrust regulator, the Competition Commission, has decided to follow the European Union rule to prohibit shipping conferences, and has made it clear that it will not allow “concerted actions on pricing”.
“Under our Act, there is no exemption to shipping conferences. They will have to stop the practice of coordinating freight rates and other supplementary charges,” Vinod Dhall, acting chairman, Competition Commssion of India, had told Mint earlier.