Experts fear short lived respite in container rates, make suggestions on shipping diverts towards Indian ports

The average shipping container rates in India have seen a double digit decrease in the recent past, even though Nhava Sheva and Mundra have been increasing in line with the global average rates. But experts fear the respite is short lived for major trade lanes, with the peak season expected in July. Freight forwarder sources said that the average contract rates for North America, Europe and intra-Asia routes had seen double-digit declines this month. From west India to London Gateway, carrier contract pricing is presently hovering around USD 6,009 per 20ft, versus USD 7,615 in May, down 21%, and at USD 7,141 per 40ft, down 11% compared with USD 8,015 at the end of last month. In the intra-Asia market to China, Hong Kong and Singapore, average pricing has fallen between 10% and 25%, data suggests.

According to experts, the decline in container rates can be attributed to better availability of containers along with the cargo diversions towards India amid the crisis in Sri Lanka. But as the industry strides towards the July peak season, the decrease could be temporary.

While the global average container prices have increased by up to 15% in May, the average container prices in India have declined, similar to the trend observed in China and many more countries worldwide. There has been a continued month-on-month decline in the prices of 40ft high-cube containers in Chennai from USD 4,044 in April to USD 4015 in May.” according to a new analysis by Container xChange. Their CEO Johannes Schlingmeier said that the Sri Lankan crisis has diverted a lot of port traffic from Colombo to India. Though it has created more opportunities for increasing the transshipment volumes for the latter, it may turn out to be a temporary shift if port infrastructure is not updated.

There is much work to do for Indian ports to woo Colombo-bound ships, starting from increasing their draught size to match that of Colombo’s to developing strategically placed ports on shipping routes. Starting from scratch might not be the key here, rather expanding the already-present ecosystem will reap more benefits in the long run and get India its place in the global value chain.”

Johannes Schlingmeier, Founder and CEO, Container xChange

According to Sunil Vaswani, Executive Director of the Container Shipping Lines Association (CSLA), Indian ports like Tuticorin, Cochin and Ennore need to be able to accommodate larger vessels in terms of length and draught/draft to be able to offer themselves as a viable alternative to Colombo. Ennore has a draught limitation of 15 metres, whereas Tuticorin can accommodate vessels with a draught of 14.2m, and Cochin up to 14.5m draught. On the other hand, Colombo can accommodate vessels of up to 17 metres draught.

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