News
September 30, 2022
Container freight rates on trades out of India continue to taper off amid falling demand, according to a new market analysis by Container News.
On the westbound India-Europe trade, contract prices from West India [Jawaharlal Nehru Port (JNPT)/Nhava Sheva or Mundra Port] to Felixstowe/London Gateway (UK) or Rotterdam (the Netherlands) have slipped to US$4,400/20-foot container and US$4,800/40-foot container, down from US$4,650 and US$5,200, respectively, last month.
For West India-Genoa (the West Mediterranean) cargo, carriers are accepting bookings at US$4,900/20-foot box and US$5,100/40-foot box, compared with the August levels of US$5,000 and US$5,300.
Eastbound cargo rates have declined by double-digit percentages – now hovering at US$1,525/20-foot container and US$1,700/40-foot container, versus US$1,725 and US$1,900 for shipments from Felixstowe/Rotterdam or Rotterdam to West India (Nhava Sheva/Mundra).
Short-term contract prices offered by major carriers for Indian cargo to the US East/West coasts have further moderated from the August levels – averaging at US$7,137 per 20-foot box, from US$7,937, and US$9,015 per 40-foot box, from US$10,015, for bookings to USEC (New York), and at US$7,032/20-foot container, from US$8,357, and US$8,913/40-foot box, from US$10,569, for loads to USWC (Los Angeles).
For the West India-US Gulf Coast trade, rates have decreased to US$9,257 per 20-foot and US$11,615 per 40-foot container, versus US$10,527 and US$12,925, respectively, in August.
On the return leg, average rate levels have remained steady with the rates maintained by major operators last month – at US$1,075/20-foot box and US$1,434/40-foot box from USEC; at US$2,484/20-foot box and US$3,193/40-foot box from USWC; and at US$1,770/20-foot and US$1,843/40-foot box from the Gulf Coast, into West India (Nhava Sheva/Mundra).
Intra-Asia trades out of India have seen the sharpest month-on-month slide, after hitting new highs following the end of Covid lockdowns in and around Shanghai.
Contract prices from India to Central/North China, Singapore and Hong Kong have dropped between 25% and 50% this month from the levels reported at the end of August.
Average contract rates offered by major carriers to regular clients for bookings from West India (Nhava Sheva/JNPT or Mundra) to Shanghai/Tianjin are now at US$350 per 20-foot container and at US$450 per 40-foot box, down from US$505 and US$810, respectively, during August.
Rates on the West India-Singapore movement have also seen a similar trend, with contract rates slipping to US$250/20-foot container and US$400/40-foot box, from US$500 and US$800 last month.
For Indian shipments to Hong Kong, average rates are hovering at US$300/20-foot container, versus US$505, and US$400/40-foot container, compared with US$810, the analysis shows.
Contract rate levels on the return leg have also fallen significantly month on month, with the slide averaging between 40% and 50%.
Local freight forwarder sources attributed the steep pricing corrections to weakening demand and noted that rate levels could come under further pressure in the coming weeks.
“The contraction in global trade is also visible from the sharp decline in the freight rates, which have reduced by about 50% on major trade routes,” said the Federation of Indian Export Organisations (FIEO) in a statement. “With inflation plaguing all economies, inventories are very high globally in all economies as the purchasing power has dwindled which has affected the offtake and thus the demand is slowing.”
FIEO added, “The demand for liquidity has gone up as buyers are delaying the payments and asking exporters to withhold further shipments or release small quantities of such shipments.”
The premier association also noted that inflationary pressures are clearly sapping consumer demand across major sourcing markets. “With inflation plaguing all economies, inventories are very high globally in all economies as the purchasing power has dwindled, which has affected the offtake and thus the demand is slowing. However, the demand for low value [Indian] products is increasing by leaps and bounds,” it said.
FIEO explained, “Therefore, while we expect volumes to remain intact, the value may take a hit.”
Forwarders have also expressed concerns about slowing export order flows. “The country saw a fall in the various export sectors, including chemicals and engineering,” Sanjay Bhatia, co-founder and CEO of Mumbai-based Freightwalla, told CN.
He went on to explain, “This has impacted the container movement to and from India as the demand for the same is declining. Container volumes at the top ports across India and global ports are dropping.”
Bhatia also noted, “As we understand, there was a 4% decline in the volume witnessed at ports. We see that demand was not as high as expected in the first quarter regarding growth, and the same was seen for the most part in the second quarter.”
Jenny Daniel
Global Correspondent – Container News
