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CN analysis: Freight rate erosion on Indian trades continues as exporters bet on trade growth

Container freight rates on trades out of India have been unable to hold the rate gains they made from the Red Sea crisis, according to an analysis of market data for May by Container News.

On the westbound India-Europe trade, while average short-term contract rates for 20-foot container bookings from West India [Jawaharlal Nehru Port (JNPT)/Nhava Sheva or Mundra Port] to Felixstowe/London Gateway (UK) in April have remained somewhat firm at US$2,700 per 20-foot container, rates for 40-foot container bookings have fallen to US$2,500, from US$2,800 at the end of April.

For Indian loads to Rotterdam (the Netherlands), May TEU rates have also seen no changes month-on-month, at US$2,750 per 20-foot container, but FEU rates have declined to US$2,550 per 40-foot container, from US$2,850 in April.

For West India-Genoa (the West Mediterranean) bookings, contract rates have slipped to US$2,700/TEU, from US$3,150, and US$2,800/FEU, from US$3,300, the CN analysis shows.

Similarly, eastbound cargo (imports into India) rates for these port pairings have slid from end-April averages, to US$1,250/TEU and US$1,400/FEU, from US$1,700 and US$2,000, respectively, for bookings from Felixstowe/London Gateway to West India, while for shipments from Rotterdam to West India, rates have slumped to US$850/TEU and US$1,300/FEU, from US$950 and US$1,500/FEU, respectively.

For trades from the West Mediterranean (Genoa) to West India, the analysis put May rates at US$800/TEU, down from US$1,000, and US$1,400/FEU, up from US$1,150/FEU.

Short-term contract prices on the India-US trades have reported sharp downward corrections from the Red Sea crisis-linked boost. Average rates in May for shipments from West India (Nhava Sheva/Mundra) to the US East Coast (New York) have stood at US$2,100/TEU, down from US$3,650, and US$2,350/FEU, down from US$4,300/FEU in April. For Indian container loads moving to the US West Coast (Los Angeles), 20-foot container rates have ticked up to US$2,500/TEU, from US$2,400, and 40-foot rates have increased to US$2,900 per FEU, from US$2,500 reported at the end of April.

However, for the West India-US Gulf Coast (Houston) trades, May rates have dropped to US$3,500/TEU and US$4,000/FEU, from US$4,200 and US$4,500, respectively, at the end of April, according to the CN analysis.

Short-term contract rates on the US-India trades (return leg) have cooled month-on month, with USEC-West India pricing reported at US$550/TEU and US$800/FEU, compared with US$600 and US$850. However, for US West Coast-West India bookings, rates have remained steady at US$1,300/TEU and US$1,500/FEU.

Average rates from the US Gulf Coast to West India have also seen no changes from April averages – hovering at US$1,300/TEU and US$2,050/FEU.

Carrier contract rates on intra-Asia trades out of India have continued to be in negative territory, on some port pairings, the CN analysis found. For West India-Yantian (South China), the analysis put average rates in April at US$20/TEU and US$35/FEU, and for West India-Tianjin (North China), carriers are accepting bookings at as low as US$5/TEU and US$10/FEU.

For West India-Shanghai (Central China) trades, rates have also remained in negative territory, at as low as US$5 per TEU or FEU. Also, for West India loads to Singapore, carriers are also accepting bookings at as low as US$5/TEU or FEU.

April rates for West India-Jebel Ali (Dubai) bookings have stood at US$210/TEU, up from US$200, and US$260/FEU, down from US$300.

Meanwhile, despite multiple challenges, India’s merchandise export trade has had a positive start to fiscal year 2024-25, which began in April.

According to provisional government data, exports by value were up 1% year-over-year to US$35 billion.

“This (performance) not only shows the determination of the resilient exports sector, but also efforts and hard work, which the exporting community is putting together,” Ashwani Kumar, president of the Federation of Indian Export Organisations (FIEO) said in a statement.

Kumar also noted: “The ongoing Russia-Ukraine war coupled with various major geopolitical tensions including the Red Sea crisis and Israel-Hamas conflict have also made the international trade scenario much tougher for the Indian exporters.”

He went on to explain: “Exports will start showing better growth numbers with improved demand in the European Union, the UK, West Asia and the US, which have given boost to the order bookings by over 10 % and have come as sign of recovery for labour-intensive sectors of exports, including leather and leather products, footwear and apparels.”

Kumar added: “With fresh orders also expected to show some positive beginning, the tariff war between the US and China may come as an opportunity for the country’s exports sector.”

According to FIEO: “The need of the hour is to take steps on the liquidity front with deeper interest subvention support and continuation of interest equalisation scheme.”

The association also appealed: "The sector also needs easy and low cost of credit, marketing support, besides conclusion of some of the key free trade agreements with the UK, Peru and Oman soon.”

Jenny Daniel
Global Correspondent

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