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Home Freight News CN analysis: Freight rates on India trades continue to cool amid demand...

CN analysis: Freight rates on India trades continue to cool amid demand challenges

The ongoing rate slide on Indian container trades is showing no sign of a reversal, according to the latest market analysis by Container News.

On the westbound India-Europe trade, average contract rates from West India [Jawaharlal Nehru Port (JNPT)/Nhava Sheva or Mundra Port] to Felixstowe/London Gateway (UK) or Rotterdam (the Netherlands) have dropped to US$1,000 per 20-foot container and US$1,100/40-foot container, from US$1,250 and U$1,450, respectively, at the end of January.

For West India-Genoa (the West Mediterranean) shipments, average rates are down to US$1,000/20-foot box and US$1,100/40-foot box, from the January levels of US$1,200/20-foot box and US$1,350/40-foot box.

Eastbound cargo (imports into India) prices for these port pairings have also seen modest declines month-on-month, after staying steady for some time. According to the analysis, rates now stand at US$1,250/20-foot container and US$1,350/40-foot container for bookings from Felixstowe/Rotterdam, down from US$1,300 and US$1,400.  Similarly, rates for shipments from the West Mediterranean (Genoa) to West India have softened to US$1,100/20-foot box and US$1,306/40-foot box, from US$1,128 and US$1,356, respectively, in January.

Thanks to new service additions, average short-term contract rates for Indian cargo moving to the US East Coast (New York) have seen a further steep slide from the January levels – tumbling to US$1,750 per 20-foot box, versus US$2,550, and US$2,485 per 40-foot box, from US$4,113 and to US$1,552/20-foot container, from US$1,826, and US$1,997/40-foot box, from US$2,613, for shipments to the US West Coast (Los Angeles).

For the West India-US Gulf Coast (Houston) trades, rates on average have slumped to US$2,635 per 20-foot and US$3,525 per 40-foot container, versus US$3,675 and US$4,913, respectively, during January.

On the return leg, short-term contract rates have seen a 5 to 8% decline, on average, from the levels maintained by major operators in January. According to the CN analysis, rates now stand at US$805/20-foot box, down from US$855, and US$1,025/40-foot box, down from US$1,100, from USEC; at US$2,409/20-foot box, versus US$2,484, and US$ 3,043/40-foot box, versus US$3,193, from USWC; and at US$1,670/20-foot and US$1,693/40-foot box from the Gulf Coast, compared with US$1,770 and US$1,843 a month earlier, into West India (Nhava Sheva/Mundra).

Rates on intra-Asia trades out of India have continued to cool, with the exception of South China trades. For West India-Yantian (South China), rates have remained unchanged at US$240/20-foot box and US$364/40-foot container, while for West India-Central China (Shanghai) trades, rates have crashed to US$75/20-foot box and US$100/40-foot, versus US$100 and US$130, respectively, a month ago, the CN analysis showed.

Average contract rates for bookings from West India (Nhava Sheva/JNPT or Mundra) to Tianjin (North China) have dipped to US$100 per 20-foot container, from US$125, and US$200/40-foot box, from US$250. For Indian cargo to Singapore, rates are now hovering at as low as US$25/20-foot and US$50/40-foot container, down from US$50 and US$100 in January, a 50% decline month on month.

For Indian shipments to Hong Kong, major carriers are accepting bookings at US$75/20-foot container, versus US$100, and US$100/40-foot container, versus US$130, according to the CN analysis.

February rates for West India-Jebel Ali/Dubai movement stand at US$75/20-foot container and US$200/40-foot box, compared with US$125 and US$350, respectively, at the end of January.

Contract rate levels on the intra-Asia return leg continued to cool, with the slide averaging around 20% for 20-foot bookings from Shanghai to West India from the January levels, the CN analysis showed.

Meanwhile, Indian merchandise exports, by value, decelerated for the second consecutive month in January, down 6.6% year-over-year, according to government data. But that was lower than the 12 year-over-year decline reported in December.

“Monthly exports continue to remain in the negative territory mainly on account of global slowdown and rising inflation giving dent to the international demand,” A Sakthivel, president of the Federation of Indian Export Organisations (FIEO), said in a statement.

He added, “As expected, the challenges still continue due to recession like situation in most economies across the world.”

Sakhivel further noted, “The decline in exports during the month is also a reflection of the continued geo-political tensions between Russia and Ukraine, tightening global financial conditions and contraction in demand. High inventories and volatility in currencies have further added to such a challenging situation.”

The FIEO chief went on explain, “Though the coming months are going to be a little challenging unless both global economic growth and geopolitical situation improves drastically, we will be on course to cross the previous year’s export target quite easily, touching almost US$440-445 billion with a growth rate of over 4-5 percent this fiscal year.”

Other industry sources also see growth potential for Indian exporters as a consequence of US importers increasingly diversifying their procurements away from China.

“The main exports from India to the US are readymade garments, textiles, handicrafts, automobiles, food products, machinery, pharmaceuticals and biochemicals,” said Bharat Thanvi, co-founder of Mumbai-based digital forwarder Freightwalla.

Thanvi further noted, “With the growth potential and the increasing demand for products from India, this market is poised for growth in the near future.”

Jenny Daniel
Global Correspondent

Contact email: [email protected]

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