Mediterranean Shipping Co. (MSC) has cancelled rate increase activity that was to have begun on 15 August on the India-US trade lane.
The previously-published trade notices announced a US$500 per container hike each in the form of peak season surcharges (PSS) and general rate increases (GRI) for shipments from India to the US (all coasts) and San Juan (Puerto Rico).
The Geneva-based carrier had said the hikes were necessary “to maintain the high level of reliability and efficiency of its services to meet the needs of customers.”
MSC has three sailings a week out of Nhava Sheva (JNPT) and Mundra for the US, which means significant capacity on the trade that has growth potential in the wake of evolving trade diversification within Asia.
The trade notice cancellation seems to reflect an underlying realisation that rate increases are hard to push through with no signs of a demand pickup.
India's export trade continues to shrink - down 16% year-over-year in July in value terms, extending the long streak of declines that began six months ago.
“Manufacturing across the Eurozone and the United States has contracted due to persistent policy tightening measures by both the US Fed and the European Central Bank squeezing finances, with also Britain's pace of decline steepening as optimism faded,” said A Sakthivel, president of the Federation of Indian Export Organisations (FIEO).
Sakthivel further explained: “With Asian economies showing mixed bag, economies across the continent struggled to maintain the momentum. The softening of the commodity prices has also pulled down value-wise exports.”
According to FIEO: “A large number of countries are showing such declines, including China whose exports also contracted almost similarly in July 2023. One of the main key reasons for a moderating pace of growth in merchandise exports significantly in 2023 has been because of ongoing geopolitical tensions, disruption in global supply chain due to Russia-Ukraine war, monetary tightening and recessionary fears, which has continuously led to a fall in consumer spendings across the globe especially in advanced economies.”
However, FIEO believes Indian export trade will soon rally as demand conditions are expected to turn around over the next few months with fresh orders for the festival and New Year season kicking in.
And while that is cause for optimism, carriers are currently facing serious challenges securing enough bookings to fill vessel space out of India, according to industry sources.
Some blank sailings or capacity adjustments had earlier helped carriers prop up rates on India-US trades, but the success proved short-lived.
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