Soaring container rates, delays choke exports

Container rates out of east Indian ports were close to all-time highs, leading exporters from the region complained in Kolkata recently.

The rise was partly on account of booming exports of steel and metal engineering products to the China market.

Despite the high cost, important transhipment ports like Colombo and Singapore were now facing huge congestion, adding to costs.

The rate for 20 feet container (TEU) to the US west coast was around $2400 while tariff for east coast was $2000 or so. Rates to the Persian Gulf region have shot up to around $950-$1100 depending on cargo.

Prakash Thaker, regional chairman of Federation of Indian Export Organisations, said: "Export from this region is becoming uncompetitive owing to freight charges and strengthening rupee. If the trend continues, we are in for a really bad time. The rise has been very sharp in last four months."

In fact, exporters said they feared another round of increases in freight rates. "We have seen such high rates only five years ago and it hurt exports badly then. Shipping lines have threatened another $250 increase from September 1 for US bound cargo and another $150 peak season surcharge for the Gulf region," Ravi Sehgal, eastern region chairman of EEPC (Engineering Export Promotion Council), said.

Exporters were also facing problems as mother container vessels were no longer calling at Kolkata or Haldia because of low draft.

Exporters had to ship consignments from the region through feeder vessel to Colombo or Singapore. As export from neighbouring countries have also gone up, waiting times at these ports were extending to 15 days at times.

Steel and engineering units faced another problem. Shipping lines were unwilling to move such containers from Kolkata since they carried metals and engineering goods.

"The weight of a 20 ft container from this region tends to be higher due to the presence steel products and engineering items. Shipping lines are thus eager to move lighter items like garments and others," Sehgal pointed out.

Exporters were considering to move consignments to west coast ports where charges were lower. Non scheduled lines were ready to carry containers at $300-400 per TEU to Gulf region.

Kolkata and Haldia ports registered highest ever container traffic in July. Kolkata Port Trust was now going all out to get more container traffic.

However, high freight rates and congestion at trans-shipment ports may scuttle the KoPT initiative.