Freight costs on Indian trades continue to trend down amidst dropping demand

As per the latest media analysis, the container liners operating to and from India are witnessing pressure build-up on freight rates as volumes are trending downwards. The contract price for westbound India-Europe trade, i.e. from JNPT to Nhava Sheva or Mundra Port to Flexstone/London Gateway or Rotterdam has suddenly slipped to US$3500 for a 20-foot container, and for the 40-foot container, it’s around US$4000 from US$4,400 and $4800 respectively.
For the cargo towards the route West India- Genoa (The West Mediterranean), the carriers are now accepting bookings at US$3750 for a 20-foot box and US$4100 for a 40-foot box.

Similarly, the eastbound cargo has also dropped and bookings from Felixstowe/Rotterdam to West India (Nhava Sheva/Mundra) have slipped.

The short-term contract prices offered by major carriers/liners for Indian cargo to the US East Coast have come down with an average rate of US$6350 per 20-foot box from US$7150, and similarly for the 40-feet box to US$8350 from US$9050.

Nevertheless, on the return leg, the average contract rates have not changed from the usual levels maintained by the major operators from last month. The rates are averaging US$1,075/20-foot box and US$1,434/40-foot container from USEC; at US$2,484/20-foot box and US$3,193/40-foot box from USWC; and US$1,770/20-foot and US$1,843/40-foot box from the Gulf Coast, into West India (Nhava Sheva/Mundra).

Even the Intra-Asia trades out of India have not seen any change in rates after the steep crash at the end of the Covid lockdown in Shanghai. The average rates offered by main carriers from West India (Nhava Sheva/JNPT or Mundra) to Shanghai/Tianjin is now US$350 for a 20-foot container and US$450 for a 40-foot container.

According to CN analysis, the Indian shipments to HK continue at an average of US$300 for 20-foot containers and US$400 for a 40-foot container. The West India-Singapore movement is now down to US$150 for a 20-foot container and US$250 for a 40-foot container, which crashed down from US$250 and US$400 for 20-foot and 40-foot containers respectively.

Mr. Sunil Vaswani, Executive Director of the CSLA (Container Shipping Lind Association) said that shipping liners are making all the necessary efforts to reposition empty containers in India and add additional capacities to help the export trade. He further added that the congestion at global ports had earlier blocked around 14% of our fleets but now that has also come down. The Russia-Ukraine war and the slowing down of western economies have not been of much help to rectify the situation. The rates now that you see have indeed come down but they have not gone below the pre-pandemic levels nor remain as high as it was during the pandemic, hence the rates are expected to be somewhere in between.

Even though the rates have drastically come down, the freight forwarders still believe the rates are on the higher side. The freight forwarders have said that the prices from Nhava Sheva to the Adriatic, the Baltic, and other regions have come down by an average of US$1000 in 50 days. The weakening in container demand in specific Chinese regions, the global economic downturn, the ongoing conflict between Russia and Ukraine, and continuing port strikes throughout the world are a few of the major trends that contributed to the price instability. Small and medium-sized exporters had anticipated lower rates, but due to diminishing consumer demand, existing shipments have also fallen.