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Falling freight rates: Shippers lose out to subdued export demand
The situation brings no cheers to shippers; it is said the situation might continue for some more months
Dr.G.R.Balakrishnan Nov 30 -0001 Shipping News

Falling freight rates: Shippers lose out to subdued export demand

The nearly 40 per cent drop in container prices has not brought any cheer to the shipping and exporters fraternity. A majority of them say the fall in rates comes at a time of subdued demand across markets.

Industry sources pointed out that there was a decline in average container prices in the country at $2,088 from $3,288 in March.The rates were skyrocketing during the pandemic, coupled with a shortage of containers, thereby hitting the bottom lines of several companies. The situation improved last year with the availability of adequate containers.

Binu KS, President of Kerala Steamer Agents Association, said the recent dip in freight levels can be attributed to many factors.

The disrupted supply chains and vessel schedules were a main reason for the imbalance in the box supply situation during the pandemic, amid a drastic dip in demand from the US and European markets. The Ukraine war also adversely hit demand across Asia to Europe.

 “Now we are experiencing a situation where we have enough space in vessels and excess supply of containers, which compelled shipping lines to start a price war, resulting in drop of freights. This may continue for another 3-6 months,” he added.

According to Prakash Iyer, chairman, Cochin Port Users Forum, the recessionary trends in the US and European markets have forced shipping lines offer lower rates to help fill cargo.

However, the situation is not conducive to get more export orders. This downward trend will continue for another few months, and cargo volume is expected to bounce back by the end of the year.