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Demand drops in India-US East Coast Corridor
Mr.G.Chandrasekar Jun 19 2023 Shipping News

Demand drops in India-US East Coast Corridor

The Indian Subcontinent to US East Coast Corridor - a booming trade lane in 2021 and 2022, with annual volumes of more than 1.1million TEU - has seen demand drop 25 per cent in the first four months of 2023, with obvious impacts upon long- and short-term rates curves that peaked in the first half of 2022, says Xeneta , a Ocean freight rate intelligence platform’s analysis.


Prices on the India West Coast and Pakistan to the US East Coast lanes held steady above 10,000 US Dollars per 40 foot container (FEU) until September 2022, when demand fell away 18 per cent y-o-y and rates began their downward slide. The second half of 2022 proved to be a watershed moment for shippers, carriers and freight forwarders, as demand dropped by 16 per cent y-o-y. This provided a stark contrast to the first half of the year, which saw demand leap 17 per cent y-o-y.


Spot rates declined steadily, but rapidly, sinking below 6,000 US dollars in November 2022, below 5,000 US dollars by early December 2022 and, with the arrival of January 2023, moving into sub-4,000 US dollars per forty foot container FEU territory. By mid-June Xeneta’s data reveals short-term prices of around 2,200-2,300 US dollars per forty foot container FEU, a level last witnessed before the pandemic, back in December 2019.


In the first three months of 2023, long-term contracted prices dropped 26 per cent.. This steep decline continued, with long-term rates currently just above 3,000 US dollars per 40 foot container (FEU). Prices can still fall further, with the pre-pandemic benchmark range going down to 2,200 US dollars per 40 foot container (FEU).


Nevertheless, in the longer term this trade is very much a ‘one to watch’. With companies keen to establish additional manufacturing bases outside China – the ‘China plus one’ strategy – to secure supply chain resilience, India has strong potential to emerge as ‘the one’..