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Moving boxes from Nagpur to Mumbai dearer than shipping them on to Dubai

DISAPOINTING exports have pulled down India freight rates to an all-time low, reports the Times of India.

The rates for shipping a consignment from Mumbai to any destination in the Middle East has come down to almost zero, as against US$200 to $250 per TEU.

Now, shipping lines are ready to take the goods if a client simply pays the terminal handling charges or even if that is not paid in some cases, said the Times.

In this case, cost of transporting a consignment overland from Nagpur in central to west coast Mumbai is more than the cost of taking it onward to Dubai.

"For Europe, the freight has come down to $100 to $250 per TEU against the regular rates of $700. Freight for Africa has fallen to $600 from $2,100 a TEU, say sources in this business, while it is $50 for Far East," said the report.

This is being billed as a bigger slump than the recession of 2008. At that time, rates for South East Asian ports from India were the lowest but had never touched nil, say sources.

There is a huge mismatch between imports and exports. Containers coming to Indian ports are lying empty and shipping firms are ready to accept any freight instead of going back empty. Nagpur, which is a major centre for rice exports to African countries, has seen a 50 per cent cut in the business.

"Exports have touched a low, much against expectations of a boost in trade. Shipping companies had increased their capacities in expectation of a boom, which is now under utilised. There is a huge piling up of containers at domestic ports waiting to go back. This has brought the rates down," said Shiv Kumar Rao of R&Y Logistics.

The rice exports to African countries are down since the rupee has remained strong, making it a better option for African traders to buy rice from Thailand, where the currency has weakened, said Rao.