Exporters in Andhra Pradesh are up in arms as their transportation costs have zoomed thanks to the skyrocketing container freight rates.
Container freight rates which had peaked amid the pandemic have yet again risen sharply particularly for west bound shipments from India.
Freight rates from India to western countries like USA, Europe, Middle East and Africa are said to have doubled and in many cases even tripled.
Exporters have lashed out at shipping lines for steeply escalating prices for twenty foot equivalents (TEUs) and forty foot equivalents (FEUs) while are also whining about the increased transit times.
‘Container freight rates are touching the sky’ said Mr Ravi Kumar Sinha, AGM, Jindal Stainless steel (JSL) one of the biggest exporters from Andhra Pradesh speaking to Vizag Industrial Scan.
JSL which ships steel coils, sheets and plates to USA, Europe, Korea and Middle East has seen its container (TEUs) rates rise acutely.
‘We ship about 700-800 containers a month from here and the rates have become exorbitant. Earlier to Europe we were paying USD 700-800 per container which has now shot up to a staggering USD 4000 per container’ informed Mr Sinha.
Concurred Mr Vijay Gupta Managing Director Berry Alloys and said ‘We are losing major business due to these unprecedented rate hikes by the shipping lines’.
The company which ships about 400 containers a month from Vizag port opined that the shipping lines have formed a cartel and hence are arm twisting exporters to pay exorbitantly high rates.
Lauding VPA’s state of the art infrastructure and the efficiency of Vizag customs Mr Gupta urged liners to exhibit fair play in pricing.
Seafood Exporters
Similarly many sea food exporters from the state of Andhra Pradesh are seeing the spiralling freight rates negatively affect their supply chain costs.
‘These rising rates have definitely dented our margins and profitability as ultimately we have to absorb the cost’ said Mr Nagesh of Nekkanti seafoods one of the biggest marine products exporters from the state of Andhra Pradesh.
Elaborating further Mr Nagesh informed that reefer container rates (FEU) to USA has gone up from USD 2900 in Jan 2024 to a steep USD 6000 per FEU in August 2024 and to some destinations in USA to even USD 9000 per FEU.
Increase in Transit Times
Similarly, exporters have been adversely affected with extended transit times of their shipments. ‘Earlier it used to take us 35-40 days to ship to Europe and it now takes about 80 days’ said Mr Sinha of JSL.
Agreed Mr Nagesh and said ‘Transit times and availability of containers are an issue. With the ballooning logistics cost and increased transit times seafood exporters are facing many supply chain issues’.
Transitioning to Break Bulk
As per some trade analysts big exporters have shifted to break bulk shipments to counter the rising container freight rates.
‘Many of my big Agri exporters have shifted to break bulk shipments due to the abnormally high container freight rates’ said a supply chain expert on the condition of anonymity.
Visakhapatnam Container Lines Association Acknowledging the steep surge in container freight rates, Mr K Santosh Kumar, Vice President of the Visakhapatnam container lines association (VCLA) attributed the hike to a combination of factors such as post-pandemic demand recovery, supply chain disruptions, increased trade volumes, carrier alliances and consolidation, fuel price increases, equipment shortages, seasonal peak demand, and the Red Sea war issue leading to Suez Canal disruptions.
‘As the shipping market continues to evolve, stakeholders must adapt to these changes to ensure smooth and efficient trade operations’ said the Vice president of VCLA.
Government Intervention
Exporters are seeking government intervention in controlling this haphazard spike in rates. ‘Government needs to step in and look at this.
There needs to be a regulatory body for this. If the situation continues like this India might be at the risk of declining exports and losing exports to other countries’ said Mr Gupta.
