Soaring India freight rates fuel demand for government backed national shipping line

The Federation of Indian Export Organisations (FIEO), the official body responsible for representing and assisting Indian exporters, has submitted a formal request to the Indian government to invest in developing its own shipping line, in response to ‘exorbitant’ freight rates.

As we have updated you weekly, the cost of freight by all modes and on all trade lanes continues to remain high, operationally disrupted and administratively challenging, including the Indian Subcontinent.

According FIEO, there has been an “exorbitant” rise in rates since the COVID crisis began exacerbated by container shortages, inaccessible vessels availability and high container freight rates all affecting Indian exports and the profitability of exporters, said newly elected FIEO President.

FIEO highlighted that India is moving towards a trillion-dollar economy which will lead the payment due for freight to US$100 billion and if Indian shipping lines got just 25% of the business, they would have a captive market of over US$25 billion.

“The Government may provide some financial support either through liberal lending or through tax benefits to facilitate the same”, stated FIEO.

The FIEO statement come in light of rising freight rates since the beginning of the pandemic in 2020, with a huge demand and supply gap which has led many exporters to put regular bookings on hold while containers are being allocated only to those exporters who are paying a 100% premium.

Indian exporters are already worried about the escalating freight rates, and now they face huge challenges securing bookings, with the waiting period increasing drastically, with no bookings available on some routes until the 15th July.

All the major lines are reporting very limited space ex-Indian ports, especially to Africa, Oceania and South America, with peak season surcharges being imposed on some routes.

Having indigenous shipping lines may not solve the problem completely, the FIEO admit, but they believe it could command a fair share of India’s trade and soften freight rates.

The optimistic view for India freight rates is that they will begin to plateau by October-November 2021, providing efficiency at ports has been restored by then.

Metro’s network and expertise extends across the Indian subcontinent, with many customers sourcing from and exporting to the region, including leading brands and manufacturers across a variety of verticals. 

We continue to monitor the local situation and will update you on significant developments as they occur. Metro are experts in moving freight from and to the Indian Subcontinent and have the network and credibility to support all of your needs and requirements with the region.

If you are currently exporting to, or importing from any Asian subregion – or are thinking of developing these regions – please speak to Grant Liddell, who will be delighted to offer assistance, guidance and recommendations on the best solutions for the movement of your goods and associated supply chain issues.