India-Europe ocean freight rate plunges by half

PROFIT made on the Asia-Europe route have been dwindling since last summer with rates on India-US routes showing a 28 per cent fall to US$1,000 (plus BAF) per TEU from $1,400, and further still from Indian ports to Europe dropping to 50 per cent to $450 predictions that it will fall to zero before second April.

Such frightening declines in rates mean that exporters are paying only bunker adjustment factors (BAF) and currency adjustment factors (CAF) of $450 to move one TEU from India to Europe with BAF set at $400, with $30-$40 to cover freight bringing it pretty close to a free ride, said India's Business Standard.

The situation is inevitable given the number of vessels lying idle and crude oil price decreasing which have caused excess capacity against a back drop of less cargo to carry.

According to a British shipowner vessel it makes sense to leave the vessel idle when capacity is low and operating is impossible. The global fleet laid up stands at 5.5 per cent, hitting historic highs as further lay-ups are predicted to rise up from 675,000 to 750,000 TEU worldwide.

Source: Schednet