Freight rate of container shipping lines are likely to go up. The hike has been necessitated by the fact that earnings of container shipping companies have taken a beating due to decrease in volumes. There has also been a continuous increase in the cost of bunker or fuel costs. As a result the shipping companies are finding it difficult to cover their operating costs.
This information was given by the Union Minister of Shipping, G K Vasan. As per the minister, shipping companies are currently facing a dip in their volumes because of the global recession. Further they are being faced with higher costs in terms of fuel and bunker costs. This has led to an increase in the operating costs necessitating a rise in rates.
The quantum of increase of freight rates would depend upon market conditions. However, the rise in rates will lead to an increase in the cost of products/merchandise shipped. Export containers from India carry textiles, spices, processed cashew-nuts, basmati rice and pharma products. Products imported to India in containers include small wooden logs and raw cashew.
According to experts, freight rates have not been revised by the industry to the extent of increase in marine fuel prices. The fuel costs have more than doubled in the last two years and have led to reduced profits of the companies in the sector.
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