News & Updates

General Rate Increase by Shipping Lines

by | Aug 6, 2021 | Transport

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MUMBAI – The port congestion pandemic has stretched around the globe with ever greater numbers of containerships idling, waiting for berth spaces to open up across five continents, causing considerable congestion and delays at ports and terminals, disrupting the supply chain and loss to the shippers.

Freight rates have sky-rocketed, and the availability of containers is a major hurdle in fulfilling contractual obligations. Our food/ingredients are life essentials. Hence the industry was absorbing the additional cost of freight by cutting its own wafer-thin margin to sustain and keep the food chain supply intact.

The Spice industry usually works on small margins and high turnover. But now, the industry faces its worst-ever disruptions with a hike in freight rates. Freight rates are surging continuously. The charges for containers are increasing between USD 500 to USD 800 every fortnight. A 40-foot long container for a shipment to New York costs around USD 8.500, which was around USD 7.000 a month ago and USD 2.500 in the pre-pandemic era.

Other destinations in the US and Canada have seen container charges reaching about USD 12.000. For exports to Europe, rates have shot up to USD 5.500 from the last month rate of USD 4.000, which was earlier USD 1.000 to USD 1.200 before the outbreak of the pandemic.

The persistent exponential increase in freight rates every fortnight is hindering smooth shipping and trading. Over and above increase, restrictions on weights and weight-based charges have been implemented by shipping lines.

Many spice exporters will find it difficult to continue if the situation continues the way it is now. It is time that the shipper is supported and finds a workable solution till the situation returns to normal.

In this regard, FISS has requested that for the ongoing contracts for which shipment will be executed in August and September 2021, the importer kindly absorb the General Rate increase quantum charged by the shipping company. Thereafter a fresh contact will be drawn, which would add the prevailing General Rate Increase to the cost for the mutual agreement of the importers.

Source: FISS

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