India plans vessels to West Asia to cut freight costs
The commerce department is working with agencies, including the Shipping Corporation of India, to operate special vessels to West Asia to support exporters with lower freight rates. The Shipping Corporation of India had previously been included on the privatisation list.
Current freight rates to West Asia are about US$3,000 to US$3,500 per 20-foot equivalent unit and US$4,500 to US$6,000 for refrigerated containers. The government is targeting rates at around half these levels to improve viability for exporters. With the Strait of Hormuz remaining inaccessible, vessels may dock at alternative ports, with onward transport by road already in use for certain markets.
The Directorate General of Foreign Trade has held consultations, and APEDA will lead cargo aggregation, including identifying exporters willing to participate. The plan covers a range of agricultural products, from perishables such as onions, bananas, and other fruit and vegetables to rice and tea. Exporters report that freight rates for some destinations are currently higher than the value of the goods.
Based on demand for refrigerated and non-refrigerated cargo, the Shipping Corporation of India will deploy vessels, with route and frequency determined accordingly. Discussions have included vessel size, with options ranging from 4,000 TEU merchant vessels to smaller units of around 1,000 TEU, particularly in the initial phase.
Concor will support container availability and facilitate cargo movement to ports, as shortages may emerge in the coming weeks. The commerce department had considered freight subsidies, but the vessel plan is viewed as an alternative that targets specific markets and aligns with global trade rules on subsidies.
Some countries in the Gulf region are also exploring options to share part of the freight costs, particularly for food shipments.
Source: The Times Of India
Key Insights
- This topic is currently trending
- Experts are closely monitoring developments
- It may impact future decisions
