Despite lower sea freight rates, there is no jubilation for commodity exporters

The sharp fall in global freight rates from a peak of $18,000 to $750 in various sectors such as the US and Europe has not pleased export-import (EXIM) trading companies.

The EXIM sector is unable to take full advantage of the situation as overall demand is subdued due to the global economic slowdown.

The Covid situation had forced shipping companies to increase freight charges between 2020 and mid-2022 to cover their expenses due to ship delays, container delays, etc.

Now prices have even fallen below the pre-Covid times since January. The move south to $750 in the European sector started to benefit customers, exporters and importers, said Cochin Port Users Forum’s Prakash Iyer.

Despite still higher prices for common feeders, shipping companies are offering exporters lower prices to withstand competition, Iyer said.

Recession plays spoilsport

Mahadevan Pavithran, a coco coir exporter in Alappuzha, said the industry cannot benefit from lower sea freight rates due to the recession in global markets and the conflict between Russia and Ukraine. The decline in coir exports was around 30 percent, which is expected to continue throughout the year.

The coir business has declined by 30 to 50 percent and the priority is to survive this dry spell by focusing on niche markets with product specialization and quality.

The industry is now only surviving due to China’s shift in focus from sourcing coconut pulp from India to Vietnam and Indonesia.

This has led to a drop in coir pulp prices on the domestic market, which is helping the industry stay afloat at this stage. Rising demand for upholstery stores has made it easier for China to seek nearby centers to purchase, he said.

Impact on the fish sector

Seafood exports are also subdued due to subdued sales in the US and Europe. Alex K. Ninan, president of the Seafood Exporters Association of India – Kerala Region, said export business has fallen 15 percent due to the US recession and the case is similar with Europe.

With the availability of sufficient stocks in the supermarkets, there will also be a significant reduction in purchases for the following Easter period.

According to Prakash Namboodiri of the All India Spices Exporters Forum, the falling freight rates would greatly benefit customers. But the overseas market, particularly the US and Europe, is not as conducive due to the recession, forcing consumers to buy hand-to-mouth. The growing regulatory concern over pesticide issues in Europe also poses a problem. Source: business line

Related Articles

Back to top button