Global container liners’ India operations in choppy waters

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

31 Dec 2008

Global container liners like Hapag Lloyd, Maersk Line, P&O Nedlloyd and Mediterranean Shipping Company are not having it easy when it comes to running their businesses out of India. Every container liner is losing in excess of Rs 50 crore each month, as the number of unclaimed containers have increased in various ports in the country. Deepak Tewari, chairman, The Container Shipping Lines Association (India), said: “With the economic downturn, there are over 50,000 unclaimed containers stuck in various ports, Container Freight Stations (CFSs) and Inland Container Depot (ICDs).
These are largely in Delhi, Ludhiana, Nagpur, Kolkata and Kandla.” According to him, the situation is worsening, as importers are shying away from claiming their cargo. There have been instances where some of containers have been in CFSs for five years or even 10 years.
It is learnt that importers dealing in scrap have not collected their cargo because of the crash in prices that has been prevalent over the past few months. “We are losing money as much as Rs 50 crore a month which goes into paying the penalty charges,” added Mr Tewari.
According to industry estimates, against an average of 300 uncleared containers at any point in time, there are over 5,000 containers in CFSs and at various ports. This is ever since the clogging started a month ago. Congestion at the Inland Container Depot (ICD) has increased by 60% in the past couple of weeks alone.
The situation becomes more difficult to handle, as there have been thousands of containers coming in from various parts of the world. “The government should have decided on this container issue a long time ago. Everyday, we are losing business, as there are customers who need these containers for shipments,” said a senior industry official.
Meanwhile, the container ship charter rates also crashed to all-time low in the recent past with the demand for tonnage going down. A 3,500-TEUs gearless Panamax carrier was fetching $15,000 a day currently. That is down from a level of $25,000 in September.
The rate for a 2,750-TEU sub-Panamax ship has fallen by nearly 45% since September to just $10,500 a day from $19,500. In the current situation, the container liners, instead of committing to long-term charters of 12 months and more, are fixing ships on a spot basis for between one and three months to meet immediate requirements.
There are, however, fewer containers available in the country to do the shipment and run the business from India.

Source: Economic Times