Bulk Freight Rates Zoom

BreakBulk Photo (1)

The COVID-19 pandemic seems to continue to play spoilsport for both exporters and more so for importers in terms of freight rates.

As countries around the world started to unlock, economies started to witness a much needed rebound in international trade.

With trade bouncing back the shipping sector has seen an unprecedented surge in freight rates both for containerised and bulk cargo.

Albeit pent up demand has led to an increase in volumes of bulk and break bulk cargo shortage in containers too has led to an increase in volumes of break bulk cargo.

 

 

Break Bulk Freight Rates Surge*:

Rice to West Africa:
From USD 50/ ton to USD 100/ton
Steel to South Europe:
From USD 35/ton to USD 50/ton
Steel to Persian Gulf:
From USD 25/ton to USD 40/ton
*Rates as informed by trade

Albeit pent up demand has led to an increase in volumes of bulk and break bulk cargo shortage in containers too has led to an increase in volumes of break bulk cargo.

‘We have definitely seen an increase in bulk cargo handled at VPT in this fiscal. There has been an estimated overall growth of 18% in volumes compared to the same period last fiscal’ said VPT’s deputy chairman Mr Durgesh Kumar Dubey, IRTS speaking to Vizag Industrial Scan.

“There has definitely been an increase in bulk cargo handled at VPT in this fiscal. We have seen an overall growth of 18% compared to the same period last fiscal.”

             Mr. Durgesh K Dubey, IRTS

              Dy Chairman, VPT

Barring petroleum, VPT has seen a surge in handling commodities like iron ore, raw fertilizer and coal.

‘We have seen a strong upside in break bulk volumes’ said Captain Siddharth Shukla, Vice President, Head Bulk Cargo & Offshore, Seaways shipping and logistics Ltd.

However what is significant is that many cargoes which were earlier containerized or sent in containers have now made a comeback to break bulk cargo.

“The charter hire for a Supramax from India has gone up to USD 35,000 per day from USD 15000 per day in a span of 6 months.”

              Captain Siddharth Shukla

               Vice President

             Head Bulk Cargo&Offshore,

         Seaways Shipping & logistics Ltd.

‘The advent of COVID 19 in 2019/2020 has led to an acute shortage of containers globally, thereby resulting in steep rise in container freights in all the trade lanes.

“Charter rate for a Supramax has gone up to USD 35,000 pd from USD 15000 pd”

By virtue of which it has been observed that a sizable volume of containerized cargo has been migrated to break bulk and bulk mode of shipping’ said Mr V Jeevan Vikas, VCLA president & Vice president Seaways shipping and logistics limited.

 

A sizable volume of containerized cargo has migrated to break bulk and bulk mode of shipping.

                         Mr. V Jeevan Vikas

                           VCLA, President

He further informed that exporters of commodities like Rice and Steel have taken refuge in shipping their cargoes through the break bulk/bulk modes due to the soaring freight levels and non-availability of equipment (20’ & 40’ containers) and also huge space issues due to congestions at most of the transhipment hubs – Colombo, Port Kelang, Singapore etc.

Agreed Mr G Sambasiva Rao, MD Sravan shipping and said ‘Shortage of containers has most certainly led to an increase in break bulk cargo volumes’.

Commodities such as steel, ferro chrome and rice are now being sent in break bulk mode.

Rice for instance has made a comeback to VPT after a hiatus of over a decade.

With volumes and demand increasing freight rates for break bulk cargo have increased significantly and doubled in some instances (See box).

Charter rates too have gone up significantly. ‘The charter hire for a Supramax from India has gone up to USD 35,000 per day from USD 15000 per day in a span of 6 months’ said Captain Shukla.

Shortage of containers has most certainly led to an increase in break bulk cargo volumes.

                     Mr. G Sambasiva Rao

                     MD Sravan Shipping

And it is not just the surge in volumes and demand for commodities that has led to the skyrocketing rates but the reluctance of ships to call in India due to the COVID-19 variant in India.

Analysts opine that these rates don’t seem to be coming down anytime soon.

‘In our view the annual world average 1-year TC rate for a standard Supramax vessel will rise by an additional $5,500pd in 2021 and then further by and additional $1,300pd in 2022’ said Mr Rahul Sharan, Senior manager, Drewry a maritime research firm speaking to Vizag Industrial Scan.

“In our view the annual world average 1-year TC rate for a standard Supramax vessel will rise by an additional $5,500pd in 2021 and then further by and additional $1,300pd in 2022.”

                       Mr. Rahul Sharan

                       Senior Manager, Drewry

New Cargo moves to VPT

The surge in demand coupled with congestion at Paradip port has helped cargo move to VPT. Commodities like Steel and others have seen sharp rise in exports from the port.

JSPL for instance has seen a gargantuan increase in its volumes from VPT. ‘JSPL’s volumes from VPT have substantially increased from 2 lakh tonnes per year to 1 million tonnes a year over the past 2 years’ said Captain Shukla.

Analysts opine steel exports to continue to be strong as domestic demand remains subdued.

Rise in Ships Berthing times

With the increase in traffic ships wait times at VPT have also increased.

‘Ships are taking 2-3 days to berth at VPT; earlier they used to be berthed within 24 hours’ said captain Shukla.

Non availability of labour is another glaring issue being faced by many port operators. ‘Labour shortage is a huge problem. 50% of my vehicles are stranded due to non-availability of drivers’ said Mr Sambasiva Rao.

Going forward the industry is hopeful of things settling down by the 3rd quarter i.e. if the third wave doesn’t have an adverse effect. As Mr Rahul puts it ‘If at all, there is another wave of the virus attack that might hamper the country’s non-coking coal imports over the next couple of quarters by denting its electricity demand growth. The further set of lockdowns in the coming months will undermine consumers’ sentiment and will have a spill over effect on the demand for industrial goods, thus dampening industrial activity and electricity generation’.

Share on linkedin
LinkedIn
Share on email
Email
Share on facebook
Facebook
Share on twitter
Twitter
Share on whatsapp
WhatsApp