Ocean Carriers Push Rates Higher Amid Tight Capacity on India Headhaul Trades

Ocean carriers operating on the larger head haul trades out of India have significantly increased rates in July due to a severe shortage of available vessel space. According to data from freight forwarders, spot booking prices from West India to the US East and West coasts have surged four- to five-fold in the past week.

The average rates to the US East Coast (New York) now stand at $9,371 per TEU and $10,479 per FEU, a sharp rise from the $1,957 and $2,282 reported at the end of June. These elevated levels are approaching the pandemic-linked record highs of early 2022. Current India-USEC rates are pegged at $10,000 per FEU as of July 15, marking an increase of over $8,000 in just one month.

Rates to the US West Coast (Los Angeles) have similarly skyrocketed, reaching $10,599 per TEU and $11,985 per FEU, up from $2,633 and $3,008. Gulf Coast (Houston) rates are now $9,955 per TEU and $10,644 per FEU, rising from $3,332 and $3,632 month over month. India-Europe spot prices have also seen substantial increases, with rates for upcoming sailings on leading services generally booked full. Rates for West India loads to Felixstowe/London Gateway or Rotterdam are now around $4,178 per TEU, up 36%, and $4,505 per FEU, up 42%.

A Mumbai-based forwarder described the situation as “a crazy month,” noting that direct Europe sailings for the first week of August are already fully booked. Rate quotes vary by carrier and customer, reflecting the highly competitive and dynamic market conditions.

There are growing concerns that carriers are not honoring bookings from their service contract customers, forcing shippers onto the more expensive spot market. Additionally, carriers are predominantly accepting bookings for lightweight cargo to maximize vessel lifts and have implemented surcharges of $300 to $500 per container for overweight standard loads. An engineering goods exporter noted that container lines now prioritize scalability over flexibility, choosing cargo that best fits their current strategies.

As the market favors the supply side, carriers continue to introduce new surcharges on top of elevated ocean freight rates. Hapag-Lloyd, for example, has announced a $500 per-container emergency space surcharge for India-Europe cargo starting August 1. The equipment situation is also becoming a concern, with booking demand surging and inventory lengthening due to vessel diversions linked to the Red Sea.

An executive at another forwarding house in Mumbai highlighted the lack of blanket empty equipment guarantees, complicating the booking process further. Additionally, Indian shippers are facing cargo flow challenges due to persistent vessel schedule disruptions causing gate cut-off changes. Container trailers serving terminals at Nhava Sheva have reported significant congestion over the past two weeks, echoing complaints from rail operators at Mundra.

The Nhava Sheva Container Operators’ Welfare Association reported that congestion has resulted in average delays of six to eight hours for every export/import and empty container being gated in or out of the NSICT (DP World) and GTI (APM Terminals) terminals. This congestion is significantly impacting the entire export/import cycle and delivery schedules to importers.

The geopolitical ramifications of a long-term crisis may lead to Chinese carriers returning to a Suez routing. Houthi attacks, backed by Iran, appear to target companies with ties to Israel or countries sympathetic to Israel. Chinese carriers might be able to restart the Suez routing before European-based carriers, potentially altering global shipping dynamics.

PNG Worldwide is connected to local and international information sources, monitors the situation, and if more information is needed, our team is ready to help arrange for equipment to move your cargo. The current state of the shipping market reflects a complex interplay of capacity constraints, geopolitical tensions, and strategic shifts by carriers, all contributing to unprecedented rate increases and operational challenges for shippers.