Exporters petition govt on freight increases as shipping companies form ‘cartels’

The Federation of Indian Exporters Organisations (FIEO) has written to the Shipping Ministry citing “monopolistic and unfair practices” by shipping companies which has led to an unprecedented increase in freights for overseas destinations.

FIEO President Sharad Kumar Saraf, in a letter to Director General Shipping has said that the shipping lines have again increased their freight to main European ports. It is about 60% increase within a week. Similarly freight to Latin American ports have been increased by 50% and for US ports are also being increased regularly. “This has an unprecedented increase and a clear indication of monopolistic and unfair practice”, he said.

The FIEO President said in the letter that availability of containers has further worsened even from regular ports such as Mundra and JNPT. The situation in inland container depots (ICDs) is still worse, he added.

The letter said that while it is true that imports have reduced but shipping lines can easily bring empty containers with negligible cost from Dubai and other ports.

“In fact they are paying a much higher rent (storage cost) for containers in other ports which can be saved by utilising them for exports out of India. Shipping companies are using this as an opportunity for increasing the freight,” the letter said.

FIEO has sought a regulatory body like RERA to regulate the shipping companies.

“Under the circumstances, we suggest that there should be a proper regulatory body to regulate the shipping companies operating from Indian ports. This body can be similar to RERA who are regulating the building industry. After the formation of RERA, there has been substantial improvement in governance of operations in the building industry,” Saraf said.

This is the second follow-up letter written by the FIEO President on the issues being faced by exporters for shipments from Indian ports.

From the last 3 months (since July 2020) the shipping lines are shutting out the containers abruptly giving reasons that the vessels are full. On the other hand in China the Shipping Company cannot shut out any cargo otherwise they face suspension of their service in China.

The FIEO said that the sea freights have started increasing gradually since July and all the shipping lines have increased the freights by 20% to 40% depending on the destinations from June to September 2020, despite the fact that the overall export from India is down than the corresponding period, due to Covid-19 situations.

The Shipping lines are increasing freights in fortnightly or monthly intervals consistently since July 2020. Besides the increase in freights, the shipments are getting delayed for the reasons told that the vessels are going full. “Shipping companies are able to increase the freights by forming cartels”, Saraf said in the letter.

“The major carriers have consolidated and have almost monopolised the container freights and are abruptly increasing the freights, without any proper justifications, by forming cartels and actions should be initiated against such monopolistic practices,” the FIEO complained to the Shipping Ministry.

It is experienced that the shipping lines are offering vessel space of 3 weeks to 4 weeks ahead. Even after such long dates for shipment, lines are shutting out the containers abruptly and are not liable to pay any compensation to the shipper for delays.

Shippers are facing huge issues due to such situations and total irresponsible and monopolistic attitudes by the shipping lines.

The shippers are charged with demurrages and detention charges for any small delay of any sort, but there is no responsibility of the carrier in case they delay the cargo for their operative reasons, it said.