The ongoing conflict in West Asia has led to a dramatic increase in shipping freight charges for cargo destined for the region, with container rates rising nearly ten-fold and charges for LPG and crude oil more than doubling, the shipping ministry reported.
Freight Rate Increases
According to data released by the ministry, average maritime freight charges for LPG have surged from $94 per tonne before the conflict to approximately $207 per tonne as of May 15. Similarly, crude oil freight charges have risen from $14 per tonne to $28.6 per tonne. For containers, freight charges have skyrocketed to $2,000 per twenty-foot equivalent unit (TEU), compared to just $203 prior to the conflict.
Reasons Behind the Surge
The sharp increase in freight charges is attributed to factors such as uncertainty and heightened risks in the region. Speaking at a media briefing on developments in West Asia, Additional Secretary in the Shipping Ministry, Mukesh Mangal, stated that the ministry is closely monitoring the rates and has issued an advisory regarding transparency in shipping prices.
Impact on Shipping Services
Times of India has learned that since the onset of the war, the average monthly number of shipping services from Indian ports to West Asia has plummeted from 444 vessels to just 125. This significant reduction in services has further exacerbated the freight rate increases.
Trends and Future Outlook
The data indicates that maritime freight charges for LPG have been rising steadily since the conflict began. For crude oil and containers, rates peaked at the end of April before experiencing a slight moderation as of May 15. An official commented, "The situation is dynamic, and we are keeping a close watch on developments. Freight charges will moderate when the conflict ends."
