Fuel Cost Rise May Push Up Freight Rates

Bunker rates have risen by $15 to $120 per tonne at Singapore in the last two days due to the tense situation, stated Indian National Shipowners Association director R L Pai. The widespread feeling in the Indian shipping industry is that bunker rates will show an upward trend in all the international sectors, including Rotterdam and Dubai. Most of the ships that call at Indian port source bunker in the world market, where it is cheaper.

Bunker rates will go up further in the next few days, says Mumbai & Nhava Sheva Intermodal Agents' Association president Dinesh Lal. The rise in bunker prices will result in shipping lines raising the bunker adjustment factor (BAF). In accordance with BAF, freight levels too will rise, says a feeder operator to the Gulf.

Freight brokers however confirmed that there was no immediate rise in freight rates. A leading broker contended that the presence of too many players in the Indo-Gulf sector will keep freight levels down. He expected a hike, if any, after 20 to 30 days. A liner operator however said freight rates will soar in the next seven to 10 days.

Pai said shipping lines will have to take insurance cover specifically for war.

This cost too would be passed onto the shippers in the form of increased freight.

An official of a leading insurance company maintained that there was no liability arising out of war, unless a such cover was obtained.

Insurance officials do not expect the number of shipping lines seeking such cover to go up if the war was over in a few days. A long-drawn conflict may change things.

In the meanwhile, operations to the Gulf ports continued as usual. A feeder operator said vessels sailed off according to schedule. Mumbai Port Trust officials confirmed it.