Spot shipping freights fall

The average spot shipping freight rates in the tanker segment in the June 2007 quarter have broadly eased on a y-o-y basis. Indian shipping companies like Shipping Corporation of India and G E Shipping typically have an overwhelming majority of their capacity in favour of the tanker segment, and in a bid to offset weakness in spot freight rates, they have long term contracts with their key customers.

For instance, in the VLCC (very large crude carriers) segment which are typically used to transport crude oil from West Asia to refiners in western countries, the average spot freight rate was $ 30,553 a day in Q1 FY08 as compared to $ 34,583 a day last year, point out analysts.

This drop in freight rates for VLCCs is attributed to sufficient supplies of crude oil at refiners in western markets such as North America, which has curtailed the demand for transporting crude oil from West Asia to other countries. In other tanker segments like Suezmax, the average spot freight rate was $ 28,765 a day in the June 2008 quarter as compared to $ 33,385 a day a year earlier.

An exception to this trend, has been the Aframax segment of the tanker market, where freight rates averaged $ 21,838 a day in Q1 FY 08 as compared to $ 15,635 a day a year earlier. Also, in the dry bulk segment, freight rates have continued to remain strong and that's thanks to continued strong demand from the Chinese metal industry. For instance, the Baltic Dry Index averaged 5971 levels in the June 2007 quarter as compared to 2548 levels a year earlier.