Date:18/05/2007 URL: http://www.thehindubusinessline.com/2007/05/18/stories/2007051802030700.htm

Back Tea shipments to UK may become dearer

Santanu Sanyal

Freight rates from Kolkata/Haldia set to rise

`Last year's freight was "subnormal" in the sense it was much lower than that in 2005. Some amount of correction, therefore, is inevitable this year.'

Kolkata May 17 Tea shipments from here to the UK/Continent this year are likely to be costlier than last year.

The shipping freight is set for a jump. The freight from Kolkata/Haldia port, which handles almost entirely the exports of the North India teas, will be higher by $150 per TEU and $250 per FEU, according to shipping industry sources.

The rise in freight, it is felt, will be caused by several factors. First, the slots are not easily available in the mainline vessels. The Europe-bound mainline vessels are getting loaded almost fully at the Far Eastern ports with limited slots becoming available either at Singapore or at Colombo for shipments from India.

Second, there is a general shortage of containers. For example, the shippers in Sri Lanka are already complaining about shortage of 600-650 TEUs every week for Europe, with the result the freight there has jumped by $300 per TEU.

Third, last year's freight was "subnormal" in the sense it was much lower than that in 2005. Some amount of correction, therefore, is inevitable this year. However, this year's projected rise, the shipping lines point out, will not help the freight level to reach the level of 2005.

Rise in freight

The tea shippers are currently negotiating freight with the shipping lines. It will be another two weeks or so before the deals are clinched. The shippers concede that some amount of rise in freight is almost inescapable. Regular shipments are likely to begin from the middle of next month.

The tea shipments through the Amingaon (Guwahati) inland container depot (ICD) too, it is felt, will begin from around the middle of next month. The empties are being repositioned at the ICD by the shipping lines. The first rake has already reached there. It may be noted that Container Corporation of India, responsible for transportation of tea containers from the ICD to Kolkata/Haldia, has already announced that it will refrain from any hike in haulage charge this year.

Tea Board has estimated this year's tea exports at 210 million kg (mkg) as compared to 203 mkg last year. However, not everybody in tea circles is equally bullish. Much will depend on the domestic market, they point out adding that the depreciation of the US dollar vis-à-vis Indian rupee too has been a matter of concern to exporters.