Freight rates for shipping commodities into India from countries requiring a voyage period of less than 14 days is expected to see a huge spike after the country’s maritime administration said that ships arriving from ports of Coronavirus infected countries identified for mandatory quarantine would have to wait outside the port till the two week period ends before allowed to unload cargo. “Fleet owners will budget it and the cost of transportation will go up exponentially,” said an executive with a local shipping company. “They will budget in the extra costs to comply with the 14 days requirement, which he would otherwise have completed in 5-7 days and go on to the next trip, to compensate for the freight lost,” he stated. For India, lot of commoditised shipments comes from South East Asian countries which are typically short-haul trades with voyage time of 5-7 days. India imports about two-thirds or 65 per cent of its crude oil and about 90 per cent of liquefied petroleum gas (LPG) annually from the Middle East, where the voyage time is about a week to India’s West Coast and a little more to the East Coast. “Indian entities hiring ships will have to pay more freight on all cargo types. It’s up to the ship charterers whether they want to pass on the higher rates to the end use consumers or not,” the executive said. “Tanker rates have gone up 5-7 times as the epidemic spread; it’s a big positive for fleet owners,” he stated. Freight rates for moving crude oil have also jumped since early March in the wake of the huge price cuts unleashed by Saudi Arabia, the world’s top oil producer, following a spat with OPEC + member Russia over production cuts. Given the very limited land storage available, the oil has to go on a ship- either to transport it or just store it on a ship, even if it has not been sold.
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