Expressing dissatisfaction over the opaqueness in the shipping rates, Commerce and Industry Minister Piyush Goyal on Thursday warned that the government may be forced to take stringent steps.

This comes as exports said that shipping rates in some cases have risen over 600% in the past two years due to rising fuel prices amid the ongoing geo-political tension.

“Your sector (logistics) has a lot of leakages. Shipping rates are not transparently announced. I am not satisfied. There is opaqueness in the shipping rates. The government may have to take some strong steps.

How will we become competitive if the logistics cost is at 13-14% (of India’s gross domestic product)?. Developed nations have brought it down to 7-8%,” Goyal said while speaking at an industry event.

Bloomberg reported that on one key route in Asia, ship owners are now earning over $49,000 a day transporting products from South Korea to the distribution hub of Singapore, compared with $98 a day prior to the war.

Clean tanker freight rates were last at this elevated level in early 2020, after the pandemic decimated oil consumption and forced fuel producers to export as much product as possible to alleviate swelling storage tanks, as per Bloomberg.

The World Bank in its report said that the war-driven supply shortages and shipping disruptions have added to price increases in commodity markets, on top of the sharp price rises since mid-2020, and to global inflationary pressures.

The report warned that shipping costs could rise further, distorted trade flows if the war in Ukraine continues. The geo-political tensions could also result in sharper-than projected slowdown in global export growth, the report added.
Source: Livemint