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Indian shippers have reason to cheer with an anticipated 10 to 15 percent drop in ocean freight for the first quarter of 2007, on all major routes. Credit for the reduced freight rates primarily goes to over supply of container shipping services.

Better still, as increased services in container shipping are due, routes as strategic as India-Europe, India-US East Coast and India-Far East are expected to follow suit.

Owing to the possibility of oversupply in container ship capacity, rates for charter and freight will continue to be under pressure. According to market observers, the comparative low rates are likely to last till the beginning of 2008. Rates have certainly declined in the last 12 months. But in longer-term perspective, they remain above reasonable level.

A comprehensive index ‘HARPEX’ of charter rates from shipbrokers Harper Peterson & Co. is 40% lower than March 2005. Nevertheless, the absolute value of this index remains twice as high as it was in early 2002, marking its lowest rate so far. On the whole, the cyclical trend of prices is characteristic of a sector with fairly long lead-time from placing a new capacity order to its delivery.

An industry analyst felt that Indian corporate houses involved in export and import in large volumes, stand to gain, apart from small and medium export houses, which are also likely to be at advantage from the drop in freight rate.

There has already been a 25 percent decline in freight rates for the India-US East Coast sector with $1,350 for twenty-foot containers compared to $1,800 six months back. Even on the India-Europe routes a 26 percent drop has made it $550 for twenty foot containers that was $750 six months ago.

A prominent ship agent house executive reveals that a drastic rate decline occurred on the India-Far East sector. The expectation is a further 10 to 15 percent reduction in freight rates on all the three main routes. Curiously, shipping firms are increasingly eyeing new services from India, the severe pressure on their margin notwithstanding.
 
In the meantime SINA a new service from United Arab Shipping Company (UASC) connects South East Asia to the US East Coast. Another container shuttle service linking India and Singapore has been introduced by Mitsui OSK Lines (MOL) from Japan.

A $37 million’s record fine has been slapped on an ocean shipping firm whose ships regularly stop at Cape Fear River’s oil terminals, federal and company officials said this on December 19, 2006. The offence is illegal dumping of waste oil into the ocean and tampering with pollution logs of Willmington and five other ports by their ships with regular stops at oil terminals at the Cape Fear River located close to downtown Wilmington.

New York based firm Overseas Shipholding Group Inc. gave its consent for pleading guilty to 33 felony counts related to dumping violations involving nine ships, apart from 3 other ships involved in log violations in Wilmington, Boston, Portland, Maine, Los Angeles, San Francisco and Beaumont, Texas, as revealed by federal officials.

Never before has such a large criminal penalty been imposed for deliberate vessel pollution. The fine is inclusive of $27.8 million in criminal charges to be distributed to the districts as well as a community service fee of $9.2 million towards the funding of marine environmental causes.

What triggered the investigation by the Department of Justice and the US Coast Guard was a report by Canadian officials who found the official records of one of the company’s ships inconsistent with the oil waste disposal. Before long 150,000-gallons of oil contaminated waste was found to have been dumped along the water route from Maine to Massachusetts.

A release from Acting Associated Attorney General William Mercer accused Overseas Shipholding, a name that ranks among the global giants of publicly traded tanker-firms, of repeatedly resorting to deliberate ocean pollution.

Mercer said that company’s management had failed to stop or expose the illegal practice despite being made aware of it a number of occasions, even after the government’s investigation was underway.

He felt that the penalty would discourage others from similar circumvention of the law to gain monetary advantages while damaging the environment.

The guilty plea agreed to by the company, prescribes a 3-year probation for implementation and observance of a stringent program for environmental control. Also included are a monitor appointed by court and external independent auditing of their ships’ international trade.

The company acknowledged in court records of being financially motivated. The US Attorney’s Office concluded that OSG profited from eluding the cost for offloading waste-oil in port and time that’s involved in obeying the law.