Record jump in freight rates hurt businesses, says Rizwan Sajan, Chairman of Danube Group
Despite lower demand due to COVID-19 pandemic, shipping companies and freight services providers have increased the freight rates at a time when businesses worldwide are facing the worst economic crisis
Date: Dubai, UAE, November 10, 2020
The recent freight increases and shortage of container is putting lot of pressure on the business, keeping that in mind Rizwan Sajan, Founder and Chairman of Danube Group, is requesting shipping companies and freighter service providers to lower freight charges at a time when businesses worldwide and the global economy as a whole are suffering due to the unprecedented COVID-19 crisis.
Shanghai Containerised Freight Index jumped from 829.29 on April 17, 2020 to 1857.33 on August 13th– a 124 percent jump in just seven months!
Freight rates of a 40-feet container from India to the Middle East ports increased multifold in past few months, according to recent press report, due to container shortages in India
The cost impact of a 25-30 percent increase in freight costs in October alone is being felt across industries. Air freight is also up by 30-40 percent owing to reduced international flights due to the COVID-19 pandemic.
International trade, especially imports, exports and re-exports have been badly affected over the last few months due to unreasonable jump of freight rates that threatens global trade and economy in the middle of the COVID-19 pandemic.
“Freight charges usually decline when the demand for goods are less. However, following the COVID-19 pandemic, freight charges have skyrocketed up to 124 percent – at a time when businesses worldwide are fighting for survival and the overall global economy is suffering severely,” Rizwan Sajan, Founder and Chairman of Danube Group.
“The current freight rates, if continue, will force traders to increase prices of commodities that will push up prices at the wholesale and retail level as well – making things more expensive on the shelves. Similarly, this will reflect on the building materials prices and escalate the cost of building homes.
“I ask the shipping agencies to reduce the freight rates in line with the market demand and supply. The current freight rates are hurting importers and adding to our costs – making products more expensive.”
Spot container freight rates have increased in recent months, driven by shipping companies’ supply discipline, despite a decline in demand at the start of the coronavirus pandemic, according to Fitch Ratings.
“Consolidation in the global container shipping industry in recent years is the key factor behind improved supply discipline in the sector. The three largest alliances now account for about 80 percent of the global market,” Fitch Ratings said in a statement.
The current freight increases are mainly due to non-availability of empty container where it is required. As local businesses, we expect the major shipping lines to re-position their equipment as soon as possible so that freight rate reach to the realistic and affordable level.
About Danube Group
Danube Group is a Dubai-based diversified business conglomerate with interests in building materials, home décor and real estate development. Established in the year 1993 by Founder and Chairman Rizwan Sajan – a Non-Resident Indian (NRI) entrepreneur – Danube Group has achieved US$1.3 billion (Dh5 billion) annual turnover in 2019.
The group’s flagship company, Danube Building Materials FZCO, it is the largest supplier of quality building materials in the Gulf Cooperation Council (GCC) countries. It provides more than 25,000 products in stock and in-house value added services in all of its multiple set of showrooms across the Middle East region and India.
The company operates from its head offices in JAFZA with logistics facilities across the region which amounts to 5 million square feet and includes kiln drying facility, factory and warehouses of the group.
From a small trading firm, Danube has grown into one of the largest building materials company in the region, with its diversified branches worldwide including UAE, Oman, Bahrain, Saudi Arabia, Qatar and India, in addition to procurement offices in China and Canada.
Danube Home is one of the largest home décor retailers in the GCC with a growing footprint across the region. Danube Properties is one of the largest private real estate developers in Dubai with a portfolio 6,194 units in 14 projects, worth Dh4.5 billion. It has delivered 7 out of the 14 projects in six years.
Danube Group has a team of 1,800 plus people working across strategic locations across the GCC and India.