Shipping sector regulator Directorate General of Shipping has advised shipping companies, vessel operators and agents to refrain from "predatory, non-transparent and opportunistic pricing" practices in the wake of disruptions due to the West Asia conflict, according to sources.
Govt Directs Shipping Operators to Refrain From Predatory Pricing Amid Middle East Crisis
The government instructs shipping operators to avoid predatory pricing practices as Middle East tensions threaten global trade stability and freight market fairness
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In an advisory issued on Monday, the DGS also asked them to ensure that all applicable charges are communicated clearly and upfront to exporters, importers and other stakeholders.
The DGS advisory came following the regulator receiving representations from various stakeholders in the EXIM trade regarding the levy of multiple ancillary charges by shipping lines/carriers and their agents.
These charges are perceived to be "non-transparent and opportunistic in nature", resulting in an escalation in transaction costs in the logistics chain, DGS said.
Besides, it said, they appear to be taking undue advantage of the prevailing geopolitical tensions and war-like situation, it said.
"In the interest of promoting transparency, fairness and predictability in the EXIM logistics ecosystem, all shipping lines, carriers and their agents are hereby advised to refrain from predatory, non-transparent and opportunistic pricing practices, including levy of exorbitant charges thereby taking undue advantage of prevailing geo-political issue," the advisory stated.
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"They must should adhere to fair trade practices and avoid the levy of charges that may give rise to disputes within the EXIM trade and ensure that all applicable charges are communicated clearly and upfront to exporters, importers and other stakeholders," it added.
Freight rates have risen sharply in recent days as military tensions in the Middle East continue to escalate, with Iran, the United States and Israel attacking one another.
An executive of a global shipping company said the ongoing conflict in the Middle East is forcing companies to take longer routes to deliver shipments covering entire Africa. This is resulting in higher fuel consumption for cargo vessels and increased operational costs.
An analyst at BigMint Research said crude oil prices, which averaged around USD 70 per barrel before the conflict, is hovering around USD 90 per barrel.