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Exports growth pushes freight costs down, says a study

Written by: Staff

Mumbai, Mar 5 (UNI) The cost of freight and insurance for exports is generally determined by the mode of transport, nature of the commodity, the size in value and destination of exports, according to a survey conducted by the statistical analysis department of Reserve Bank.

The survey observes that the percentage cost of insurance as well as cost component to the free on board (FOB) value of exports varies considerably over the last five years perhaps due to a competitive market.

While the raio of air freight and land freight to the fob value of exports declined over the years, the same for sea freight went up in the recent years. In 2004-05, the average cost of freight for exports made through air is estimated at 5.59 per cent, while the averge cost of freight through sea and land mode are estimated at 4.68 per cent and 1.35 per cent respectively.

On the other hand, the ratio of insurance cost showed a reducing trend for export made through air as well as through sea. In 2004-05, the average cost of insurance for exports done through air, sea and land were 0.18 per cent, 0.22 per cent and 1.02 per cent respectively as against 0.23, 0.25 and 1.14 per cent in the previous year (2003-04).

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