After a turbulent 1999, container freight rates in the Middle East are on the upswing, with mainline operators reporting an increase in the volume of traffic on all the major shipping routes through the region.

Container freight rates increased by an average 21.4 per cent for the first nine months of the year, compared to prevailing rates in full-year 1999. The Far East-Middle East sector has been the most profitable for this year, compared to other routes, where rates have increased to an average $850 a 20-foot equivalent unit (TEU) from $700 a TEU.

'The scenario this year is bright and business is back on track, ' says an official of a Dubai-based shipping line. 'However, rising bunker fuel costs will continue to act as a depressant on margins.'

Bunker prices increased by an average 150 per cent in the past six months due to a hike in global oil prices, rising to $190 a tonne from $75 a tonne. This forced major liners to impose an emergency bunker surcharge (EBS) without the approval of operators. EBS varied from $25 a tonne to $75 a tonne on all routes from the Middle East.

'With freight rates on the rise, Far Eastbased medium-sized shipping lines are working towards rationalisation of tonnage, ' the official says. 'There is a duplication of services. The number of ships being operated in the Middle East is being reduced and this will cut down operating costs.'