The Hindu Business Line : SCI fleet acquisition plan hits hurdles

SHIPPING Corporation of India is finding it difficult to go ahead with its proposal to acquire tankers, bulk carriers and container vessels in view of the world's major shipbuilders' reluctance to accept new orders for deliveries in next 2-3 years.

"If the present situation persists, we may have to revise our decision and go for second-hand acquisitions," a spokesman for SCI told Business Line, adding that the "virtual suspension of acquisitions in past couple of years is now proving costly for the shipping line".

The vessel prices have skyrocketed in the past two years or so. A VLCC (very large crude carrier), which cost $65 million two years ago, is now costing around $115 million. SCI took delivery of a VLCC from a Korean yard in January and the delivery of another is due in August. It intends to acquire two more VLCCs but the Korean yards with which the negotiations have been initiated are believed to be asking for double the price.

In addition to two VLCCs (for which orders are yet to be placed), SCI proposes to acquire at least four Aframax crude tankers (1.3 lakh dwt each), six LRI product tankers (70,000 dwt each) and two Suezmax tankers (1.6 lakh dwt each). On the bulk carrier front, the plan is to acquire two capsize vessels (1.7 lakh dwt each), four Panamax vessels (75,000 dwt each) and six Handymax (53,000 dwt each). There is a further proposal to acquire two container vessels of 4,300 TEU capacity each.

The major shipbuilding yards of the world are now chock-a-block with orders for deliveries till 2008-09 so much so they refuse to even entertain inquiries for any new order for delivery before that. The order books of domestic yards such as Vizag-based Hindustan Shipyards and Kochi-based Cochin Shipyards too are full.

Will the proposed acquisition lead to net addition to SCI's tonnage? Not significantly. In the last two years, there have been scrappings of several vessels and these included six World Bank tankers of 87,000 dwt each, one Aframax tanker of 1.3 lakh dwt, one bulk carrier and one product tanker each of around 28,000 dwt. Fortunately, no scrappings are being planned in the next two years.

Right now, SCI's total tonnage of tankers and bulk carriers come to around 4.6 million dwt, comprising three million dwt of crude tankers, about 0.45 million dwt of product tankers, one million dwt of bulk carriers and 0.12 million dwt of specialised vessels such as LPG and chemicals carriers. The shipping line owns three container vessels of 1600-TEUs capacity each.

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