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Amit Mitra

Hyderabad, June 25 Facing tighter access to funds and a global freight market that is yet to firm up significantly, Indian shipping companies have delayed some of their expansion plans. This has resulted in the domestic shipping fleet remaining flat in terms of gross tonnage (GT) in the last five months.

India’s shipping GT has hovered around the 9.3-million-tonne mark in the last five months, although the number of ships in the fleet has marginally increased. This, industry sources say, was due to the fact that a bulk of the purchases by shipping companies consisted of smaller vesselssuch as offshore vessels, which lent the numbers, but not gross tonnage.

Industry analysts feel that the growth will remain subdued for the rest of the year, with ship owners’ access to funds not likely to improve significantly. The industry is hoping to get a stimulus package in the ensuing budget that may spur their buying of marine assets — the Shipping Ministry has conveyed its plea to the Finance Ministry.

In fact, for the whole of 2008, the shipping industry’s growth was slow. There was a meagre addition of 0.27 million tonnes of gross tonnage during 2008 — the combined shipping tonnage increased from 9.03 million GT in 2007-end to barely 9.3 million GT towards 2008-end.

In terms of number of ships, it increased from 850 to 912 as on January 1, 2009, with the new entrants to the fleet being mostly smaller vessels.

From 9.32 mt as on February 1, 2009, the GT dipped to 9.28 mt by the first week of June, although the number of ships again increased from 916 to 938 because of the same reason of the additions being smaller vessels.

Some industry sources say that this trend may upset the Government’s target for expansion of the shipping fleet during the Eleventh Plan. “The Government had targeted a fleet of 12 mt by 2012, but as of now, it looks that the target would have to be revised,” a source said. The freight market, which is the basis for ship owners to plan their purchases, has been showing some faint signs of improvement, but these are not any significant prompters for acquisition.

For example, the freight rate for very large crude carriers fell from an average of $11,421 a day in April this year to $3,838 in May, but picked up to between $21,000 and $23,000 in the first two weeks of this month — during the same period in June 2008, the rate was as high as over $1,00,000 a day. More or less similar trends were seen in the Suezmax and Aframax segments.

The Baltic Dry Index, which is a measure of the freight rates in dry bulk transportation, rose from an average of 1,659-2,546 in April and May respectively this year to between 3,500 and 4,073 in the third week of June.

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