06-03-2013, 10:50 AM
Indian shipping industry report - 2000
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Introduction
For delivery of goods, the four basic modes of transport are ocean, air, rail and road. Globally, the railway and road networks
are largely used for domestic movement of goods while shipping is primarily used for transporting goods in large quantities between
nations.
The world sea-borne trade, at around 5.5 billion tonnes in 1999, represents nearly 95% of total merchandise trade and has
been growing at more than 3% over the past 2 decades. In terms of value, the global shipping industry is estimated to be more than
USD 225 billion and constitutes a significant part of the world GDP.
As India makes a transition from an “import-substitution” closed economy model to an outward-oriented trade regime, the
importance of shipping, as an enabler of trade and economic growth cannot be over emphasized.
The country’s transport infrastructure is still underdeveloped. Freight costs, measured as a percentage of total value of
imports (c.i.f) is around 10.3%, one of the highest in the world. Against this, the global average is around 5.24% and the average for
all developing economies is around 8.04%. Massive improvement in transport infrastructure is necessary to enable future trade and
economic growth.
While, around Rs 100 billion (USD 2.5 billion) of investments have been made in the last 5 years to augment port facilities
in the country, and equally massive investments in road and rail networks, the shipping sector has received least attention from both
investors and government bodies.
Crude and product imports from Gulf, Malaysia and Nigeria
India imports around 40 million tonnes of crude and 20 million tonnes of products every year on a FOB basis, chiefly from Gulf,
Malaysia and Nigeria. While Indian shipowners have a considerable stake in this trade, liberalization and relaxation of norms has
allowed private-sector refineries to make their own shipping arrangements. Indian shipowners chiefly deploy Suezmaxes from Gulf
and Aframaxes from Malaysia. Most of the vessels chartered from foreign shipowners are large-sized VLCCs. Product imports are
carried out chiefly in small vessels of around 30-40,000 dwt.
Iron ore exports from India to East Asia
India exports around 30 million tonnes of iron ore annually, 70 per cent of which is directed toward Japan, China and South Korea.
Iron ore exports are predominantly made on a f.o.b. basis, implying lack of opportunity for Indian shipowners. It should be noted that
globally iron ore shipments are made in large Capesize and Panamax vessels. These vessels, however, constitute a small portion of
the Indian fleet.
Exports from the ports of Mormugao, Chennai and Visakhapatnam are in such vessels while from New Mangalore and Paradip they
are carried out in ships of Panamax vessels of upto 65,000 DWT, due to draft restrictions. Shipping Corporation of India is the only
major Indian player in iron ore transportation and carries around 0.5 million tonnes to Japan from Visakhapatnam and Paradip.
These Handymax vessels are deployed on a triangular route to carry coking coal from Australia and then iron ore to Japan followed
by ballast to Australia on return.
Fertilizer and fertilizer material
India imports around 5 million tonnes of fertilizer and 3 million tonnes of rock phosphate and sulfur, chiefly in small size Handymax
and Handysize vessels. Imports are made nearly at all the major ports of the country, of which, more than 60 per cent of the imports
are routed through the East India ports. While previously Transchart used to play a major role by making around 50 per cent of the
shipping arrangements for fertilizer imports, its role has come down substantially over the past few years, primarily because major
portion of imports are carried out by private companies nowadays. Better infrastructure facilities at ports such as JNPT, have led to
prospects of future fertilizer imports being made in Panamax vessels to capitalize on economies of scale.
Containers
India exports and imports around 1 million TEU’s each, mainly through Bombay, JNPT and Chennai. USA, Western Europe and East
Asia are the chief destinations through transshipment ports of Dubai, Colombo and Singapore. Only one Indian player, SCI, has a
role in container shipping. However, most of the leading global container lines like NOL-APL, Maersk-Sealand and P&O-Nedlloyd
offer services to Indian shippers.
Coastal shipping
Against the fairly respectable growth witnessed in India’s overseas trade, coastal trade has remained quite stagnant and
today accounts for around 40 million tonnes of cargo, chiefly comprising four bulk commodities viz. crude, products, thermal coal and
iron ore. This is primarily because of the typical contours of our country which favors road-rail transport more than coastal shipping.
This, added to lack of proper regulatory support to coastal shipowners and lack of proper integration with road/ rail network, has led
to present scenario of low coastal trade volumes.
Cement
Cement is another important commodity moving between various minor ports, in smaller 2,500 - 4,000 dwt vessels. Gujarat Ambuja
Cement was the first company to set-up bulk-handling facilities to transport cement by sea. The company has 3 port facilities in
Western India and is also planning to build a jetty in southern state of Kerala. The company owns five mini bulk carriers of
2,500 DWT, which carry around 1 million tonnes of cement between the jetties in Western India. Narmada Cement, which has been
taken over by L&T, is also using coastal shipping for transporting cement between ports in Western India. Other companies who
have used coastal shipping for movement of cement include L&T, Saurashtra Cements, etc.