Monday, January 5, 2009

Shipping Corporation Of India

The year-end review released by the department of shipping (MoS) seems to have unnerved port and shipping industry circles which have been
looking at it for some kind of lifelines to navigate out of the present crisis. With nothing more than a list of initiatives the government has taken, the review has turned a blind eye towards the recessionary trends plaguing both the sectors.

It is no secret how the financing woes and the collapse in shipping rates hitting Indian port and shipping sectors. Companies like Shipping Corporation of India (SCI) have toned down their aggressive fleet acquisition programmes, shipyards are witnessing their order volumes plunging more than 15%. The review, without a single word on the ongoing turmoil, makes it appear not rooted in reality and therefore fails to point the direction where the distraught industry is headed.

The initiatives listed in the review for the shipping include setting up of Indian Maritime University; steps taken towards protection of Indian seafarers and towards setting up National Maritime Complex; approval of cruise shipping policy; declaration of new national waterways; Navratna status to SCI and its acquisition of 3 vessels; aids to navigation and its efforts at building two shipyards.

According to the review, some of the major initiatives undertaken in the Indian port sector include finalizing the model concession agreement to ensure uniformity in the contractual agreements between major ports and selected bidders for their projects, formulation of new tariff guidelines based on normative cost by Tariff Authority for Major Ports and recommendation for a review of rail road connectivity of the major ports, etc.

In its hastily done list of activities, the ministry seems to have also forgotten to mention the only positive development in the whole of shipping sector - the moderate increase in fleet, both in numbers and tonnage.

According to industry sources, as of November 30, Indian tonnage has inched forward to about 9.3 million gross tonne (GT). The tonnage, which was at 9 million GT at the beginning of 2008 declined thereafter and it stands recouped as of now.

"Simply enumerating the initiatives would not help the industry to tide over the present crisis it is engulfed in," said a shipping company executive on condition of anonymity. "Today the industry is fighting on several fronts. It has to acquire so many ships to replace its existing fleet. On the top of it, shipping has the problem of achieving the existing share of Indian fleet in Indian exim trade. All of which will entail an estimated expenditure of Rs 90,000 crore. From where is the money going to come? With the downturn the world over, which financial institution would give this kind of funding to the industry?" he asked.

"The government is only trying to give a positive look by talking about the things they have initiated. They have to do that because elections are round the corner. But if you look at all these initiatives what dividend they are going to deliver to the industry in a situation where there is a crisis in the world markets and downward trend in freight market," said a member of Indian National Shipowners' Association (INSA).

"The initiatives are something in the positive direction, no doubt. But it is too early to talk about them before being implemented and started yielding any result.

"For example, the Maritime University, which was inaugurated on December 31, 2008. Till today the industry bodies like INSA, MASSA, and FOSMA continue to contribute to the faculty payments. Until these institutions are run on a self-sustained basis, it would remain a drain on the govt and the industry."

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