Thursday, 12 February 2009

Industry Snapshots

Faina’s release gets “curioser and curioser”, as conflicting reports emerge on the status of the vessel. Somali pirates released the ship after a record 3.2 million US dollar ransom was paid and said to be heading for Mombasa, Kenya. However, at least one report appearing on Iran’s Press TV says that “NATO frigates have helped evacuate the 19 crewmembers of MV Faina when its engines failed to start and are now unloading its cargo”. The Belize registered Ukrainian shipping vessel has been in the eye of the storm ever since Somali pirates hijacked it in September last year. The ship’s Captain died of a stroke. It was revealed in a BBC report that the ship was carrying arms, tanks, grenade launchers and other heavy weapons. Questions were raised on destinations and end user agreements. Pirates threatened to blow up the ship if their demands were not met, even as coalition navies attempted to blockade the ship then under the hijackers’ control. Kenya said the arms were destined for that country, but international apprehensions that the weapons were meant for Sudan persisted. The recent developments and conflicting reports must surely be adding to the unease of the families of the crewmembers back home in the Ukraine, many of whom threatened to sue their government at one stage. The ship has 17 Ukrainians, 2 Russians and 1 Latvian national on board who have spent more than four months under extremely harrowing circumstances. As for their families, this January report from RT Moscow says it all: “In the four months of the Faina stalemate, the families have tried virtually everything to get their next of kin back, from picketing the presidential administration to spreading leaflets in downtown Kiev. They’ve even collected money for the ransom. But all they’ve managed to get so far are broken promises from the authorities.”

Baltic index jumps to highest levels since October on the back of increasing Chinese demand for ore. The Dry Index BDI, which tracks freight rates for basic commodities like iron ore, coal, fertiliser and grain, is said to have benefitted immensely from the drop in ore volumes in China, resulting in imports picking up to that country. The index rose 14% on Thursday to just below 1500, a marked improvement on its sub 700 levels late last year. On the Indian stock exchanges, stock prices of shipping companies rose substantially following the rise in the BDI, although financial analysts are unsure whether this is a long term move or a temporary uptick due to adjustment in supply and demand. Reuters had earlier quoted BHP Billiton Plc, the world's biggest miner, saying that the massive build up of iron ore stockpiles in China that prompted suppliers to defer millions of tonnes in shipments last year is ending, pushing spot prices higher. The credit crunch, which has plagued the industry for the last six months, is also seen to be easing, with cautious bankers now slowly opening new Letters of Credit. Traders must be heaving a sigh of relief, as must be Indian ship owners, some of whose stocks rose almost 20 percent in two days.

Indian maritime infrastructure investment must be quadrupled, says Ashwani Kumar, Minister of State for Industry. Speaking at an Industry meet, the Minister said that this increase in investment was essential to bring up the Indian ports and services sector to international standards. "Our shipping and logistics infrastructure is far below international standards. We need to improve on speed and cost of handling of cargo. Investment in shipping needs to be quadrupled. Seventy five per cent of this trade is through ports. If we make our port infrastructure world class, it can lead to an increase of two per cent in the country's GDP year after year." The Minister rued that the Indian share of global trade stood at a paltry one and a half percent at just US$ 448 billion, pointing out that an increase in investment in the sector would also create a huge employment opportunity in India. Many analysts claim that FDI has slowed down in the recent downturn in this sector, although the Minister was quick to point out that PSA Singapore, Dubai Port and a Spanish company have invested in India. Industry watchers say that government initiatives are urgently needed to kick start this process once more.


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