Friday, 15 May 2009

Industry Snapshots

Shipbuilding in Gujarat set to take off with major plans to develop the Narmada Estuary near Dahej. A first for India, the Marine Shipbuilding Park (MSP) is a Rs 1,000 crore Gujarat Maritime Board project for developing common infrastructure facilities for shipbuilders, reports the Times of India. Besides the ABG Shipyard currently existing, a dozen more have been mooted. The available depths of water are about ten metres around Dahej, so larger ships will not be built here, at least initially. India builds just one percent of the global fleet right now; with ABG planning expansion and with many other proposals expressing interest, this move should help raise that dismal figure.

Escort services prove useless as Pirates hijack the cargo ship ‘Victoria’ proceeding under convoy in the Gulf of Aden. The EU naval forces NAVFOR confirmed that the ship was taken within ‘a few minutes’ from within the security corridor, a scrambled helicopter arriving too late to help. The German owned and Antigua and Barbuda registered general cargo ship was bound for Jeddah with a cargo of rice. The Romanian crew are all reportedly unhurt.

Bulk carrier and general cargo fleets to grow in spite of market turmoil, says a report by Fairplay Research, which feels that although scrapping of ships is likely to increase and orders likely to be delayed or cancelled, the overhang of the huge shipbuilding supply in the pipeline will affect a net increase in tonnage. New ships also tend to be larger. Analysts think that this trend will continue over the next three years or so, when increasing demand for infrastructure projects now kick started by stimulus projects around the world should firm up rates. The report says that reefer vessels may be on the decline anyway, with refrigerated containers taking over a large chunk of their business. China remains at the top spot in building bulk carriers and general cargo ships, accounting for almost half the current tonnage on order.

Indian port growth slows down as economic decline bites, reports the Hindu Business Line, saying that traffic growth in the current financial year 2008/09 is just around two percent. Of the dozen major ports, seven, including JNPT, Kandla, Mormugao, Tuticorin, Paradip, New Mangalore and Chennai gained, while the losers included Mumbai, Kolkata, Kochi, Visakhapatnam and Ennore. Kandla handled the largest volumes, but Mumbai Port was hard hit with a drop of around nine percent. Worryingly, the Hindu points to the underutilisation of modern facilities in some ports on the East Coast while reporting congestion on the West Coast. With major investments in port infrastructure in the pipeline, many feel that better infrastructure and a better utilisation in existing facilities is critical. Critics also point to delays and higher costs in India as a continuing drag: it takes around three weeks to clear cargo in India against three or four days in Singapore. The question needs to be asked, “Do we need to build so many additional berths, or better utilise the existing ones, removing regulatory bottlenecks and improving infrastructure and connectivity where needed?”

CEO of Liberty Maritime asks US congress to remove obstacles to ship owners arming crews. Philip J. Shapiro made called the Maersk Alabama incident a ‘game changer’, and aired footage of the attack on the Liberty ship ‘Liberty Sun’ two days after the Alabama incident, The raw video footage was shot by a bridge team member and carried on CNN earlier; it shows reactions on board as the vessel was hit by four rocket propelled grenades and automatic weapons fire in the aborted attack. Mr. Shapiro has now pushed for arming crews in self defence. He also mooted the idea of using Government or privately employed security personnel to protect US ships. Saying, “Prohibitions contained in U.S. and foreign laws and existing legal liability make arming crew members very difficult if we are to abide by current law”, he asked that this be changed.

Piracy or Suicide? Amongst news of continuing attacks and hijacks off Somalia, some odd news. In one incident which we at Marex call the ‘French Kiss’, the French Navy killed ten pirates and captured eleven others after the would be hijackers mistook the French frigate ‘Nivose’ for a merchant ship. Unsurprisingly, they were clobbered. The incident occurred almost 500 nautical miles from the Somali coast. In the second incident, Pirates fired small arms at the U.S. Navy supply ship ‘Lewis and Clark’ off the coast of Eastern Somalia. The ship speeded up and escaped. Interestingly, the ‘Lewis and Clark’ was earlier used as a prison for captured pirates, leading to speculation that this may have been an act of revenge. On the other hand, maybe the pirates, many reportedly very young, were chewing the stimulant ‘khat’ as usual, which would make this attack an act of Dutch courage.


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