Tuesday, 13 October 2009

Industry Snapshots

M.V. Black Rose off Paradip

Shipping Ministry Committee’s opinion: ships more than 25 years old should be banned from Indian ports. The high powered and Chairman of National Shipping Board led committee feels that exceptions could be made if the vessel in question was “approved by the competent authority”. Concerns were expressed that an estimated 35 per cent of the ships calling at Indian ports are more than 25 years old. Investigations into recent accidents on the Indian coast have thrown up the fact that these ships are particularly vulnerable; besides, there have been major shortcomings in documentation that have exposed fraudulent certificates and insurance documents in at least one case off Paradip recently. It has reportedly been recommended that stringing preloading and post loading inspections be conducted in case of ships carrying bulk, especially iron ore, and that ports ensure compliance with existing safety codes. Members of the committee include the Chairman of Visakhapatnam Port Trust, the Chairman of New Mangalore Port Trust and the Deputy Chairman of Paradip Port Trust. These are preliminary findings: a final report is awaited.

Industry wants government to review FDI rules in shipping, reports Livemint. Although the 100% FDI allowed in shipping since 2001 has proved a damp squib with no takers, shipowners are concerned about overseas competition and are demanding a level playing field. Reports say that representatives will meet commerce minister Anand Sharma to push for a review. “Hundred per cent FDI in shipping has not helped India at all,” says Mercator Shipping’s Anil Devli. “Nobody came to India all these years.” Observers say that the move has been prompted by the impending ban on single hulled tankers next year; with India allowing single hulls for another five years till 2015, the industry is concerned that foreign shipowners will see India as a preferred destination for their older ships. Malaysian AET Tanker Holdings is already looking at registering some ships in India. Critics allege that this is unfair. “If you want to start a company in Malaysia, you should hand over 51% stake to a local company there,” one says. “This should be reciprocal.” Indonesia, too, has reserved all domestic LPG shipments for their own flag; China protects domestic shipping to a much greater extent. “In today’s context, when the world is looking inward, and every government talks about protectionist measures for their indigenous industry, we must do the same in India,” S. Hajara, CMD of SCI told Livemint. “We are saying that the Indian coast should be completely reserved for the Indian flag carriers.”

Moore Stephens Shipping Confidence Survey optimistic. The shipping consultancy firm says that confidence levels in the shipping industry have improved in the last quarter, with global analysts expressing average confidence levels at 5.7 on a scale of 1 to 10; this figure was at 5.5 in May 2009. Although brokers were the most optimistic, owners, managers and charterers were not too far behind. Surprisingly, given that Chinese demand has driven much of this confidence, optimism was lower in Asia, with confidence levels remaining unchanged at 5.9. The industry has mixed opinions on asset acquisition, with some respondents saying that ships could presently be bought at historically low prices while others expecting prices to drop further. Most opined that the worst may be over globally. “The recovery of the global economy will result in strong demand for tonnage as delayed projects get up and running again,” says one. Amongst the less optimistic predictions were concerns about the massive oversupply situation. One analyst said, “Because two newbuildings are being delivered for every vessel scrapped, the shipping market will not be able to pick up over the next three or four years, and it may deteriorate even further, with a number of owners forced into bankruptcy.” Other concerns included high finance costs and fears that ‘confidence would return to the industry more slowly than it disappeared’.



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