With Baltic Dry Index having hit 10-year high recently, Indian shipping companies are not just benefitting from high freight but also from increased trade with Bangladesh and Vietnam, industry experts said today.
“Construction activity has picked up significantly in Bangladesh as the country is focusing on infrastructure growth. Due to this, Indian shipping companies are witnessing increased cargo volumes with a lot of bulk raw material getting shipped. This is going to be a long term trend as infrastructure push is expected to continue,” Captain Rahul Bhargava, chief operating officer at Essar Shipping told Business Standard.
Shipping Corporation of India, Great Eastern Shipping, Tolani Shipping and Essar Shipping are into bulk carriers along with other segment fleet in the domestic market.
“All vessels on spot charter will earn more and most companies keep a combination of spot and contracted vessels, so the benefit would vary depending upon the portfolio,” informed Anil Devli, chief executive officer at Indian National Shipowner’s Association.
Another trade route, which has strengthened for India though a seasonal one is export of rice to both Bangladesh and Vietnam.
“Export of rice has emerged as a new business for domestic shipping companies in the last few weeks. We have already shipped close to 200,000 tonne rice to Vietnam and Bangladesh and another 150,000 tonne would be shipped soon. This trend, however, is expected to be short-lived and would last for another 2 months. But its new commodity for domestic shipping companies,” informed Bhargava.
Meanwhile, with China switching its trading partners due to geo-political issues, increased trade between the dragon country and South Africa for bauxite and with the US for coal is also auguring well with tonne miles going up.
China earlier imported coal from Australia but has now switched to the US for the fuel buy leading to increased tonne mile, which is also another reason for the index to go up, informed industry officials.
Among the domestic shipping players, it is the better employment of kamsarmax and supramax, which yields strong earnings for the companies.
“Kamsarmax is the preferred vessel for bulk transport at present and a lot of bauxite is getting transported by domestic shipping companies. These vessels are getting well employed in South Africa,” informed an industry official on condition of anonymity.
Both Great Eastern Shipping and Shipping Corporation of India have Kamsarmax as part of its fleet.
Meanwhile, supramax vessel freights have almost doubled to $5000 per tonne from $2,500 per tonne on the Indonesia-India route, in turn auguring well for the domestic shipping companies, said industry officials.
“Global trade despite pandemic is stable. It is stable not strong. Also, the increase in index is because several global shipping companies have gone bust so there is shortage of vessels which is driving the index higher,” explained Hitesh Avachat, group head-corporate ratings at Care Ratings.
Discussion about this post