The Hindu Business Line : Significant growth in tonnage

`Maharishi Parashuram', delivered to the Shipping Corporation of India by the Kochi Shipyard last year. The freight market looking up after April 2003 and the resultant spurt in acquisitions saw Indian tonnage touch 6.62 million GRT by January 1, 2004.

DESPITE the high taxation level that continued to nag the shipping industry, the growth of Indian fleet was significant in 2003, as shipping companies plumped for acquisitions to take full advantage of the boom in the freight market.

According to industry analysts, the tonnage began to soar after April 2003, when the boom in freight market actually began to galvanise ship-owners. From 6.20 million GRT (gross registered tonnage) as on January 1, 2003 the Indian tonnage floated up to 6.62 million GRT on January 1, 2004. Since 1976, the Indian tonnage had peaked to 7.05 million GRT in January 2000, with the maximum addition of 5.9 lakh GRT witnessed in 1999.

According to an analyst, "The growth in tonnage is expected to continue on its upward course in the coming months as shipping companies are looking out for fresh acquisitions. Even Shipping Corporation of India (SCI), which has been given the Government nod for tonnage addition despite the pending disinvestments programme, is planning to invest up to Rs 300 crore."

In fact, 2002-03 had traced a decline in tonnage addition, as the high taxation constricted funds generation by shipping companies to go in for new ships. The strength of the Indian fleet flagged from 6.82 million GRT as on March 31, 2002 to 6.18 million GRT as on March 31 2003 — a net reduction of 6.43 lakh GRT. Interestingly, during this period the number of ships had risen from 560 to 616 — mainly on account of the inclusion of 56 ships, mostly tugs, survey vessels, towing vessels and pilot vessels belonging to the Indian Ports and State Maritime Boards, in the registry of Indian ships.

From April 1, 2003, the Indian fleet began to show signs of recovery. As on July 1, 2003, the tonnage increased to 6.43 million GRT, as during the preceding months there was an addition of seven oil tankers by SCI (three), Great Eastern (two) and Mercator Lines (one) and India Steamship Co (one).

According to statistics provided by the Indian National Shipowners Association (INSA), as on July 1, 2003, about 33 per cent of the Indian fleet operating in overseas trade (totalling 1.87 million GRT) comprised dry bulk carriers. Some 40 per cent of the overseas fleet consisted of crude carriers, while there were about 10 cellular container vessels of 1.3 million GRT.

One disconcerting factor has been the deteriorating age profile of the Indian fleet. INSA officials pointed out that as on April 1, 2003, the average age of the fleet was 16.5 years. In terms of DWT, over 31 per cent of the overseas fleet, totalling 80 ships of 2.91 million DWT, was over 20 years of age, while another 29.3 per cent between 15 and 19 years. Thus, over 60 per cent of the Indian fleet needs to be replaced in the next five years or so.

In fact, the Planning Commission's Working Group has recommended acquisition of 156 ships of 3.25 million GRT so as to maintain the strength of the Indian fleet at around 7 million GRT.

Leading the tonnage growth has been GE Shipping, India's largest fleet owner in the private sector. The company acquired seven crude carriers and two product carriers in the first three quarters of the current fiscal, which increased its tonnage from 1.317 million DWT as on March 31 2003 to 2.10 million DWT as on December 2003 end. This apart, the company has laid out a capital expenditure programme for Rs 1,038 crore, involving acquisition of 10 vessels, including one Aframax, one product carrier and two Suezmax vessels that are expected to be delivered before September 2005. This would increase its fleet strength to 2.68 million DWT by March 2006.

Originally, SCI also had an ambitious expansion programme, involving an outlay of $1 billion for acquiring 29 vessels, including 26 tankers, during the Tenth Plan. But it had to put on hold its capital expenditure programme, as the Government did not want the company to take any major decisions till its disinvestment programme was wrapped up. Now with the lifting of the ban on investment, SCI is expected to fall in the acquisition trail, especially in the light of the fact that it has to replace about 25-30 per cent of its tanker fleet in the next few years.