Chartering demand four times India’s fleet size

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

30 Jun 2008

India's demand for chartering ships is nearly four times its fleet size of 860 ships. This is the first impression that anyone looking at the long list of 3942 requests for chartering ships that directorate general of shipping (DGS) received last year. The fact that there is a huge unmet need for ships and shipping in India is good news for those who want to enter the shipping sector and those fund houses that wait for deploying their monies into the sector. With more than 40% of existing fleet going for scraping in the next five years, there is also acute need to augment Indian tonnage. But that could be quite a different story, given Indian realities.
According to available data, there were 3942 applications last year for chartering vessels. It included 1386 applications for tankers. On the other side, Indian fleet has about 860 ships of which 220 odd ships are engaged in overseas trade with the remaining in coastal and inland waters.
According to trade sources, there are various reasons for putting up requests for chartering. At times the requests are not genuine, while there could be multiple requests for a single cargo. It is also observed that parties do not proceed after getting the licence. Shipping agents are also understood to use the mode for their recruitment purposes.
In the given circumstances, what is important is to know more details about the requirements in the applications, said a shipping industry expert.
"Is there that much business available for Indian ships? How many such requests for chartering get clearance in the form of licences from DGS? How many of the licences are really being put to use and by the parties who have originally put up the requests? What are the sizes of ships in demand? Whether it is for voyage or period charter? Answers to these all-important questions could perhaps provide keys to many of the burning problems of the Indian shipping trade today," he said.
But, unfortunately, there are no answers available with anyone in the industry because there is hardly any study carried out on such figures. In fact, getting the figures on a regular basis itself is found to be difficult, as the shipping directorate treats it as highly confidential and even have warned strict action against circulating it.
According to shipping administration sources, they distribute the requirements for ships on charter to all shipowners in the country. Only when no interested party turn up that they issue the licence to charter a foreign vessel.
Unlike major shipping companies, most of local shipowners are understood to be interested in such information as they want to corner more of Indian cargo. This is especially so today with the recent circular by the directorate making coastal shipping the preferred mode compared to cross ocean trading which is subjected to more cumbersome regulations.
At a time when the fate of government's chartering wing Transchart is hanging in balance with it losing most of the cargo it earlier dealt with, the above information could help it take a pragmatic decision, as well, argued the expert.

Source: Economic Times