Report Summary
Shipping Industry is one of the most cyclic industries. Being a global industry, it is affected by a whole gamut of factors which range from world economic condition, political events, natural disasters to age of existing vessels, new vessel delivery schedules, availability of ship building slots with ship yards, government regulations etc.
Besides being characterized by volatile revenue stream, the shipping industry is also highly capital intensive. A single ship can cost anything between US $20 Mn to US $300 Mn. Commoditized product coupled with the fact that globally there are a large number of players in this segment; no single company has significant pricing power.
The total world shipping tonnage, as on 1st January 2007, stood at 1014.55 Mn DWT [Dry Bulk (35%), Wet Bulk (37%), Containerships (12%), General cargo (10%) and others (6%)]. The Indian tonnage, as on 1st October 2007, stood at 15.08 Mn DWT [Dry Bulk (34%), Wet Bulk (58%), Containerships (1%), others (7%)].
In 2007, the shipping industry saw a clear dichotomy between the wet bulk and the dry bulk freight market. While the dry bulk freight rates moved from strength to strength during the greater part of the year in 2007, the tanker market saw a downturn in the freight rates as compared to the rates witnessed in 2006. For containership freight market, 2007 was a year of consolidation after having witnessed a meltdown in 2006.
The wet bulk market remained suppressed in 2007 due to decreased movement of crude oil. The orderbook position at the beginning of 2008 was very high. With world tanker fleet being young not much tonnage deletion is expected in the next 2-3 years. A probable slowdown in US economy and its consequent impact on world economy will thus decide the balance between cargo movement and tanker tonnage supply.
Dry bulk cargo constitutes of two main commodities: iron ore and coal. Iron ore trade is largely driven by the demands of the Chinese steel industry. Chinese iron ore demand remained strong in CY 2007. As 83% of India's iron ore exports are to China, the trade volumes arising out of India will also depend, to some extent, on the prospects of Chinese steel industry. The demand for coal is expected to remain strong from the Asian countries. The orderbook position at the beginning of 2008 seemed very high. A timely delivery of the new buildings will thus decide the actual tonnage addition and thus the demand – supply balance.
With 2-2.5 times relationship with GDP growth rate, the container trade volumes will continue to grow exponentially. The cargo growth will occur due to increase in the volumes of the currently containerized commodities as well as due to containerization of newer commodities. With orderbook position at precariously high levels, it remains to be seen whether the world containerized cargo is able to absorb the new tonnage.
India will be a major contributor to the incremental growth of cargo in all the segments in the coming years. As per NMDP projections, the total cargo traffic at the Indian ports is expected to grow at a CAGR of 13.58% upto FY12 with the POL, coal and container traffic growth remaining strong. Though the cargo emanating from India is expected to remain healthy, the Indian shipping industry can take advantage of this opportunity only if the Indian government plays a facilitative role. At present the most pressing problem faced by the industry is that of manning. Under Merchant Shipping Act, ships with Indian flags need to necessarily be manned by Indian crew. As there is a shortage of officers (due to flight of officers to foreign flags), the Indian shipping companies find it difficult to meet this requirement. Besides this the Industry is also saddled with other challenges like onerous tax structures (12 taxes), multiplicity of regulations, falling cargo support from TRANCHART, infrastructure constraints etc.
To encourage the addition of tonnage under Indian flag, the Indian government needs to provide conducive financial and fiscal/legal environments which are at par with international standards, barring which Indian shipping companies may explore possibilities of adding tonnage outside India by setting up subsidiaries in countries with more favorable environment.
Report Outline
Chapter 1 Wet Bulk Market 2007
1.1 Tanker freight market
1.2 Oil trade
1.3 World tanker orderbook position & Outlook
1.4 Tanker asset price
1.5 Indian POL port traffic
1.5.1 POL traffic
1.5.2 POL demand
Chapter 2 Dry Bulk Market 2007
2.1 Dry bulk freight market
2.2 World dry bulk volumes
2.2.1 Steel
2.2.2 Iron ore
2.2.3 Coal
2.2.4 Grain
2.3 World dry bulk orderbook position & Outlook
2.4 Dry bulk asset price
2.5 Indian dry bulk port traffic
2.5.1 Iron ore
2.5.1.1 Iron ore traffic in FY07
2.5.1.2 Iron ore traffic projection
2.5.2 Coal
2.5.2.1 Coal traffic in FY07
2.5.2.2 Coal traffic projection
Chapter 3 Containership Market 2007
3.1 Containership freight market
3.2 World container volumes
3.3 World containership orderbook position & Outlook
3.4 Indian container traffic
Chapter 4 Shipping Industry - Cost Dynamics
4.1 Bunker expenses
4.2 Crew expenses
4.3 Dry-docking, repair & maintenance expenses
4.4 Port calling dues
4.5 Insurance expense
4.6 Depreciation
4.7 Operating margins
Chapter 5 Ship Classification
5.1 Ship classification
5.1.1 Wet bulk carriers
5.1.2 Dry bulk carriers
5.1.3 Containerships
5.1.4 Specialized vessels
Chapter 6 Fleet Description
6.1 World fleet
6.2 Indian shipping industry
6.2.1 Indian fleet
6.2.2 Share of Indian Ships in India's overseas trade
Chapter 7 Industry Features
7.1 Demand-supply dynamics
7.2 Choppy revenue streams
7.3 Capital intensive
7.4 Pricing power
7.5 Regulatory requirements
7.6 Ways of deployment
7.7 Ship financing
7.8 Tonnage tax
7.9 Age profile
7.10 Vessel flags
7.11 Productivity of vessels
Chapter 8 Indian Shipping Industry-Challenges
8.1 Challenges
8.1.1 Onerous tax regime
8.1.2 Multiplicity of regulations
8.1.3 Declining share of Indian shipping tonnage in India's overseas trade
8.1.4 Declining cargo support
8.1.5 Manpower shortage
8.1.6 High port calling costs
8.1.7 Ports congestion and connectivity with hinterland
8.1.8 Underdeveloped coastal shipping
8.2 Steps taken to meet the challenges
Chapter 9 Company Profile
9.1 Shipping Corporation of India (SCI)
9.2 Great Eastern Shipping Company Ltd. (GE Shipping)
9.3 Mercator Lines Ltd. (MLL)
9.4 Inter firm Comparison
Annexure 1 Vessel Description
Annexure 2 Tonnage Tax Scheme
Annexure 3 IMO Phase-out Time table for single Hull tankers
Tables
1.1 Average tanker freight rates
1.2 Oil statistics
1.3 Crude oil seaborne trade
1.4 World oil demand (2005-2008)
1.5 World tanker orderbook position
1.6 Tanker asset price
1.7 Domestic crude oil production & imports
1.8 Domestic Oil demand
1.9 POL traffic at Indian Ports (Projected)
2.1 Average dry bulk index
2.2 Growth in Crude Steel Production
2.3 Iron ore trade
2.4 Coal trade
2.5 Grain trade
2.6 World dry bulk orderbook position
2.7 Dry bulk asset price
2.8 Dry Bulk ( 5 year CAGR)
2.9 Iron ore traffic at Indian ports
2.10 Coal traffic at Indian ports
3.1 Average yearly containership index
3.2 Cargo handled by top container port
3.3 World containership orderbook position
3.4 Share of Container traffic in total traffic handled at major ports in India
3.5 Container traffic at Indian Ports (Projected)
4.1 Bunker expenses as % of total operating income
4.2 Employee expenses as % of total operating income
4.3 Dry-docking, repair & maintenance expenses as % of total operating income Table No. Particulars
4.4 Port calling dues as % of total operating income
4.5 Insurance Expense as % of total operating income
4.6 Depreciation Expense as % of total operating income
4.7 Operating Margins
7.1 Age profile of world fleet (as on January 1, 2007)
7.2 Age profile of Indian fleet (as on January 1, 2007)
7.3 Simple average age of Indian Fleet
7.4 Tonnage (DWT) registered under foreign flags
7.5 Productivity of vessels
8.1 Tax Rates
8.2 Major Acts governing the Indian shipping industry
8.3 Average turnaround time at Indian ports
8.4 NMDP Projects
Figures
1.1 Demand Supply Drivers for Wet Bulk Carriers
1.2 Tanker freight market
1.3 Major oil importing/exporting countries
1.4 POL Traffic at India's major ports
1.5 Oil Import as a % of total Oil Demand
1.6 India's Petroleum product trade
2.1 Dry bulk freight market
2.2 Major iron ore importing/exporting countries
2.3 Major coal importing/exporting countries
2.4 Major grain importing/exporting countries
2.5 Share of Major Dry Bulks at Indian Ports
2.6 Iron ore Traffic at India's Major ports
2.7 Coal Traffic at India's Major ports
3.1 Containership Average Charter Rates
3.2 World container throughput
3.3 Distribution of existing containership tonnage as per size
3.4 Container Traffic at India's Major ports
4.1 Bunker cost-VLCC rate movement
5.1 Ship classification
6.1 World Tonnage and trade growth trend
6.2 World Capacity break-up of vessels (as on January 1, 2007)
6.3 Types of Cargo Carried by world shipping fleet (as on January 1, 2007)
6.4 Capacity break-up of total Indian Cargo Carrying Tonnage (in DWT)
6.5 Type of Cargo Carried by world shipping fleet (as on January 1, 2007)
6.6 Indian overseas seaborne trade trend
6.7 Indian tonnage and trade growth trend
6.8 Share of Indian ships in different types of Indian Overseas Cargo
7.1 Demand- Supply Dynamics of Ships
7.2 Correlation between Time Charter and Spot Rates of Panamax Bulk Carriers
8.1 TRANSCHART cargo trends
8.2 Worldwide supply and demand of officers
