Week ending September 27, 2002

News on Shipping

MTI to be converted into a full-fledged maritime university The Government has decided to demerge the Maritime Training Institute (MTI) run by the Shipping Corporation of India (SCI) and to convert it into a full-fledged maritime university before it disinvests the latter. This decision was based on the fact that training was a loss making proposition and that bidder for the strategic stake in SCI might not be interested in training. MTI currently conducts short-duration courses approved by Director General of Shipping for technical personnel working on board ships and after its conversion to a full fledged university, would become one of its first kind in India.

SCI to be delisted after open offer by bidders The government plans to delist the Shipping Corporation of India (SCI), once the open bids for the strategic sale are received. Currently, the government holds 80.12% stake in SCI, out of which 51% will be divested to a strategic partner. If an open offer for picking additional 20% from the market is also made by the successful bidder, then the public holding in SCI will fall below the minimum required for listing, as per the SEBI guidelines, resulting in delisting. Necessary actions like issue of fresh shares to keep the SCI listed have been left to the discretion of the likely strategic partner. Transaction documents have almost been finalized and financial bids would be called in October 2002.

World Maritime Day theme for 2002: " Safer shipping demands a safety culture" The Indian National Shipowners' Association (INSA), which celebrated World Maritime Day 2002 on September 23, has stressed the importance of safety and quality of ships plying on the high seas. In particular, stress was laid on strict adherence to the ISM code, which has now become mandatory for all types of vessels trading internationally and greater accountability for those responsible for any accidents. India is presently black-listed by Paris MOU on Port State Control and is also on the watch-list of United States Coast Guard. The lax attitude on the part of some of the ship owners has led to some of the Indian Flag vessels being detained at foreign ports.

News on Shipyards

Subsidies on shipbuilding extended to the private yards The Union Government plans to modify the subsidy policy for the shipbuilding sector and also extend it to the private shipbuilding yards. The ministry is of the opinion that shipbuilding subsidies are necessary to help the Indian shipbuilders to compete in the international markets. Since the major shipbuilding companies like Cochin Shipyard Ltd. (CSL), Hindustan Shipyard Ltd. (HSL), Hooghly Dock and Port Engineers Ltd etc are facing extinction due to foreign competition the government decided to extend the subsidy policy for another five years. However, in the new subsidy policy the government has scrapped the interest differential subsidy scheme for the public sector shipbuilding yards. The two main beneficiaries of this extension policy are ABG and Bharati private shipyards.

GSBA demands merger of unviable plots The Gujarat Maritime Board has ordered for amalgamation of unviable plots as per the demand of the Gujarat Ship Breakers Association (GSBA). Earlier in the mid-90's, the government had allocated about 100 plots (30m width) for aspiring shipbreakers for handling medium sized vessels. But now as larger vessels have started coming in, the government has decided to merge the smaller plots in order to attract more of the large sized vessels. The Alang shipbreaking yard (world's largest shipbreaking yard) is one of the main beneficiary of this decision. There are about 183 plots in the Alang-Sosiya region, out of which only 80 plots are presently active. So by merging these small plots to larger ones, Alang will now be able to handle larger size vessels.

News on Ports

58 % rise in Vizag's box traffic The Visakhapatnam Port Terminal (VPT) has registered a significant rise in the container traffic in the first quarter of FY 2002. The port recorded a huge 58% rise in the container traffic in the first four months of FY 2002-03 as compared to the same period in FY 2001-02. During 2001-02, VPT handled 21517 TEUs.

Californian dockworkers on strike Dockworkers at the Long Beach and Oakland ports in California have slowed down their work as a part of the strike against the carriers represented by the Pacific Maritime Association. The strike call follows a dispute over the West Coast contract. The slowdown of work could disrupt the cargo shipments to retailers and other businesses. Meanwhile, the shipping liners of San Francisco are planning to meet soon to decide upon their next step over the issue.

Indian Navy objects to tall cranes at Vallarpadam project The Indian Navy has reportedly raised objections over using tall Super Post Panamax cranes at the proposed Vallarpadam transshipment terminal near Cochin Port. The Navy fears that tall cranes, proposed at the terminal could obstruct the aircraft movements at the naval airport, especially for night flying crafts. Since Navy objection could lead to the winding up of the Vallarpadam project, the Shipping Ministry is trying to come to an understanding with the Naval Authorities. However the Navy is unwilling to relent unless the height of the crane is scaled down to the limits prescribed by the Airports Authority of India (AAI) and the Director General of Civil Aviation (DGCA).

Fresh tenders to be floated for Vallarpadam Following the discharge of the existing tender for the Rs 2,000 crore Vallarpadam transshipment hub at Kochi, the government has decided to float fresh tenders. The re-tendering would be done through the open tender route, as against the initial idea of closed tendering. P&O which was the sole bidder in the earlier round would be allowed to participate in the fresh bidding. The fresh round of bidding follows fears expressed at P&O gaining a monopoly status (P&O was already operating the Colombo Port) when it had earlier emerged as the sole bidder for the project. during in the last round of tendering in 1998. The Cochin Port Trust wishes to appoint consultants as advisors for the Vallarpadam project to hold pre-bid meetings with prospective bidders. The entire re-tendering exercise is expected to be completed by the end of the current financial year.

Meeting between the port and dock workers federations and port management Following the proposed strike called by the All India Port & Dock Worker's Federation on 25th September, the port trusts are holding a conciliatory meeting on the issue of productivity-linked bonus at Mumbai on October 8th. The workers federation is demanding uniform bonus for all port workers instead of linking it to the productivity ratio of the ports.

Auctioning of containers piled up at Kochi Port As per the scheme between Emirates Post and India Post, thousands of parcels, which have been sent by the expatriate workers from Emirates to Kerala, have been lying piled-up at Kochi Port. The Indian Postal authorities have taken delivery of only 35 out of the 63 containers sent, but 28 containers with over 10,000 packets estimated to be valued at over Rs 60 million are still lying idle at the port since June. Due to lack on infrastructure for distribution and handling of large number of these parcels, the postal authorities have failed to clear the container cargo from port. With mounting demurrage charges and apathy of the postal authorities in clearing the containers, the port authorities now propose to auction the cargo as they are unable to keep the containers at the port for too long. The port's move has led to strong reactions from the Gulf NRIs, who have threatened that Indian Postal Authority would be held responsible for the loss of cargo and would have to pay compensation.

First consignment of IOC flagged off Under a contract signed between Indian Oil Corporation (IOC) and the state-owned Ceylon Petroleum Corporation, the first shipment valued at $10 million was flagged off from the Chennai Port. Mt. Rabindranath Tagore, the 40,000-tonne oil tanker, is carrying 10,000 tonnes of aviation turbine fuel and 29,000 tonnes of gas oil (diesel).

Efforts to divert Tughlakabad traffic to Kolkata/Haldia The Kolkata Port Trust (KoPT), Container Corporation of India (Concor) and the shipping lines are working on a joint plan to bring the South East Asia-bound export containers originating from Tughlakabad to Kolkata/Haldia, in view of the growing congestion on the Delhi-Mumbai corridor. As a promotional measure, the container handling charges at Kolkatat Dock System (KDS) and Haldia have been reduced by 20-40%. CONCOR is also planning to offer a concessional rate for the rail haulage between Tughlakabad ICD and Haldia, applicable only to 40-ft containers (FEU) at Rs 30,000 per FEU as against Rs 31,000 FEU at present, besides, Rs 7000 per TEU (or 10,000-11,000 per FEU) as handling charges at both ends. CONCOR has also tied up with Transworld for moving containers from North India for shipments through Haldia to Chittagong. The Association of Shipping Interests in Calcutta (ASIC) has also finalized the terminal handling charges (THCs) for Haldia dock at Rs 2,310 per TEU (Rs 3,460 per FEU).

News on Logistics

Cimmco Birla shuts operations following Concor action Cimmco Birla has shut down its operations at Bharatpur, following the invocation of bank guarantees worth around Rs 39.0 crore, following cancellation of orders worth Rs 144 crore by CONCOR. Cimmco has however filed arbitration proceedings against CONCOR for violation of the contract stipulations, suddenly and without notice. However, reasons sited by CONCOR for the decision are: failure on the part of Cimmco Birla to meet the delivery schedule, insolvency levels and technical specifications and further states that bank guarantees were encashed as per the terms of the contract. Meanwhile, Cimmco has been declared as a sick industrial company by BIFR.