Week ending March 5, 2003

News on Shipping

GE Shipping orders a new Suezmax crude carrier : GE Shipping has entered into a contract with Hyundai Heavy Industries Company Ltd, South Korea to build a 1,50,000 DWT (dead weight tonnage) Suezmax crude carrier. The latest ship building order is the second of its kind placed by the company, after it withdrew from the bidding race for Shipping Corporation of India. The company had earlier contracted a product tanker of 45,500 dwt from Hanjin Heavy Industries & Construction (Hanjin), South Korea, which is scheduled for delivery in July 2004. The latest order for Suezmax tanker is scheduled for delivery in the fourth quarter of 2005. The order is reportedly worth about $45 million. The company now has five tankers on order aggregating 0.45 million dwt, which includes two product tankers, two Aframax crude carriers along with one Suezmax tanker scheduled for delivery from April 2003 to March 2005.

SCI decides to scrap six crude oil tankers : The Shipping Corporation of India has decided to scrap six crude tankers (89,400 dwt each) - acquired by it some three decades ago with the assistance from the World Bank - are due for scrapping. `Netaji Subhas Chandra Bose' will be the first to be scrapped sometime in October 2003 to be followed by `Vivekananda' and `B.R. Ambedkar'. Three other tanker vessels - `Satyamurthi', `Chhatrapati Shivaji' and `Lok Manya Tilak', are to be scrapped in 2004. Two other carriers, namely, `Rajendra Prasad' (1,10,000 dwt) and `Maharishi Karve' (1,23,000 dwt), which are now being used for the storage purpose, are also likely to be scrapped, though not immediately. `Rajendra Prasad' is currently berthed at Panna-Mukta oilfield while `Maharishi Karve' is berthed at the Bombay High. The scrapping of the World Bank tankers, as these are commonly called, will reduce SCI's total crude carrying capacity by more than five lakh dwt. This will be made up largely, not wholly, by new acquisitions - four Aframax crude carriers (1,10,000 dwt each) currently being built at Hyundai shipyard in Korea.

Maersk flags off new US West Coast Service : Maersk has launched a new India-US West Coast service with the maiden voyage by its 4,300 TEU container vessel " Dirch Maersk". The South Korean built vessel was received at Jawaharlal Nehru Port and is scheduled to operate between Nhava Sheva and Los Angeles with a transit time of 27 days, considered the best in the shipping industry. Trade volumes between India and US West Coast are about 170,000 TEUs every year, while the trade between India and Far East averages at about 390,000 TEUs annually.

News on Ports

Economic Survey seeks more port competition : The latest pre-budget Economic Survey for 2002-03 has sought creation of an enabling framework, which will spur competition between multiple operators in a given port and to foster competition between different ports. The survey in its outlook for the ports sector has acknowledged the "sharp improvement" in the country's port sector following the entry of private entrepreneurs and says that performance of ports in India still lagged behind the standards set by ports such as Singapore and Hong Kong. It however, notes that principal indicators of port efficiency have shown an improvement at major ports, with average turn-around time coming down from 4.1 days in 2000-01 to 3.7 days in 2001-02. Similarly, the average output per ship-berth-day increased from 6,701 tonnes in 2000-01 to 6,972 tonnes in 2001-02. However, the average pre-berthing time on port account at major ports remained unchanged at 0.5 days during the two years.

Consultant for Vizhinjam port being finalised : The Kerala government has reportedly zeroed in on three of the seven short-listed bidders for the final selection of the consultant for preparation of the feasibility report for the development of Vizhinjam port. As many as 21 internationally reputed consultants had responded to the tender floated by the state department of ports. Those in the final reckoning include Collen Grummit and Roe of Australia, BMT Asia Pacific, Singapore, and L&T Ramboll. The location of the port has been meanwhile moved away from the originally identified site near the existing fishing harbour. The consultant will prepare the feasibility report after looking into various parameters, including a detailed study on the container traffic through the route. As per the proposal, Vizhinjam is to be developed into a major trans-shipment port. Apart from the port, a bunkering facility is also part of the development package, which is estimated to cost around Rs. 2,500 crore. The state department of ports is likely to invite expressions of interest (EOI) for the selection of a project developer within the next couple of months after the appointment of the consultant.

Chennai offers new package on vessel-related charges: The Chennai Port Trust (ChPT) has announced an `attractive' package to shipping lines in vessel-related charges, including a maximum slab for pilotage and port dues for container vessels above 28,000 GRT (gross registered tonne). The move comes in the wake of efforts on the part of the port authority to attract main line container vessels to the port and eventually make the port a major transhipment hub in the region. Vessel related charges include port dues, tug charges, pilotage, light dues and berthing/unberthing. The package offers port dues plus pilotage not exceeding $14,500 for any container vessel above 28,000 grt, a capacity of about 2,100 TEUs and has been sent to TAMP for approval. Under the package shipping lines can bring any size container vessel above 28,000 grt but pay vessel-related charges equivalent only to 28,000 grt vessel capacity. To avail the concession, the mail line vessel, however, should go beyond Singapore and Port Klang ports in the East Coast and beyond Dubai and Salalah in the West Coast and make at least 36 calls to Chennai port in a year. For a vessel of above 5,000 TEUs, the concession could work out to about 60 per cent of the existing rates. Chennai port's vessel-related charges of $24,639 (for a 2,268 TEU vessels) was the highest in the region compared to $6,243 in Dubai, $8,148 in Singapore and $7,255 in Colombo. For a 4,422-TEU capacity vessel, the charge in Chennai would be $35,780, compared to $ 7,577 in Dubai, $10,710 in Singapore and $10,336 in Colombo.

Paradip port may achieve higher rail-borne traffic : Paradip Port Trust (PPT) is set to achieve a higher rail-borne traffic in 2002-03 over the previous year. According to Mr. Subrat Tripathy, Deputy Chairman of PPT, the extent of increase in traffic is likely to be around one million tonnes. The increase in throughputs of the rail-borne traffic was recorded in respect of items such as thermal coal, iron ore and coking coal. Till February 2003, the volume of rail-borne iron ore traffic was 2.4 mt, as compared to 2.07 mt in the same period of last year. The corresponding figures for thermal coal were 8.44 mt (8.14 mt) and coking coal 1.51 mt (1.31 mt). About seven lakh tonnes of thermal coal and coke were also moved by rail during the period as compared to 2.3 lakh tonnes in the same period of the last year.

Paradip port to repay ADB loan by March '03: The Paradip Port Trust (PPT) has decided to repay the Asian Development Bank (ADB)'s loan to the tune of Rs 121 crore before March 2003. This will be the second installment of repayment in the current fiscal (2002-03). The PPT repaid about Rs 72 crore some months back. Out of the total of Rs 193 crore to be repaid before March, the principal amount will be about Rs 120 crore and the balance interest. With this repayment, the burden would be reduced to about Rs 339 crore from the earlier Rs 459 crore or so. The loan was raised to part fund the huge mechanised coal handling plant in the port. PPT repayment is enabled due to improvement in the financial health of the port, largely due to jump in cargo throughput. The major items posting jump in throughputs so far in the current fiscal are iron ore, thermal coal, coking coal and items such as chrome, ferro chrome and manganese.

IPBCC hikes bunker adjustment factor: The member lines of IPBCC (India-Pakistan- Bangladesh-Ceylon Conference) have hiked the bunker adjustment factor (BAF) in view of the increased bunker costs. IPBCC has also launched a rate restoration programme for 2003. The new charges will come into effect from March 1. The BAF for FCL (full container load) cargo now stands at $90 per TEU and for LCL (less than container load) at $9 w/m. The BAF for break-bulk cargo has been jacked up 26 per cent. The member lines will monitor bunker costs regularly and keep the BAF under regular review. The member lines of IPBCC include the SCI, Bangladesh Shipping Corporation, Ceylon Shipping Corporation, Pakistan National Shipping Corporation, CMA-CGM, Contship Containerlines, Ellerman, Evergreen, Hapag-Lloyd, K-Line, Malaysian International Shipping Corporation, Maersk Sealand, Norasia, Nedlloyd, Rickmers, Safmarine, United Arab Shipping, Yang Ming Line and Zim Israel Navigation.

Chennai port has been ignored by Budget say users: Various chambers of commerce and industry and trade bodies representing user interests at Chennai port have expressed disappointment with the Budget, while however welcoming its overall policy thrust on infrastructure sectors. The Southern India Chamber of Commerce and Industry (SICCI) has stated that more funds could have been allocated for the Chennai Port considering its strategic importance on the east coast.

Cochin port union not against Vallarpadam : The Cochin Port Staff Association (CPSA) has denied that it is against the Vallarpadam Project. In a statement CPSA has stated that implementation of the project would not only help the port to equip itself to compete with other ports in the changed shipping scenario but also bring economic benefit to the Kerala region. It pointed out that the workers in the port, had extended their support to make this project a reality. He said that workers were however apprehensive about the future of those working in the present container terminal which is to be taken over by the private operator. The CPSA has also criticised the move to develop one more transhipment terminal at Vizhinjam, saying that two transhipment hubs in the same international sea route will not serve any purpose. Vizhinjam and Kochi lies in the same region and it would be difficult to generate sufficient cargo from the hinterland.

Old Mangalore port to be upgraded: The Karnataka government is considering a Rs. 6-crore proposal to `upgrade' the Old Mangalore Port and convert it into a `commercial port'. According to the Karnataka's minister for transport, Mr. B. Ramanatha Rai, who earlier held the portfolio of ports and fisheries, the proposal is due to be taken up for consideration shortly. The upgradation project is said to involve dredging work apart from the construction of a 150-metre concrete wharf and upgradation of the old jetty..

News on Logistics

Priority sought for IWT development:The inland waterways should be developed on a priority basis, especially in a state like Andhra Pradesh, which was once very strong in coastal transportation, Mr. G.L. Rao, President of the Institution of Engineers (India) has stated, while speaking at a two-day national convention on "Marine engineering and its impact on the shipping industry'' organised by the Institution of Engineers. He said that Centre had allocated Rs 800 crore for reviving the waterways and the Andhra Pradesh Government had also evinced interest in the matter. Marine engineers should take the lead and defunct waterways such as the Buckingham canal should be revived, he said. The state has historically been a flourishing maritime region and many ports were in business but currently only Visakhapatnam and Kakinada were handling cargoes. He opined that all the other ports and the connecting waterways in the agriculturally rich hinterland could be developed.