Expanding on the land side

Mahesh Sivaswamy, Chairman & CEO, Transworld Group Singapore

Mahesh Sivaswamy, Chairman & CEO, Transworld Group Singapore, details on the shipping line’s strategy to expand into land side operations, more so into warehousing and cold chain

QHow has been the business last year?

 Business has been good last year and we added four ships to our fleet. This expansion has helped us to keep our costs under check. Compared to the previous years, the cost kept on escalating in the last year and somehow we have maintained the balance. This is in particular to OEL, while other companies have done fairly well. The growth on the east coast is faster than on the west coast. We are putting in a lot of containers and ships covering the east coast and connecting to Myanmar, Bangladesh and South East Asia. There is also a lot of growth happening in the North East. In fact we are starting our own CFS in Kolkata to be operational by July this year.

 QWill you be further moving into land side operations?

 We will be doing so on pan India basis. Starting from Dadri about 15 years ago, we extended into Mundra, Nhava Sheva and in fact very close to JNPCT. We are also working in Tuticorin and very soon we will be opening in Kolkata. In Nepal we have a joint venture with Concor. In Chennai we have 17 acres of land which we have preserved for future opportunities. There is lot of warehousing and cold storage opportunity coming up in Chennai. Work is in progress for developing cold storage facility in Chennai. On pan India basis we will be moving into cold storage operations. We have also forayed into 3PL, which is another major initiative.

QWhat is your take on Bangladesh?

If we look at the past decade, the country had slow growth but is progressive. Initially all the cargo movement used to happen through Singapore, then Port Klang was the addition there. In the last 8-10 years we are seeing cargo moving via Colombo as well. Volumes are growing and the garments manufactured in Bangladesh are largely made for companies in the US and Europe. This industry per se has been growing very substantially. China has gradually become expensive and even Tirupur cannot match Bangladesh when it comes to supplying cheap garments. OEL has very large services connecting Singapore, Port Klang and Colombo. We are the largest operator for trade in and out of Bangladesh.

QHow are the other countries – Myanmar, Vietnam shaping up?

These are also strong economies on the east. In the past 4-5 years we have found the need to open our own offices as “Transworld GLS” in all these countries. We are present in China, in Vietnam we operate from two offices (Hi fong and Oh Chi Minh), we are also present in Thailand and in Vienna we are present for the past 16 years now. We have three offices each in Malaysia and Indonesia. We are present in Singapore as well and in India we have 26 offices. In Myanmar we are growing on the land side as well. In Vietnam we have a very big facility in Hi Fong. We are currently operating through a network across 10 countries.

QHow do you see the general economy and container growth happening?

Since the end of last year, the freight rates have been taking a beating. There were expectations that after the Chinese New Year, things would turn around, but it doesn’t seem to be the case. The ships coming out of China are not moving full load which is why the rates are going down. And I don’t see it quickly turning around. The point here is that costs are going up as the charter rates are going up. Bunkers have touched $400 per metric tonnes now. It’s not going to be an easy sailing quarter-by-quarter. As a service provider I would say the customers have really shrunk. May be in the long-term it will be good for the shipping industry, but at this point of time it is not the case.

Do you see any effect of the sanctions imposed by US and China on each other?

 AThere has not been any effect particularly on us, but it could be a reason for the shrinking of cargo, which is the reason for freight rates going down. But the major impact will be on the bigger lines. Expansion on the land side will help the group to have multiple revenue areas. Particularly in India that is the way forward.