Trasformer AD
Trasformer AD

THE YEAR OF CONSOLIDATION

Facebook
Twitter
LinkedIn
WhatsApp
Email

[vc_row][vc_column][vc_column_text]

The shipping markets have in the main been pretty icy since the onset of the global economic downturn back in 2008, but 2016 has seen a particular blast of cold air rattle through the shipping industry, with few sectors escaping the frosty grasp of the downturn. Depressed freight rates and excess tonnage prevented the earnings of shipping lines from looking up. Tankers market has been normal and better than the dry bulk market that is seeing a slight upward movement in freight rates, but the container liners have been in distress altogether. Global container port traffic growth was just 1 per cent in 2015 and does not look very optimistic in 2016. There has been a major dip in the offshore side as well due to contracts being renegotiated by Indian companies and supply being low. Shipping
As the turmoil continued, shipping lines tried to balance stagnant business volumes, over capacity and falling freight rates. While some formed alliances to stay afloat, the THE YEAR OF CONSOLIDATION less fortunate perished. A major casualty was the collapse of Hanjin Shipping, Koreas largest container line, while another shipping giant Hyundai Merchant Marine failed to become a full-fledged member of global shipping alliance 2M. Korea’s shipping industry, which once boasted the world’s fifth-largest market share, is still struggling despite efforts from financial firms to salvage it. CMA CGM acquired Nepture Orient Lines, the parent firm of APL for about $2.4 billion. The combined capacity of these two lines will sum up to about 2.4 million teu. The Ocean Alliance was formed between CMA CGM, China’s COSCO Shipping, Evergreen Line and OOCL to offer 40 services across Asian, European and US markets. \
Maersk Line and the Oetker Group finalised their decision to buy Hamburg Sud for $4 billion. NYK Line, K Line and MOL have agreed to form the sixth largest shipping line controlling 7 per cent of the global container market share.
Shipping stocks that excelled
Drewry released The Maritime Honours List 2016, which comprises the best performing maritime equities. The steady performers of recent years have slid a few notches and the outliers have performed. The clear favourites at the start of the year have gone into hiding and the underdogs have bounced back sharply. Overall industry returns have been uninspiring with majority losing money for their investors.
Seaports
While the private ports witnessed a slowdown in shipments, the major ports saw an increase in cargo traffic for the first time in seven years. The major ports handled traffic of 606.37 million tonnes in 2015-16 had an increase of 4.31 per cent over the previous year, in spite of global recession. The growth during 2016- 17 till November 2016 has further increased to 6.77 per cent against corresponding period of last year. Key developments on the west coast include JNPT implementing direct port delivery for swift movement of cargo, satellite port at Vadhavan gets a nod to ease traffic at Mumbai Port, second liquid chemical berth is commissioned at Mumbai Port with a capacity to handle 55,000-dwt vessels carrying liquid bulk chemicals and POL products.
On the east coast, a new multipurpose general cargo berth is constructed at Visakhapatnam Port with a capacity of 6 million tonnes, V.O.Chidambaranar Port has become the first Indian port to provide shore power facility to vessels at berth, floating cargo handling facility with a capacity of 2.55 million tonnes a year being developed at Haldia Dock Complex for handling mini bulk carriers and barges. Gopalpur Port recommissions operations targeting mineral-rich hinterland of Odisha, Jharkhand, and Chhattisgarh. Exim
The collapse of the Chinese economy, which had become increasingly reliant on credit to sustain its rapid expansion, had ripple effects around the world. The silver lining has been the unprecedented growth in the Indian economy forecast to peg at 6.5 per cent in 2016-17. But even India has seen continuous slide in exports because of the prevailing slowdown in both traditional and emerging markets.
On the brighter side trade relations with South Asian neighbours improved. Bangladesh offered transit facility to Nepal for importing petroleum products from third countries and the landlocked nation also obtained access to Vizag Port. An Integrated Check Post was established at Birgunj-Raxaul check point at the Indo-Nepal border. The first laden vessel sailed from Krishnapatnam Port to Chittagong Port marking the debut of coastal shipping. In fact, sensing the business opportunity in coastal shipping many foreign vessels changed to Indian flag. Cabotage rules were amended to promote transshipment through Indian ports and a maiden voyage sailed to Ashuganj Port for transporting goods to Tripura under a transshipment agreement with Bangladesh.
Shipping Corporation of India resumed sailing to Iran after a fouryear gap, while Iran ended free shipping of crude oil to India and terminated a three-year old system of getting paid for half of the oil dues in rupees. An MoU was inked with South Korea for cooperation in developing ports.
Logistics
The focus has been to increase the speed of doing business as Indian Railways launched timetabled freight trains to meet its incremental loading target of 50 million tonnes for FY17. Another initiative was the opening of railways parcel business to container train operators to run parcel special trains. India’s first rail auto hub is being developed in Walajabad near Chennai, aims at shifting the transportation of cars to rail rather than road.
Regulations
The Union Cabinet approved the proposal of Ministry of Shipping to replace the Major Port Trusts Act, 1963 by the Major Port Authorities Bill, 2016. This will empower the major ports to perform with greater efficiency with full autonomy in decision making. A new model concession agreement for ports has been announced for more equitable allocation of risk, provision to handle unforeseen circumstances and attract more private investments. The 12 major ports have been instructed to finalise capital/maintenance dredging contracts through open competitive bidding and to go for long-term dredging contracts. Six rules under the Merchant Shipping Act have been scrapped to promote ease of doing business. The government announced a 10-year, $600-million package aimed at boosting the shipbuilding and ship repair capabilities. Infrastructure status has been granted to shipyards enabling them get long-term finance at cheap rates. New stevedoring and shore handling policy was announced and all port customers will be notified on the ceiling tariffs set for Stevedoring and Shore Handling activities. The tariff will be mandatorily displayed on the port website. DG Shipping announced guidelines for VGM reporting under SOLAS.
Termed by many as the year of consolidation for shipping lines, 2016 has seen major disruption that will continue into the New Year. A bright spot has been the Indian ports sector that managed to put up a brave face, backed by favourable government policies.

[/vc_column_text][/vc_column][/vc_row]

Facebook
Twitter
LinkedIn
WhatsApp
Email

Subscribe to Our Newsletter

Share your views in comments

AR-627903_Web banner_Maritime Gateway_300x200

Gateway Media Private Limited
Join Our Newsletter

Latest Issue