The shipping freight market is turning the corner, and the worst seems behind it. The freight market is here to stay firm, at least for some time, say analysts. From next year, however, new regulations being implemented might have some implication for the industry. Indian companies have a large share of tankers in their fleet, so their revival is yet to come.
Fortunes turning better
Benifer Jehani, Director, CRISIL Research, said: “The shipping sector will now see fortunes turning better for them. Freight-charter rates have seen an increase of 35 per cent in the dry-bulk segment, while the container segment has also seen a 30-35 per cent rise.” However, the tanker segment has not done so well, as rates have fallen by 5-10 per cent. The fall is even bigger for very large crude carriers.
Ranjeet Singh, who has been the Chief Executive Officer of Essar Shipping since September 2016, said, “momentum seen in global shipping freight market will also benefit Indian shipping companies”.
Dry-bulk segment best performer
Indian shipping sector has a larger dependence on tankers due to high imports, but this segment has not done well. Benifer of CRISIL explained that the dry-bulk segment, which accounts for 45-50 per cent of the world fleet (in deadweight tonnage terms), witnessed a 35-40 per cent increase in charter rates during January-April this year, as compared to a similar period last year. This increase is on account of high-quality coal and iron ore imports and by the East Asian nations.
Fortunes of Indian shipping companies would be mixed. Jenifer said, “Tankers account for the largest share, of about 60 per cent, in Indian fleet because of high dependence on import of petroleum, oil and petrol products and LNG imports.
Bulk cargo demand has received a boost following the substitution of lower-grade coal and iron ore in the East Asian nations with higher-grade inputs in order to improve environmental efficiencies. Iron and coal account for almost half of the global dry-bulk trade.