Shreyas’ endeavour into dry bulk space
The contract involves road movement for the first and last mile connectivity for which Shreyas has tied up with local transporters at both ends. RINL has moved its products by road and rail thus far.
Container ship operator Shreyas Shipping and Logistics is venturing into the dry bulk segment by winning a deal from staterun steel maker Rashtriya Ispat Nigam (RINL) for transporting products from its plant at Visakhapatnam to stockyards in Ahmedabad, Mumbai and Kochi. The company has purchased a foreign-flagged multipurpose vessel to haul 225,000 tonnes a year to the three destinations on an annual contract worth about 75 crore. The ship will be converted into an Indian flag because transporting cargo on local routes along the coast is reserved for Indian registered ships, according to local rules. Of the total quantity to be shipped, 60,000 tonnes is meant for Kochi, 75,000 tonnes for Mumbai and 90,000 tonnes for Ahmedabad.
Shreyas will add one more dry bulk ship to its fleet to execute the contract, the first to be tried by a state-run steel maker as the Shipping Ministry aggressively pushes coastal shipping to reduce logistics costs. The company currently runs a fleet of 11 small-sized container ships. Logistics cost contributes around 15 per cent to the total landed cost of steel. The water mode contributes only one per cent of logistics in India (compared to 24 per cent in China), even though it offers environmental benefits and savings in fuel costs. Steel demand in India, the world’s third biggest producer of crude steel, is projected to touch 200 million tonnes per annum (MTPA) by 2025 under base case scenario of GDP growing at 7-8 per cent per annum. According to the Sagarmala programme of the Central government, logistics efficiency will be critical for making existing capacity more competitive.
The Sagarmala estimates a potential for moving 7-8 MMTPA of steel through coastal route by 2020, and 12-14 MMTPA by 2025. Moving steel products by the coastal route could
`1.3 save as much as per tonne-km. This translates
`1,000-1,200 into savings of crore per annum by 2025.