Car­ri­ers Per­spec­tive: Con­sol­i­da­tion will cre­ate new im­pe­tus

Evo­lu­tion or rather revo­lu­tion is tak­ing place faster than ex­pected in the port and ship­ping sec­tor. The ses­sion picked up some on­go­ing and im­mi­nent is­sues that might com­pletely change the land­scape of the sec­tor in the re­gion.

Maritime Gateway - - Contents -

The first busi­ness ses­sion fo­cused on the views of ma­jor ship­ping lines about de­vel­op­ments tak­ing place in ship­ping arena of South Asia seaborne cargo move­ment. Heavy weights from world’s top ship­ping lines were part of the dis­cus­sion panel and the met­tle to over­see the pro­ceed­ings was in the hands of Michael Pinto, IAS (Retd), For­mer Sec­re­tary, Min­istry of Ship­ping, as mod­er­a­tor.

Over a pe­riod of time ves­sels’ car­ry­ing ca­pac­ity have grown tremen­dously, and it has ef­fect on freight rate, ship­pers, and ves­sel op­er­a­tors as well as own­ers. Elab­o­rat­ing on the mat­ter, Capt. Dheeraj Bha­tia, MD, Ha­pag-lloyd In­dia said that there are cer­tain cost ad­van­tages for op­er­a­tors to have larger ves­sels, how­ever it might not have a lin­ear ef­fect on the en­tire sup­ply chain. The cost in­volved in han­dling a larger ves­sel can be high if there were not re­quired cargo vol­ume. Size of ves­sels call­ing at the ports on the West Coast of In­dia has in­creased from 5,0006,000 teus to 8,000-10,000 teus, and the ves­sels call­ing Colombo Port are lit­tle big­ger.

Capt Vivek S Anand, Di­rec­tor, NYK Line In­dia, ex­plain­ing the de­vel­op­ments said that tighter en­vi­ron­ment laws had forced ship­ping lines to adopt big­ger ves­sels. The in­dus­try would be mov­ing back to the sit­u­a­tion where 20 per cent of op­er­a­tors used to con­trol 80 per cent of the trade. Hence, coun­tries which couldn’t have in­fra­struc­ture in place to han­dle larger ves­sels would be in dif­fi­cult sit­u­a­tion.

Capt. Swami­nathan Ra­jagopalan, Com­mer­cial Di­rec­tor, CMA CGM Agen­cies In­dia said that in the past ship­ping lines have been af­fected by com­pe­ti­tion, ad­di­tion of ca­pac­ity and en­try of mul­ti­ple play­ers. A sim­i­lar kind of sit­u­a­tion is be­ing ex­pe­ri­enced in the port and ter­mi­nal sec­tor as well. Cost and ef­fi­ciency would im­pact ports and their pre­pared­ness to han­dle larger ves­sels could also be a de­cid­ing fac­tor.

The mod­er­a­tor raised con­cerns about re­turn on in­vest­ment on part of ter­mi­nal and port op­er­a­tors, which needed to in­vest to ac­com­mo­date larger ves­sels, upon which Michael Ju­lian Be­vis, Se­nior Di­rec­tor (Group Re­la­tions), South Asia AP Moller­maersk, ex­plained that South Asia or In­dian ports should not be looked at in iso­la­tion as the dilemma has been there glob­ally. Ports needed to have in­fra­struc­ture in place to com­pete glob­ally. As the dis­cus­sion and de­bate was get­ting in­tense, BK Man­dal, For­mer CMD, Ship­ping Cor­po­ra­tion of In­dia opined that though gi­ant ships ben­e­fit from economies of scale but there should be ra­tio­nal­ity about cargo avail­abil­ity.

Con­sol­i­da­tion in the ship­ping in­dus­try has ini­ti­ated, and elab­o­rat­ing the im­pact, Capt. Anand said that con­sol­i­da­tion at global level would take place and it would give im­pe­tus to hub and spoke model. Capt. Bha­tia said con­sol­i­da­tion is need of the hour for lines who have in­vested heav­ily and also for those who are fi­nan­cially in a dif­fi­cult po­si­tion. Capt. Ra­jagopalan un­der­lined the fact that con­sol­i­da­tion has started even in re­gional and feeder op­er­a­tor seg­ment as the vol­ume of cargo han­dled by feeder op­er­a­tors has also grown. Merger and ac­qui­si­tion might not be the key but con­sol­i­da­tion in terms of op­er­a­tion of ton­nage have al­ready been ini­ti­ated. They said the in­fra­struc­ture out­side the port also needed to be im­proved for seam­less cargo evac­u­a­tion. On the mat­ter of ris­ing con­tainer freight rates, Be­vis stressed that the reg­u­la­tor and pol­icy mak­ers should al­low mar­ket forces to op­er­ate freely to en­sure a level play­ing field as a free and com­pet­i­tive mar­ket prin­ci­ple would ben­e­fit the con­sumer.

(L to R) Capt Vivek S Anand, Di­rec­tor, NYK Line (In­dia) Ltd; Capt Dheeraj Bha­tia, Man­ag­ing Di­rec­tor, Ha­pag-lloyd In­dia Pvt Ltd; Michael Pinto, IAS(RETD), For­mer Sec­re­tary, Min­istry of Ship­ping- Mod­er­a­tor; Michael Ju­lian Be­vis, Se­nior Di­rec­tor Group...

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