Gain for shipping players as Baltic Dry index touches 10-year high

Shipping Corporation of India, Great Eastern Shipping, Tolani Shipping, and Essar Shipping are into bulk carriers along with other segment fleets in the domestic market

With the Baltic Dry Index having hit a 10-year high recently, Indian shipping companies are not just benefitting from the high freight but also from increased trade with Bangladesh and Vietnam, industry experts said on Wednesday.
 
“Construction activity has picked up significantly in Bangladesh as the country is focusing on infrastructure growth. Due to this, Indian shipping companies are witnessing increased cargo volumes with a lot of bulk raw material getting shipped. This is going to be a long-term trend as infrastructure push is expected to continue,” Captain Rahul Bhargava, chief operating officer (COO) at Essar Shipping, told Business Standard.
 
Shipping Corporation of India (SCI), Great Eastern Shipping, Tolani Shipping, and Essar Shipping are into bulk carriers along with other segment fleets in the domestic market. “All vessels on spot charter will earn more and most companies keep a combination of spot and contracted vessels. So, the benefit would vary depending upon the portfolio,” said Anil Devli, chief executive officer (CEO) at Indian National Shipowners’ Association. 
 
Another trade route, which has strengthened for India, though a seasonal one, is export of rice to both Bangladesh and Vietnam.
 
“Export of rice has emerged as a new business for domestic shipping companies in the last few weeks. We have already shipped close to 200,000 tonne rice to Vietnam and Bangl­adesh and another 150,000 tonne would be shipped soon. This trend, however, is expected to be short-lived and would last for another two months. But it’s a new commodity for domestic shipping companies,” said Bhargava.
 
Meanwhile, with China switching its trading partners due to geo-political iss­ues, increased trade with South Africa for bauxite and with the US for coal is also auguring well for vessels with tonne miles going up.
 
China earlier imported coal from Australia but has now switched to the US for the fuel, leading to increased tonne mile. This is also another reason for the index to go up, said industry insiders. (see chart)
 
Among domestic shipping players, it is the better deployment of Kamsarmax and Supramax vessels that yields strong earnings for companies.
 
“Kamsarmax is the preferred vessel for bulk transport at present and a lot of bauxite is getting transported by domestic shipping companies. These vessels are getting well employed in South Africa,” said an industry executive.
 
Both Great Eastern Shipping and SCI have Kamsarmax as part of their fleet.
 
Meanwhile, Supramax vessel freights have almost doubled to $5,000 per tonne from $2,500 per tonne on the Indonesia-India route. This is auguring well for domestic shipping companies, said industry executives.
 
“Global trade, despite the pandemic, is stable. It is stable, not strong. Also, the increase in index is because several global shipping companies have gone bust. So, there is a shortage of vessels which is driving the index up,” said Hitesh Avachat, group head of corporate ratings at CARE Ratings.