Japan's MOL plans to ramp up India fleet with domestically built vessels

Plans to become India's second-largest shipping firm

Buoyed by maritime reforms announced in the Budget, Mitsui OSK Lines (MOL) — the world’s second-largest shipping company — is looking to raise its fleet here with domestically-built vessels and is in talks to place orders on Indian shipyards. 

“We’re the second largest shipping company in the world. This is also the target we have set for India — to become the second largest such company in the country,” Anand Jayaraman, executive officer for the South Asia Middle East Region, said at an interaction in New Delhi. 

The company owns a fleet of 935 vessels globally, with a significant share in energy transportation across the globe. 

In India, its fleet primarily comprises crude oil carriers and automobile carriers. 

“We have been discussing having our ships made in India — in the near future, India will become a shipbuilding nation. As one of the biggest ship owners, we will be having ships in India,” said Jayaraman.

 

He added that the company would like to have more options in shipbuilding as the industry is dominated by only three nations — China, South Korea, and Japan. MOL has been in talks with the government, private players, and public sector shipyards, such as Cochin Shipyard, to build mid-range oil tankers.

 

In the long-term, the company wants to place orders for more complicated and larger vessels.

 

“India, with 13 ships (registered under the Indian flag by MOL) at this moment, is a miniscule number. But this is the first time that a separate ship-owning centre has been set up by MOL. We are looking at other areas also but India is going to be right in the middle of ship-owning plans,” he said.

 

The company has 10 vessels registered in Mumbai and three in Gujarat International Finance Tec (GIFT) City, Gandhinagar. It intends to increase its share of vessels registered at GIFT City to half of its total fleet in the coming years, said Jayaraman.

 

GIFT City is being promoted as a lucrative hub for vessel registrations as it allows transactions in US dollars and gives a 10-year tax holiday.

 

“Looking forward, we want to be leaders in green shipping. There is a big push from the government on green ports — starting with green tugs to having green power at all major ports. We are trying to bring our expertise in operating tugs in Japan and Vietnam. These will be hybrid tugs which can run on green power or conventional fuel,” he said.

 

The company is also looking to get into end-to-end logistics and would be open to joint ventures, albeit with smaller players who have the expertise.

 

Cold chain storage and rail logistics are among areas MOL is looking to get into. It hopes to make headway by this year or early next year.

 

Cross-sectoral play

 

According to Yokote Eiji, deputy general manager of corporate communications at MOL’s headquarters in Tokyo, the $12.5-billion carrier intends to increase the share of its non-shipping business to 40 per cent by 2035. This would help it build resilience against any possible shipping recession.

 

The company is also in talks on the formation of a maritime university, but the discussions are at a nascent stage, said Jayaraman.

 

As part of its diversification plans, MOL is also looking to invest in startups — one such investment in a digital startup associated with the company’s core business is under way.

 

The company is already present in India’s real estate through its subsidiary – Daibiru Corporation, which recently invested in Delhi’s Atrium Place projects for $123.5 million. It is in talks for acquisitions in other cities as well. 

Into uncharted waters

• MOL’s India fleet primarily consists of crude oil carriers and automobile carriers
• MOL has been in talks with stakeholders to build mid-range tankers
• The firm reafirms that India is going to be right in the middle of its shipowning plans
• The firm intends to increase its share of vessels registered at GIFT City to half of its total fleet
• By next year MOL is looking to get into cold chain storage and rail logistics