SCI puts capacity addition plan on hold

Adverse market condition is main reason; no tenders for vessels but will proceed with buying six tanker handlers.

With the cost of money moving up and freight rates diving, Shipping Corporation of India (SCI) has put on hold its plans of issuing fresh tenders to acquire new vessels. The 1961-founded company is already taking delivery of about 10 vessels this year, mostly bulk carriers, though there is overcapacity in the market.

SCI, though, will go ahead with one domestic tender for purchasing six tanker handlers. “Till the market conditions improve, we will not issue more tenders,” said Arun Kumar Gupta, its director (technical and offshore services).
 

FLEET FACTS

SCI is already taking delivery of about 10 vessels, mostly bulk carriers, this year though there is an overcapacity in the market

THE company has a target of ordering 62 vessels under the national maritime development programme by 2012

THE government-controlled SCI currently has 79 vessels with a capacity of 57 lakh dead weight tonnage

INDIA ranks sixteenth in the world in terms of capacity. The fleet size of the shipping industry is 10 million gross tonnage

 

The Mumbai-headquartered company has a target of ordering 62 vessels by next year under the national maritime development programme. Of these, SCI has already ordered 39 with $2 billion investment, with fresh acquisitions on hold, the company is expected to fall short of the target by 15 vessels.

Government-controlled SCI currently has 79 vessels with a capacity 5.7 million dead weight tonnage (dwt). Of these, 45 vessels are tankers, 17 bulk carriers, five liners, 10 offshore supply vessels and two passenger-cum-cargo vessels.

India ranks 16th in the world in terms of capacity: the shipping industry’s total fleet size is 10 million gross tonnage annually, though it forms a marginal share of only one per cent of the global fleet. On the other hand, India’s seaborne trade has been growing at 12 per cent in the past 10 years. Consequently, the share of India’s vessels in carrying the country’s cargo has been declining. Currently, it is only eight per cent.

Fitch said charter rates across most segments remained depressed, with a marginal uptick driven largely by industry discipline. “The outlook on the sector continues to remain negative, driven by oversupply,” according to its mid-year ratings review of the shipping sector.

SCI had expressed its interest in participating in ship-building ventures on a public private partnership basis. The state-owned enterprise is in the process of appointing a consultant for a detailed feasibility study.

The National Maritime Agenda mentions that a joint venture is likely to be set up under the PPP model by 2014 at an approximate cost of Rs 3,500 crore.

Though the company is faced with an oversupply problem, it is hoping the demand-supply will balance out by 2013.