Indian ships carrying own cargo lag global trends

Even though India is aggressively trying to increase capacity of ports, the domestic shipping industry continues to lag behind global compatriots in terms of tonnage.

An ICRA report on the shipping industry's performance shows the share of domestic vessels carrying the country's own tonnage is negligible.

The share of Indian shipping companies carrying general cargo is only 5.19 per cent, 7.1 per cent for dry bulk cargo and 30.1 per cent for liquid bulk cargo. The overall share of Indian ships in overseas trade is only around 16.1 per cent.

In 2004, the Indian shipping industry carried 13.83 million tonnes of cargo for exports and 40.89 million tonnes for imports.

ICRA's assessment is that the Indian shipping industry usually is in a position to meet extra tonnage for most part of any given year, except for brief periods when the economy peaks and demand increases.

However, even then, despite fierce competition, given the fragmented nature of the industry, size does not translate into market or pricing power.

Comparison of data for monthly tonnage of foreign trade between April 2002 and March 2004 of Indian vessels, shows the best performance of Indian vessels was in April 2002, with 30 per cent share of the pie. The worst period was in October 2003, just 5 per cent of total foreign tonnage.

The report adds that if Indian shipping companies were larger in size and fleet, they would have better economies of scale and allow a company to offer more frequent and reliable services.

A larger fleet also increases flexibility to react to shifts in geographical and transportation patterns.

The report also notes that India ranks only 15th in the world by flag of registry, forming approximately 1.5 per cent of the world's tonnage.

Indian shipping companies collectively owned 704 vessels with 8.3 million gross tonnage or around 13.75 million deadweight tonnage.