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The falling rupee may bring more export business for the shipping lines, with Indian goods getting a competitive edge in the international market. Shipping companies which are already reeling under subdued freight rates and oversupply of vessels are worried over rising fuel costs as the dollar becomes more expensive.
Shipping Corporation of India, for the first time has decided in its board meeting to go for partial bunker hedging. “We will start with a small percentage and then increase the amount we will hedge gradually,” said Sunil Thapar, director- bunker and tanker division, Shipping Corporation of India.
While most companies feel that they are hedged against the currency crisis since the sector deals in dollars only. However, because the outgo is also in dollars, the rupee depreciation has not meant huge benefits.
The currency depreciation has created woes for coastal shipping, since most of the revenue is incurred in rupees, while the costs are in dollars. “The returns in coastal shipping are suffering. The overall coast of logistics is going up since the port charges are in dollars,” said Anil Devli, president, Indian National Shipowners Association.
For coastal shipping, there is an added challenge as far as bunker goes. The increase in price of high speed diesel has made it less competitive to the road transportation which has subsidized diesel. “This has also discouraged new entrants from venturing into coastal shipping. It is not a flourishing business,” a senior port sector analyst said.
Last week, rupee plunged to a low of 66 per dollar mark. The rupee has lost more than 16% against the dollar so far in 2013 - making it the worst performer by far among Asian emerging market currencies, according to Reuters.
