Reort On Shipping Industry
The Shipping Industry – Sailing through turbulent waters
The Shipping industry is highly co-related to the developments in global trade, therefore any adversity in the global economic growth adversely affects the prospects of global shipping fraternity thereby explaining the cyclical nature of the industry. With the world economic growth in CY11 estimated at 4% (at constant price), the sea-borne trading volumes (tonne-miles) are estimated to have been muted during CY11 growing at 4.3% on y-o-y basis.
The global crude oil demand for CY11 is estimated to have been 89 mb/d registering y-o-y growth of 0.8%. However, the oil demand from the OECD nations is estimated to have remained subdued averaging 45.6 mb/d recording de-growth of 1.3% on a y-o-y basis. On the other hand, the oil demand from the non-OECD nations is estimated at 43.4 mb/d posting growth of 3.1% on a y-o-y basis. Correspondingly, the crude oil supplies in CY11 are estimated at 88.4 mb/d registering a yearly increase of 1% thereby denoting lower cargo flow. To add to the subdued oil demand during CY11, the vessel deliveries during January-October 2011 aggregating 16.1 mn GT further aggravated the over-supply of wet bulk vessel fleet. This in turn resulted in decline in vessel freight rates to average US$2,330/ day during CY11 reporting y-o-y decline of 88.5%. The new-build orders in this vessel segment during January-October 2011 aggregated 3.5 mn GT reporting decline of 75.3% as compared to the same period previous year. Correspondingly, the orderbook position as on October 31, 2011 aggregated 46.7 mn GT declining by 24.8% as compared to the orderbook position as on December 31, 2010. Notably, the vessel scrapping activity in this segment aggregated 4 mn GT recording y-o-y de-growth of 27.3% as compared to the same period previous year primarily owing to the expiry of the phase-out timelines of single-hull vessels due to be scrapped by CY10. http://www.bharatbook.com/market-research-reports/marine-and-shipping-market-research-report/indian-shipping-industry.html
With the demand for dry bulk vessels being derived from the demand for commodities such as coal, iron-ore, steel etc. the demand for dry bulk vessels remained subdued during CY11 on the back drop of fiscal and financial imbalances experienced globally. Correspondingly, the Baltic Dry Index (BDI) averaged1,548 during CY11 declining by 43.9% on y-o-y basis. Notably, the deliveries in this segment aggregating 43.3 mn GT recording growth of 23.7% as compared to the same period previous year further aggravated the vessel over-supply situation. The new-build orders in this vessel segment aggregating 12.4 mn GT during January-October 2011 declined by 61% as compared to the same period previous year. Correspondingly the orderbook position as on October 31, 2011 aggregated 122.4 mn GT declining by 18.9% as compared to the orderbook positions as on December 31, 2010. The scrapping volume during January-October 2011 aggregated 11.8 mn GT increasing by 4.7x as compared to the same period previous year. Shipping Industry
The trend of containerisation has been gaining increased acceptance globally thereby replacing break-bulk/dry bulk mode of transportation. The development of container ports with greater draught and equipped with advanced cargo handling facilities can primarily be attributed to the said growth. The deliveries in this segment aggregated 11.2 mn GT declining by 18.2% as compared to the same period previous year. The freight rates of containerships 4,500 teu averaged US$20,167/ day registering y-o-y growth of 29.9%. Correspondingly, the new build orders during the period from January-October 2011 aggregated 17.9 mn GT growing by 3.1x as compared to the same period previous year. Of the same, the new-build orders for containerships>8,000 teu aggregated 13.2 mn GT accounting for 73.7% of the total new build orders. Correspondingly, the orderbook position as on October 31, 2011 aggregated 49.3 mn GT growing by 14.4% as compared to the orderbook position as on December 31, 2010. The vessel scrapping volumes during the period from January-October 2011 aggregated 0.5 mn GT recording de-growth of 68.7% as compared to the same period previous year, with no scrapping witnessed across containerships>8,000 teu.
The Indian Shipping industry too suffered set-back on account of the global downturn with the Indian shipowners faced with additional challenges in the form of: multiplicity of regulations, onerous tax regime, port congestion etc. However, in an effort to propel the growth of the country’s shipping industry, the Government of India (GoI) through the Ministry of Shipping announced the Maritime Agenda for the period 2010-2020. The total proposed investment under this programme is expected to be Rs.4.43 lakh crore of which an estimated Rs.1.2 lakh crore of investments are proposed for the shipping industry. In additions, the GoI through other regulatory bodies has initiated various programmes such as like National Rail Vikas Yojna (NRVY), National Highways Development Programme (NHDP) etc. for the development of port and other related infrastructure projects. However, the success of such initiatives depends upon their effective execution and timely implementation.
With the economic imbalances as witnessed across the developed nations of the world expected to prolong, CARE Research expects the sea-borne trading volumes to remain subdued growing in the range of 4.4-4.7% on y-o-y basis during CY12-14. In addition to the same, the factors such as orders in hand with the global shipyards resulting in constant flow of vessel deliveries during CY12-14 is expected to further worsen the over- supply position of global fleet thereby adversely affecting the vessel freight rates.
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