Shipping Corporation defers expansion of container fleet

Kailash Rajwadkar

Mumbai, June 3: The Shipping Corporation of India (SCI) has decided to defer its container vessels expansion, in light of the sea being flooded with container vessels by 2003. SCI was earlier evaluating plans to buy three container vessels but gave it up and decided to focus on the energy and liquefied natural gas (LNG) segments.

“We are keeping our fingers crossed with the US economy too not doing well,” SCI director (technical & offshore services division) KK Palit said on the likelihood of the expansion of its fleet.

Shipyards worldwide are working to their optimum capacity with firm orders in excess of 200 container vessels. This would lead to a decline in tariff rates, resulting in consolidation with a few large players left in the fray.

Besides, a large number of these ships have a huge capacity of 5,000 TEUs (twenty equivalent units) to 7,500 TEUs, Mr Palit said.

SCI, with only four container vessels currently, is in the process of formulating a policy for its liner division comprising container and break-bulk.

Company officials had earlier stated that it is not necessary to own ships to undertake shipping business and would prefer to enter into consortia to conduct its container liner business.

Meanwhile, SCI’s fleet expansion on the tanker segment announced last month seems to be on track. The company is likely to get the government’s approval in six weeks time by July for its two LR-2 Suezmax size tankers. The proposal is currently with the Public Investment Board (PIB) after which it will formally go to the cabinet committee of expenditure (CCE).

The tendering process for the two Suezmax, each estimated to cost $ 45-50 million, is already under process. “We will place orders by July on receiving the approval,” Mr Palit said.

SCI would also be shortly submitting its proposal for its two bulk carriers, each costing $ 35-37 million to the government for approval.

SCI’s board had in-principle approved and is awaiting its specific approval after which it would be forwarded to the government, he said.