With activities picking up after a huge lull, shipping companies have started to garner attention amongst gain. Great Eastern Shipping (GE) reported 6.6% growth in revenues in the December 2009 quarter to touch Rs 706.3 crore. Higher operating days and firming of freight rates in the December 2009 quarter, especially over the September 2009 quarter helped it to outperform its peers. Revenue days rose to 3,402 days in December 2009 quarter as against 3,268 days in the September 2009 quarter.
Excluding the extraordinary gain from the sale of a vessel to the tune of Rs 53.8 crore in the September 2009 quarter, the net profit in the December 2009 quarter has been higher by 72.6%. TCE per day or Time Charter Equivalent time charter equivalent, a standard industry measure of the average daily revenue performance of a vessel for dry bulk carriers as well as product carriers increased to Rs 20,964 and Rs 19,131 as compared to Rs 17,065 and Rs 18,865 in the September 2009 quarter.
Thanks to this, after dipping to 25.4%, operating margins improved to 28.2% in the December 2009 quarter. Overall, TCE for product tankers increased while it dropped with respect to crude tankers In the case of dry bulk vessels.
Moreover, GE is ramping up its fleet, especially in the offshore segment, which will be scaled up to 27 vessels in financial year 2011-12 from the present 17 vessels. The total fleet size will increase to 74 vessels in 2011-12 from the present 58 vessels. Baltic indices have risen 60-100% from the lows of 2009, but are below historical averages. According to analysts at Morgan Stanley, as global growth gains ground led by recovery in OECD countries, charter rates will rise. Global ton-mile demand has historically tracked GDP growth. Morgan Stanley analysts reckon that global ton-mile demand will pick up, driven by recovery in GDP growth.
Moreover, demolition driven by the MARPOL (Marine Pollution) convention will moderate the increase in tanker capacity, in reckon analysts.
Even this is expected to support charter rates as supply would tend to remain constrained in the trade.