Shipping Corp to discontinue liner services to China after 12 years

Written by Nikita Upadhyay | Nikita Upadhyay | Mumbai | Updated: Jul 3 2012, 07:12am hrs
Shipping Corporation of India (SCI), the country's largest shipping company in the public sector, will discontinue its liner operations to China that it started 12 years ago, as business on this route has become unviable.

Liners are ships that carry containers, a growing segment globally due to their convenience and economy. Containers can be stacked and transported over long distances, and transferred easily from one mode of transport to another.

"We will stop our liner services on the India-China route because it is not viable for us," a senior SCI official said. "Although we have a good volume of cargo coming to India, we almost go empty when going back to China.

China is India's second largest trade partner after the UAE. However, while India imported goods worth R1,98,079 crore in 2010-11 from China, exports were worth less than half as much, at R88,932.6 crore, data from India's commerce ministry showed.

This trade deficit, in favour of China, is reflected in freight rates. While import rates are anywhere between $800-850 for a 40-feet container, for exports, it's as less as $100, making export cargo in this route unviable.

Other large shipping lines that have a service on this route are Mitsui OSK Lines, NYK Lines and Maersk Line.

Imports from China constitute 20% of our total import basket," says Amit Goyal, chairman, western region, Federation of Indian Export Organisations (FIEO). India imports toys, electronic goods, textiles, engineering items and stationary products from China, while it exports cotton, cotton yarn, certain pulses and food products.

SCI, which reported a loss of R428.21 crore in fiscal 2011-12 compared to a profit of R567.35 crore a year ago, is pulling out all stops to keep operating expenses in check.

The company's liner segment, which contributed close to 30% of its revenues, ran into a R311.6-crore loss last fiscal compared to a profit of R62.4 crore a year ago.