Funding is expensive for operators and ship owners

Shreyas Shipping and Logistics Limited is the ship owning and operating unit of Transworld Group in the Indian subcontinent. The company is India’s first container feeder owning and operating company. Currently it owns and operates a fleet of six vessels trading on the Indian coast. It also provides crucial links between Indian ports which helps in providing door to door logistics solutions through its logistics arm and assists transshipment of cargo from these ports.

Ramesh S. Ramakrishnan, Chairman & Managing Director – Shreyas Shipping and Logistics told Sandeep Menezes that vessel sharing agreements are a good thing since it will help operators to remain in better health.

Ramesh S. Ramakrishnan

Ramesh S. Ramakrishnan

Excerpts from the interview:

What are the main challenges facing the Indian shipping sector? How can these challenges be mitigated?

I think today we have issues such as taxes on the wages of people working onboard Indian ships. There are also various infrastructural bottlenecks that exist. These challenges for Indian ships and ports have been there since long period of time. But now I feel that it is being heard by the government and ministers.

Funding is very expensive in India for operators and ship owners. The costs of funds in India are comparatively much higher than what it is in the global markets.

These are all issues which if the government understands and put solutions into practice will change the face of the Indian shipping industry.

It has been a difficult time for the shipping industry, especially on the dry bulk sector. Tanker market has been okay, but dry bulk has been a big disappointment. Going forward, how do you foresee the scenario?

I feel that it is a question of too much supply. There is growth in the trade but that growth is not enough to cover the quantum of supply in the market. I feel that it will take another year or two before things actually settle down and start to go up. But currently the dry bulk market is at its lowest point.

India may continue to exempt vessel sharing agreements among shipping companies from the purview of fair trade watchdog CCI. Comment.

It is actually a good thing because at the end of the day it is not the revenue that makes a big difference but how one can share the costs. Therefore all these vessel sharing agreements will definitely help the operators to remain in better health.

Overall share of Indian ships in the carriage of the country’s overseas seaborne trade has been declining over the years. From about 31.5 per cent at the turn of the 20th century, it has shrunk to around 10.9 per cent in just over a decade. Comment.

The maritime industry is the second line of defense. Until the government takes a very conscious decision and believes that this industry is important for the nation’s safety and security – it will remain in similar scenario wherein the tonnage is not going to grow to the extent that the government wants. There remain issues such as funding and extent of understanding of this industry.

If the government wants to see this industry grow then they have to take a decision on how they are willing to support the industry. Till then the industry will grow but we will not have a great share of EXIM trade with us.

There exists an acute shortage of skilled seafarers across the Indian shipping industry. Tell us about the extent of shortage facing the industry?

There is a direct connection to the extent of supply. Lot of countries are doing everything to enhance the numbers – but it all takes time.

Shreyas Shipping witnessed total income rise by 18.37% QOQ. Tell us about the key reasons?

The key reason is that we have increased the size of our assets, increased our trade reach while ensuring better utilization of assets both in terms of percentage of cargo that we carry. All this has been possible because of the network that we have built over the last 25 years that we have been in this business. Now that we are using our assets better hence the topline and bottomline are better.

Going forward, tell us about the capex plans of Shreyas Shipping?

We have plans to acquire further vessels and are closely looking at it. We do think that we have to enhance the number of vessels that we have in our fleet but are going to implement it very cautiously.