MARITIME NEWSLETTER FOR THE WEEK ENDED AUGUST 30, 2003

   

Employees of Kochi port faces second round of VRS

Kochi port exercises second round of voluntary retirement scheme for employees following the directives from Shipping Ministry. The scheme is open from 1st August to 30th October. The VRS is applicable to the employees below 53 years of age. The VRS, this time is proved to be very cost effective but the management is not expecting a very good response as compared to the first time. The reduction in the workforce is less as the first round of VRS was coupled with decrease in retirement age from 60 to 58 years.

Essar to decide on Equity or Foreign Convertible Bonds

While ABB Lummus has accepted to pick a stake in Essar shipping, the company is still to take decision on how to raise the additional fund. They are considering issuing the equity or foreign currency convertible bonds. The fund is raised to bridge the gap of Rs 200 crore in project cost at the Vadinar Terminal and to service the interest cost. The terminal project of ABB which is being set up simultaneously with Essar’s refinery at Jamnagar is set to restart in a month. This project was stalled three years ago due to lenders refusing to disburse funds but now the lenders are ready to support the project at a debt-equity ratio of 2.6:1. The project is now expected to get over within 18 months. Meanwhile, a shipping equity fund, AMA of US has also agreed to support Essar Shipping’s bid for Shipping Corporation of India.

Festival seasons leads to accumulation of containers at the terminals

The Nhava Sheva Internationational Container Terminal (NSICT) authorities are experiencing huge accumulation of import containers bound for various inland container depots (ICDs). This is mainly due to an increase in the exports during festivals like Dussera, Diwali and Christmas. Since the capacity of railways is overstretched during this period, it is feared that the accumulation of containers will surely increase. It is observed that the problem is created by 2500 TEUs bound for ICDs as they take 12 to 18 days to clear and hence aggravate the problem. NSICT feels that the only way to resolve the problem is by restricting imports of ICD-bound cargoes. But such a restriction is difficult to be enforced. NSICT has therefore come up with an idea that for the time being, bookings for the ICDs located at Sabarmati, Nagpur, Sanatnagar and Indore be stopped altogether so that these trains could be made available for movement between Tughlakabad and NSICT, thereby helping clear the backlog. The lines might be asked to give an undertaking before berthing of the ships to shift all discharged boxes out of the terminal within the three days of normal free time. Hence there is a an immediate need to find solution for clearing the backlogs at Nhava Sheva International Container Terminal.

Govt. Focuses on Security Forces for Ports

The Union Govt. focuses on setting up of separate security force for ports which will ensure the safety and security of the ports. Also formation of a Bureau of Port Security is considered. At present we have different security systems at different ports, which is thought to be centralized and having a uniform security systems for all the ports.The issue of port security was discussed at a high level meeting at Kochi in the presence of Chairmen and Deputy Chairmen of various ports. Due to the implementation of the IMO Guidelines and International Ships and Port Security System from July next year, the port authorities had to adopt adequate measures to suffice the norms of the international organization.The govt.’s guidelines will be firmed up only after the finalisation of the findings of Raman Committee headed by Mr M. Raman, Chairman of Ennore Port Ltd.The Port  Security system will ensure the security of the port properties ships, cargoes, crew etc. The cargoes handling procedures will also be guided to ensure maximum security.Several ports across the globe have already introduced Container Security Initiatives(CSI) sponsored by US Government. As on date 19 of the world’s top 20 port have joined CSI and are at various stages of implementation. Under CSI Officers of the US Customs And Border Protection (CBP) will be stationed at the ports concerned to check sea containers bound for the US.

Increasing demands likely to raise ship prices

There is a probability of ship prices going up as there is an increase in demands for tankers, natural gas carriers and container ships. Increase in demand is due to EU’s plan to get rid of about 1,800 tankers with single hulls by 2010. In addition, the US, Asia and Europe are using more natural gas which spurs the demand for ships carrying liquefied gas. About $25 billion worth of tankers to carry oil, refined products and chemicals are on order. South Korea’s Hyundai Heavy Industries Co and Hanjin Heavy Industries have reported a multiple fold increase in shipbuilding orders this year. All these fact are indicating a likely hike in the prices of ship in the near future.

India steamship sailing high on higher charter rates

Increase in the tanker charter rates has led to increase in India steamship company’s income by 40 %.It has recorded net profit of Rs. 4.27 crore and a return of 18.98 % pre tax profit in the quarter ended June 30, 2003. Mr. Ashok Kak, Managing Director of India Steamship (ISS) is confident of maintaining healthy cash flows and profit from current operations. According to Mr. Kak, a long term business plan is formulated. According to which the investment is focused on areas of core competence such as tankers, bulk carriers and specialized vessels for captive use by group companies. The acquisition of “Ratna Shalini” a Japanese built Aframax vessel has increased the ISS fleet to two tankers. The capital requirement for third tanker is estimated to be around Rs. 60 crores. This will get funded through loans and internal accruals. ISS is already repaying loans raised for aquiring “Ratna Shalini”. ISS is not been paying dividends for many years. Mr. Kak at AGM said it is difficult to announce dividends till the carry forward losses are taken care off. Some share holders have suggested merger of ISS with any of the group companies. ISS Holdings being a separate subsidiary and having no activities was also questioned. Mr. Kak replied that ISS Holdings might not be the same at the time of next AGM.

Kerala govt. defends Vizhinjam project

As the Vallarpadam international container transhipment project at Kochi is entering its final phase, the Kerala govt. has already started working on the development of a similar facility at Vizhinjam. In support of its argument the govt. has stated that it is the only port in country with a natural depth of around twenty metres within one nautical mile from the shore. Also has an added advantage of being closer to international shipping route. No need for constant dredging and no cyclonic disturbances makes the location worthy of being developed as a transhipment terminal. The govt. has already approached L& T Ramboll for consultation and IL&FS to identify private companies for developing the port.

Paradip port to start transhipment of petroleum products

Paradip port is soon starting the transhipment of petroleum product based on the assurance of Indian Oil Corporation to nominate suitable vessels. It is awaiting removal of the pipes laid down in front of the jetty by Dredging Corporation of India. It is now capable of handling tankers in full load. The operations were not started because of inadequate draft in front of the berth. Also fire-fighting equipments were not installed. It would take few more months to handle Class A products like crude and motor spirit as the fire fighting equipments required are not installed. Till then the port can handle Class B products like diesel, kerosene and furnace oil. Initially the port had set a target of 2.5 million tonnes of POL traffic for the current fiscal but seems impossible, as the throughput in first four months of the current year was 40% lower as compared to same period last year. Meanwhile few companies like CESC Ltd., The Oswals and Nilachal Ispat have assured to increase their transactions through Paradip port. This will definitely boost the POL traffic at Paradip port to some extent.

PLL expecting Rs 600 crore approval from its Board for Dahej Terminal Expansion

PLL is expecting an approval from its board for an investment of Rs 600 crore to expand its capacity at Dahej terminal. The capacity will be raised to 10 million tonnes. The total capital of Rs 600 crore will be raised by way of debt-equity, which will be in the ratio of 70:30. It means the fresh equity capital would be around 180 crore and therefore the total share capital of PLL will rise from 800 crore to 980 crore.

Shipping companies and ports getting ready for security codes

The Indian shipping industry and the Ports are getting ready for the implementation of the International Ship And Port Facility Security (ISPS) code, which will cover all Indian foreign going ships, major and minor ports and ship repair yards. The implementation is to comply with the deadline of July 2004 as recommended by International Maritime Organization (IMO). Any ship or port that do not comply with the norms will be left out of international trade.The objective of IMO in introducing the security codes is to avoid threats of mutiny, pilferage, thefts, illegal migrants and stowaways, piracy and armed robbery against ships, illicit drug smuggling and terrorism. The ISPS code will apply  to all passenger ships, high speed pax crafts, cargoships on international voyages and port facilities and port facilities serving such ships. For implementation of the code, shipping companies will have to identify  and train Company Security Officer(CSOs), assess ssecurity requirements of ships, fit additional security equipments, prepare security plan for each ship and obtain plan approvals from the respective government. As for the ships, the Ship security assessment (SSA) and Ship Security Programme (SSP) will have to be prepared and implemented, and also arrange for the verification audit of the Ship Security Certificate. According to DGS the implementation of guidelines is happening at a very fast rate. Until now three ports have been assessed, JNPT, Paradip, and Chennai ports. The implementation cost varies from port to port depending on the size of the ports and for ships the cost depends upon the risk the ship carries and the route that is selected. As per Organization for Economic Co operation and Development (OECD) the initial cost to implement the code on about 40,000 ships is around $1,279 millions and a recurring expenditure of $730 per year.

TAMP hearing: Rates hike at Kochi port steers protest

Kochi port users are protesting the plan for revision in the scales of rates and discontinuation of volume discount schemes. They have conveyed their views to the Tariff Authority for Major Ports (TAMP). TAMP Chairman Mr. A. L. Bongirwar, met representatives of various organizations concerned with the Kochi port to justify the 25 % increase in port related charges. But according to shippers community, increase in the rates would not be in the best interest of the port as tariffs are already higher as compared to the neighbouring ports. Also the performance of Kochi port is dismal and is suffering loses year on year. The removal of discount was with the view of privatization of the container terminal but the shippers suggested TAMP to continue at least till the privatization process is complete. Shippers emphasized on decreasing the pilotage charges. Similarly, shippers suggested that pilot detention charges in the gantry berth should not be levied if port authorities cause the delay. The port authorities should consider reducing the rates instead of increasing them to at least stop the existing users from switching over to other places.

Visakhapatnam port makes a record load of illmenite sand

Visakhapatnam Port Trust loaded 27,775 tonnes of illmenite sand on 27th August 2003  which is the highest daily loading of  the mineral by any Indian Port. This high productivity was achieved without the help of any mechanised system, which makes it very significant.“M V Navycos Arc” the vessel, Indian Rare Earths Ltd, the exporter, Orissa Stevedores Ltd, the Stevedoring firm and G R Enterprises the steamer agent, were the companies involved in this achievement.

 

 
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