Week ending July 19, 2003


News on Shipping

Essar Shipping posts higher net profits in Q1 : Essar Shipping Ltd. has posted net profit of Rs 30.28 crore in the first quarter of 2003-04, against Rs 3.31 crore in the same period of last fiscal. The net profit after providing a book loss on sale of a vessel and dry-docking, aggregating to Rs 25.32 crore, were taken on record at a recent meeting of the board of directors. The total income during the quarter was Rs 151.64 crore, compared to Rs. 97.02 crore for the corresponding period of the last fiscal, representing an increase of 56.3 per cent. Fleet operations and charter revenues have also been higher at Rs 122.52 crore during the quarter, as against Rs 72.28 crore during the first quarter of last financial year. The company at present has a fleet of 32 vessels aggregating 13.50 lakh DWT, including six Suezmax carriers, 3 product tankers, 11 mini-bulk carriers and five dry bulk carriers.

Essar ties up with American Shipping Equity Fund for its SCI bid: Essar Shipping Limited, one of the three bidders for the strategic stake in Shipping Corporation of India (SCI) has tied up with The New York-based AMA Shipping Equity Fund I, a part of the American Marine Advisors group. The other two remaining bidders in the race for SCI strategic stake include the Sterlite group and Videocon group.

Safmarine to launch new service from Nhava Sheva : Safmarine is launching a new service, to connect to new ports in the Mediterranean, Red Sea and Baltic regions. Safmarine, part of the A.P. Moller Group, will be launching the new service - Prime Express, along with Maersk from July 31. Safmarine will pull out two of its post Panamax container vessels, earlier part of the EPIC service for deployment, while Maersk will pool in four vessels. The new service would thus have six large-capacity container vessels of over 5,000 TEUs, with the frequency of call at NSICT being once a week. Prime Express, which will be Safmarine's Europe-West Asia-South Asia shipping service, will significantly benefit the trade by offering faster transit time and expanded coverage. It will directly link NSICT with Salalah, from where cargoes will be carried to other destinations. It will also give Indian trade faster access to new Mediterranean ports such as Fos Sur Ner, Valencia and Genoa, while the expanded network would include new ports in the Red Sea and Baltic regions, like Jeddah, Aarhus, Gothenburg and Le Havre.

INSA seeks amendment to IT Act : The Indian shipping industry has sought deletion of the new sub-section (4) in Section 33 AC of the Income Tax Act on the grounds that it would create severe hardship for the shipping companies. The Indian National Ship owners Association (INSA), representing Indian shipping companies has submitted a representation to the Central Board of Direct Taxes (CBDT) in this. The move comes in the wake of a new subsection in Finance Act, 2003, which completely takes away, benefit of a reduced lock-in period for sale of ships acquired by the shipping companies through Section 33 AC funds. Following demands from shipping industry, the Finance Minister had cut the lock-in period from eight years to three years for the sale of new ships acquired by shipping companies out of the reserves created with the help of tax benefits accorded under Section 33 AC.

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News on Shipyards

CoPT invites expression of interest for setting up ship repair facility : The Cochin Port Trust (CoPT) is appointing consultant for studying the feasibility of a Rs. 100 crore ship repair facility for which it has already invited expression of interest (EOI). The project for setting up of the ship repair facility was initiated following the interest shown by the Korean firm Chang HoSalbage. The companies, which had shown interest in the project, had sought details like the building of a way breaker, the road and rail connectivity and soil conditions.

News on Ports

JN port likely to switch over to MGT payment route : JNPT is considering switch over from the revenue-sharing formula to the Minimum Guaranteed Throughput (MGT) route for the proposed Rs 900-crore third container terminal project. The move comes in the wake of a majority of the 10-port operators, opting for the MGT formula during a recent pre-proposal meeting. The ten bidders include operators such as Port of Singapore Authority, Maersk, Evergreen-Marubeni, CSX Terminals, West Port Malaysia and French Shipping Lines. The proposal to alter the terms of payment would be placed before the board for approval. The suggestion to switch over to a MGT has reportedly come from the bigger players among the bidders, as they feel this mode of payment would result in smaller players backing out. As per the schedule, the last date for submission of proposals has been fixed for August 25 and date of announcement of the short-listed bidder in the last week of November this year. Under the existing proposal, the licensee was to pay to the port a revenue share based on the revenue share quoted by the former in the price proposal document and gross revenue for the operating year. industry.

I IPBCC warns of increase in box rates bound for Russia : The India-Pakistan-Bangladesh-Ceylon container conference (IPBCC) has issued a notice that box movements to Russian gateway port of St Petersburg would cost $62 more for a TEU and $42 for a FEU following the increase in terminal handling charges (THC) at the port. The port has increased it terminal handling charges following recent renovation work it undertook at the port. The THC at the Russian port was earlier $138 for 20 ft container and $158 for a 40 ft container. India exports around 5,000 container per annum to Russia with an average value per TEU at $ 25,000-30,000. The major items exported from India to Russia include textiles, garments, drugs and pharmaceuticals, tobacco, tea, electronic goods machinery and instruments. India imports fertilizers, newsprint, non-ferrous metals, iron and steel, synthetic and reclaimed rubber.

Infrastructure projects in New Mangalore hinterland to be revived : The long pending infrastructure development projects in the hinterland of New Mangalore Port (NMP) are being revived after a recent meeting of the State Hinterland Development Committee, after a gap of six years. The meeting deliberated on taking up projects like conversion of broad gauge line between Hassan and Mangalore and linking port with Golden Quadrilateral project. The NMP hinterland has potential that can transform a large portion of under-developed Karnataka. Hinterland development, coupled with the proposed three coastal Special Economic Zones (SEZs) fall under the jurisdiction of the NMP hinterland, namely at Mangalore, Padubidri in Udupi district and Tadadi in Uttara Kannada. This would also ease the export route for coffee and other general cargo items such as the wooden toys of Chennapatna, handicrafts of Mysore, cashew of the coastal areas, machine parts and auto spares of the industrialised belts of Bangalore and Mangalore.

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News on Logistics

CWC offers custom bond route from Nhava Sheva to Delhi : The Central Warehousing Corporation (CWC) has offered to help the lines by having a custom bond tie-up, following a directive issued by the NSICT to shipping lines to move their containers on their own to reduce the persisting congestion at the terminal. As per the tie-up offer, shipping lines which are willing to move their boxes from NSICT to CWC's Inland Container Depot (ICD) in New Delhi need not have to shell out the high custom bond that independent transporters normally have to pay. Instead, the boxes could be despatched through CWC, which is required to pay a much lesser custom bond. CWC has offered to cut down the royalty for this arrangement from the earlier Rs 2,000 per TEU to Rs 1,000 per TEU. Even this would result in significant savings for the shipping lines, as without this tie-up they would have to shell out a much higher custom bond payment of three times the value of the cargo. Containers from NSICT are usually moved by rail to various ICDs, including the far flung ones like those in New Delhi or Ahmedabad.

EMC resumes cargo movement on US east coast : Evergreen Marine Corporation has started moving its cargo along the US east coast ports after a gap of some four weeks. The resumption follows the withdrawal of charges by the company against the International Longshoreman's Association (ILA). The problems started in the middle of May when Evergreen challenged the legality of the strike launched by its port captains in Port Elizabeth in New York. The contention of the company was that port captains were managers and, therefore, ineligible for ILA representation and industrial action. The ILA had taken the side of the striking port captains. Many ships and thousands of containers were hit by the strike, which spread gradually to Norfolk, Baltimore, Charleston, Savannah and Port Everglades. The overwhelming need to get the cargo going and put an end to the crippling strike prompted Evergreen to withdraw the charges.

Most major ports record less than targeted volumes in Q1:Major ports, have failed to attain the cargo targets set by government during the first quarter of fiscal 2003-04. However, on an aggregate basis, the cargo volumes handled has improved in comparison to same period of 2002-2003. As per Indian Ports Association (IPA) figures, the 13 major ports have improved their first quarter performance of 2002-03 by 5.61 per cent but lag behind the target by 1.20 per cent. Only four ports - New Mangalore, Mormugao, Mumbai and JNPT - could achieve the targets. Major ports handled 79.67 million tonnes of cargo during the Q1 against performance of 75.44 million tonnes in Q1 last year against target of 80.64 million tonnes. Visakhapatnam - the number one port for the past three years - has shown negative growth both in terms of the target and its own performance last year. The port handled 11.62 million tonnes of cargo during April-June showing a negative variation of 2.06 per cent against its own performance of 11.86 million tonnes during the corresponding months of 2002-03 and 6.37 per cent against the target of 12.41 million tonnes. This is attributed to the fall in the traffic of thermal coal and crude transshipment. In comparison to other major ports, Vizag however, continues to maintain its edge, its nearest competitor being Kandla port with traffic of 10 million tonnes during the first quarter, marking a 7.32 per cent growth. Chennai port has taken a lead over Haldia Dock Complex and Jawaharlal Nehru Port Trust (JNPT) for the third position with traffic of 80.89 lakh tonnes. Ennore with 25.15 lakh tonnes posted the best growth rate of 30.18 per cent followed by Haldia Dock Complex 74.41 lakh tonnes (21.39 per cent), JNPT 74.73 lakh tonnes (13.97 per cent) and Paradip 65.26 lakh tonnes (11.61 per cent). Kolkata Dock System, Chennai and Kochi joined Vizag in reflecting negative growth trends against their own first quarter performances of 2002-03 by 1.36 per cent, 4.92 per cent and 5.50 per cent and respectively. The three ports handled cargoes of 10.19 lakh tonnes, 80.89 lakh tonnes and 31.11 lakh tonnes respectively during the first quarter.

Shipping minister moots "Coastal India Cruise" : Union Shipping ministry has asked four major public ports - Mumbai, Goa, Mangalore and Kochi - together to launch a major initiatives to promote "port tourism.' The plan revolves round converting part of their waterfront to entertainment centres on the lines of some of the great piers around the world and links the four ports with a cruise service called "Coastal India Cruise". Mumbai port, can earmark part of its land for a modern convention and entertainment centre, the minister said. This centre could be developed and run by private parties. Kochi, Goa and Mangalore ports too can be tapped, with the launch of a cruise service of international standard. Kochi port has already been promoting the idea for sometime now. A committee set up by the Shipping Ministry to study the cruise service proposal has finalized its report. The report has suggested that the project should have financial support from both the States and the Centre; and that their departments of tourism should be directly associated with the project. The Ministry of Shipping is expected to shortly issue guidelines on the basis of the committee's recommendations.

Sandheads terminal project draws poor response : Kolkata Port Trust's (KoPT) notice inviting expression of interest(EOI) from international firms for creating facilities for trans-loading of dry bulk cargo and setting up a floating container terminal at the Sandheads has invited poor response with only three firms - two for the trans-loading project and another for the floating container terminal project - responding to the notice so far. KoPT has therefore, extended the last date for submission of applications to September 30 from original deadline of July 31. The two firms that have shown interest include K C Maritime, Hong Kong, promoted by a Hong Kong-based NRI, and Ningbo Port Authority of China. A delegation from Ningbo Port Authority has already visited the port. The response to floating container terminal project is even poorer with only one firm, the local Capstan Shipping in tie-up with Liebherr, an Austrian firm, showing interest. While trans-loading facilities for handling dry bulk cargo are in place at several ports in the world, the floating terminal for handling containers is totally a new concept.

TAMP clears discounts on vessel-related charges at Vizag port:Vishakapatnam Port Trust (VPT) has secured the approval of the Tariff Authority for Major Ports (TAMP) for offering concessions in vessel-related charges to container vessels calling at the port. The port trust has been allowed to offer a discount of 35 per cent in port dues and pilotage for container vessels with a gross registered tonnage (GRT) of up to 27,000. Currently, Vizag port is offering a discount of 10 per cent for this category of container vessels. In the case of container vessels with a GRT of more than 27,000, the port will grant a 25 per cent discount in port dues and pilotage. The discount offered to this category of container vessels will, however, be subject to a maximum levy of $12,500. The discounts will be available to dedicated container vessels and combi-vessels that handle more than 150 TEUs taking import and export together. When port dues or pilotage are not leviable, the discount will be allowed on the chargeable component of the tariff. The discounts in vessel-related charges for container vessels being offered by Vizag will help the new private terminal operator to attract more vessels. In its proposal submitted to TAMP, VPT had argued that the port dues and pilotage for different sizes of container vessels calling at Visakhapatnam port were much higher compared to the tariffs for container vessels of similar size at the Chennai and Tuticorin.

Feeder vessels at JNPT to be diverted Mumbai to ease congestion:The shipping ministry is considering diversion of some of the smaller feeder vessels bound for the Nhava Sheva International Container Terminal (NSICT) and the Jawaharlal Nehru Port Trust (JNPT) to Mumbai port as a means to ease congestion at NSICT and JNPT. The congestion at NSICT and JNPT has been caused by the delayed release of rakes, largely due to long time being taken for loading of import rakes thanks to the shortage of handling equipment at the port level. According to an estimate, loading of an import rake is now taking seven to eight hours on an average compared to four to four-and-half hours earlier. The delayed release of import rakes from these two ports is also leading to their delayed arrivals at Tughlakabad (TKD) near Delhi and other inland container depots (ICDs) in the northern and western regions. As a result, the departure of the export rakes from these ICDs too is getting delayed. The departure of the export rakes from TKD is now delayed by at least 48 hours.





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