Week ending March 26, 2003



War-risk premium shoots up for shipping companies:

Following the outbreak of war in Iraq, war risk premium for the shipping companies that are plying their ships to countries in the Persian Gulf region have shot up sharply. According to reports the war risk insurance rates for a oil tanker worth $ 50 million sailing to Kuwait has gone up as high as $1,87,500 compared to $15,000 prior to the outbreak of hostilities. The earnings of shipping companies however, are unlikely to be affected, as the additional insurance burden would be passed on to the customers. Insurance costs typically make up between 0.1 per cent and 0.5 per cent of the total shipping expenses. While fresh booking of cargo for the Persian Gulf region have dramatically come down in the last one week, some of the shipping lines continue to operate a few vessels, that have been chartered earlier.

Plea for level playing field for coastal shipping operators: The Indian National Shipowners' Association and the Indian Coastal Conference, the latter representing Indian coastal operators have made a joint representation to the Ministry of Shipping seeking its assistance to encourage coastal shipping. The appeal was made at the recent Suminfra 2003, a summit conference organized by the Confederation of Indian Industry on coastal shipping. Mr. Sudhir Rangnekar, director of Shipping Corporation of India (SCI), who spoke on the occasion said that coastal shipping in the country was neglected compared to other transport modes like road and railways. He said that there were no incentives available for coastal shipping operators as was available to other surface transport operators. He also called for further broadening of the definition of coastal shipping under the Merchant Shipping Act 1958 from mere port to port carriage of cargo so as to bring under its purview also offshore shipping activities, which has become prominent of late.

Bunker Surcharge likely if Iraq war is prolonged: With growing uncertainty about an early end to war in Iraq, shipping fraternity in India is increasingly finding itself worried about the possibility of imposition of surcharge being imposed by their principals. So far the mainline operators have desisted from imposing any surcharges but should the hostilities in Iraq continue for over next two weeks, there is strong possibilities that surcharges on bunkering as well as additional insurance premium will result in hike in the shipping freight costs. During the last Gulf war, the Singapore-based Ship Operators Association had imposed a surcharge of $ 50 for 20 feet containers and $ 100 for 40 feet containers. The insurance underwriters had also slapped a surcharge on insurance premiums of vessels. Cargoes originating from Mumbai and Kandla would face a difficult situation as these are mostly transshipped through Dubai or Salalah ports in the Gulf region

DG Shipping asks shipping lines to be ready for evacuation: The Director General of Shipping has notified the Indian shipping companies on the possibility of their ships being used for evacuating the Indians from the Gulf region and has also indicated that protection will be provided to Indian ships operating in the region. The decision when implemented will have a crucial bearing on Shipping Corporation of India (SCI), which has several passenger vessels in its fleet. Two of its passenger ships - MV Harshvardhan and MV Ramanuja are currently operating in the Andaman & Nicobar and Lakshadweep Islands linking them to the mainland.

P&O Nedlloyd makes India its IT outsourcing hub: P&O Nedlloyd IT services is stepping up its outsourcing activities in India and is slated to open its third office in Mumbai in April. The company has already set up its software development operations in Chennai and Pune. The software development centres in India are expected to provide back office services to P&O Nedlloyd's worldwide operations. The software services group of the company has been set up in India as part of company's global strategy of cutting down expenditure. P&O Nedlloyd currently has a similar back office operations in Shenzhen in China, which caters to the requirements of the North Asian region.

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News on Ports

Mumbai Port Trust invites EOI for cruise terminal: Mumbai Port Trust (MbPT) has invited expression of interest (EOI) proposals from interested parties for the development and management of a cruise terminal at Mumbai port. The proposed scheme envisages upgradation of facilities at the present passenger terminal building for cruise vessels at the Ballard Pier extension berth in Indira dock and management of the terminal. Detailed papers with the background information and the scheme can be obtained from the port authorities or on the port's website www.mumbaiporttrust.com. The last date for submission of EOI papers is May 31 2003.

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EOI bids invited for 100 % stake sale in CIWTCL: The Ministry of Disinvestment has called for expression of interest (EOI) from companies and consortium for the strategic sale of government's 100 per cent stake in the Central Inland Water Transport Corporation Limited (CIWTCL) kicking off the privatization process in the inland waterway transport (IWT) sector. CIWTCL was incorporated in 1967 and has two business divisions, river services division which operates the inland vessels and Rajbagan Dockyard (RD). CIWTCL disinvestment, unlike disinvestment of other PSUs is expected to be sale of the entire government stake along with transfer of management. The final date for submission of EOI was March 25.


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