Shipping & Shipbuilding Industry

 

Overview

With 13 major ports and 200 other ports, the shipping industry in India can embark its journeys from a coastline of 7,517 km and accounts for about 95% of trade in the country and 70% through maritime transport. Earnings and freight rates are based on market demand and supply. Growth in trade and geographical balance, which decides the length of haul necessary, drives demand. On the other hand, supply drivers are new shipping orders and tonnage from scrapping existing ships. Waterways and shipbuilding are two major segments of this industry. As on March 2014, the capacity of major ports clocked 800.52 MMT against cargo traffic of 555.54 MMT in 2013-14. With a 70% capacity utilization, Indian ports and shipping are at present doing quite well when compared to global standards. Publicly owned ports in India have increasing levels of container throughput, as can be seen from April 2014 to February 2015. Container handling during this period increased by 7.15% that was 7.25 million twenty feet equivalent units from 6.77 million TEUs reported in the previous year.  Containerized cargo was tonnage was up by 4.4 % from 104 million tons to 109 million tons with overall cargo volumes on the rise.

With US$ 1637.30 million worth of FDI received by Indian ports from April 2000 to February 2015, 30 new projects were received in FY 2014 that had invested US$ 3.16 billion, a triple fold increase from the previous year. The same period reported a growth rate of 20.6% in coal cargo traffic, from 86.7 MT in FY 13 to 104.5 MT in FY 14. Commodities saw a growth rate of 25% in handling fertilizers in April 2014 from April 2013. Iron ore went up by 16.8% in the same period. Several companies govern shipping in India. Public units, private only units and PPPs form industry participants, the largest being Shipping Corporation of India in terms of assets owned, but Gujarat Pipavav leads with the highest market capitalization and net profit amongst all players.

 

Buy Industry Analysis

 

Outlook

India is set to invest heavily in the ports sector in the coming years. Jindal ITF, which banks on importing coal, will invest US$ 79.11 million to boost its trans-loading operations. A MoU has been signed between the Inland Waterways Authority of India and the Dedicated Freight Corridor Corporation of India to establish logistics hubs with good rail connectivity. This was intended with a convergence of inland waterways with rail and road connectivity, to sketch a structure that would facilitate economically efficient cargo transportation in the country. Major events occurring in the past are:

 

 

  • The Shipping Corporation of India Ltd. will purchase five vessels from Cochin Shipyard Ltd. and buy used LPG carriers to restart ship purchases that saw a halt previously.
  • Vishakhapatnam Port Trust set aside US$ 474.67 million expansion and modernization plan to up its port capacity by 50%. Toyota Kirloskar Motor Pvt. Ltd.
  • Kamarajar Port Ltd. entered in to an alliance to export the former’s automobiles through the latter is ports.
 

The government too, would back the industry through robust efforts in terms of infrastructure resources and finance. With two new ports on its way, one in West Bengal and the other in Andhra Pradesh, it also filed in line an Integrated National Waterways Transport Grid covering five national waterways.  To aid the private sector, the government has allowed up to 100% FDI under automatic routes for port development projects and various income tax incentives. Apart from minute details such as standardization of bidding documents and better security clearance procedures, a major step that the government took was to increase delegation powers to shipping ministry to ease formation of PPPs. 

With India’s infrastructural visage changing rapidly, the 12th Five Year Plan seeks to invest US$ 28.57 billion totally and US$ 158.19 billion would be invested by the Union in the port and shipping industry by 2019. The Maritime agenda 2010-2020 has had the Ministry of Shipping targeting a 3130 MT capacity by 2020. 101 waterways across Indian rivers will be established, boosting infrastructure, transportation and other allied industries dependent on this industry’s demand. 10 coastal economic regions will be developed through the Sagarmala Project to bolster manufacturing by port modernization covering about 300 – 500 km in coastline. Inland waterways are yet not up to global standards and have a huge potential, not just directly, but such efforts would mount other industries’ growth too. Private investment would be sought as an option that would not only be strategic for the government, but by entering in to PPPs, the government can focus its resources with lesser pressure on funds. Unfortunately, Indian flagships carry less than 10% of Indian cargo. Less than 3% of the country’s outbound merchant ships are built in India where most of the ships anchor at dry docks for repairs and thus the Indian shipbuilding has plunged to a poor 0.3% in global outlook.

Better traffic projections and securing inland waterways through building better transportation structures as well as integrating them with road and rail connectivity must be established through PPPs as per agenda of ‘Make in India’. This industry needs better organization through a careful strategy to boost outbound structures and domestic infrastructure. Shipbuilding that saw a golden period from 2004 to 2008 should be revived in tune with the country’s agenda for this industry. Oil exploration activities undertaken by India will boost the shipping industry through offshore engineering activities.

 

What this report contains:

  • A detailed overview of the industry

  • Structure of the industry from both, domestic and international perspectives

  • Related industries that this industry has inter-dependencies with and their understanding

  • Detailed analysis of industry segments in terms of the value and depth of corresponding market

  • Analysis & insights about the elements and critical success factors of this industry using strategic models

  • A forecast on the state of this industry in 2020, predicting the growth and movement patterns for 2016 - 2020

  • Our professional analysis on the future of the industry based on strategic actions adopted by major industry participants

  • Quantitative estimates and forecasts of the growth prospects of the industry using revenue and financial forecasting models

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