Shipping Corporation of India Plans to Sell More Vessels for Dismantling

Shipping Corporation of India, biggest state-run shipping company, plans to sell up to 13 old vessels (25 years old) by March to boost its performance, Livemint reports.

Arun Kumar Gupta, a director at Shipping Corp.’s technical and offshore division said that company plans to sell 15-17 ships in this fiscal year, out of which they have sold four ships until now.

Shipping Corporation of India has 26 vessel under construction at domestic and overseas shipbuilders and operates a fleet of 82 ships including bulk carriers, oil tankers and product and chemical carriers.

Shipowners faces economic problems as number of new modern, more efficient vessels increases, therefore companys that charter ships do not prefer to hire ships built 20-25 years ago.

According to London-based Clarkson Research Services, ship breakers have treated 64% more ships with a combined cargo-carrying capacity of 33 million DWT this year (786 ships) then in the same period last year (732 ships).

Charterers do not want to operate old vessels and companys need to spend more on repairs and maintenance of older ships. Besides, the acceptability of such ships at ports is less. When freight rates are under pressure, there is no point running older ships and keep sustaining losses, Gupta said.

Shipping Corp. reported a loss of Rs.146.46 crore for the first half of this fiscal year, compared with a net profit of Rs.450.46 crore a year earlier.

B.K. Mandal, Shipping Corp.’s finance director said that second quarter loss main contributors were lower income from the sale of ships, higher depreciation and ship fuel costs, and an increase in the interest cost due to the revaluation of foreign currency loans.

Erik Stavseth, a shipping analyst at Oslo-based investment bank Arctic Securities ASA said that shipowners could decide to sell in scrap even younger vessels due to weak freight markets. He also added that there are three ways to help return the shipping industry to profitability and to restore the supply-demand balance. These include scrapping vessels, laying up ships and refraining from ordering new ships.

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World Maritime News Staff, November 21, 2011; Image: SCI