SHIPPING INDUSTRY

CURRENT SITUATION IN

INDIA The Indian shipping industry plays an important role

in the Indian economy as almost 90% of the

country’s international trade is conducted by the sea

.

India is ranked 15th in the world, with a shipping

tonnage of around 11.5 million gross tonnage (GT)

in 2011.

Today, India has around 1071 ships with 722 coastal

and 349 overseas ships, Indian coastal shipping is

highly fragmented .

The top 9 companies account for nearly 70% of the

total fleet by Dead Weight Tons and in terms of

number of ships, the top 9 companies only control

20% share of the fleet. Many companies own just 1

or 2 ships.

•The Indian shipping industry consists of

approximately 31 major shipping companies with

Shipping .

Corporation of India (SCI), the largest public sector

enterprise also being the largest in the country.

PORTS

India has a long coastline, spanning 7516.6

kilometres and is serviced by approximately 200

ports.

India has historically been serviced through 14 major

ports. Several, private ports outside the scope of

Major Ports Act has emerged in recent years.

•Mumbai is the largest port and handles 50% of all of

Indian export originating mainly from the Northern

and Central India.

Bulk wise, the overall tonnage of all cargo shipped

through major ports in the 2010 was 560 million

tonnes.

Company

name

Activities Office

Location

Total

Turnover

(USD$)

No. Of

Ships

Shipping

Corporati

on of

India

(SCI)

Ship

owners,

chartering

, offshore

Mumbai 803

Millon

85

Government Entities in the Indian Shipping

Industry

Key Private Entities in the Indian Shipping

Industry

SWOT Analysis of the Indian

Shipping Industry

Strengths

• India has access to two major shipping

routes.

• More than 7500 km coastline including

the island territories.

• Widespread ports.

Weaknesses

• The underinvestment in the India’s

marine sector has affected the

development of ports in the country.

• Inefficient judiciary system slowing the

development of new port infrastructure.

• High levels of bureaucracy prevents the

government funding from developing new

port projects in the country.

Opportunities

• Indian shipping companies having

acquisitions with foreign shipping

companies.

• More than USD $4bn is expected to be

invested in India's port sector.

• New major container terminals being

developed at the port of Chennai and

Mumbai.

Threats

• Major developments taking place in Sri

Lanka's port sector may reduce demand for

shipment services at Southern Indian

ports.

• A government tax on iron ore exports may

lead to a fall in bulk shipments at major

export terminals.

CHARTER

Charterer, in its literal definition, means engaging for

service under a contract. A charterer can own a cargo

and hire a shipbroker for delivery of the cargo at freight

rate. The freight rate can be per-ton basis for a specific

route or can be per day basis for the duration agreed

upon in the contract.

Shipping charterers might, for a specific period, hire

the ships from the owners of shipping companies

and trade them to be used as a cargo carrier at a rate

more than the rate of charter. They might re-let the

chartered ships to other Shipping charterers in the

market to make profit. A contract called charter

party is formed to register the type of ships used,

types of charterers, the rate of charter, the agreed

terms and conditions between the charterer and the

owner of the ships.

TYPES OF CHARTERING

VOYAGE CHARTERINGThe voyage chartering means that the ship-owner

promises to carry on board a specific ship a

particular cargo for a single voyage from one or

more loading ports to one or more discharging

ports.

The payment is called freight and the contract is

called a voyage charter party. Voyage charters

are concluded between the ship owner or

deponent owner and the charterer.

CHARACTERSTICS

Specific vessel, specific cargo, specific port and

specific routes.

Rights, duties and responsibilities of ship-owners

and charterers are determined by the charter party.

The charterer should be responsible for the

arrangement of the cargo, payment of freight

calculated according to the quantity of the cargo

loaded or carried and other expenses concerned.

The shipowner possesses and controls the vessel

and takes charge of the operation of the vessel and

the manning and management of crew.

TIME CHARTERING

The time chartering means that the ship-owner

provides a designated manned ship to the charterer,

and the charterer employs the ship for a specific

period against payment of hire instead of for a

certain number of voyages or trips. Time charter

generally does not include loading and unloading

costs in the charter rate.

Period

A single voyage

Several months or years

REASONS FOR TIME CHARTER

The time charterer may be a ship-owner who for

a time needs to enlarge his fleet or a cargo

owner with a continuous need for transport, who

does not want to invest money in a ship but

wants to have the control of the commercial

operation of the vessel. The charterer may be a

speculator taking a position in anticipation of a

change in the mark.et

CHARACTERSTICS

The ship-owner should be responsible for the

manning of crew and bears the wages and provisions

thereof.

The master shall be under the orders and directions

of the charterer as regards employment and agency.

If the charterer shall have reasonable cause to be

dissatisfied with the conduct of the master or

officers, the ship-owner shall on receiving the

complaint make a change in the appointments,if

necessary.

The charterer should be responsible for the operationof the vessel and bear the variable operational costssuch as bunkers, port charges, handling charge andcanal tolls etc.

The ship-owner should bear the fixed operationalcosts such as costs relating to the vessel capital,ship’s maintenance and stores, insurance premiumand so on.

The ship is chartered as a whole/part and the hire iscalculated and collected according to the duration ofchartering and the agreed hire rate.

There are the provisions for the delivery/redelivery of vessel.

BAREBOAT CHATERING

• The bareboat chartering is a charter of a different type.

This contract amounts to a lease of the ship from the

ship-owner to the charterer.

• The bareboat chartering ordinarily means that the vessel

is put at the disposal of the charterer for a long period

employment without any crew.

• The charterer thus will take over almost all of the ship

owner's functions except for the payment of capital cost.

This means that the charterer will have the commercial

as well as the technical responsibility for the vessel and

will pay for maintenance, crew costs and insurance, etc.

REASON

Bareboat chartering is less common than other

types of contract.

It is sometimes used where a shipowner or ship

operator wishes to operate ships or to

supplement his fleet for a period of time without

incurring the financial commitments of actual

ownership, but at the same time requires to have

full control of the chartered vessel, including

control of its navigation and management.

Further, bareboat chartering is sometime

employed in connection with the financial

arrangements for purchase of the vessel on

installment terms. The bareboat charter then

serves as a hire/purchase contract, by which the

shipowner/seller retains formal ownership and

thereby security in the vessel until the full

purchase price is paid.

WORLD SEA BORNE

TRADE

Maritime transport is essential to the world’s

economy as over 90% of the world’s trade is carried

by sea and it is, by far, the most cost-effective way

to move en masse goods and raw materials around

the world.

Maritime activity has a key role to play in the

alleviation of extreme poverty and hunger as it

already provides an important source of income and

employment for many developing countries, such as

the supply of seagoing personnel and ship recycling,

ship owning and operating, shipbuilding and repair

and port services, among others.

The International Maritime Organization (IMO) is the United Nations (UN) system’s regulatory agency for the maritime sector. Its global mandate is “safe, secure and efficient shipping on clean oceans”. IMO pursues that mandate by adopting international maritime rules and standards that are then implemented and enforced by Governments in the exercise of flag, port and coastal State jurisdiction.

IMO’s rules and standards are accepted by Governments and the global shipping industry because they provide a single, universal framework governing maritime operations and ensure the efficient, safe and environmentally friendly carriage of global trade.

Driven in particular by a rise in China’s domestic

demand as well as increased intra-Asian and

South– South trade, international seaborne trade

performed better than the world economy, with

volumes increasing at an estimated 4.3 per cent in

2012, nearly the same rate as 2011. About

9.2 billion tons of goods were loaded in ports

worldwide, with tanker trade (crude oil, petroleum

products and gas) accounting for less than one

third of the total and dry cargo being responsible

for the remaining lion’s share

Primary passages are the most important since

without them there would be limited cost effective

maritime shipping alternatives which would

seriously impair global trade. Among those are the

Panama Canal, the Suez Canal, the Strait of Hormuz

and the Strait of Malacca, which are key locations in

the global trade of goods and commodities.

Secondary passages support maritime routes that

have alternatives, but would still involve a notable

detour. These include the Magellan Passage, the

Dover Strait, the Sunda Strait and the Taiwan Strait.

MAJOR SEA PORTS IN THE

WORLD

Port of Shanghai

Port of singapore

Port of Hongkong

Port of Dubai

Port of New york

Port of Mumbai

Port Tokyo

Port of Rotterdam

Port of Perth