Silver lining for shippers
According to Sundaram Balakrishna, owner of Freight Carrier, a small-sized shipping agency in Coimbatore, “The dip in the fate of ship owners transcends into good fortune for these companies. This will provide companies looking toward expansion the scope to increase their assets.”
According to experts, the best time for expansion is when prices are down and one can see some light at the end of the tunnel in terms of trade picking up. A senior member of the Indian National Ship Owners’ Association said that the markets could dip further and one does not want to be stuck with an asset, though it is an opportunity to keep a tab on.
Apart from VLCC, prices in other categories like product carriers and dry bulk carriers have also nosedived. According to SN Thangaraja, owner of Thangaraja Shipping Agents, a small-sized Chennai based shipping agency, “Due to the steady oversupply and prolonged weakness in freight rates, asset prices across all segments have fallen significantly. Resale values fell from the peak levels of 2008 to 40-60%, depending on the asset size and age, while new building prices fell by 30-50% from the highs of 2008.”
With the current surplus situation in markets, experts say this is the best time to consolidate and put the best practices in place. Indian shipping companies have space to focus on things like safety issues, which they do not have in boom time.
Priyanka Roy Chowdhury |
Even with the shipping industry in rough waters, some companies are sensing an opportunity. As vessel prices decline by over 65%, many companies are perceiving it as a golden chance of acquiring assets at a cheaper price. This crisis will make a 10-year-old very large crude carrier (VLCC), which was earlier sold for US$75-80 million, now available for just US$23-25 million.
