— Shashank S. Kulkarni, Secretary General, Indian National Shipowners’ Association The shipping industry is plagued with serious issues such as the rising menace of piracy and dismantling of chemical-loaded ships. Shashank Kulkarni talks to Dilip S. Phansalkar about steps being taken to overcome the obstacles.
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— Shashank S. Kulkarni, Secretary General, Indian National Shipowners’ Association
Year 2008 was a year of mixed fortunes for shipping companies. What are your expectations for 2009?
If the current lows of the freight market are considered as ‘bottomed out’, then 2009 is expected to be a flat year. However, apprehensions are being expressed in certain quarters that the bottom is yet to be breached. In such an eventuality, 2009 may perhaps prove worse than 2008. In any case, revival is expected only after the first quarter of 2010.
A year ago shipping companies took a hard hit when freight rates plummeted sharply. How is the situation now?
The freight rates in the dry bulk sector as well as the container segment started dropping since August/September 2008. The situation is currently very grim, and shipping companies are not able to recover even their running costs with the prevailing freight rates. Thankfully, the POL sector is not that badly affected which may perhaps help the survival of some companies. However, the tonnage acquisition plans of most of the shipping companies have been badly affected.
To what elements do you attribute the fall in freight rates last year?
It is difficult to pinpoint the exact cause for the fall. The freight market in all sectors had generally performed quite well for an unusually long period since the start of the new millennium. The industry was expecting certain correction after the Beijing Olympics. However, the fall has been too steep since then, both in the dry bulk as well as the container segment. The turmoil in the financial world added to the crisis.
What other issues concern the industry? Will the best years ever come back?
The industry has been facing newer regulations each passing year. Safety and security aspects are being tightened. Environmental concerns, criminalisation of seafarers have become major issues for the shipowners. The Indian shipping industry while on one hand got the special legislation of the concessional tonnage tax, it got burdened with several other taxes, chiefly amongst which is the service tax. In light of this, a well-laid out cargo support policy along with a conducive fiscal policy will go a long way in bringing back the past glory.
India’s port capacity is expected to rise to 2 billion tonnes by 2012. Comment on the present maritime infrastructure.
Indian ports which are currently handling around half a billion tonnes of cargo, will be required to handle double the quantity in the next four-five years looking at India’s sustained GDP growth, notwithstanding the current worldwide recessionary trends.
The present maritime infrastructure is woefully inadequate to service the trade. The port capacities are overstretched in terms of international norms. Berth occupancy in some of the ports is exceedingly high. The exim trade suffers due to poor port connectivity with the hinterland. Evacuation of import cargo takes weeks together while export containers are regularly shutout due to traffic congestion. It is always desirable to have excess infrastructure capacity which can take care of incremental growth in the trade.
India is getting hazardous chemical-loaded ships for dismantling from obscure countries. What steps are being taken to prevent it?
This matter pertains to the shipbreaking industry. While it is important that ships laden with hazardous material should not be beached, banning of shipbreaking activity which provides livelihood to many cannot be the ultimate solution.
The Government of India is alive to the situation and necessary steps are being taken to ensure that the ship is made safe before the demolition activity begins. The International Maritime Organisation is also in the process of developing the ship recycling convention to take care of such aspects.
Many ships change hands several times, flipping their flags of convenience, making it impossible to trace the original owner in case of an accident or when a liability arises.
Shipping is a unique industry. While it operates on a global basis, ship operations involve a variety of specialists. A ship can be owned by a person in one country, but he/she can register it in some other country. It can be chartered to a company from a third country. The same ship can be managed by a company from a fourth country and the manning agent could be from a fifth country.
The crew on the ship could, of course, be of multi-nationality. This is an inherent feature of the industry which cannot be wished away. The IMO and other UN bodies have been continuously evolving legislations by which the ultimate ownership/beneficiary could be identified easily.
The ministry of shipping is drawing up plans to set up a Marine Emergency Fund for relief operations in the aftermath of marine casualties. How prone is India to disasters at sea?
India is indeed fortunate to have not faced with a daunting environmental disaster like a major oil spill.
But with a long coastline of more than 7,500 km, emergency preparedness is always essential. Smaller accidents have been happening with regularity, especially during the rough monsoon periods. Setting up of a Marine Emergency Fund is therefore a welcome step.
However, in no circumstances, the shipping industry should be burdened with any additional cess in the current trying times.
The unprecedented rise in piracy is threatening the safety of ships and crew. What precautionary measures is INSA taking?
INSA has been continuously taking up the dangerous issue of piracy with the Government of India. Thanks to the persistent demand of the industry, the Indian Navy has deployed its warship in the piracy-infested zone of Somalia which has provided some solace.
The Director General of Shipping has been issuing maritime notices for the benefit of ships passing through that zone. INSA has also advised its members to pay extra compensation to the crew transiting in the danger area.
Source : www.projectsmonitor.com
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