Mumbai: With dry bulk freight rates continuing to hit new lows on a daily basis, companies with diversified fleets are counting on their container, tanker and offshore sectors to bail them out.
“We expect the bulk trade to remain sluggish; and so, are tightening costs,” says Capt Kowshik Kuchroo, president – shipping, at India’s second largest private sector shipowner Mercator Ltd.
The earnings from seven tankers and one very large crude carrier owned by the company have helped offset the losses being regularly made by the 13-strong fleet of bulk carriers. Mercator’s bulk business is handled by its Singapore subsidiary, Mercator Lines.
The company has, for the last six years, been transporting coal from its mines in Indonesia to India, for consumption by a number of power plants. But it has not been employing its own bulk carriers for the purpose, as it has been able to secure spot charters at much cheaper rates.
“Dry bulk shipments are an indicator of global economic activity; and, from prevailing rates, it is easy to predict the global economy is not picking up,” says Kuchroo. “For the next two years, I don’t see the bulk segment going anywhere.
“Falling bulk freight will push out private equity players that had made speculative buys. This will shrink the order book and bring some discipline into the dry segment.”
Mercator is also mulling scrapping one of its aged bulk carriers, thus following the example of another Indian shipowner, Essar Shipping, which has marked down two 30 year old bulkers from its fleet for the scrapyard.