BackTata NYK to induct 10 more dry bulk carriers by 2009
Tata NYK to induct 10 more dry bulk carriers by 2009
PremiumFreight plans: Tata group chairman Ratan Tata.
Mumbai: Singapore-based Tata NYK Shipping Pte Ltd, the 50:50 joint venture shipping firm set up by the world’s sixth biggest crude steel maker, Tata Steel Ltd, and Japanese shipping major NYK Line, will expand its fleet by inducting 10 more bulk carriers to meet rising demand for shipping cargo into and out of India.
The joint venture started commercial operations in May and currently operates a fleet of six vessels, including four Handymax carriers and two Panamax vessels (called so because they can transit the Panama Canal carrying cargo).
“We will induct 10 more vessels by 2009. We have placed orders for building a few Supramax and Panamax carriers at various global yards, including those in Japan, while some others will be taken on lease," said John Konno, chief executive officer of Tata NYK Shipping. He declined to reveal the value of the orders the company has placed or the name of the shipyard, where the ships are being built. Executives in the shipping industry, who did not wish to be identified, said the fleet expansion could cost the company $100-200 million (Rs393-786 crore) at current prices.
The joint venture was set up to ship bulk cargo such as coal, iron ore, bauxite and steel arriving in and departing from Indian shores. Konno said the shipping firm would cater to the needs of Tata Steel for moving raw materials and finished steel. Tata Steel, India’s largest steel maker, is boosting its capacity locally by more than 15 million tonnes (mt).
“In future, Tata Steel would require to transport large quantities of raw materials and finished steel, which necessitates strategic control over logistics. This joint venture is a step in that direction. Besides, we see a huge potential for this company in India," Tata Steel managing director B. Muthuraman had said in a statement at the time of signing the joint venture with NYK Line.
The shipping company will also service other customers, Konno said.
The ships operated by Tata NYK are registered in Panama or Singapore, and fly the flags of these countries where the tax regime is conducive for shipowners. “We could consider registering ships in India at a later date," Konno said.
Freight rates for shipping dry bulk cargo have risen by more than 100% over the past one year on the back of a surge in global trade, particularly in China and India, and inadequate port facilities and congestion at Australian and Brazilian ports that have restricted the availability of ships for hauling cargo.
“India accounts for 6% of the world’s dry bulk trade, up from 3% a few years earlier," said Peter Malpas, research manager at London-based ship broker Braemar Seascope Pty Ltd. “ It will continue to be a major player in the world dry bulk scene," he added.
India exports about 80mt of iron ore a year to buyers in China, and an additional 25mt to customers in Japan and Korea. The country also imports large quantities of coking coal and thermal coal, used to fire steel and power plants.
The cost of shipping iron ore from India to China has zoomed by more than 100% in the last six months, to more than $50 per tonne from about $20 per tonne earlier. And the ocean freight for importing coking coal and thermal coal has jumped to about $70 per tonne from $25-29 per tonne a year earlier. “The freight market for shipping dry bulk cargo will remain stable for the next two years," said Konno.
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