Mumbai: India’s shipping industry will begin recovering in the middle of next year as the demand-supply mismatch of vessels is set to end, said S. Hajara, chairman and managing director of Shipping Corp. of India Ltd, the country’s biggest shipping firm by fleet size.
There were “record deliveries of vessels” in 2010, he said. But as supply exceeded demand amid a trade slump, there was a slowdown, said Hajara, who will step down from his position on 3 December.
“I do believe that the demand-supply equilibrium would be restored by the middle of 2013. I think tanker and container freight will recover fast,” Hajara said at the India Shipping Summit on Tuesday.
Poor freight rates across sectors forced Indian shipping companies to halt or slow plans to buy ships.
The domestic financial environment isn’t conducive to the funding of ship purchases, said Yudhisthir Khatau, vice-chairman and managing director, Varun Shipping Co. Ltd. Indian shipping companies would prefer to own ships registered overseas considering the cost of funds and taxes in India, he said.
Hajara said ships of high value are being delivered in a market where the level of income for such vessels is very low.
“This is a big challenge faced by shipowners. Also, the ships delivered now are not as energy efficient compared with ships ordered a year ago,’’ he said.
N. Shankar, chief executive of consultancy firm Vinsight Maritime (S) Pte Ltd, said the recovery is only likely to start in 2014.
‘’It is unlikely for shipping industry to recover in 2013. It’s not deliveries of ships driving the recovery of shipping industry, but sentiment. This should happen in 2014,’’ Shankar said.