SCI net profit 15% higher in FY09; to raise rates

SCI net profit 15% higher in FY09; to raise rates
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First Published: Mon, Jun 15 2009. 10 08 PM IST
Updated: Mon, Jun 15 2009. 10 08 PM IST
Bangalore: State-run Shipping Corp. of India Ltd (SCI), India’s only ocean carrier that runs container services for foreign trade, on Monday announced net profits of Rs940.67 crore for the fiscal year ended March, up 15% from profits of Rs813.90 crore in the previous fiscal. Revenues for fiscal 2009 increased to Rs4,561.83 crore from Rs4,084.36 crore a year ago.
The company’s board on Monday also declared a dividend of Rs6.50 a share.
The company also said it would hike freight rates starting 1 July on the India-Europe route, following rate hikes announced by at least four foreign-based carriers.
“We will hike rates to Europe by $200 (Rs9,580) for a 20ft container and $400 for a 40ft container from 1 July,” said Anand Chopra, vice-president, container services and marketing, SCI.
The company, which has a fleet strength of nine, also said it would start collecting a war risk surcharge of $50 per container from 1 July for shipments to Europe that have to pass through the piracy-ridden Somalia coast and the Gulf of Aden. The new levy is being implemented to offset the increased war risk premium, Chopra said.
Cargo owners are currently required to insure their goods on their own as well.
SCI has also decided to bill the bunker adjustment factor (BAF) separately from the base freight rates. BAF will now be charged separately to cargo owners.
BAF is a surcharge collected by carriers to account for fluctuations in bunker (ship fuel) prices.
“We will be imposing a BAF of $202 per container from 1 July to reflect the rise in oil prices,” Chopra said.
SCI runs a fixed day, weekly direct service in partnership with Mediterranean Shipping Co. SA, the world’s secondbiggest container shipping, to Europe.
The India Subcontinent Europe service links Jawaharlal Nehru Port, India’s busiest container port, and the nearby Mundra port with European ports such as Barcelona,Hamburg, Rotterdam and Felixstowe.
Container shipping firms have been badly hurt by falling freight rates, especially on the India-Europe sector, falling 70-80% since August due to a global economy slowdown and declining demand.
However, SCI, which ships about 1,600 containers a week to Europe, is uncertain about the success of the planned rate hikes. “Nowadays, cargo owners have too many choices of carriers to move their cargo,” said an SCI executive, on condition of anonymity.
“In April, we tried to raise rates between Indian and Europe, but never got what we were looking for,” he said. “Nobody wants to take the lead in hiking rates. This is an industry notorious for undercutting each other. So, what is stated and what you end up doing are two different things.”
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First Published: Mon, Jun 15 2009. 10 08 PM IST
More Topics: Shipping Corp. | Profit | FY09 | Europe | Foreign trade |