Mumbai: Shipping agents who handle cargo for overseas shipping firms are fast disappearing from Indian port cities.
International container shipping companies are setting up their own offices in India, eliminating the need for such agents as they now see India’s economic boom as a much larger opportunity than before. The agents, responsible for handling the cargo on behalf of their shipping lines, usually handle the paperwork for clearing imports and exports of goods.
The trend actually started in the 1980s when P&O Nedlloyd Container Ltd, a London-based shipping company which was recently acquired by AP Moller-Maersk AS, decided to end its relationship with Tata Tea Ltd, a Tata group company that was serving as its agent.
But the trend has intensified over the past two years. Kawasaki Kisen Kaisha Ltd (K Line) of Japan is the latest to terminate its arrangement with United Liner Agencies of India (Pvt.) Ltd.
After this, only Hamburg Sud Group of Germany, Senator Lines GmbH and Islamic Republic of Iran Shipping Lines Group will be left with handling Indian operations through their agents. They, too, are expected to set up their own facilities in India soon.
Major container shipping companies, such as AP Moller-Maersk AS, APL Ltd, CMA CGM Group, Mitsui OSK Lines Ltd, Hapag-Lloyd AG and Mediterranean Shipping Co. SA, have already set up their own offices in India, ending their agency arrangements.
An executive with United Liner Agencies, who does not wish to be identified, says K Line is forming a joint venture company with 51% equity stake to manage business in India from April. United Liner will hold 49% stake in the company.
K Line executives could not be contacted immediately for a comment.
With the foreign shipping lines setting up their own offices, agents are also re-inventing themselves into transporters, operators of container freight stations and inland container depots that are related to ports and shipping.
“There are over 400 shipping agents across India with many more branches in port cities. Each of them employ at least 150 people and documentation clearing import and export cargo alone fetches each of them Rs5 lakh a day,” says a shipping executive with a leading ship agency house who didn’t want to be identified.
About 95% by volume and 70% by value of India’s international trade is carried by sea.
According to the ministry of shipping, in the first eight months of fiscal 2008 ended November, the traffic handled at ports was 333.27 million tonnes (mt) compared with 294.60mt in the year-ago period, a 13% increase. In 2005-06, India handled 4.23 million twenty-foot containers and is expected to handle 11.7 million such units by 2011-12.
S.P. Rao, president of Mumbai and Nhava-Sheva Ship-Agents Association, or MANSA, which has 102 ship agents as registered members, says the trend of international companies setting their own offices will continue even as agents also change their roles, including shifting their focus to trucks and trailers.
“Once an international company, through its agent, exceeds a particular volume of containers in and out India, it becomes economical for the shipping line to set up its own facility in India,” says C.S. Manohar, president, Seaworld Shipping and Logistics Pvt. Ltd, a shipping agent.
Seaworld has represented CP Ships Ltd of Canada, Contship Containers Ltd of the UK and Neptune Orient Lines Ltd of Singapore.
“After crossing certain volume, international shipping lines do not want any interference between customers and lines. They want to get in touch with customers directly and prefer to come on its own,” adds Manohar.