Shipping industry in India

1. SHIPPING INDUSTRY

2. CURRENT SITUATION IN INDIA The Indian shipping industry plays an important role in the Indian economy as almost 90% of the country’s international trade is conducted by the sea . India is ranked 15th in the world, with a shipping tonnage of around 11.5 million gross tonnage (GT) in 2011. Today , India has around 1071 ships with 722 coastal and 349 overseas ships, Indian coastal shipping is highly fragmented .

3. The top 9 companies account for nearly 70% of the total fleet by Dead Weight Tons and in terms of number of ships, the top 9 companies only control 20% share of the fleet. Many companies own just 1 or 2 ships. •The Indian shipping industry consists of approximately 31 major shipping companies with Shipping . Corporation of India (SCI), the largest public sector enterprise also being the largest in the country.

4. PORTS India has a long coastline, spanning 7516.6 kilometres and is serviced by approximately 200 ports. India has historically been serviced through 14 major ports. Several, private ports outside the scope of Major Ports Act has emerged in recent years. •Mumbai is the largest port and handles 50% of all of Indian export originating mainly from the Northern and Central India.

5. Bulk wise, the overall tonnage of all cargo shipped through major ports in the 2010 was 560 million tonnes .

6. Company name Activities Office Location Total Turnover (USD$) No. Of Ships Shipping Corporation of India (SCI) Ship owners, chartering, offshore Mumbai 803 Millon 85 Government Entities in the Indian Shipping Industry

7. Key Private Entities in the Indian Shipping Industry

8. SWOT Analysis of the Indian Shipping Industry Strengths • India has access to two major shipping routes . • More than 7500 km coastline including the island territories. • Widespread ports.

9. Weaknesses • The underinvestment in the India’s marine sector has affected the development of ports in the country. • Inefficient judiciary system slowing the development of new port infrastructure. • High levels of bureaucracy prevents the government funding from developing new port projects in the country.

10. Opportunities • Indian shipping companies having acquisitions with foreign shipping companies. • More than USD $4bn is expected to be invested in India's port sector. • New major container terminals being developed at the port of Chennai and Mumbai.

11. Threats • Major developments taking place in Sri Lanka's port sector may reduce demand for shipment services at Southern Indian ports. • A government tax on iron ore exports may lead to a fall in bulk shipments at major export terminals.

12. CHARTER Charterer, in its literal definition, means engaging for service under a contract. A charterer can own a cargo and hire a shipbroker for delivery of the cargo at freight rate. The freight rate can be per-ton basis for a specific route or can be per day basis for the duration agreed upon in the contract.

13. Shipping charterers might, for a specific period, hire the ships from the owners of shipping companies and trade them to be used as a cargo carrier at a rate more than the rate of charter. They might re-let the chartered ships to other Shipping charterers in the market to make profit. A contract called charter party is formed to register the type of ships used, types of charterers, the rate of charter, the agreed terms and conditions between the charterer and the owner of the ships.

14. TYPES OF CHARTERING VOYAGE CHARTERING The voyage chartering means that the ship-owner promises to carry on board a specific ship a particular cargo for a single voyage from one or more loading ports to one or more discharging ports. The payment is called freight and the contract is called a voyage charter party. Voyage charters are concluded between the ship owner or deponent owner and the charterer.

15. CHARACTERSTICS Specific vessel, specific cargo, specific port and specific routes. Rights, duties and responsibilities of ship-owners and charterers are determined by the charter party. The charterer should be responsible for the arrangement of the cargo, payment of freight calculated according to the quantity of the cargo loaded or carried and other expenses concerned. The shipowner possesses and controls the vessel and takes charge of the operation of the vessel and the manning and management of crew .

16. TIME CHARTERING The time chartering means that the ship-owner provides a designated manned ship to the charterer, and the charterer employs the ship for a specific period against payment of hire instead of for a certain number of voyages or trips. Time charter generally does not include loading and unloading costs in the charter rate. Period A single voyage Several months or years

17. REASONS FOR TIME CHARTER The time charterer may be a ship-owner who for a time needs to enlarge his fleet or a cargo owner with a continuous need for transport, who does not want to invest money in a ship but wants to have the control of the commercial operation of the vessel. The charterer may be a speculator taking a position in anticipation of a change in the mark.et

18. CHARACTERSTICS The ship-owner should be responsible for the manning of crew and bears the wages and provisions thereof. The master shall be under the orders and directions of the charterer as regards employment and agency. If the charterer shall have reasonable cause to be dissatisfied with the conduct of the master or officers, the ship-owner shall on receiving the complaint make a change in the appointments,if necessary.

19. The charterer should be responsible for the operation of the vessel and bear the variable operational costs such as bunkers, port charges, handling charge and canal tolls etc. The ship-owner should bear the fixed operational costs such as costs relating to the vessel capital, ship’s maintenance and stores, insurance premium and so on. The ship is chartered as a whole/part and the hire is calculated and collected according to the duration of chartering and the agreed hire rate. There are the provisions for the delivery/redelivery of vessel.

20. BAREBOAT CHATERING The bareboat chartering is a charter of a different type. This contract amounts to a lease of the ship from the ship-owner to the charterer. The bareboat chartering ordinarily means that the vessel is put at the disposal of the charterer for a long period employment without any crew. The charterer thus will take over almost all of the ship owner's functions except for the payment of capital cost. This means that the charterer will have the commercial as well as the technical responsibility for the vessel and will pay for maintenance, crew costs and insurance, etc.

21. REASON Bareboat chartering is less common than other types of contract. It is sometimes used where a shipowner or ship operator wishes to operate ships or to supplement his fleet for a period of time without incurring the financial commitments of actual ownership, but at the same time requires to have full control of the chartered vessel, including control of its navigation and management.

22. Further, bareboat chartering is sometime employed in connection with the financial arrangements for purchase of the vessel on installment terms. The bareboat charter then serves as a hire/purchase contract, by which the shipowner /seller retains formal ownership and thereby security in the vessel until the full purchase price is paid .

23. WORLD SEA BORNE TRADE Maritime transport is essential to the world’s economy as over 90% of the world’s trade is carried by sea and it is, by far, the most cost-effective way to move en masse goods and raw materials around the world. Maritime activity has a key role to play in the alleviation of extreme poverty and hunger as it already provides an important source of income and employment for many developing countries, such as the supply of seagoing personnel and ship recycling, ship owning and operating, shipbuilding and repair and port services, among others.

24. The International Maritime Organization (IMO) is the United Nations (UN) system’s regulatory agency for the maritime sector. Its global mandate is “safe, secure and efficient shipping on clean oceans”. IMO pursues that mandate by adopting international maritime rules and standards that are then implemented and enforced by Governments in the exercise of flag, port and coastal State jurisdiction . IMO’s rules and standards are accepted by Governments and the global shipping industry because they provide a single, universal framework governing maritime operations and ensure the efficient, safe and environmentally friendly carriage of global trade .

25. Driven in particular by a rise in China’s domestic demand as well as increased intra-Asian and South– South trade, international seaborne trade performed better than the world economy, with volumes increasing at an estimated 4.3 per cent in 2012, nearly the same rate as 2011. About 9.2 billion tons of goods were loaded in ports worldwide, with tanker trade (crude oil, petroleum products and gas) accounting for less than one third of the total and dry cargo being responsible for the remaining lion’s share

26. Primary passages  are the most important since without them there would be limited cost effective maritime shipping alternatives which would seriously impair global trade. Among those are the Panama Canal, the Suez Canal, the Strait of Hormuz and the Strait of Malacca, which are key locations in the global trade of goods and commodities . Secondary passages  support maritime routes that have alternatives, but would still involve a notable detour. These include the Magellan Passage, the Dover Strait, the Sunda Strait and the Taiwan Strait.

27. MAJOR SEA PORTS IN THE WORLD Port of Shanghai Port of singapore Port of Hongkong Port of Dubai Port of New york Port of Mumbai Port Tokyo Port of Rotterdam Port of Perth