India: Cabotage tweak flags ‘foreign flight’ by container ship operator
In a retaliatory move, Shreyas Shipping & Logistics Ltd, the country’s biggest container ship operator, said it will flag out its Indian-registered ships to overseas business-friendly jurisdictions after the Centre decided earlier this week to open the country’s coastal shipping to foreign container lines.
“We will flag our ships out, it doesn’t make any sense to stay here any longer,” Ramesh S. Ramakrishnan, Chairman and Managing Director of Mumbai-listed Shreyas Shipping told BusinessLine in an interview on Friday.
Shreyas runs 11 container ships accounting for 90 per cent of EXIM trans-shipment along the Indian coast.
“We have been operating in an environment where it is far more expensive as compared to other regimes and we have been very committed about ensuring that we are able to develop the transshipment business over many ports, plus we have been developing the ability to offer something which is very cost effective for the domestic market as well. Both together makes this business fly,” he said.
“We still have tonnage operating outside India although flagged in India. Why are we keeping that as a stand-by. If there would have been so much business, we could have easily brought those vessels here and if I’m operating outside why should I keep them under the Indian flag? I’ve been patriotic all this while. With this new cabotage policy, we don’t want to be patriotic anymore,” added VK Singh, Managing Director, Shreyas Shipping.
Shreyas’ decision to flag out its ships will reduce Indian tonnage at a time when the government was looking to augment the local shipping capacity.
Cabotage relaxation by itself, according to Ramakrishnan, is not going to bring anything additional to any of the ports simply because the ports have to solve and deal with a number of other challenges including the price at which they are able to offer their service to the ship owners.
“Unless and until those challenges are dealt with effectively, all this is not going to help in the trans-shipment business which today the government of India plans to enhance in India. It’s a complete myth that if you open cabotage and allow somebody to carry some laden exports/imports and some empties, the trans-shipment business is going to happen and everything will change,” Ramakrishnan said.
The new policy, according to Singh, will shift the cargo more to Colombo because main lines or feeder operators who are going to Colombo will be able to offer cheaper rates due to multi-legging.
“Main lines are not going to shift here and main lines are not going to call all these ports. It is going to hit domestic cargo movement also because the revenue which we are generating today from EXIM containers if that goes out, we’ll have to increase the cost of domestic movements,” Singh said.
Posts profit in Q4
Shreyas reported a net profit of ₹23.1 crore during the fourth quarter of FY18 compared to a loss of ₹12.6 crore a year earlier. Income for the January-March quarter jumped to ₹157.5 crore from ₹96 crore last year.
For the full year, the company reported a net profit of ₹80.9 crore from ₹3.6 crore a year ago.
Source: The Hindu Business Line