The Hindu Business Line : Shipping cos getting more cargo support from Transchart

NOTWITHSTANDING the efforts by the Ministry of Petroleum to free the Indian oil companies from the clutches of Transchart, the chartering wing of the Shipping Ministry, for crude oil imports, the Indian shipping companies have, on the contrary, been receiving an increasing flow of Government-owned cargo through Transchart.

The chartering wing was formed by the Government in tune with its policy that all Government owned/controlled cargoes should be imported on freight on board basis and exported on cost & freight basis, with all centralised shipping arrangements to be made through Transchart.

It has thus been, over the years, supporting growth of Indian shipping by giving them preference for carrying Government-controlled cargoes, besides obtaining competitive freight rates for the importers, including the oil companies.

Shipping industry sources say the total volume of shipping arrangements made through Transchart increased from 51.22 million tonnes to 64.39 mt during the last one year.

This included 47.75 mt of liquid cargoes such as crude, fuel oil, LPG and naphtha, 11.47 mt of dry bulk cargoes such as coal, limestone, iron ore and fertiliser and 4.26 mt of coastal cargo.

As a matter of fact, the import of crude oil by the oil companies through Transchart also increased from 8.10 mt to 13.84 mt during this period.

The share of Indian ships in the overall movement of Transchart cargo has marginally increased from 34.70 per cent to 36.96 per cent.

This assumes significance in the light of the fact that there have been serious attempts by the Ministry of Petroleum to allow its flagship company IOC to make its own shipping arrangements for crude oil imports, circumventing Transchart.

The oil industry feels that circumventing Transchart would bring down crude transportation costs.

Understandably worried over IOC's move to by-pass Transchart, the Indian shipping industry has countered the campaign, pointing out that "this could lead to all oil companies buying crude on C&F basis by making their own shipping arrangements".

Clearly, what the shipping companies are concerned is that such a situation would deprive them the valuable cargo support that they are getting in the present system, which allows Indian lines to get first right of refusal to carry the cargo.

The Shipping Ministry is also pushing for Transchart's case on the ground that it has an experience of more than four decades, with worldwide ship owners being represented through approved shipbrokers.

Also, as Transchart circulated tonnage enquiries worldwide and thereby inviting better competition, it helps avoid competition among users and provides secured freight payments to ship-owners.

More importantly, the Shipping Ministry has pointed out that any measure to decanalise import of a particular cargo had the impact of triggering considerable reduction in import of such cargo on f.o.b basis, with corresponding increase in its imports on C&F basis.

"And the view that arranging shipments of imports on C&F basis reduces transportation cost does not hold water, going by statistics," a shipping industry source pointed out.