The Hindu Business Line : Shipping cos to sail to Pakistani ports — Mr S. Ramakrishnan, CMD, Shreyas Shipping

With India-Pakistan relations improving and an amendment to the existing shipping protocol between the two countries on the cards, Indian shipping companies are beginning to sail to Pakistani ports.

And taking the lead in this regard is Shreyas Shipping Ltd, which plans to start an India-Sri Lanka-Pakistan feeder service from March.

The company, which reported 170 per cent increase in net profits for the third quarter of the current fiscal, feels that if the Indo-Pak shipping protocol is suitably amended to allow shipping companies in both the countries to pick up third-party transhipment cargoes, there could be a significant increase in trade.

In an interview with Business Line, Mr S. Ramakrishnan, chairman and managing director of the company, discussed a wide range of issues related to the shipping industry and his company's plans.

Excerpts from the interview:

What prompted you to plan the India-Sri Lanka-Pakistan service?

We plan to launch this new service from March. Initially, we thought that we should wait for the Indo-Pak shipping protocol to be amended, as without it we cannot pick up transhipment cargoes. But we decided to launch the service first. We intend to use two of our 450-TEU vessels on this route. We may think in terms of buying new ships for deployment on this route.

What kind of cargoes you expect on this route?

The SAFTA accord in January 2004 has led to an increase in bilateral trade between India and Pakistan.

As both the countries have strong manufacturing bases, a service like this could ensure that the two countries make better use of their manufacturing facilities. We expect export of agro products and auto components from India.

We expect textile products from the Pakistani side, while a lot of food and agro products are finding their way out of Sri Lanka.

Could you throw some light on the existing Indo-Pak shipping protocol?

At present, the shipping protocol between the two countries does not allow shipping companies of both the countries to pick up transhipment cargoes for a third country party. In other words, Indian flag vessels can only pick up cargoes from an Indian port to be dropped at a Pakistani port, and vice-versa.

There have been projections by some trade bodies that if the protocol is amended to lift this restriction, cargo flow between Indian and Pakistani ports could increase dramatically.

The Shipping Ministry has taken up the issue of amending the shipping protocol between the two countries with the External Affairs Ministry.

You had recently launched a Colombo service...

Yes. We had been operating services from Kandla to Kochi port via Jawaharlal Nehru port.

We have now extended the service from Kochi to Colombo, which will ensure a two-way cargo flow.

Another advantage is that we can pick up oil bunkers at Colombo port, where the bunker prices are at least $150 per tonne lower than in Indian ports, which levy a higher level of duties.

What are your fleet expansion plans?

We are on the look-out for both second-hand and new ships. We plan to own about 10-15 vessels within the next two years in the 750-1,500 TEU category.

What about your plans to launch services on the East Coast?

We are exploring the possibility of launching a service on the East Coast for we see interesting possibilities there. We have not firmed up any plans yet, but we are studying the cargo movement on the coast.

We may think of deploying one of our new acquisitions on the East Coast at a later date.

You have reported a 170 per cent increase in net profit for the third quarter of this fiscal. What were the chief drivers of this growth?

The Q3 performance has been mainly driven by increase in charter hire of about 60 per cent and increase in revenues of the service sector. In fact, the supply position of container vessels has emerged as the major driver in the shipping industry.

Also, in addition to the coastal transshipment feeder service, we have been concentrating on developing the coastal shipping trade by providing the concept of domestic transportation in containers by sea and offering multi-modal transportation.

What is your outlook for the future?

The shipping market continues to be buoyant. With the upswing in the economy, India has taken steps to improve and strengthen its relationship within the SAARC region.

We are studying the prospects of running a service connecting ports within the SAARC region.

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