The Hindu Business Line : London brokerage to sail the buoyant Indian shipping market

The growth in Indian tonnage and the expected jump in the volume of ocean-going trade has drawn the 125-year-old London-based SSY ship-broking group to India, where it has initiated dialogue with shippers, shipping firms and shipyards.

THE recent surge in India's ocean-going trade, the growth in Indian shipping tonnage and the increase in the flow of orders to Indian shipyards from foreign ship-owners have prompted the 125-year-old London-based SSY (Simpson, Spence and Young Ltd) ship-broking group to sharpen its focus on India.

SSY, which has operations in over 10 countries, is preparing to enter the Indian market. In fact, reports indicate that other ship-broking houses are also looking at India as their next destination, after China. SSY recently opened its Beijing office for contracting of new-building ships and dry cargo chartering, before turning its attention to India.

"We see bright prospects for SSY in India. We are having dialogues with exporters, importers, shipping companies and shipyards," Mr. John A. Welham, chairman of SSY, told Business Line.

SSY's focus will be on Indian shipyards, especially those in the private sectors, in the light of the fact that global shipyards have full order-books till 2008. "It is only from 2009 that global shipyards can take fresh orders. Hence, we see Indian shipyards in a strong position to get orders from foreign ship owners in certain categories of ships," he said.

SSY handles about 250 sale/purchase of ships annually through its global network, apart from contracting some 4,000 charters for various shipping companies. SSY recently expanded its geographical reach, and also entered new sectors such as charter of container ships and gas and chemical carriers.

SSY will also be tying up with Indian ship-owners, exporters and importers to give them the latest market reports, including availability of ships and cargoes, and help them book their cargoes or ships. "Our studies have shown that India will be importing 40.9 million tonnes of coal this year, which is 8.5 million tonnes more than in last year. Similarly, crude oil imports will be higher by 5 million tonnes to tough 95 million tonnes. We are also encouraged by the projections of gas transportation to India in the months to come," Mr Welham said.

The ship-broking firm is also keen on entering the freight futures market as soon as it is introduced in India. "In other parts of the world, freight futures play an important role for shipping companies to hedge freight earnings. There are companies that hedge even 95 per cent of their freight earnings. I feel this should be introduced in India also," he said.

On freight market trends, he felt that freight earnings could continue their downward move in the coming months, as delivery of new vessels has started and fewer vessels are going to the scrap yard.

"It is a simple supply-demand (of ships vis-à-vis cargoes) concept that rules the freight market. Of course, the increased demand for oil movement in the winter will boost freight rates, but these may still be lower than what they were last winter," he felt.

On prices of ships, Mr Welham said prices of new vessels have begun to fall from their peak levels registered in April . "Since April, bulk carrier prices fell by about 20 per cent and tankers between 5 per cent and 10 per cent. This trend is likely to continue in the coming months, as deliveries pick up. In 2006, about six per cent of the existing global fleet will be added in the form of new tonnage," he said.

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