The Hindu Business Line : Tanker rates not picking up: Mercator Lines

There has been some turbulence in the shipping market. Some rates have gone up and some have gone down quite sharply. Mr Harish Mittal, Chairman and Managing Director of Mercator Lines, puts this into perspective.

Excerpts from CNBC-TV18's exclusive interview with Mr Harish Mittal

I believe that VLCC rates (very large crude carriers) are down nearly 30 per cent, month on month. Is that the real picture?

No. One cannot say 30 per cent. It's down, but if you look at the whole year's average, it's still up. I can say that the tanker rate liquidates are bit down.

Our company is into three segments - tankers, bulkers and offshore. The dry bulk market is very high; it's almost 50 per cent higher than last year.

If one looks at shipping as a whole, one cannot say that ship rates have come up or down, because there are various segments such as containers, dry bulk and tankers involved.

On a month on month basis, how much slippage have you seen?

Month on month, we are expecting it to be a bit high. But if one looks at the average of the whole year, it's better than last year. The first two quarters were good. And looking at freight futures, the last quarter that is January-March, is still bullish. At times the market responds reverse to expectations. But as far as the whole tanker market is concerned, it's not very down, not very up.

What do you expect to see for the next 2-3 months for both dry and wet rates?

The dry rates are very firm. At the moment, we have 14 ships in our control. We have almost 5 million tonne CoAs (Contract of Affreightment) with our company and we have even taken long-term CoAs from the dry market for up to four years.

This means that my whole fleet is booked for next four years either on tank charter or on CoA as far as dry bulk is concerned.

As far as Mercator is concerned, we are not really getting affected. But if you ask me about the tanker market situation, I can say it's really not picking up the way we thought it would.

Could you tell us what percentage of your revenues comes from these various categories that you spoke about?

Till last year it was maximum from tanker, but this year it's almost 65 per cent. Revenue is coming from dry bulk ships. Only 35 per cent will be coming from the tanker market.