The Hindu Business Line : Shipping cos plan to revive Transchart campaign

With the freight market booming till the Wall Street crisis began to unfold, shipping companies did not make Transchart an issue, as there was enough cargo available in the global markets.

Amit Mitra

Mumbai, Nov 10

Indian shipping companies are planning to revive its campaign for restoration of the original status of Transchart, the chartering wing of the Shipping Ministry, so that they can be ensured of some cargo support from the Government-owned companies.

This comes in the wake of the shrinking cargo availability and plummeting freight rates as an upshot of the global financial meltdown, which have cut a deep swathe in the daily earnings of most ship owners.

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 (f.o.b.) basis and exported on cost & freight (c&f) basis. Transchart had been supporting growth of the domestic shipping industry by giving them first right of refusal for carrying Government-controlled cargoes, besides obtaining competitive freight rates for the importers, including PSU oil companies.

However a couple of years ago, the Petroleum Ministry decided to free the oil majors from Transchart and allow them to make their own shipping arrangements so as to get better freight deals. Thus, over the years, the role of Transchart got diluted.

The total volume of shipping arrangement made through Tranchart decreased from about 65 million tonnes in 2003-04 to a bare 31 mt last fiscal, when the total domestic cargo availability was about 500 mt. In fact, shipping industry sources said in the last fiscal, Indian-flagged ships could carry only 61 mt out of the total cargo volume of 500 mt, with the remaining being grabbed by foreign-flagged vessels.

With the freight market booming till the Wall Street crisis began to unfold, shipping companies did not make Transchart an issue, as there was enough cargo available in the global markets. Now, with fortunes reversed, the industry is planning to revive its Transchart campaign through the Shipping Ministry.

The Baltic Dry Index fell from an average of 10,844 in May to 885 on October 30. Even in the tanker segment, there has been a fall—the rates for very large crude carriers, for example, fell from an average of $1,14,782 a day in May to $42,669 on October 30.

Industry sources say that the daily earnings of some shipping companies have fallen below operating costs, making many companies think of idling a slice of their fleet, as a result of the fall in freight rates.

Under these circumstances, the industry feels that it is time the Government provide some cargo support through Transchart. The industry will press for Transchart’s case on the ground that it has an experience of more than four decades, with worldwide shipowners being represented through approved shipbrokers.

Also, the industry points out, any measure to decanalise import of a particular cargo had the impact of triggering considerable reduction in import of the cargo on f.o.b. basis with corresponding increase in imports on c&f basis.

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