Business Daily from THE HINDU group of publications
Saturday, Jul 01, 2006
Business Daily from THE HINDU group of publications Saturday, Jul 01, 2006 |
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Logistics
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Shipping Falling freight rates worry shipping cos Amit Mitra
CARGO BEING loaded into a ship
Mumbai , June 30 The steady fall in the global freight market over the last few months is worrying Indian shipping companies. Industry analysts say that the shipping companies may report lower earnings in the spot fixtures this fiscal, to the extent of 15-20 per cent as compared to last fiscal. It is also felt that the freight market would continue to soften in the coming months, although crude transportation may hold up due to increase in refinery activities. Increased fleet supply, on the back of limited scrapping and slower growth in commodity demand, has resulted in softening freight rates. For instance, industry analysts project that in the tanker segment, there could be a scrapping of six to seven million DWT this fiscal with deliveries being around 26 million DWT, resulting in net fleet growth of 5-6 per cent. This, coupled with lower oil demand growth forecast of about 1.5 per cent, is expected to create the downward pressure.
Buoyancy for VLCCs
What could be good news for the shipping industry is the fact that the freight rate in the Very Large Crude Carrier (VLCC) segment firmed up significantly this month. From an average $22,746 in April this year, the VLCC rate climbed to $31,680 per day in May. From the middle of June, the rates in this segment ranged upward of $50,000 per day. The rates had peaked in November 2004, when an average spot rate of $1.52 lakh was recorded.
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