SCI may trim loss-making international container service

NK Kurup Mumbai | Updated on August 11, 2014 Published on August 11, 2014

Public sector firm Shipping Corporation of India (SCI) is considering gradual reduction of its exposure to the loss-making international container service.

SCI, the only Indian company operating international container service, has been finding it difficult to keep its vessels afloat in the past few years due to a prolonged slump in the freight market.

Though there has been a marginal improvement in rates compared to last year, they are still ruling at uneconomic levels, said a shipping company official. In the case of SCI, its operating expenses are higher than its global competitors. While the India line operates smaller vessels of 4,000-6,000 TEUs, global players like Maersk and MSC operate with 14,000-16,000 TEU ships.

SCI, India’s largest shipping company, runs three main container services from India to Europe, the Far East and West Asia. Some of these weekly services are operated in collaboration with other intentional container shipping lines.

While SCI wants to reduce its global liner operation, the company is keen on expanding its container services along the coast. It is also exploring the scope of deploying some of its larger vessels for coastal operations. The new Government is expected to come out with policy that will promote coastal shipping and SCI is likely to play a key role.

Strategically, it is not a wise move for SCI to exit the international container service entirely, said a former official of the company. For the national carrier, its presence in the container trade is important. Instead, the company should be rationalising its service to make it economically viable, he said.

A Navratna company, SCI has been reporting losses for the past three years. The board of directors will be meeting on Tuesday to finalise its first quarter financial results. It is also expected to review the container service operations and also consider ways to reduce losses, the official added.

To cover its overall losses, SCI sold some vessels and also cancelled orders for new ones. Last fiscal, the company reported a loss of ₹274.66 crore.

Published on August 11, 2014
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