Logistics

Shipping Corp in a spot over box ships

P Manoj October 17 | Updated on October 17, 2021

Market demands exorbitant rates

Shipping Corporation of India Ltd (SCI) is looking to charter at least five container ships of varying capacities, in a market where such ships are being let out by the owners at huge rates on the back of a global capacity crunch for moving consumer goods in steel containers.

Vessel hiring

The Mumbai-based firm, owned by the government, has floated a tender to hire two container vessels, each having a capacity to load as much as 12,000 twenty-foot equivalent units (TEUs), to be deployed on a service linking India with North European ports. The service is being run in partnership with Mediterranean Shipping Company SA, one of the world’s top three container carriers.

SCI is seeking to hire another container vessel with a capacity to load 4,400 TEUs to be used for running a service linking Indian ports such as Mundra, Kandla, Pipavav, Cochin and Tuticorin. Tender has also been issued to charter two container ships, each having a capacity to carry 750 TEUs on the service connecting Indian Sub-Continent with foreign ports or linking Indian ports such as Kolkata, Haldia, Chennai and Kattupalli or on the India-Male service, the firm said in the tender notices. SCI currently owns and operates two container ships. India’s export-import (EXIM) trade has been urging the government to strengthen SCI as they are fully dependent on foreign shipping lines for exports, in the midst of surging freight rates for shipping cargo containers.

Soaring rates

SCI, India’s only mainline container ship operator, is struggling to find a replacement for ‘Seamax Norwalk’, the lone ship it had deployed on the Europe service it is running with MSC.

The lease period of ‘Seamax Norwalk’, having a capacity to load 6,875 TEUs, ended in August. The ship was hired at around $17,000 a day and the ship owner demanded about $50,000 a day to renew the charter period. This was not acceptable to SCI and the ship was returned to the owner. The charter hire rates for container ships have soared to more than $70,000 a day, holding up the efforts of SCI to hire another ship. Industry sources said that container vessels are extremely tough to find for buying or for leasing, as container fleet owners struggle with port congestion and equipment shortages, putting pressure on service reliability and ship availability. “To issue a tender to charter container ships is not a problem, but somebody should take the decision to hire the vessels at the prevailing high rates,” said a shipping industry source. “It’s a catch-22 situation,” he added. Till it finds a replacement for ‘Seamax Norwalk’, SCI has opted for a slot sharing arrangement with MSC to fill the slots with 600-800 containers a week in the nine ships operating on the service. For this, SCI pays slot costs to MSC.

Published on October 17, 2021

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor

You May Also Like