India-Gulf container rates plunge as capacity returns and cargo backlogs ease
Container shipping rates from India to the Persian Gulf have significantly softened from the peaks ...
Shipping Corporation of India (SCI) – under tremendous pressure to step up liner operations to support local shippers amid the Middle East disruption – needs new containerships.
SCI is India’s only long-haul container line, but it massively lost ground to foreign-flagged counterparts due to a lack of investment in fleet expansion and other strategic flaws over the decades.
In a revival attempt, the national carrier has just floated a $360m tender, seeking bids from Indian and foreign shipyards for the construction of four methanol dual-fuel box ships able to carry 1,700 teu, ideally suited for feeder or regional trade coverage.
“In case [an] Indian shipyard does not have previous experience of building container carriers, it will be required to have a technical tie-up/collaboration with a reputed international shipyard or international design company which has delivered at least three container carriers of minimum 3,000 teu in the past 10 years, which are in service,” notes the tender document.
Cochin Shipyard (CSL) is India’s premier shipbuilding facility. The publicly-owned facility is building six 1,700 teu LNG-fuelled vessels for delivery to CMA CGM between 2029 and 2031, so is expected to be a strong contender for SCI’s order.
India’s shipbuilding sector is on the cusp of major development, as local yards seek collaborations with Asian giants, particularly South Korean companies. HD Hyundai Heavy Industries has already offered to invest some $5bn to set up a mega-shipyard in India’s southern state of Tamil Nadu.
And India’s prime minister, Narendra Modi, during a visit to Seoul this month, reiterated the country’s shipbuilding ambitions and liberalised policy support for companies wishing to invest. Last year, New Delhi announced it would need to acquire more than 400 ships at a cost of some $25bn for maritime development.
“The two sides supported the collaboration between Indian and republic of Korea businesses to upgrade Indian shipyards, including a block fabrication facility being built in southern India to support a new dry dock to construct large and specialised vessels,” a joint statement said.
The push is critical, as Indian exporters/importers — often on the receiving end of supply chain disruption — have been pushing for container capacity to cut soaring freight fees and additional surcharges.
The launch of Bharat Container Shipping Line stemmed from that industry pressure. The joint-venture, between SCI, Container Corp of India (Concor) and Sagarmala Finance, will see investment of some $6.9bn in the initial stage.
Meanwhile, vessel capacity for Indian container bookings to the Middle East remains a hot commodity, especially for reefer cargo, which has sparked serious rate shocks for exporters.
According to reports, landside challenges in the Middle East are preventing carriers from boosting ocean capacity.
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