Dubai government-owned global port operator DP World Ltd has acquired 'SSL Krishna', an Indian flagged feeder container ship from Transworld Shipping Lines Ltd, for some $11.9 million (?110 crore), and is said to be looking at buying more Indian flagged box ships of Transworld and others, multiple sources said.

The 2,490 twenty-foot equivalent units (TEUs) capacity 'SSL Krishna', built in 2002, is one of the 10 Indian flagged feeder container ships owned by Mumbai-listed Transworld Shipping Lines Ltd, formerly Shreyas Shipping & Logistics Ltd.

In 2021, Dubai-based Transworld Group sold 100 per cent of its stake in Avana Logistek Ltd (including its subsidiary Avana Global FZCO) and Transworld Feeders Pvt Ltd (the containerised Indian coastal and EXIM feeder shipping operations of Transworld Shipping Lines Ltd, excluding its container vessels and bulk ship operations) to global port operator DP World Ltd's shipping solutions business (formerly known as Unifeeder).

Following the 2021 deal with DP World, Transworld Shipping Lines Ltd (TSLL) struck a long-term free carrier agreement (FCA) with Avana to charter out the container ships.

"Avana has been operating the Transworld ships on long-term charter after the 2021 deal. Now, Avana is purchasing Transworld ships one by one and will own and operate them. It is even looking at purchasing suitable ships from other owners also. Avana is now becoming a ship owning company," an industry official with knowledge of the matter said.

DP World's shipping solutions business is acquiring the 'SSL Krishna' as part of its longer-term fleet strategy to have a balance of both owned and chartered assets," a spokesperson for DP World said, without divulging further details.

The change in ownership of 'SSL Krishna' requires re-registration of the ship with the Directorate General of Shipping, for which the process is underway, an official at India's maritime administration said. The registration has been delayed because the ship is stuck in Jebel Ali Port.

Avana has purchased 'SSL Krishna' through the Domestic Tariff Area (DTA), though DP World has opened a unit in GIFT City, India's first and only International Financial Services Centre (IFSC), located in Gandhinagar, Gujarat.

DP World's move to buy the Indian flagged feeder container ships of Transworld Shipping Lines coincides with a government move to roll back the waiver granted to foreign-flagged container ships to operate along India's coast from 21 October.

India's coastal trade is reserved for Indian-flagged ships, and foreign ships are allowed to operate only when locally flagged ships are unavailable, under cabotage rules.

DP World is likely to tap into India's coastal container business, as foreign-flag container ships will no longer be able to serve this segment post October, when the cabotage waiver ends.

Other global carriers such as CMA CGM and Maersk have already re-flagged four ships (a fifth is underway) and two ships, respectively, under the Indian flag, while Mediterranean Shipping Company, the world's biggest container carrier, has announced plans to convert a dozen ships to the tricolour. In March, Hapag-Lloyd said it will register four ships in India, all aimed at tapping India's cabotage and EXIM feeder trades.

The Dubai government-owned port operator is one of the largest investors in India's port sector, with facilities at Jawaharlal Nehru Port, Mundra Port, Cochin Port, and Chennai Port.

It is building a container terminal with a capacity of 2.19 million TEUs, estimated to cost ?4,243.64 crore, at Tuna Tekra, Deendayal Port, Gujarat. The terminal is expected to commence operations in 2027, boasting a 1,100-metre berth capable of handling next-generation vessels carrying over 18,000 TEUs.

Transworld Shipping Lines has benefited from long-term chartering of ships to Avana.

"TSLL benefits from steady revenue visibility and cash flow supported by the long-term FCA with Avana. The strong position of Unifeeder in the global charter-hire market and strategic focus on India provide TSLL access to a wide global clientele for export-import (EXIM) as well as domestic cargo. The FCA has reduced cargo volume offtake and geopolitical risks as the entire container tonnage will be deployed by Avana," CRISIL Ratings Ltd wrote in a 31 March revised credit rating on the bank loans of TSLL.

While the FCA with Avana provides cash flow stability, spot charter rates vary with trade volumes, ship and container availability, and demand and supply. TSLL therefore remains partly vulnerable to downturns in the shipping cycle and pricing volatility, CRISIL Ratings wrote, while placing its rating on the long-term bank facilities of Transworld Shipping Lines on 'Rating Watch with Developing Implications.

The rating action factors in the impact of the ongoing conflict in the Middle East, where TSLL has deployed three of its vessels, namely SSL Kaveri, SSL Krishna and SSL Godavari; out of these, SSL Kaveri is stuck at Jebel Ali Port in Dubai, and operations have been halted.

Ritesh Ramakrishnan, Managing Director of Transworld Group, did not respond to a text seeking comment.

Source: ET Infra. Com 

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