The rising trend in the Baltic Dry Index, the benchmark for dry bulk freight, has failed to enthuse Indian shipping companies because most see it as a blip that does not reflect the trade situation.
The Index is at 690, up 70 per cent month on month and 95 per cent in the last three months. "There is nothing to be excited about. The jump is purely momentary," said an executive with the Shipping Corporation of India.
The grain harvest season in South America is the cause for the blip because freight rates from the region to China have improved. "If the index continues to rise, it will reflect in freight rates for domestic shipping companies," said an executive with Essar Shipping. "This could lead to $8,000-10,000 freight per day, which will help companies cover their interest costs," he added.
Shipping Corporation of India, Great Eastern Shipping, and Essar Shipping are leaders in the Indian shipping market.
"The trade routes that make up the dry bulk index do not include any of India's routes. This index is more of a sentiment gauge for Indian shipping companies," said an executive with Equator Maritime.
"The dry bulk situation remains poor for Indian shipping companies when exports are falling," he added.
India was one of the world's top iron ore exporting countries before the financial crisis hit. Duties on some minerals have discouraged exporters, hurting overall trade.
"Also the problem for bulk cargo in coastal shipping is there is no return cargo available. Shipping companies do not find it effective to run vessels along the coast," said the executive with Equator Maritime.
"There are decent earnings in the tanker division for crude as well as refined products. Low crude oil prices are helping tanker companies," said the Essar Shipping executive.
Source: Business StandardPrevious Next