Profits to dip for India shipping firms
Shipping companies in India are likely to post lower profits for the fourth quarter of 2008-2009, as the freight market remained subdued in the wake of lesser movement of commodities.
Although dry bulk rates, which had touched rock-bottom in December 2008, did pick up marginally, the tanker freight market sank during the quarter.
Shipping analysts do not expect any significant recovery in the freight market in the current quarter, according to the Business Line.
The Baltic Dry Index, which is a measure of the bulk market sentiment, collapsed from an average high of 11,793 in May to a low of 663 in December 2008. At that point, the situation was such that most categories of dry bulk ships were not even breaking even on operating expenses, prompting many ship owners to keep part of their fleets idle. From January this year, the BDI displayed a marginal recovery, which, however, by no means gave any significant push to the earnings of shipping companies. The index crawled up to 905 in January, after which it inched up to 1,816 in February and to 1,958 in mid-March 2009. In the last 10 days, the index has been hovering around the 1,600-mark.
In the corresponding quarter of the previous fiscal, the BDI ruled higher at 7,170 in January 2008 and 8,063 in March 2008.
The tanker freight market had a different story to say. It was relatively firm in the previous quarter, with VLCCs (very large crude carriers) getting an average of $55,475 (Dh203,704) a day in October and $45,090 in December. However, in the last quarter, the VLCC earnings slipped from an average of $44,065 a day in January to $30,672 in February and $25,177 by mid-March. The last week of March saw the tanker rates fall to an average of $16,320 a day.
Compare the rates with those that shipping companies got in the corresponding quarter of the previous fiscal. VLCC rates ruled at $68,269 a day in January 2008 and $ 51,470 in March 2008. In the third quarter of the just ended fiscal, except for India's flagship carrier Shipping Corporation of India, most other shipping companies reported lower profits. For example, Great Eastern Shipping, the largest fleet owner in the private sector, registered a 17.9 per cent dip in its net.
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