Essar Shipping is looking to replace its older vessels as part of a drive to rejuvenate its fleet with younger and larger tonnage as it takes advantage of lower ship prices amid continued weakness in the dry bulk segment. The company plans to acquire vessels in the secondhand market in a phased manner and remove our old tonnage, Essar Shipping Managing Director Anoop Sharma, explained in a recent interview with a leading industry publication in Mumbai. Further reflecting the move towards younger tonnage, the company is planning to sell two vessels which are over 25 years old.
In the last five years, the average age of the fleet has gone down significantly to around 13 years; the figure is expected to fall further upon delivery of four Supramax vessels that the company has on-order.
One of the largest players in the Indian Shipping market, Essar has also favoured retaining tonnage in the tanker market, gradually increasing its share in the Indian market, while still benefiting from the versatility of owning ships in different segments. Essar Shipping has a diversified fleet of 15 vessels including very large crude carriers (VLCCs), Capesizes, Panamaxes, Supramaxes and Handysizes, totaling 1.83m Dead Weight Tonnes (DWT) with another 2.05m DWT coming online by end-2017.
The environment in the dry bulk market prospects has been very tough, comparable to a ‘(one) dollar shop’ where all vessels irrespective of their size are fetching similar rates. Given the dynamic geopolitical situations in the world currently, Essar’s strategy is to have vessels locked in for short periods, of not more than three months. Simultaneously, it reduces the ballast and idle time of its vessels while maximising returns using back haul cargoes - for its anchor customers, Essar Steel and Essar Power - and triangulation of voyages.
Overview of the bulk commodities market
On Indian demand for bulk commodities, a lot of coal is moving long haul into the country from Africa, and short haul from Indonesia and Australia. The other major commodities coming to India, that has seen a spike of late, are fertilizers which trade mostly from the Persian Gulf, Mediterranean region and Europe. In the meanwhile, India has been actively exporting bauxite particularly to China, driving demand for geared vessels.
Source: Lloyd’s List magazine, June 2016 issue
