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Fleet expansion in shipping A Mirage - Views on News from Equitymaster
 
 
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  • May 13, 2000

    Fleet expansion in shipping A Mirage

    The gross registered tonnage (grt) transported by Indian shipping companies is on a declining trend. The share of Indian shipping sector in the total cargo transported worldwide is also decreasing. If the Indian shipping sector has to regain market share, fleet expansion in terms of gross tonnage, has to be taken seriously.

    Trends in Gross Registered Tonnage of Indian Fleet
      FY96 FY97 FY98 FY99
    Gross additions (grt m) 0.3 0.2 0.3 0.2
    Increase/ Decrease -64.0% -47.0% 47.0% -12.0%
    Total Fleet (grt m) 7.1 6.9 6.8 6.9
    Increase/Decrease 1.0% -2.0% -1.0% 1.0%

    The table above indicates that the gross addition on a year-on-year basis shows the incapability of the Indian shipping companies to expand the fleet.

    The direct impact of this is visible from the tonnage targeted for every five-year plan and the tonnage achieved for the respective period. Right from the Ist five-year plan to the VIIIth five-year plan, the tonnage achieved is nowhere near the tonnage targeted. The trend in tonnage is given below,

    Tonnage Trends
    grt m Targeted Achieved
    VIth plan 7,500 6,319
    VIIth plan 7,500 5,907
    VIIIth plan 7,000 6,916
    IXth plan 9,000 6,852*
    * Till 1st July 1999

    These targets could be achieved only when the tonnage capacity and the operational efficiency are improvised. However, since exports and imports are looking good for the current year, the shipping companies should capitalize on this and improve their topline growth. Nevertheless, if the shipping sector has to see some growth, the government should provide adequate tax shelters for these companies, which mostly depend on their internal accruals and the depreciation benefits.

     

     

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