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A look at the shipping industry - I

Aug 25, 2008

The shipping industry handles 95% by volume and 70% by value of India's international trade. In order to understand this pivotal engine of economic growth and the companies operating in the sector, we shall look at the shipping industry from this article onwards.Classification
The industry can be classified into wet bulk (tankers & offshore), dry bulk (classified into capacities) and liners (containers, MPP and Ro-Ros).


Demand
The tanker (wet bulk) segment is driven by oil demand in general. Specific factors include: Season (severity of winter), capacity utilisation of crude pipelines (pipelines are substitutes), crude inventory with refiners etc. The offshore (wet bulk) segment is also driven by long-term movements in oil demand and crude prices. Specific factors include: demand for exploration activities such as seismic services and drilling rigs.

The dry bulk segment is influenced by the commodity demand- primarily iron ore and coal. In fact, it is now accepted that the dry bulk market is driven by demand in China and India. China imports its raw materials mainly from Australia and Indonesia. All short-term demand increase in iron ore is met by India. The most logical alternative to these sources for China is South America, which massively changes the tonne-mile scenario.

Supply
The changes in the availability of vessels largely determine the degree of competition within the global shipping industry. Supply is a function of age of fleets, price of steel, regulatory issues such as phasing out of single hull carriers etc.

We shall continue our study of the shipping industry in the next article.

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1 Responses to "A look at the shipping industry - I"

jilu

May 27, 2011

it is better to add company details

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