The state-run Shipping Corporation of India Ltd. (SCI) has received a "poor response" to its plan to purchase six used ships of various types for a budget exceeding Rs 20 billion through tenders, according to multiple sources, as very few fleet owners have lined up to offer their ships in a booming freight market. Crucially, a person with knowledge of the tender stated that the national carrier did not receive any offers for the purchase of a fifteen-year-old, 9,000?12,000 twenty-foot equivalent units (TEUs) capacity container ship. This is because the Red Sea crisis forced owners to reroute their box ships via the longer Cape of Good Hope rather than the shorter Suez Canal route in order to avoid attacks by Houthi militants backed by Yemen. Ship rerouting has resulted in more sailing days for the journey, requiring more ships to be deployed on services, soaking up extra capacity.
The only part to generate a "decent" reaction was the 15-year-old very large gas carrier (VLGC) with a capacity to transport 79,000?84,000 cubic metres of LPG. SCI got "half a dozen" proposals for the vessel. The bids were "nothing much" to write home about for a 15-year-old medium-range (MR) product tanker with a 46,000?52,000 dead weight tonne (dwt) capacity. Additionally, SCI has invited bids for a 10-year-old tug supply vessel that can handle anchors (a domestic tender open only to ships registered in India), a 10-year-old offshore vessel that can be used for multiple purposes, and a 15?20-year-old high-speed craft that can accommodate 150 passengers, all of which will be used on the service between Kankesanthurai, Sri Lanka, and Nagapattinam, Tamil Nadu. Rich from the epidemic, liner shipping firms have placed huge orders for container ships that will be delivered in the next two to three years. The only way that any old container tonnage will be forced into the market for sale is through those deliveries, he continued. The container shipping sector is doubtful that SCI will get proposals to purchase a ship given the state of the market. According to a container shipping industry executive, the supply chain has already experienced an elongation of more than 20 days due to the detour via the Cape of Good Hope. For example, on the service jointly operated by SCI and Mediterranean Shipping Company (MSC) with nine ships, the requirement has increased to 12 ships because the voyage time has extended to 85 days from 63 days. The executive explained that to cover the rotation, the service needs three more vessels. Similarly, every service in the container shipping industry globally requires more vessels. Fleet owners are cancelling sailings, and many are displaying schedules for ships that do not exist. Attempts to book on a specific vessel result in automatic rejection due to the unavailability of such vessels. There are no surplus ships for sale, so owners are faced with the question of where to acquire ships for purchase. During the COVID pandemic, when India's exporters suffered from soaring freight rates and a lack of container shipping capacity to transport their goods, they were dependent on global carriers. The Ministry of Ports, Shipping, and Waterways approved SCI to purchase two container ships with viability gap funding (VGF). However, there was no interest from anyone, and the plan did not progress. The industry executive remarked that if it were someone else, they would have eagerly accepted the opportunity to buy ships with VGF support. For instance, MSC recently initiated a container shipping service from Paradip Port to Colombo with VGF provided by the Odisha government, demonstrating that it could be accomplished. Currently, SCI only operates two container ships out of its 59-strong fleet. Containers are primarily a business-to-consumer (B2C) affair, whereas SCI operates as a business-to-business (B2B) company. A trade source commented that SCI operates container ships primarily to support Indian import-export trade with certain controls. Once this responsibility shifts to global conglomerates, they may coordinate and raise rates accordingly.
