Ports see pick-up in cargo volumes

The Baltic Dry Index (BDI) touched a 14-month high of 4,381 in the early half of this month, and while this brings cheers to the shipping companies, it also brings good numbers to the major ports of the country.

Total volumes handled in October stand at 46.6 million tonnes (mt), up 11% year-on year and 9% month-on-month. For April-October 2009, volumes improved 3.6% to 314.6 mt, but fell short of the shipping ministry’s target of 333 mt.

Industry experts say the rise in the BDI and a subsequent rise in the volumes at ports can be attributed to revival in demand as business activity picks up.  “With increase in sea freight demand over last month, we believe industrial units are replenishing inventories on anticipation of higher exports during H2FY10,” said Jignesh Dhabalia, analyst, India Capital Markets.

Kaushik Khushroo, VP, strategy, Mercator Lines, said, “While the iron ore movement to China is increasing, the coal movement to India is going up and this is set to rise as the 12 ultra mega power generation projects are being executed. For each project, we need around 15 mt of coal and by 2012, when Tata and Reliance UMPPs begin, we would need an additional 30 mt of coal, which amounts to 200 capesize vessels.”

Khushroo added that this is an indicator to the increase in dry bulk volumes. Volume growth was mainly contributed by POL (petroleum, oil and lubricants), iron ore and coal on MoM basis.

K S Nair, director (dry bulk carrier tanker), Shipping Corp of India said, “Port volumes have also increased due to the heavy congestion in Australian ports, due to which some business has been diverted to Indian ports. While coal movement is on the rise, iron ore movement has gotten a boost as China wants to build inventory as its new year is coming up.”

But while the dry bulk cargo has been showing signs of stability, container volumes are still suppressed. “While all other major ports showed improvement in volumes by 13% YoY during the month, volumes at JNPT and Chennai remained subdued. Container volumes were marginally up by 1% in October, despite an increase of overall tonnage by 11%. As compared to September, volumes increased by 4%, but October volumes are on downward trend,” added Dhabalia.

Both Khushroo and Dhabalia feel the festive season can give a small boost to the container market. “By 2012, the container market will be bullish again as the markets in Europe are opening up too,” said Khushroo. As cargo movement has increased, so has dry bulk freight.

Nair added that over the last month, freight charges for Supramax and Handymax ships have gone up by almost $ 4,000 per day.  Dhabalia said, “The long term charter rates on an average have gone up by almost 5-10% over the last month.”