Shipbroking activity in India has become increasingly liberalised. The government no longer exercises its former control and some international shipbrokers have accessed the market. A number of large London based broking houses, including Braemar and Clarksons, have established a presence in Indian cities.
In line with the shipping industry generally, consolidation is a growing trend and more shipbrokers are reported to have sought to band together to strengthen their scale and global reach. A recent example of this is the collaboration between McQuilling Partners, a US shipbroker and marine consultancy, and Indian shipbrokers, Seaway Shipping and Logistics, resulting in the two entities jointly establishing a new shipbroking company, Seaways McQuilling Pte Ltd.
The new company will be based in Mumbai and New Delhi and will focus on providing tanker, dry bulk, chemical and offshore brokerage services, combined with research and logistics consultancy in India and other regional markets. Seaways, a major logistics service provider, has stated it will provide McQuilling with a direct platform to offer their range of services to clients and to the Indian market.
Before the Seaways McQuilling collaboration, UK-based ICAP Shipping purchased Indian shipbroker CTI India, with a workforce of 28 people based in offices in New Delhi and Mumbai. On a global scale, shipbrokers are said to have recognised that larger, consolidated entities have a better ability to attract and retain clients. This has been stated to be the rationale for the merger between Braemar and ACM Shipping, announced only weeks before the McQuilling and Seaways deal. It has been suggested that the merger of these two companies may act as a catalyst for further collaborations, potentially allowing overseas shipbrokers greater direct access to the Indian market.
Recent reports suggest that the shipping industry in India may itself benefit from considerably more trading opportunities. In particular, the government’s focus on thermal power generation may mean that there will be a rise in thermal coal shipments, which may bolster the dry bulk market. India is already the third largest importer of coal, purchasing some 138 million tonnes of coal in 2012-2013, with imports predicted to reach 200 million tonnes in the coming years.
It has been suggested that this predicted spike in coal imports may provide new trading prospects for owners and operators of supramax and handysize vessels. These are currently the vessels primarily used for moving coal into India given the shallow nature of some Indian ports and the limited availability of shore cargo gear. Braemar ACM has reported that the supramax sector has shown positive gains from the transport of Indonesian coal to India.
India’s huge demand for coastal cargo carriage means that a number of improvements are likely to be needed to port infrastructure and the ports sector more broadly in order to cater to the increased volume in traffic. Proposals have recently been announced for the partial deregulation of state controlled pricing at government-owned ports. It is hoped that this will encourage greater efficiency and promote further public-private partnerships. The Indian shipping ministry has announced that it is to seek cabinet approval for an amendment to the Major Port Trusts Act 1963, with a view to the introduction of a new tariff regime as early as March 2015.
The recently appointed shipping and road transport minister has also stated he will pursue policies that will reform Indian cabotage rules and flagging restrictions. For some time it has been apparent that India-flagged vessels are not available in sufficient number to meet the country’s demand for coastal cargo carriage.
Although the easing of cabotage has provoked some controversy, it is likely that changes to port infrastructure will be generally welcomed by the industry. It is hoped that cautious relaxation of regulations will allow the efficient movement of containers and ease congestion at ports and port storage facilities, while also protecting the interests of existing operators. Such developments will be both welcomed and closely monitored by the industry.