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Essar Shipping to scale up third-party cargo

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Essar Shipping to scale up third-party cargo – Report


Essar Shipping to scale up third-party cargo – Report

Business Standard reported that the Ruia-owned Essar Shipping is planning to increase volumes via third-party cargo, even as it services debt in a not so friendly freight market. Mr Ranjit Singh, executive director and chief executive officer, Essar Shipping, said that “Current tanker freight levels are not as good as two years ago. But, by 2019, we expect freight rates to pick up in this segment as older tonnage is scrapped.”

The scenario in the dry bulk segment is quite the opposite.

Mr Singh said that “At the current level of the Baltic Dry Index, we are able to service debt, cover operational cost and also have an earnings kitty.” The Index, a measure of freight traffic, has moved up from its all-time low of 290 in February 2015 to over 1,700 in December. The Baltic Dirty Tanker Index has tumbled to 800 from 1,070 in June 2015 and the Baltic Clean Tanker Index to 690 from 848 in July 2015.

Baltic indices are global benchmarks and a leading indicator of economic growth. According to the 2016-17 annual report of Essar Shipping, its total debt at the end of March was Rs 4,282 crore. The company has 14 vessels and is expected to handle 22 million tonnes of cargo in 2017-18, up from 17 million tonnes the previous year.

The incremental volume is expected from the dry bulk segment. Essar Shipping plans to increase the third-party cargo contribution in the dry bulk segment. This will reduce dependence on captive cargo.

Mr Singh said that “We aim to double our third-party cargo volume to eight million tonnes in the dry bulk segment by 2020.

We are meeting parties.”

At present, about 70 per cent of Essar Shipping’s cargo is captive and 30 per cent is third-party.

Source : [2]


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