SHIPPING AND AIR CARGO

SHIPPING AND AIR CARGO 2011 will be a pretty difficult year for shipping because the excess supply (of tonnage) will continue to put pressure on freight rates. 2010 was a record year for delivery (of new ships). 2011 will be closely following that, and thereafter it will drop. On the demand side, there will be growth despite the financial difficulties in the Euro region and in the US. The BRIC countries (Brazil, Russia, India and China) are growing pretty fast and that will drive the trade. Because of that the demand for tonnage is expected to grow at a decent rate in 2011.

In 2010 the growth in demand has been pretty good. Dry bulk has grown 10 per cent and crude 3.4-4 per cent. Of course, this growth has to been seen in view of the low base of 2009, when global trade had actually plummeted. But supply growth has been higher than demand growth and that put pressure on freight rates, which remained subdued. Despite the severe winter, the energy demand has not reached the expected level and the tanker rates have not gone up. The impact of excess supply (of ships) is expected to continue till early 2012.

Thereafter, there will be a reasonable chance for a decent revival in rates. This is because 2009 was a historic low for new ship orders and therefore delivery of new ships will be very limited in 2012. But the growth in demand will continue following the expected global economic recovery. So, there will be demand supply equilibrium by 2012.

............Excerpts from an Interview with Mr Sabyasachi Hajara heads the country's largest shipping company, Shipping Corporation of India, which operates almost all types of ships from LNG tankers to passenger vessels. Mr Hajara who has been with SCI for more than 38 years, is the only head of an Indian company to be in the list of 100 most influential people in the world of shipping, published last month by Lloyd's List.