Though it is more cost-effective to charter larger vessels, Indian buyers prefer the smaller ones due to 2 reasons. One is that the ports in India can more easily accommodate the smaller vessels. Secondly, the vessels which bring coal to India from Indonesia, instead of returning empty, load iron ore in India and head for China from where they return empty to Indonesia. From India to China, the freight cost for iron ore is around $6 per ton, covering around 3,000 nautical miles. This strategy reduces the shipping companies’ costs by almost 25 percent, Rahul Sharan, Lead Research Analyst, Drewry Maritime Research, tells Madhumita Mookerji.
What is the current scenario like with regard to the seaborne coal market?
Out of the total logistics costs, seaborne shipping costs constitute the largest share. Shipping costs for coal to India depend largely on global supply demand dynamics of not only coal but other dry bulk commodities.
From the shipping perspective, demand supply balance in the coal sector doesn’t influence charter rates. The way it works is like this: a dry bulk vessel carries coal, grains, iron ore, bauxite, alumina, fertilisers etc. Now, what the shipping companies do is quantify the entire demand for these commodities and then the shipping demand for these commodities and then they supply the total number of vessels as demanded.
At the moment, there is an oversupply of almost 25 percent in the vessel chartering industry across dry bulk commodities globally .
In that case, how have coal freight rates been behaving because of this oversupply?
Normally, coal buyers in India and elsewhere in the world are price takers. They are not price buyers. Whatever freight rates are floating in the charter market, these buyers will have to accept these. The volume of coal coming to India out of the total dry bulk commodity segment is just a fraction (less than 3 percent of the dry bulk cargo volume globally) And that is why coal buyers do not determine or influence the charter rates.
How have the freight rates been over the last few years and what factors influenced the trend?
Let me go back a little bit into history to explain this properly.
هذه القصة مأخوذة من طبعة October 2017 من Coal Insights.
ابدأ النسخة التجريبية المجانية من Magzter GOLD لمدة 7 أيام للوصول إلى آلاف القصص المتميزة المنسقة وأكثر من 9,000 مجلة وصحيفة.
بالفعل مشترك ? تسجيل الدخول
هذه القصة مأخوذة من طبعة October 2017 من Coal Insights.
ابدأ النسخة التجريبية المجانية من Magzter GOLD لمدة 7 أيام للوصول إلى آلاف القصص المتميزة المنسقة وأكثر من 9,000 مجلة وصحيفة.
بالفعل مشترك? تسجيل الدخول
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