SCI’s Growth Trend Expected to Continue in Next Quarter, Says CEO Harjeet Kaur Joshi
What would be your suggestions to these women who aspire to reach the position you occupy?
Persevere, dare and be ready to step out of your comfort zone. Aspire to achieve the goals in which you believe with conviction and assert your position. Recognizing the “leader” in you is relatively easy compared to nudging that leader to withstand trials and beyond. Instead, a consistent entrepreneurial capacity and diligent performance with a focused vision of where you need to reach would help maintain and improve the momentum of your aspiration.
Under your leadership, how have you faced the pandemic and continued to maintain the growth of SCI?
The unprecedented pandemic was dealt with effectively, with foresight and vision. A Business Continuity Plan (BCP) was finalized well in advance of containment and implemented with IT systems configured to accommodate WFH requirements.
Business operations and functions continued to be performed without any exceptions, interruptions and delays and SCI was able to deliver on all fronts well within the stipulated time frame and without benefiting from the extensions granted by the regulatory authority, whether for the publication of results or holding of meetings. A remote audit was performed due to the restrictive scenario and SCI managed to break its own records of over a decade.
We had a major challenge of controlled crew change which was made necessary by IMO globally and DG Shipping nationally as a guarantee to curb the spread of COVID. The increased cost of these crew changes did not deter SCI and crew changes were handled with the “Safety First” approach and ensuring a qualitative crew change with care and compassion, including ensuring that the seafarer reaches his home in good health and safety.
SCI has adhered to strict preventive measures and the entire detained fleet has remained COVID-free – a great achievement.
Despite the slump in activity, how is SCI evolving?
The collapse of the market, in particular the Tanker segment, had a negative impact on shipowners. SCI’s diverse fleet, judicious practice and strategic deployment of its vessels on a mix of voyage and period charter as well as the selection of trade routes have helped to absorb market volatility to some extent and leverage built on market strength in segments that are doing well. And although the dry bulk market is now improving with China driving demand, during the period of declining demand for coal, SCI has balanced its deployment by focusing on the relatively better demand for grain transportation.
The impact of the covid-19 pandemic and falling oil prices were also felt in the offshore market in 2020-21, resulting in the postponement or cancellation of ongoing E&P projects by many E&P companies and opportunities Limited employment for offshore vessels which made us seek out diverse clients instead of focusing on just one. Additionally, with Brent crude rising to US $ 60 and projected bunker prices in the upper range, offshore activity is expected to increase, opening up new opportunities in the offshore services sector.
In the container segment, demand from consuming regions of the world has increased due to a phased recovery of normality following the Covid-19 pandemic, and, with increased demand for containers and space for them. ships, sea freight has also seen an increase. Second, container tariffs have also increased due to the dynamics of the demand-supply gap, as the repositioning of empty containers has been adversely and severely affected due to the delay in unloading containers and clearing customs at the unloading locations due to congestion and the resulting increase in turnaround time for containers. With demand intact, supply scarce and freight rates stable in the short term, SCI’s results were encouraging and the trend is also expected to continue in the next quarter.
Overall, with its inherent advantage of a diverse fleet operating in different business segments and the strategies in place, SCI has been able to not only maintain but perform exceptionally well during this tumultuous time.
What are the challenges facing the maritime industry? How much has low sulfur fuel increased input costs?
The shipping industry is still not out of the depression that began in 2008 alongside the global financial crisis and is also somewhat shaken by the impact of the Covid crises. Shipping and trade are closely linked to economic development and the pandemic impacting logistics / procurement and, with the start of the second wave of Covid-19 in many countries, the recovery remains uncertain.
Asia contains economic powers mainly China, India, Japan, South Korea as well as ASEAN countries where gradual and slow ramifications of trade growth are visible after the disruptions caused by the pandemic . However, this growth in trade is a prerequisite for Western countries to be able to overcome the pandemic. In addition, the US-China relationship will also have an impact on the decision of a full-fledged trade recovery.
Currently, the biggest challenge facing shipowners is the crisis in the tanker market with freight rates at historically low levels. Moderate demand and excess tonnage put pressure on freight rates, in some cases resulting in negative round-trip gross operating profit. TCY’s revenues for the Middle East Gulf routes to India have been negative in recent months.
Indian tonnage has not increased compared to Indian Exim activity over the past 2-3 decades; a significant part of Indian trade is still handled by foreign lines depriving Indian shipping lines of business opportunities. The growth in Indian tonnage would complement the growth of the shipbuilding industry and the economy in general, as part of our government’s Make-in-India initiative. However, an enabling environment, a level playing field and political support are needed to provide the necessary impetus for the growth of the shipping industry in India.
In a positive development, the government announced in its budget a subsidy program of Rs. 1,624 crore to encourage the growth of Indian tonnage. In addition, the industry has solicited a dedicated financial institution to provide long term loans at competitive rates to Indian shipping companies to enable them to compete with their overseas competitors benefiting from such low cost financing.
Without a doubt, low sulfur fuel has increased input costs, but during the Covid-19 pandemic all the equations of demand-supply dynamics have changed dramatically. Crude oil prices fell in early 2020 due to shrinking demand, the global economic slowdown and huge inventories; This is why switching to low sulfur only resulted in a marginal increase in the cost of fuel.
The cost of the bunker, however, started to increase from November-December 2020 due to the reduction in crude production by OPEC, the partial shutdown of production for maintenance and the increasing demand after opening. economic activities in most parts of the world. A sharp increase in bunkering prices has been noticed over the past two months, with crude rates rising nearly 50% over the same period and is expected to impact direct operating costs.
It is usually during the downturn in economies that vessel purchases and sales gain momentum. An activity there?
Asset prices in the oil, dry bulk and gas segment are quite attractive at the moment as container ship prices prevail at exceptionally high levels due to the current strong increase in demand in the cargo trade. containers. It has been SCI’s policy to acquire assets at the right time. The prevailing scenario of SCI’s financial stability and attractive vessel prices is the right time and SCI is actively seeking opportunities to improve its fleet. Currently, SCI is in the process of acquiring vessels for which the tender has already been issued and the inspection of vessels is underway.
Business plan for future growth.
Regarding the improvement of the fleet, SCI may consider the upcoming acquisition of vessels in a broader spectrum depending on market conditions, availability of funds and other factors. SCI seeks to consolidate its position as India’s leading shipping company and continues to explore new business opportunities in EXIM trade, Coastal Trade has also increased its global footprint in cross trade opportunities by seeking new partnerships as well as the tonnage in charter which is always an open option.
SCI, through its wholly owned subsidiary Inland & Coastal Shipping Ltd. (ICSL), also entered a new segment of inland waterways from January 2021 and started regular service on national waterways no. 1. Currently, SCI operates 2 vessels on this route and is expected to induct a third vessel in the near future. These 3 vessels belong to the Inland Waterways Authority of India and have been taken over by ICSL on a bareboat charter basis for inland waterway operations.
As a well-diversified shipping company with a strong presence and expertise developed over decades, opportunities abound for SCI as we explore all areas of the shipping segment.
(This article was originally planned for International Women’s Day.)