Page 21 - Annual Review 2021 full

Annual Review 2021

The past year saw the ill effects of the policy which have been volatile in the offshore segment with no
killed the growth of container shipping fleet under incremental demand and with the supply side far
the Indian flag and that it clearly promoted the outweighing demand
growth of foreign flag container fleet. India’s EXIM
trade was completely at the mercy of the foreign flag The cost of operations that had spiked in the wake
container vessels and India had no strategic card to of the pandemic have rationalized to a large extent.
play given that it had zero fleet which could in any The office of the Directorate General of Shipping has
manner meaningfully contribute towards tilting the been proactive in framing of guidelines related to
scales in favour of Indian EXIM trade. Unlike India, COVID and has extended certificates for manning,
China has a healthy national container fleet. crew and other vessel related issues. This support
has really helped the Indian flag offshore industry.
We expect the government of India to realise its
error and reverse these Orders at the earliest. Dredging

Dredging continues to be an important industry as
Offshore market volumes of global trade increase and more goods
In 2021, drilling programmes and field development are shipped through the sea using large vessels
projects that were paused or delayed due to or ships. For this purpose, dredging is required to
COVID-19 crisis, recommenced and the first six keep ports working. Therefore, there is a strategic
months of 2021 saw a surge in term demand for dimension to the dredging business.
vessels, both for anchor handling tug supply
vessels (AHTS) and platform supply vessels (PSV). Due to a lack of a growth oriented long term policy,
the sector has seen no private sector investment at
This sharp climb in activity started to flatten out all. The refusal by ports to follow standard contracts
towards the third quarter of the year but the positive for dredging has, among other issues, led to several
sentiment remains in the market. The forecast for Indian companies facing shut down in businesses.
2022 is however mixed. The expectations vary in DCI, continues on course and is now owned by
different markets and regions. a consortium of major ports of India, a transfer of
ownership from the government to the ports. This
As oil companies maintain a tight focus on costs, has help DCI build stronger relationships with
there is no sentiment to commit to multi-well, Indian major ports.
multi-year projects and therefore fewer long-term
charters are available. The Middle East, Asia Pacific, The perennial problem of the Indian dredging
Latin America, and Northwest Europe generate a sector is that foreign dredging companies continue
majority of the positive impetus. to dump prices resulting in Indian companies
facing unfair competition. While this is good news
Oversupply remains as a major issue for the OSV for the ports, Indian dredging companies who have
industry. With a continued focus on costs by higher operating costs have to bear the brunt. As a
charterers, and poor utilisation levels, the scope result, the Indian dredging fleet has seen no growth
for solid improvement in day rates is absent. An in the last two years and the number of Indian flag
uneven recovery may also release underutilised dredgers have remained stagnant at 44.
tonnage from the lagging regions. Permanent
removal of vessels is happening but generally at a Indian dredging companies are by and large
slow rate and in a piecemeal process. While some restricted majorly to the maintenance dredging
of the major owners run divestment programmes works, therefore the competition in maintenance
and reduce fleet sizes, many of the smaller owners dredging market is aggressive with steep drop
and operators continue to cling on to uneconomic in prices when compared with the international
assets and the fleet size remains stubbornly high. maintenance dredging market. Permitting
foreign dredging companies to participate in the
So as we move forward, there is room for positive maintenance tenders of our ports provides them
sentiment in the market as demand improves and an opportunity to dump prices. This aggressive
there is potential for further upsides as the global competition forces Indian companies to match
economy recovers and oil prices track a higher such low prices and this price war only has losers
path. But oversupply and weak day rates continue in the long run – the Indian dredging industry. This
to darken the horizon as the OSV industry aims to is evident as many Indian players have had to shut
get back to business. down their business and one has not seen any fresh
investment in this sector by the foreign companies
In India, the offshore sector has seen increased who are able to access the market without any
activity since oil prices improved from January investment.
2021. It led to uptake in utilizations and higher day
rates but heavy supply of assets has kept the rates The Ministry of Ports, Shipping and Waterways
offered at moderate levels. In fact, the day rates promulgated “Dredging Guidelines for Major

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