Private Shipyards Banking On Defence Sector

With the global shipping market witnessing turmoil, private shipyards in India are banking on the defence sector to ride out the current crisis. Slowdown in demand for goods has led to frequent instances of cancellation of orders for ship owners, ship builders and shipyards.Consequently, this has also affected the businesses of logistics service providers (LSPs) and container operators, leaving them with few consignments.Under these circumstances, private shipyards are looking to drive business from the defence sector. Therefore, private shipyards like ABG Shipyard, Bharati and Pipavav are joining hands with international engineering firms like Rolls Royce, Wartsila Diesel and Yanmar Marine.While ABG Shipyard and Bharati Shipyard have already tied up with Rolls Royce to build ships for the Coast Guard, many others are planning to follow suit.One of the major concerns for the shipping industry in recent months has been the steep fall in orders for new vessels. At a time when the economic meltdown is impacting most trades across the world, demand for new ships has also declined significantly.Moreover, cancellation of orders is another cause for concern for the industry. The cancellation rate in the dry bulk vessel segment alone is nearly 15% of the global order books.Decline in the demand for new vessels has not only affected the shipping industry, but also LSPs and container operators. Most of these companies, including small and mid-sized players, have incurred heavy losses in the last few months in the aftermath of the global crisis.They were hoping that new vessels would bring in more cargo handling orders, and thereby help them recover their losses. But a fall in orders for new ships has put their hopes to rest for the time being.According to Shantanu Ghosh, Administrative Manager, Raj Hamsa Ultralights Private Limited, a mid-sized Bengaluru-based logistics company, "The rough phase that the shipping industry is presently going through has also taken a toll on the logistics players. With funds drying up fast for most companies, it is becoming increasingly difficult to survive the present crisis. Hence, if the shipping industry can acquire some business from the defence sector, it would be helpful for both logistics and shipping companies."

By : David Parks