Synopsis:
- The global shipping industry performed well from mid-CY2021 to CY2022 backed by recovery in charter rates across multiple vessel segments after the initial impact of the pandemic. The outlook for the industry in CY2023 is mixed and will depend on capacity addition in each segment. With the global merchandise trade volume projected to slow down in CY2023 and given the highest capacity additions in CY2023-CY2024, the container shipping segment is expected to be the worst impacted. The tanker segment is expected to maintain its CY2022 performance in CY2023 due to the lowest capacity addition and redistribution of crude trade flow by key consuming economies. The performance of the dry bulk carrier segment is expected to improve in the second half of CY2023 driven by supply-side dynamics.
- The Indian shipping fleet is primarily dominated by crude and product tankers, accounting for the majority of the overall capacity at 57%. Dry bulk carriers follow at 16%, while container vessels make up approximately 5% of the fleet. Given that globally crude and product tankers are expected to outperform the container vessel segment and given the dominance of these vessel types in the Indian fleet, the Indian Shipping Industry is expected to maintain a steady performance in FY24. Furthermore, the domestic fleet mainly consists of small to mid-size vessels, which are less susceptible to volatile charter rates. Considering these factors, CARE Ratings maintains a Stable outlook for the domestic shipping industry in FY24.
- The financial performance of the two largest domestic shipping companies, namely Shipping Corporation of India Ltd and Great Eastern Shipping Company Ltd, reflects a consistent improvement in revenues and profitability during FY23. CARE Ratings anticipates that these companies, assumed to be representative of the Indian shipping industry contributing around 45-50% of the country’s total tonnage, will demonstrate a stable business and financial risk profile in the coming year.
