As part of its ongoing portfolio-restructuring exercise Mercator decides to exit dry bulk cargo business.
The bulk cargo-carrying business has been the worst affected by the downturn in the shipping cycle, with the Baltic Dry Index, or BDI, having collapsed from a level of 11,793 in 2008 to an all-time low of 373 on 15 January, and showing no sign of a revival anytime soon.
BDI is a measure of shipping rates and its fall signals that the recovery of the world economy is some distance away. The index measures costs of shipping commodities such as coal, iron ore, steel and grain.
Besides Mercator, domestic shipping companies such as Shipping Corp. of India Ltd, Great Eastern Shipping Co. Ltd and Chowgule Steamships Ltd undertake dry bulk cargo transportation.
On 20 November, Bloomberg reported that the volume of goods imported into China has already fallen by around 4% in the first three quarters of the year, after rising an average of 11% per year in 2004-14.
That means China has cut around 0.4 percentage point from the world goods trade growth in the nine months to the end of September, after having added an average 1 percentage point a year in the previous decade, the report said.
The dry bulk shipping market will remain in recession due to contracting demand for iron ore and coal, and any recovery is not expected until 2017, according to the Dry Bulk Forecaster report published by global shipping consultancy Drewry in September.
“Falling demand and oversupply have severely impacted commodity values, with iron ore and coal prices in virtual free fall. The dry bulk shipping sector has been a casualty of these developments with resultant impacts on vessel earnings,” it said.
India’s exports contracted for the 13th month in a row in December due to tepid global demand but trade deficit widened due to a jump in import of gold and electronic items.
Data released by the commerce ministry showed that exports contracted 14.75% to $22.3 billion during December, while imports shrank 3.9% to $33.9 billion, amounting to trade deficit of $11.7 billion.
India’s overall exports are projected to decline by 13%, from the previous year’s level, to $270 billion, by the commerce ministry.
Source: Livemint
