India's shipping companies may face drop in margins in FY22: Crisil

14 Sep '22

1 min read

Pic: Shutterstock/ MartinLueke

The margins of Indian shipping companies are likely to contract in fiscal 2022 (FY22) because of declining charter rates in the tanker segment despite historically high charter rates in the container and dry bulk segments in fiscals 2021 and 2022, according to a report by global analytics company Crisil.

“The Indian shipping industry largely comprises tanker vessels, which account for approximately 57 per cent of the overall fleet pie. While the container segment is the next largest, it accounts for a distant 22 per cent share. Hence, the Indian shipping players profitability is largely swayed by the tanker segment,” said the report.

The enormous impact of the lower share container segment will seep into fiscal 2023 as well, with limited ship movement on account of an expected decrease in trade resulting in a slight reduction in overall industry margins. Notwithstanding, the margins will still be higher than levels before the COVID-19 pandemic due to conducive conditions, which have slashed the variable expenses of shippers.

The report anticipates that the correction in charter rates across segments may impact player revenues to a certain degree.

ALCHEMPro News Desk (NB)

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