Shipping Ministry protocol for vessels to hurt cement industry importers

From the West Asian countries such as Saudi Arabia, Iraq, UAE, Oman and Qatar, India largely imports its crude oil and limestone.
No sooner did the Union shipping ministry lay down protocol for vessels calling on the Indian ports to combat COVID-19, importers, especially for the cement industry, are already staring at a cost escalation on account of 14-day quarantine period.

 “India imports limestone in large quantities from the UAE (United Arab Emirates), Qatar and Oman, where the voyage is about three to four days. Now, the vessels will have to wait for 10 odd days extra before berthing here. Due to this, ship owners will be budgeting the extra wait time on account of quarantine. This will push up the cost of transportation for importers in turn impacting cement industry,” Rahul Bhargava, director (Commercial & Operations) at Essar Shipping told Business Standard.

Limestone is used in the making of cement. 

 
According to the protocol rolled out over the weekend by the Ministry of Shipping, vessel arriving at the Indian ports from infected countries before 14 days of departure from the infected port have to be quarantined until it completes the 14-day period. India imports sizable dry bulk, liquid bulk and container cargo from the West Asia and South East Asian countries from where shipping takes less than 14 days. 

“It will be a serious issue for limestone importers mainly on the west coast where the commodity comes typically to ports of Gujarat. Their cost of transportation is expected to go up by 35-40 per cent as both bunkering and chartering costs will go up for additional number of days,” said Bhargava.

While the short haul will take a hit, for the long haul, where limestone vessels move from these countries to the east coast of India, the voyage is about 10-11 days, the cost escalation will not be that high. "The additional number of days (to make up the quarantined period) is less which means cost of transportation for the east coast importers will not be impacted much,” Bhargava explained.

From the West Asian countries such as Saudi Arabia, Iraq, UAE, Oman and Qatar, India largely imports its crude oil and limestone.

Crude oil imports will not have much impact since both Saudi Arabia and Iraq, the top suppliers to India, are not among the 22 listed COVID-19 infected countries.

Vessels arriving from any port in China, where the virus is believed to have originated, will also have the necessary quarantine period of 14 days, said the ministry.

Either India gets the Chinese container cargo directly or is transshipped via port of Colombo in Sri Lanka or via Singapore. India imports electronics, spares, electronic intermediates such as chips and other components of gadgets from the dragon country in large quantities.

Whether it is a direct voyage or via transshipment, it takes about 15-20 days for a container shipment to come to India from China (wherever Chennai Port or the Jawaharlal Nehru Port Trust).

“The China cargo will have to kept in quarantine in the port and terminal boundary which will then attract a per day demurrage charge (for 14 days), which the port levies on the cargo. This will push up cost of transportation for the importer but here the port has the freedom to give discounts or wavers depending on the trade conditions in the current scenario,” said Subrata K. Behera, manager -ports and container research at Drewry, a London-based maritime research firm.

Alongside, India’s exports are also expected to get impacted in coming days as industrial plants are operating at minimal levels due to weak demand and downsizing staff at various location will also impact outbound trade, said industry officials. 



Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel