The Shipping Corporation of India (SCI) has posted its best set of quarterly results for more than 13 years. During the first quarter of the current financial year, ending 30th June 2020, the company achieved a profit of US$ 42.03 million, on revenues of US$ 156 million, compared with a loss of US$ 5.71 million in the corresponding quarter of the 2019-2020 financial year.
Chairperson and managing director, Mrs H K Joshi, says,”This is a big turnaround for the company and is primarily the result of our being able to grasp the opportunities presented in the tanker market. During this period we saw a big spike in tanker rates driven by the rising demand for floating oil storage as crude oil prices crashed. We were fortunate to have tankers in locations where they could take advantage of the positive spot market at that time.”
SCI’s tanker business alone generated a profit of US$ 53.71 million in the first quarter of the financial year compared with US$ 6.3 million in the corresponding three months of 2019-2020. While the first and second quarters of the 2020-21 financial year will see benefits arising from strong tanker demand for floating oil storage, the positive scenario will not last into the second half of the year, Mrs Joshi points out.”Since mid-June we have started to see a flattening of the tanker market, as traders start drawing down on their floating storage inventories. This is restoring tankers back into the shipping market as a time of very low demand, pushing freight rates back down from their high points.”
By comparison with the buoyant tanker market, SCI’s liner and container shipping business was more or less at the same level as last year with a US$ 3.9 million loss in the quarter, against a deficit of US$ 3.86 million in the equivalent months of the previous financial year.
Bulk shipping similarly held steady, with profits more or less the same at US$ 2.91 million compared to US2.92 million to the end of June 2019, while SCI’s technical and offshore operations division saw a decline in profitability to US$0.14 million compared with US0.9 million in the corresponding period of the last financial year.
All sectors of the business continue to see an ongoing benefit from low bunker fuel prices. The reduced cost of bunkers is estimated to have saved SCI around US$ 30 million so far this year across its diverse fleet. In particular the decision to opt for a low sulphur fuel strategy to comply with IMO 2020 rather than fitting scrubbers has proved to be a wise decision, giving SCI a significant cost advantage compared with those who chose to retrofit their fleets with exhaust gas scrubbers.
The pandemic has constrained SCI’s plans for fleet investment so far this year, but Mrs Joshi confirms it is still the company’s intention to acquire vessels to enhance the SCI fleet. “We are constantly watching the market for the right opportunities,” she concludes.