Improved demand brings return for German heavy-lift specialist’s westbound service from India to Europe.
Here’s a peek into how the recent economic recession affected trade regions differently: through the dark days of the crisis, project cargo and heavy-lift specialist carrier Rickmers-Linie continued to serve India from Europe, but there wasn’t nearly enough demand in the other direction to support a westbound service.
Europe’s floundering economy led the line to simply serve India from Europe on an ad hoc charter basis and refrain from operating the roundtrip service it had established to tap into fast-growing India.
“We’ve been serving India for years and years and years,” Gerhard Janssen, marketing and sales director at Rickmers-Linie, told American Shipper. “With the crisis emerging, we continued to serve India from Europe, but the backhaul export trade from India disappeared overnight.
“We scaled back because of the crisis, because that would have meant we would go back with the ships empty. That doesn’t work commercially. But we never gave up on the Indian market, never even considered it.”
Janssen said renewed demand westbound has made the roundtrip service viable once again.
“The Indian economy has been resilient and healthy the last two years,” he said. “Now we’re starting again on the roundtrip because westbound trade to the Red Sea and Med and northern Europe are picking up again. It makes sense commercially to engage on a roundtrip basis.”
The German line intends to run its re-established roundtrip service every three weeks using five vessels (six if required, Janssen said.). Three of the vessels are on charter, while two larger newbuildings entered Rickmers’ fleet between May and July.
The two Rickmers-owned vessels, the Rickmers Yokohama and Rickmers Tianjin, are 17,000 deadweight tons and have two 150-ton cranes and an 80-ton crane. The smaller chartered vessels are on medium-term deals while Rickmers maps out its long-term plans for the India/Europe trade.
The service links Hamburg, Antwerp and Genoa with Mumbai and Chennai.
“The base ports are Mumbai and Chennai,” Janssen said. “We have gone to Mundra before on an inducement basis, and certain cargo types and project requirements may have us call Hazira, Cochin or Vizag (Visakhapatnam). It’s doable, but clearly a function of customers’ needs.”
The eastbound trade never suffered the last few years because India’s demand for project cargo was impacted little by the economic downturn. And now major Indian industrial conglomerates are driving two-way demand.
“Inbound to India, it’s typically capital goods,” Janssen said. “All type of construction materials. Steel, cranes, railway and power generation equipment. On the westbound, now we see more commodities, like steel, and some interesting project cargos. It appears the major players in India are moving on to become significant players on the global (engineering, procurement and construction) stage. They’re not just being manufacturers. We obviously expect a lot of potential and expect to get a piece of this growth.”
Janssen said India’s 5 percent economic growth is “something people in Europe would dream of. So it’s not just about the next couple of months, but the long term. It’s definitely our objective to leave our footprint.”
But problems remain. India’s ports are ill equipped to handle the growth in trade the nation’s importers and exporters are generating. For instance, the vessels operating on another Rickmers service, it’s round-the-world service, are too large to enter the Port of Mumbai.
“There’s not enough capacity,” Janssen said. “It’s similar to other parts of the world. Everyone is looking at container traffic. The old-fashioned, multipurpose, non-major bulk sections of the trade have been neglected. Major Indian ports are not an awful lot different from other ports in the world. Indian ports need infrastructure, especially in the hinterland. Infrastructure exporters need access to ports, they need docks that are in good shape and can withstand these major loads.”
As an example, he said it can often be a challenge to navigate an out-of-gauge shipment through the narrow, crowded streets of Mumbai.
“There’s an excessively long coastline in India, and I would think there would be a major opportunity,” Janssen said. “It’s not just a political challenge, but a financial challenge. I’m personally convinced it will happen. But it might take a while.”