Our focus is on the growing economies where we are planning to build, especially in Indonesia, Malaysia, Vietnam, Thailand.
Now we are about 9 months in the COVID-19 pandemic. How much of NVOCC business has been affected, and are you coming out of the blues?
We had in place contingencies since as early as February. So, our basic thought was to first protect our staff so that we could better engage with the customers, and we were all very well prepared and we put measures in place to avoid any disruptions in our businesses. While practically all economic trade was shut down, seaborne trade was continuously operative. During the first couple of months, our capacity was down by 20% to 30%, but as we moved along, things started picking up, the backlogs are getting cleared, the sailings have resumed full-fledged and now we are much better off than we were in the pre-COVID era.
That’s good to know. You started somewhere in 2004 and after almost 16 years of being into business, now you are the leading NVOCC operator in South East Asia. So, how was the journey and what is your USP?
It has been an amazing journey. Our Chairman, Captain Mohan, had a vision to do something on the lines of ship owning or becoming a shipping line. We started in a small manner by picking up about 80 to 90 boxes in India, basically to service one of the PSUs to move some cargo from India to Singapore and Malaysia. From there on we grew and developed in phases. Initial 4 to 5 years was building stage, where we had enhanced the equipment, we started increasing on the working coverage. Later on, it was more of procedural connections, we went into a lot of leadership changes, building a strong core, that’s what has helped us today sustain and as I mentioned earlier, we are always evolving being a short sea operator, it is always being near to the ground and understanding the shipper’s needs. So, that is where I feel, we have achieved a lot of growth. Today, we are in almost 24 countries, servicing 100 odd locations all over Asia. Our focus is on the growing economies where we are planning to build, especially in Indonesia, Malaysia, Vietnam, Thailand. These are the core focus locations for us post-COVID.
Due to pandemic, lot of projects have been stalled for the want of either manpower or capital infusion. Since you are into project cargo and also some special cargo services, how is the business in these segments?
It has been slow. I think, we do about 10% to 15% of top line on these types of special businesses. Our most important achievement over the last year was we did an extensive movement of drill rigs from India to Africa and also we participated heavily into the low sulphur and scrubbers, so we were moving few scrubbers around and of course that slowed down right now because most of the special projects require physical inspections and inability to travel has hindered them. Secondly, ease of funds, access to funds also and of course and it’s quite a labour intensive activity. So, yes, it dropped down a little but thanks to the pick up on the dry cargo segment in the last 3 to 4 months, it has not affected our business that much.
Now let me talk about the two immediate challenges that our industry is facing. One is shortage of equipment, the availability of empty containers, and secondly, I understand that there is a tighter credit controls from carriers, cutting down the credit period. So, how both the things are affecting your business? One is credit availability and second is availability of containers?
We are a short sea player so for us availability of containers has not been a problem as much as what the mainlines are facing. It is more acute for the mainlines because they are invested heavily, if you see, year-on-year, I believe the growth on the trans-pacific capacities is over 30%. Basically, they have washed out all the equipment in Asia and Europe and put them or even the vessels in the transpacific trade. But we have always been here and our focus will stay intra-Asia. So, we are able to manage our placements much better. What is also happening is there are extensive delays so what a usual transit time would take about 15 days, now it has become 25 days or 30 days. So, that has created an artificial crunch, because equipment is either in transhipment ports or in transit, so our ability to use it has reduced, but we are able to manage because we can always reposition and place them where we want. So, we are not facing any inconveniences as far as equipment is concerned.
With regards to credit, shipping has been very liberal over the years. Not getting paid for 3 months to 6 months has been the norm. Well, if we want to continue doing and perform more efficiently, the money has to return back to the system. So, as much as the carriers require funding to run the ships, we require to pay carriers in time, so if we have to perform our duties with regard to the carriers, we expect our forwarders and shippers also to pay. But it doesn’t mean we are anyway imposing on them. We have been doing business with lot of our shippers for over the last 10 years and they are quite understanding. We are quite aware of their concerns, so like I said, we are being near to the ground, handholding. We are more open and closer to the trade. So, I don’t see any of our shippers or forwarder complaining in such a way.
Coming to intra-Asia, though the intra-Asian region is very opportunity oriented, but still we see the connectivity has not improved to great extent. So, what are your suggestions as a major operator in this region?
It has been an imbalance; I won’t say connectivity was ever an issue. In fact, if you see the pre-COVID times, the rates from India were as low as $50 or $20 to Port Klang and Singapore. It has since improved with the rise in demand, but we have always had providers helping us to connect. At any given day, we can load from the west coast of India. The east coast is a little slower trajectory because of withdrawals. If you have noticed, the mainlines have deployed a lot of the capacity by removing from this regions into transpacific. But that will come down post Chinese New Year, it should improve. The other problem what everybody is facing today is each port on an average has about 4 to 5 days of congestion. So, if a service has 5 ports in its rotations coming in from China to India, which would have normally taken about 25 to 30 days for a roundtrip, but it is now gone up to 35 to 40 days. So, that delays in the connection – so, it’s a very temporary phenomenon, which would probably improve.
You have been earlier into coastal shipping, so what is your perspective about its future? And have you seen the recent Coastal Shipping Bill? Do you have any recommendations or suggestions to improve coastal shipping?
We exited the coastal shipping business about 7years back. It has grown tremendously from about 6000 teus a month on the coast to almost 30,000 teus. The new policies, the new guidelines look very impressive and it will enable the Indian shipper to better participate. I look at the bill from two perspectives – one as an ex-seafarer, my concern is crew welfare because crew abandonment has become a major issue. Luminaries like Mr. Abdul Ghani Serang, Captain Sanjay Parashar, Minister of Shipping have always been at the front helping the seafarers. And business-wise, a concern is the Bill of lading. So, that’s a little sensitive issue because it would be ideal if all the stakeholders, the trade bodies like MANSA, CSLA, the Forwarders’ Association, the Shipper’s Association, FICCI, put their heads down, maybe look at something. There is also a mention about the National Maritime Policy and to come out with something on lines with the FMC – The Federal Maritime Commission, something which can evolve over the years, but it shouldn’t be a very kneejerk reaction, it should be thought processed, because if we put too much regulation into activity, we will end up into courts.
You are sitting at a place – one of the largest transshipment hub. What is the sense you are getting? When would be the business as usual?
I don’t think it would be very optimistic to see an improvement before Chinese New Year. Traditionally, Chinese give a break of 2 weeks, in production and dispatches. So, if that happens this year as well or the coming year as well, in February, we might see some relief because some carriers might actually keep calling Chinese ports or clear the old backlogs. But at the moment, from what I hear in Malaysia, Singapore and Colombo, they are very badly affected. Singapore to the least, but all of them are facing about 3 to 5 days of delay and Colombo is affected by COVID in particular terminals, there are manpower issues. So, to get back to normalcy, I don’t see anything which is showing up in the radar saying that let’s say by March or April. There might be a recovery after March but it won’t just fall off the cliff – you will suddenly get better. So, I feel we are in for a little bit of time.
Captain, what are your future plans for Maxicon?
Well, we are into like I said, the growing economies are where we have a foothold. We have been a core Malaysia, India, Singapore, Bangladesh type of business activity. We have about 20% odd business in these other sectors. We would like to actively involve in trades in South East Asian countries like Malaysia, Singapore, Vietnam, Thailand. We want focus more into other activities like building on a project cargo division. Technologically, we want to go into the big league, be more equipped. We want to service the customers who don’t have a laptop, to a customer who can do a payment by any methodology. So, we want to be available at the both ends of the spectrum of the trade.
