Japan’s Mitsui OSK Lines (MOL), one of the world’s largest ship owners, is exploring India as a possible sourcing hub for vessel construction and has initiated talks with shipyards, including Cochin Shipyard Ltd.
The Japanese major, which currently depends largely on China and Korea for its fleet additions, apart from its home country, is seeking to diversify its supply chain by considering India as an alternative base.
At present, MOL will look to source medium range carriers in the initial stages; and then scale up orders for more specialised offerings as the ecosystem develops.
In shipping parlance, Medium range (MR) carriers are used for transportation of cargo, often refined oil products, which are ships with a capacity of approximately 50,000 deadweight tonne (DWT). These carriers are commonly used for intercontinental and shorter-haul routes.
Previously, it had initiated discussions with the state-run shipyards to explore the possibility of placing orders.
India’s contribution to global shipbuilding is less than 1 per cent, in comparison to China – 40 per cent, Korea – 30 per cent and Japan – 20 per cent.
Incidentally, MOL is not a ship-maker itself. It is a global shipping company that operates a large fleet of various vessel types, including tankers, bulk carriers and car carriers. It has a fleet size of 935 – making it the second largest player globally – of which 13 are Indian-flagged vessels (10 under MOL India and three under IFSC) – and the fourth largest in the country.
“We are in discussions with the likes of Cochin Shipyard. Earlier too, we had spoken with some of our partners here for placing ship-making orders. Right now, we do see that there is a potential. Depending on space available, and the shipyard’s intent we can look at securing medium range product carriers sometime in the near future,” Captain Anand Jayaraman, Executive Officer, South Asia Middle East Region, MOL (India) said.
Cost Competitiveness
Sources said, the cost of construction of such MR carriers could be in the range of $50 million if procured from China, and around $52 million in case of procurement from Korea with delivery timelines being in the range of 18 months.
In comparison, the construction of the same could cost $70 million with delivery timelines being in the range of 24 months.
To mitigate the cost differences, government support becomes important.
Broader Presence
Asked on India presence, Jayaraman said, the company would look to hedge its supply chain with India emerging as a possible alternative sourcing destination.
Bringing in new ships for operations here “would depend on customer demand and requirements.”
The company is also building its logistics business where it is open to joint ventures. “We are open to expanding on our own and also through JVs,” Jayaraman said adding that in the initial days it will target the niche segments before competing with the larger conglomerates in the segment.
