+91-44-2522 8888
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Chennai, Tamilnadu
 
 
 
Shipping Services
 
CONTAINER LINER SERVICE
          The sustained growth in containerized trade between China and Europe has generated viable markets for starting new services. With India straddling the main sealane about halfway, its economy on overdrive and on strong fundamentals and Sino-India trade booming, the opportunities have compounded.
 
The progressive size increase of the vessels on main hauls and the resultant availability of larger vessels in the feeder market have created the possibilities of operating these mid-size vessels on long hauls.
 
On amortization and operating cost comparisons, the expensive new large ones and the older midsize ones can compete effectively, with decent nett margins, favouring the written down ones.
 
Availability of such tonnage, enables the launching and establishment of a regular service with chartered in tonnage alone, without any capital investment.
 
Likewise, availability of Containers in the leasing market enables the box support system without asset commitment.
 
The Group of promoters behind this proposed service have had ample exposure and hands on experience in risk-benefit management of such a liner service.  
   
The time tested structure of Agencies and Freight Brokers enables quick marketing and set up with minimal costs & overheads.
 
As compared to owning vessels, slot chartering space etc, operating the service with chartered vessels and leased tonnage evolves as the least risk option.
 
The people behind the venture have credibility in the market to obtain vessels, boxes and terminal windows fairly quickly at attractive rates.
 
A lean management team coupled with effective Information Technology makes it easy to monitor and manage the enterprise remotely in many time zones.
 
Apart from the pre-launch expenses, commencement of service and the first cycle of delayed earnings, the venture will be self-supporting to a large extent.
 
Thus the main requirement to launch the service is working capital to the extent of USD10 -15Million.
 
The WHY Compulsions

            The post GATT liberalised WTO trade flows that started as a trickle about a decade ago, has propelled seaborne trade at a fast and sustained pace all around. The globalised village of the current long peace era has truly integrated mercantilism, by linking manufacturing, distribution and consumers. India and China lead such growth with robust economies and the EU too, after coming under the Euro. Container trades serve these huge consuming markets. The providers of the proposed China-India-Europe Container Service, have sector specific expertise garnered over decades in Shipping Agency, Freight Forwarding etc linking the main trade routes and are well aware of the nuances of the trade and how to handle downturns. They intend to integrate their services in the booming trades where volumes are aplenty and burgeoning growth is catered to by ever larger firms-ships leaving room for small/mid-size players.

         The evolved liner trade has grown in size and strength and as larger ships are put into services, the smaller ones get displaced, become available to independent players and are able to serve, at competitive rates. India straddling the China-Europe trade route at about half way, is well located to exploit trade in both directions. The Liner box trade is typical of non-asset based services, with ships provided on lease/charter by tax planning investors and the operators hiring everything from Ships, Containers, Terminal slots and Staff too to meet the exigencies of the trade. Thus with least Capital/Asset exposure, financial management is easy and less risky too.

 
STRATEGY
In depth knowledge of Trade patterns/growth/risks/downsides
Identify service with viable/risk options well considered.
Determine lead time to commence Service.
Line up reliable Agents, Forwarders, Transporters, NVOCCs at both ends.
Organise cost effective management set up.
Recruit and appoint Managers/Executives.
Draw up cost-effective funding options and accounting systems.
Lease/Hire all items except short life office equipment.
Provide for Working Capital flow on call.
Arrange ships to be chartered with technical/commercial/legal back ups.
Contract boxes to be leased in the right mix, location and options.
Make Bunkering arrangements with quality control and credit terms.
Design Bill of Lading and other documents.
Advertise schedules and connectivities.
Market aggressively.
Sales team to be in position a month before.
Contract with terminals for berth slots, duration and rates.
Contract with Feeder operators.
Insure against Charterer’s and Carrier’s Liabilities with recourse to the chain system.
Have in place box pick up, drop, repair etc and storage space on lease if necessary.
Set up pro-active monitoring systems.
Audit business plan and execution right from planning and inception.
Provide Overdraft on call against credit period, receivables and bad debts.
Consider Forex hedging.
 
The SERVICE
         The service is slated to be launched in April 2011 with Slot chartering and available suitable ships on hire. It will be a weekly service and when fully established, within few months, with nine ships completing voyages every 9 weeks and a full cycle in 17 weeks.
 
The NETWORK

         The promoters are with good and experienced background and standing in the world of commerce, having been catalysts to the trade for decades and generations. Like-minded investors and fund promoters are being lined up, to launch the service, provide working capital and establish it’s profitably over few years.

        The Management team is drawn from existing services and it is they, who have developed the blue print for this service. They are drawn from different levels of shipping lines and are putting together their name and experience behind the proposed service. They are well versed in Liner Operation freight rate setting, freight collection and chasing receivables. Box Lessors, Container Terminals, Freight Forwarders, Sub-agents, Intermodal hauliers etc., comprise the network team.

 
The METHODOLOGY

         Purpose built suitable container ships will be chartered as required for committed periods, with options to extend charters, at known costs for longer periods. These are available in the market through brokers. Their size/types have been identified and used for costing. Charter terms, provide for performances and penalties for under-performance as well. Weather delays are factored in and reserve speed is provided to perform at 20knots. Containers can be feedered to ports with smaller volumes, so as to save time and costs of direct calls.

         The Containers themselves are hired for long periods as and when required at major ports and returned when in surplus. Major leasing firms, provide these on Master Lease at short notice, at big and small ports. The service operators are allowed to name the ships, paint their insignia on ships/boxes and issue their own Bill of Lading –a trade document for transport of cargo. Fixed time calls at Terminals are assured by reserving berths, contracting throughputs to obtain competitive rates and engaging Freight Forwarders and Transporters to book, consolidate and haul cargoes to match slot availability and port calls. All risks of charter and carriage are covered under insurance which are easily available at reasonable rates.

 
The DOWNSIDES
         Every enterprise has downside risks and so too shipping. Costs can be reduced by slow steaming and minimizing port calls. Boxes can be off-hired when in surplus and ships also, to continue with service matching demand patterns. With no assets owned, it is fairly easy to downsize service and temporarily suspend service in worst case scenarios. Variations in Bunker cost and Currency Exchange rates are recovered through `adjustment factors’. There are peak season surcharges and extras for congestions and war risks too. Major risks and accidents are insurable with low deductibles.
 
SUMMARY
          The time is ripe and apt for the proposed service to be launched by people in the know. Such plans can be implemented speedily with low gestation period by utilizing the existing networks of the proposed partners. Whilst working capital is called for in the short run, it can be recovered and ploughed back to continue and strengthen the service. Surplus generated can at first be used to reduce funding and interest burden, and then to expand services. Projections confirm that over a period of three years the service can be debt free and self-sustaining, with healthy balance sheets that can be further exploited.
 
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