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The rationalization of services has not led to any significant reduction in capacity: Capt Achanta Sivakumar

Brief Profile of Captain Achanta Sivakumar   (Part 1)
Sea Career :

Capt Achanta started his career with Shipping Corporation of India (SCI) as a cadet officer after completion of the pre-sea course at T.S Rajendra in 1976 and rose to the rank of a chief officer in a short span of 8 years. In 1988, he left SCI and joined foreign shipping companies operating out of Monaco. He was promoted to the rank of a Master in the year 1990. He has held command of various ships for over 6 years.
During his tenure at sea, he sailed around to many ports around the world. He sailed on all types of vessels including small, medium and large Oil tankers, Large dry bulk carriers, General cargo ships and container vessels.
During his sea career, he was instrumental in initiating and implementing many programs concerning environmental and operational safety andfor  improvement of onboard efficiency.
Shore based career:

After having decided to settle ashore after a distinguished career at sea, in early 1996, as his first assignment, Capt Achanta took up employment with a container shipping lineagency , (NORASIA)agency based in CHENNAI. During his tenure with the company, he was instrumental in opening up additional branches at Kolkata, Bangalore and was part of the executive management council of the company(The think tank of the company).
In 1998, ( i.e after his first shore assignment above), he joined a MUMBAI based ship management company as General Manager in-charge of safety and quality management on board the vessels managed by the company, in addition to Manpower management functions. During this stint he was instrumental and responsible for ISM(International Safety Management) code on board the vessels owned by Foreign principals and managed by Herald Management Services Pvt Ltd.
In 1999, He opted for the position of General Manager, in-charge of Business development with Seaways Shipping Limited, a Hyderabad based shipping company with presence across the length and breadth of the country and involved in all types of maritime activities, services, including logistics activities. Primary focus of Capt Achanta during this tenure was to develop container related activities at various locations in India.
Question and CASwer session with Captain Achanta

 Sagar Sandesh: What is the state of the Shipping industry? Has it come out of the woods after the ten year Recession? The industry is now in a consolidation phase. Has consolidation of the industry helped to improve their profits? Reports indicate Container industry is picking up while it remains flat in Indian ports barring some in the West coast. Where does the consolidation phase lead the industry? Your take on the industry in near and long-term, please.
 Capt Achanta Sivakumar: The spate of Mergers and Acquisitions,(M and A)  in the shipping industry amongst the top twenty carriers is nearing completion and we do not expect any more major M & A's in the liner industry.
Notwithstanding the M & A's, the rationalization of services has not led to any significant reduction in capacity. 

Kawasaki Kisen Kaisha Ltd. President Eizo Murakami (left), Mitsui O.S.K. Lines Ltd. President Junichiro Ikeda (center) and Nippon Yusen KK President Tadaaki Naito join hands after announcing in Tokyo on Monday that they will merge their container operations

There is huge amount of excess capacity deployed on most trade lanes, driven by continuous induction of mega container carriers each year.
Globally the excess capacity (supply) and dropping trade volumes (demand), has resulted in continual erosion of freight rates on almost all long and short haul trades.
While there may be short term improvements (seasonal) on freight rates, in general, we do not anticipate any marked or sustainable improvement, in freight rates, or capacity utilization in near future, i.e. for 2018 & 2019.
The Indian EXIM trade has different dynamics, compared to global trade, because of infrastructural bottlenecks, coupled with significant seasonal variations in demand for agro commodities (both exports and imports).
The exports and imports out of /into India are subject to constant shifting of the goal posts (by way of frequent changes in government directives, and policies), which create a lot of uncertainty, in creating any long term strategies.
 SS: Trade wars have broken out between United States and China, What will be the impact on international trade and shipping? Will certain shipping routes become premier routes and some others uneconomic? Protectionism is gaining ground in free market areas in the name of Nation first. How do you see these global trends impacting the international trade?
CAS: The current USA Government and administration various steps, by way of imposing huge import tariffs, on friendly as well as not so friendly nations across the world, have  begun to cause huge disruption to currently well established trade patterns. This has also caused a lot of uncertainties in the short & medium term.
SS:Logistics remains a nightmare for the industry in India as goods from China and FarEastern countries bound for Hyderabad or Nagpur find their way through JNPT and Mundra ports while it makes economic sense to handle them in East coast ports.  There are both time and cost over runs as the goods move to west coast ports. How do you reverse these trends and contain Logistics cost?
There are 2 aspects to this:
1.     Shipping companies find it cheaper to drop off imports bound for multiple interior 
locations, at NHV( orMundra), from a time, cost and efficiency perspective.
2.     Landside infrastructure for inland haulage - rail and road networks are much better developed on the West Coast than the East Coast.
3.     Therefore, with current infrastructure, the East coast ports can only cater to ICD's within a 400-500 kms range and not beyond.
SS: What needs to be done to improve the railway infrastructure between National capital region and Nagpur with ports in the East Coast?

CAS:  In my personal view, it is futile exercise because East coast ports are not really on the global EAST-WEST trade lanes and most shipping lines have to deviate from principal trade lanes to call the South and East coast ports, of India. The Current EXIM volumes of the South and East coast ports, do not justify calls by more major shipping lines.
SS: Ports in the West Coast especially Mundra, JNPT and Kandla are over worked while the infrastructure created in the east coast ports from Vizag to Tuticorin are under-utilized or working at 50 per cent of their capacity. Railways had promised a dedicated railway corridor between Delhi and Chennai and Mumbai and Chennai in parliament ten years ago but they still remain on paper. Will creation of such corridors improve the situation or you have any other suggestion in mind.
CAS: The cargo availability in the hinterland of the North West INDIAN ports, is huge, where-as the same cannot be said of the hinterland of the South and Eastern INDIAN ports.  The amount of available EXIM cargo in SE INDIA vis--vis available vessel space, tonnage deployed is already over tonnaged, thus making a dedicated freight corridor is uneconomical, at this point in time, without developing the manufacturing infrastructure along the corridor.
 
(To be continued)

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