IBSA pact fails to spur maritime trade

NEW DELHI: Despite a trilateral agreement on shipping and maritime services between India, Brazil and South Africa, no Indian flagship carrier is interested in venturing into the two foreign coasts. Inadequate cargo and absence of two-way containerised traffic has deterred shipping lines from increasing services to Brazil and South Africa.

The trilateral agreement on merchant shipping, maritime transport-related matters and its ratification was signed between the three countries at the India-Brazil-South Africa (IBSA) summit in September this year. The agreement was aimed at promoting shipping links and strengthening relations and co-operation among the three countries. India’s trade with Brazil and South Africa stands at around $8 billion.

“One of the reasons why the agreement has not resulted in greater shipping activity is the inadequate quantum of cargo to Brazil and South Africa. At present, only 400-500 containers are moving to the two countries every week. For such long distances, at least 1,500-2,000 container capacity is required,” Shipping Corporation of India director SS Rangnekar said.

The outward movement of cargo from India consists primarily of containerised cargo. “Since much of the trade is aimed at containerised cargo, presence of our shipping lines is low. The participation of Indian vessels in containerised trade isn’t much at present,” Indian National Shipowners Association (INSA) secretary-general SS Kulkarni said.Currently, bulk of the cargo to Brazil and South Africa is shipped to Colombo in Sri Lanka from where it is loaded onto vessels heading to those countries.

Another reason why the agreement has not taken off as desired is the lack of containerised cargo from the two countries signatory to the agreement. Exports from India consist primarily of containerised cargo but inbound cargo to India consists of bulk cargo, such as sugar.

“Since inward cargo consists only of bulk, shipping lines can’t operate one-way container services. Empty capacity and the resulting revenue loss is a deterrent,” Mr Rangnekar said.

According to an official in the Directorate General of Shipping, very few ships are plying to the two countries and any increase in movement will depend on the pattern of trade and the initiative of shipping lines.