Pratik Bijlani –
Behind every vessel trading across the world’s oceans lies a commercial calculation—of cargo, freight, fuel, capital, market timing and risk. That broader business perspective came into focus at the Company of Master Mariners of India’s (CMMI) Monthly Lecture on 3rd September at MSC House, Mumbai, where maritime professionals Mr. Vijay Handa and Mr. Ashok Rao examined the commercial forces shaping the shipping industry.
Introduced by Capt. Kaustubh Pradhan, the session looked beyond the operational side of shipping to explore how tankers, dry bulk carriers, containerships, gas carriers and emerging offshore sectors respond to market cycles and wider economic conditions. Rao, a former SCI executive with extensive chartering experience in Bengaluru and Chennai, and Handa, also a former SCI executive who later served as Senior Vice President at Reliance and has been President of Saigal SeaTrade since 2019, drew on decades of experience to explain the commercial realities behind shipping decisions.
At the heart of their presentation was the nature of shipping as a largely open and highly competitive market. In segments such as tankers and dry bulk, where vessels and services are relatively homogeneous and market information travels quickly, owners are often rate-takers rather than rate-makers. In such an environment, the speakers identified capital cost as one of the few sustainable competitive advantages available to owners. “Shipping is a capital-intensive, highly competitive industry where owners are primarily rate-takers. The real commercial advantage lies in surviving the low markets through disciplined capital management, strong charterer relationships and operational efficiency, while positioning the fleet to take maximum advantage of the peaks when they arrive.” said Rao.
The ability to buy vessels during market downturns, maintain manageable leverage and secure competitively priced capital can therefore determine who survives difficult cycles and who is best positioned when rates recover. Equally important, Rao stressed, is keeping vessels commercially productive. “The simplest way to maximise revenue is to maximise the ship’s earning days. That requires reducing idle time, maintaining strong relationships with charterers and ensuring that an owner has sufficient fleet presence to respond when attractive cargo opportunities emerge in the market.” he said.
The discussion highlighted the inherently inelastic nature of vessel supply, which can make downturns prolonged even when freight markets weaken sharply. Strong markets, by contrast, can be relatively short-lived. To navigate these cycles, Rao and Handa advocated a balanced approach across spot exposure, time charters, Contracts of Affreightment and pool arrangements, allowing owners to manage risk while retaining exposure to favourable markets.
Looking ahead, the speakers pointed to substantial vessel orderbooks, particularly for VLCCs, Suezmaxes and VLGCs. A continued influx of tonnage, they warned, could eventually create an oversupply environment reminiscent of the prolonged downturn following the 2008 financial crisis.
The subsequent question-and-answer session brought market realities closer to current developments. Responding to questions about sanctioned or “shadow” tonnage, Rao explained that vessels engaged in sanctioned trades are effectively taken out of mainstream commercial markets. This can reduce the pool of available tanker capacity even as commodity movements continue to generate demand, creating unusual distortions in conventional supply-and-demand relationships.
The speakers also discussed strategies for weaker markets, including the importance of market intelligence, customer relationships and operational efficiency. One tactic highlighted was triangulation, whereby consecutive voyages are structured to reduce ballast legs and maximise earning days. Attention then shifted to the current combination of elevated crude prices and strong tanker freight rates. Handa linked the strength partly to firm refinery demand for crude, while cautioning that the expanding tanker orderbook could eventually weigh on freight rates. The possibility of a market correction similar to 2008–09 remained a key concern.
Members also raised questions around containership ordering, a possible normalisation of Red Sea trades and the implications of disruptions in West Asia for India’s natural-gas supply. The speakers pointed to diversification of LNG sources, including supplies from the United States, Algeria and Australia, while noting the evolving role of methanol, LNG and green ammonia in the future marine-fuel mix.
The evening concluded with a vote of thanks by Capt. Pankaj Kumar, Secretary General of CMMI, followed by the felicitation of the presenters by Capt. M.P. Bhasin, Master Chairman of CMMI.
For maritime professionals, the lecture offered a reminder that understanding shipping requires looking beyond the ship itself. Freight rates, vessel supply, capital discipline, geopolitical developments and cargo flows are all pieces of the same commercial puzzle. In an industry defined by cycles, the ability to survive the troughs—and be ready when the next peak arrives—remains at the heart of successful shipowning.
Marex Media