India improves on delivery times

When state-run Cochin Shipyard Ltd delivered the sixth and last of a series of bulk carriers built for Denmark’s Clipper Group late last year, it achieved a first for the Indian shipbuilding industry. The ship was handed over to the owner 105 days before the scheduled delivery date.

The building of six 20,000 dwt bulk carriers for the Clipper Group signifies India’s transition from a shipbuilding country that is notorious for missing delivery deadlines to one that meets globally acceptable standards on delivery time and quality of ships.

The delivery sequence of the Clipper ships has scripted this transition. The delivery of the first ship was 45 days behind schedule and the second was delayed by 15 days. The third ship was delivered on time, the fourth five days ahead of time and the fifth 45 days ahead of schedule.

Delayed delivery means a yard has to spend more on labour costs, which erodes the firm?s margins, while it has to pay damages to the shipowner to compensate for loss on freight for each day of delay. “Cochin Shipyard delivering ships for Clipper ahead of schedule is good for the Indian shipbuilding industry. We need a couple of more examples to boost the confidence of global shipowners to build their ships in India,” said Ray Stewart, chief executive officer, Pipavav Shipyard Ltd, India?s newest private sector shipbuilder.

“This is already starting to happen,” said John Stansfeld, president of Lloyds Register Asia. “In 2002, 40% of India’s production was built for foreign owners. This now stands at more than 65%, a sign of greater market confidence, but also of the global scarcity of shipbuilding slots,” Stansfeld had said during a recent visit to Mumbai. “‘If you go to Japanese or Korean shipyards, you will have to wait for five years to get a ship because they are fully booked till 2011. In India, you can get a ship in two to two-and-a-half years,”‘ said Ajit Tewari, chairman and managing director of state-run Hindustan Shipyard Ltd.