Domestic Shipping companies revenue may decline by 5-7% in next fiscal: CRISIL

Domestic shipping companies are likely to see a further 5-7 per cent decline in revenue in the next financial year amid normalisation of the rates, a report said on Thursday 21 Dec. This follows a steep 23-25 per cent fall in their revenue in the current fiscal (2023-24) after a 35 per cent growth in the last financial year when charter rates had surged because of geopolitical conflicts (including the Russia-Ukraine war) and higher demand from China post-pandemic, credit rating agency CRISIL said on Thursday.A CRISIL study of five shipping companies, which account for about half of the around 20-million metric tonne (MMT) deadweight tonnage (DWT) of shipping fleet in India, indicates as much, it said.According to CRISIL, the charter rates correlate with the global demand-supply dynamics.

CRISIL Ratings said it also expects credit profile of shipping companies to remain stable, benefitted by healthy cash flows and limited debt addition as no major fleet addition is planned.

This will ensure comfortable debt metrics, despite a slight moderation from fiscal 2023 levels, said Gonsalves, Associate Director at CRISIL Ratings..

It also said that any trade disruptions (including escalation of the Middle-East conflict) impacting charter rates, adverse movement in fuel costs or any regulatory changes which could impact fleet utilisation could alter performance expectations and will bear watching.