Shipping Companies and Their Commercial Expansion: An Indian Focus

This report analyzes the commercial expansion of shipping companies, focusing on the Indian market. It begins with an introduction to the global shipping industry's role in international trade, highlighting the importance of shipping companies in facilitating the movement of goods. The report then delves into the registration process for a shipping company in India, advocating for Mumbai as the headquarters due to its strategic location and economic advantages, including India's rapid economic growth and strong bilateral ties with key markets. The analysis covers the legal and economic factors influencing shipping companies, including registration requirements, port selection, and the benefits of operating in Mumbai. The report also examines the economic and freight conditions, such as increasing fuel costs, and suggests a joint ownership format for the shipping company to mitigate risks. The report also discusses the advantages of registering ships in India, the required documentation, and the strategic importance of Mumbai as a port of registry. The report concludes by emphasizing the opportunities for expansion within India and to other countries in the region, making it a comprehensive analysis of the shipping industry's prospects in India.

Running head: SHIPPING COMPANIES
Shipping Companies and Their Commercial Expansion
Name of the Student:
Name of the University:
Author Note:

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Introduction:
The global shipping industry carries an immense volume of goods and plays a key role in
the global trade. The World Shipping Council defines linear shipping as the services of
transportation of goods in high-capacity marine ships. The body also mentions that the linear
shipping industry carries around 60 percent annual (Worldshipping.org. 2019). Thus, it is evident
from the report of the council that shipping contributes immensely to international trade. Shenkar
and Rosen (2018) mentions that the shipping industry plays the pivotal role in the global logistics
chains. Yoo (2018) points out in this respect that manufacturing of goods today require
companies to acquire raw materials and work in progress inventory in bulk from one country to
another. The companies in order to move this immense volume of inventory depend on shipping
companies which operates container ships across the ocean and transport freight on behalf of
their agent companies. The manufacturing companies are dependent on global shipping network
to transport their manufactured goods to foreign markets. Thus, it is evident that the shipping
companies have play a very important role in the global economy by enabling transportation of
goods in the global economy. Adland and Jia (2018) point out that the global shipping companies
come under influences like government actions, economic conditions and legal factors. The
shipping companies before entering countries as a result have to consider the legal aspects like
registration norms and exim (export and import) laws. The companies in order to operate
profitably in the market have to select a country in which they would register their operations.
The aim of the paper is to delve into registration process of a shipping company in a selected
country. The country chosen would be India. The third section of the essay would take into
account the economic and freight conditions which the shipping company would encounter in the
country.

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Analysis
The shipping company should register its name and operations in India. The headquarters
of the company should be located in Mumbai, the home to the busiest and the largest container
port namely, Jawaharlal Nehru Port in India. The logic behind opting for India and Mumbai as
the country of registration and base respectively can be justified on several grounds. The first
justification for choosing India as the country of registration is that India is the fastest growing
economy in the world growing a speed of 7.8 percent (Economictimes.indiatimes.com. 2019).
This means that the market of the country is experiencing high rates of increase in gross
domestic product. Semuel and Nurina (2015) defines that term gross domestic product as the
value of all the finished goods and services produced in a country. The GDP of India was 2689
billion USD while its PPP was 10401.44bn USD as per IMF. The nominal GDP and PPP of the
country is expected to touch 2957.72 USD bn and 11412 USD bn in 2019 (Statisticstimes.com.
2019). This means that value of goods and services produced in India are expected to experience
increase. This means also means that the purchasing power of the Indian consumers are also
increasing. An analysis of the fact brings into the light that companies operating in India are
experiencing rise in productivity owing to the increasing demand for goods and services
manufactured in the country. This in turn means that the companies operating in India would
engage in greater deal of exporting and importing products. Moreover, India has emerged as an
exporting giant catering products like manufactured cars and agricultural products. Thus,
registering the shipping business in India would enable the company generate more business by
catering the manufacturing companies in the country.
The second justification which would support the registration of the shipping company in
India is the growing diplomatic and economic relationship which India shares with other

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countries. India has strong bilateral ties with major markets in the world like the United States of
America, the EU, the UK and Australia. The country, unlike her neighbor China is not involved
with a trade war with the western markets. Moreover, the country has strong bilateral ties with
Asian countries like Japan and South Korea. This means by creating the base in India, the
shipping company would be able to generate immense business by facilitating export and import
of goods.
The third justification to support the registration of the shipping company in India is its
geographical attributes. India has one of longest coast lines in the world which is served by busy
ports like Mumbai and Chennai, which are also commercial hubs. These port cities have
immense numbers of large, medium and small scale manufacturing firms which export their
goods to other countries. Moreover, owing to the warm climate of the country, the ports remain
free of ice unlike ports of the USA, Russia, Europe and China. This means that the company
would be able to operate and provide shipping services to the companies in the country all the
year round. This would enable the country to generate perpetual business and earn immense
revenue..
The fourth factor which can be mentioned to substantiate the establishment of the
shipping company in the country would be its strong financial condition. The country has a large
network of financial institutions both of banking and non-banking nature. India is the home to
several multinational banks like State Bank of India. The country is one of the most important
markets to foreign origin banking chains like HSBC Bank. This means that the company can
enjoy a large number of options to open current account and avail payment gateways. It be
pointed out that the the business organisations in order to manage their funds, have to invest in
different types of asset classes. Similarl, they also require to generate immense amount of funds

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to fuel their business operations. It can be pointed out that India is home of National Stock
Exchange and Bombay Stock Exchange, which are leading stock exchanges in the world. This
means that the company can get listed on these stock exchanges in order to raise immense capital
from the securities market in the country. The company also be able to invest its capital in
several asset classes to generate high returns on its own investments. Thus, the shipping by
entering in India would be able to take the advantage of the booming financial market in India.
The fifth advantage which the shipping company would enjoy by registering in India
would be opportunities to expand in the long run. India is situated in a strategic position in Asia.
The country is marine routes connecting developed markets like Australia and Japan. The
country shares both marine and land routes with booming Asian markets like China. This means
the shipping company would be able to exploit the marine routes which India has with developed
and emerged markets to expand its business in the long run. Thus, it can be inferred from the
discussion above that entering India would provide the shipping companies expand into countries
surrounding the country.
The registration of ships in India functions under the supervision if Directorate General
of Shipping, Ministry of shipping, Government of India (Dgshipping.gov.in. 2019). The body
mentions that ships in India can be registered with ports which would be called as ‘ports of
registry’ of the concerned ships thereafter. The shipping company in order to operate in India
should register the ships in Mumbai, Chennai, Kolkata, Goa and Cochin. The main officers of
the ports of Mumbai, Chennai and Kolkata are empowered to register ships. Similar power is
awarded to surveyer-in-charge of Goa and Cochin. The registrar of the ships in their capacities
are empowered to obtain and maintain the complete documentary records of the ships. The
Directorate General of Shipping, Ministry of shipping mention that the owners of the ships,

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either in the form of sole owner, joint venture ownership or as corporate bodies should furnish
certain documents with the directorate to have their ships registered. The first document which
the owners of the ships have to furnish are ‘a declaration of ownership’ showing the type of
owners mentioning the appropriate category of ownership from the aforementioned three
categories. The second document which the owners of the ships have to furnish before the
registrar are certificate signed by the builders of the ships establishing the authenticity of the
attributes of the ships like tonnage and accurate denomination. The third document which the
owners of the ships have to furnish is the sales invoice obtained from the seller of the ship while
purchase as well as resultant transfer of ownership of the ship from the seller to the purchaser.
The registrar of the ships concerned upon by satisfied by the authenticity and strengths of the
document would then approve surveys of the ship. The role of the surveyor is to establish the
actually tonnage of the ship to be used as a commercial ship in compliance with Merchant
Shipping (Tonnage Measurement) Rules, 1987. The owners of the ship after completion of the
document should inform the surveyor of the ship the name of the ship at least 14 days in
advance. The surveyor, after successful completion of the survey issues a Certificate of Survey.
Then the registrar then issues carving and marking note. They have to be returned to the registrar
after their particulars are engraved on the ship in specified manner and confirmed by the
surveyor.
The shipping company should exercise the option of choosing the port of registry
between Mumbai, Chennai, Kolkata, Goa and Cochin. The most preferred port would be
Mumbai. This decision regarding choosing the most appropriate port of registry, Mumbai can be
justified by pointing out the advantages which Mumbai enjoys compared to the other ports of
registration. First of all, Mumbai is the commercial hub of India. The city of Mumbai sits on the

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western coast of India which is very close to the industrial regions in North India and South
India. The port of Mumbai is able to attract goods for export to other countries. Similarly, the
port also receives goods meant for usage in both north and south India. This means that the
shipping company would be able to take advantage of the immense amount of exports and
import of goods through the port of Mumbai to generate huge revenue. Secondly, the city is the
headquarters of leading financial institutions like the State Bank of India which means the
company would be able to avail financial facilities easily. Thirdly, the Mumbai is situated very
close to the information technology hub of India, Bangalore. Bangalore has offices of several top
IT companies like Microsoft and Amazon. This means that the company would be able to avail
IT facilities at very cheap rates from the companies. In fact, the company can also generate huge
revenue by catering to the import and exports of machineries for the IT companies. Fourthly, the
city is well connected to the other parts of the country which would make it easier to transport
goods. Fourthly, Mumbai would be able to provide the shipping company with experienced
human resources who would contribute to the high performance of the company. This talented
and qualified human resources would enable the company to operate profitably and gain
competitive advantage in the global market. These advantages of Mumbai makes it choicest of
the registration ports mentioned above.
The shipping company should operate the ship by following joint ownership format under
the current economic and freight conditions. The first economic condition which has come to the
forefront is the increasing fuel costs. This is because the high cost of fuel raises the cost of
operations of the shipping companies. In this case it would more profitable to run the business
using the joint venture or partnership format compared to sole proprietorship format. This is

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because the sole proprietorship format would enable the firm to diversify its business expenses
and losses.
The second market condition which comes to the forefront is that joint venture format
would enable the company to operate in the extremely competitive environment. It can be
pointed out that the emerging markets like China, owing to their favourable socio-economic
conditions like increasing income among consumers and expanding consumer population are
experiencing increase in market demand for products. These two factors are attracting
multinational companies from the developed markets like the USA and Europe. These
companies in order to take advantage of the profitability of the Indian market have slowly shifted
their emphasis on serving the Indian market more appropriately. In fact it can be pointed out that
resident Indian companies have also introduced new products to cater to the needs of the Indian
consumers. The companies operating in India, both of Indian as well as foreign origin in order to
meet the demands of the Indian market alone, import immense amount of inventory in the forms
of raw materials, work-in-progress and finished goods from foreign markets. Similarly, immense
amounts of inventory in all of these three forms are exported to foreign markets from India. This
immense amount of movement of goods from one country to another have in turn boosted the
marine transport sector. Today global shipment companies have invested in the shipping industry
of India to make it one of the fastest growing industry. It is evident that competing in the
shipping industry in emerging economies like India to meet the ever increasing marine transport
of their respective industrial sectors put immense pressure on the resources of the shipping
companies. The shipping companies in order to compete in the shipping market are pooling in
their resources to operate jointly. Thus, in the light of this real world situation it can be pointed

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out that the shipping company should partner with another shipping companies to commercially
operate its ships.
The third strategy which the shipping company can implement in order to commercially
operate its ships would be promoting its shipping services in the Indian and foreign markets. The
company should promote its services aggressively in order to attract more and more clients. It
can be pointed out that the achievement of client satisfaction is extremely important for shipping
companies to sustain in the market. However, achievement of total client satisfaction is not
feasible. Thus, it is evident that the shipping company would require to promote its services to
achieve two goals. The first goal which promotion would achieve for the company would be
acquisition of new customers. The second goal which promotion would achieve for the company
would be attracting new partners. As already mentioned in the third strategy, that joint venture
enables companies to pool in resources to operate more efficiently in the market. Thus, it is
evident that in order to operate profitably, the shipping company would require to enter into
multiple joint venture. For example, the shipping company may enter into joint ventures with one
firm to operate in the consumer goods market and another firm to operate in the electronics
goods market, both in the areas of marine logistics. Thus, promotion can enable the shipping
company attract firms with which it can enter into joint venture. Thus, it can be pointed out that
the shipping company should promote its services in the market to operate its shipping
commercially.
The fourth strategy which the shipping company should take to operate in the market
would be acquiring smaller shipping companies. As far as the previous strategies are concerned,
the strategy of promotion can be termed as a short term strategy which would enable the shipping
company to attract clients to generate higher profits. However, promotional strategy alone cannot

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enable the shipping company gain dominance over the shipping market in India. The strategy of
joint venture would undoubtedly enable the firm to pool its resources to operate more profitably
in the market. However, this strategy is a medium strategy since the firm would be required to
share its market and resources with a third party firm. The strategy of acquisition and merger can
enable the shipping company acquire smaller shipping companies and gain access to their
resources. This access to resources would enable the firm in question to boost its competitive
market position strongly.
Conclusion:
It can be concluded that the shipping company should enter the Indian shipping market.
The company in order to get registered in the Indian market should go through the steps laid
down by the government of India. It is also clear that the Indian shipping is already extremely
competitive, the company needs to enter into joint venture with a shipping firm. However, this
strategy is a medium term strategy and cannot serve the company in the long run. Even, the
strategy of promotion its service cannot gain the company long term business profit. The
shipping company should acquire smaller shipping firm to get access to their resources. This
strategy undoubtedly would enable the shipping company operate in the market profitably in the
long run.

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References:
Adland, R. and Jia, H., 2018. Dynamic speed choice in bulk shipping. Maritime Economics &
Logistics, 20(2), pp.253-266.
Dgshipping.gov.in. 2019. Dgshipping.gov.in. [online] Available at:
http://www.dgshipping.gov.in/Content/PageUrl.aspx?page_name=ShipManualChap6 [Accessed
13 May 2019].
Economictimes.indiatimes.com. 2019. Economictimes.indiatimes.com. [online] Available at:
https://economictimes.indiatimes.com/news/economy/indicators/india-remains-fastest-growing-
economy-ahead-of-china-despite-up/downs/articleshow/67334194.cms [Accessed 13 May 2019].
Semuel, H. and Nurina, S., 2015, February. Analysis of the effect of inflation, interest rates, and
exchange rates on Gross Domestic Product (GDP) in Indonesia. In Proceedings of the
International Conference on Global Business, Economics, Finance and Social Sciences (pp. 1-
13).
Shenkar, N. and Rosen, D., 2018. How has the invention of the shipping container influenced
marine bioinvasion?. MANAGEMENT OF BIOLOGICAL INVASIONS, 9(3), pp.187-194.
Statisticstimes.com. 2019. Statisticstimes.com. [online] Available at:
http://statisticstimes.com/economy/gdp-of-india.php [Accessed 13 May 2019].
Worldshipping.org. 2019. Worldshipping.org. [online] Available at:
http://www.worldshipping.org/about-the-industry [Accessed 13 May 2019].
Yoo, J.Y., 2018. Global logistics trend spillover through container and RoRo shipping in North
Europe short sea shipping.

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Appendix:
Appendix 1: Table showing GDP of India