Financial Times

Mercantile Shipping expands fleet
Mercantile Shipping Company Limited (MSCL), the island's biggest ship owner, is expanding its fleet in a big way, acquiring more second-hand tonnage and even ordering two new cargo ships to be built abroad. "We plan to expand our activities and acquire more and slightly larger tonnage," said Thomas Kriwat, MSCL's new managing director.

The company, a Sri Lanka-German joint venture, has a fleet of nine vessels which are getting old with some of them being over 35 years old and which need to be replaced. "We want to buy more second hand tonnage and explore new building opportunities of tonnage suitable for trade in this region," Kriwat told The Sunday Times FT in an interview.

MSCL might double its fleet in the next five years. The company had long focussed on local business, transporting goods to and from Jaffna and also transporting flour from the Prima flour mill in Trincomalee under difficult conditions during the height of the Eelam war.

In recent years, MSCL began deploying its ships in regional trade such as transporting Indian export-import cargo and this has made up for the loss of the coastal trade which virtually dried up with the ceasefire and the re-opening of the road to Jaffna.

"Our international chartering business has been building up more and more over the last few years. We're able to perform to internationally recognised standards," Kriwat said.

The company now does business with international charterers like Cargills, transporting mainly sugar, and has two vessels of 14,000 DWT size trading in Africa on long-term time charter to Safmarine, a unit of the AP Moller/ Maersk shipping group.

The new tonnage the company is acquiring will be multi-purpose vessels with their own cranes capable of handling both break bulk and container cargo. Kriwat said MSCL was negotiating with the Netherlands to build two multi-purpose vessels each of 7,600 DWT with two cranes capable of handling both break bulk and container cargo.

They will cost euro 12.5 million each and be funded through a Dutch grant, the company's own capital and international loans. "The market is good, earnings are also good," Kriwat said. "We're also in the process of getting private investors interested. Since our own capital resources are somewhat limited, we're talking to local and foreign private investors on a joint venture. They will give capital and we'll provide the expertise to manage and operate the ships."

MSCL aims to serve the transport needs of the region and create employment for Sri Lankan seafarers. "This is a major project not only for our company but for Sri Lanka as a whole. Sri Lanka can be more recognised internationally as a ship owning and ship operating nation," Kriwat said. Shipping industry officials said Sri Lankan companies usually can afford only second-hand tonnage and rarely order new buildings which are more expensive.

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