VITAL INDUSTRY UPDATES – 24/06/2015

June 24, 2015 12:07 pm Published by

Importance of distinguishing between piracy & armed robbery when reporting incidents stressed

It is important to distinguish between armed robbery and piracy when reporting incidents in South-East Asia waters, says the Singapore Shipping Association (SSA), which has commissioned a study to determine the scale of threat posed to seafarers in the area.

The findings reveal that in the first quarter of this year, the vast majority of incidents in this region fall under the category of armed robbery (which is within the territorial waters and under the jurisdiction of the sovereign state) not piracy (which is on the high seas). The distinction determines whether a merchant vessel can seek protection from the navy/coast guard of the littoral state, or from the navy/coast guard of the vessel’s flag of registry.

The study points out that recent reports of pirate attacks are, in fact, more likely to have been armed robbery and targeted at specific vessel types, particularly when in port or at anchor. SSA stresses that, with an estimated 50,000-90,000 vessels transiting SOMS (Straits of Malacca and Singapore) each year and further numbers sailing around the South-East Asia and South China seas, it can be calculated that the likelihood of a merchant vessel, which exercises high vigilance and conducts anti-boarding watch, being attacked is between 0.012 and 0.07 per cent.

 The situation in the South China Sea is vastly different to the situation in the Gulf of Aden where heavily armed pirates board vessels in open seas with the intention of taking the ship and its crew hostage for ransom payments.

 

To fully understand the real scale of the problem, the SSA commissioned a technical report to examine incidents of armed robbery and piracy in South-East Asia waters and the South China Sea. The report undertook a detailed analysis of the quarterly reports of the International Maritime Bureau of the International Chamber of Commerce (ICC IMB) and the Regional Cooperation Agreement on Combating Piracy and Armed Robbery against Ships in Asia (ReCAAP) for the first quarter of 2015 (January 1 to March 31). The findings revealed that only 14 per cent of attacks on merchant vessels were classified as piracy. Of the remaining incidents, 85 per cent were cases of armed robbery with almost half of these (46 per cent) occurring while in port or at anchorage. The vast majority of incidents (68 per cent) involved “petty theft” by unarmed perpetrators where crew were unharmed and economic loss was low.

SSA is encouraging Captains and seafarers to ensure they comply with recognised methods to counter possible boarding when traversing South-East Asian waters and advises that, if boarded, Captains should put the well-being of their crew first while, at the same time, fully complying with the standing instructions of their respective companies.

SSA has worked with ReCAAP to provide Guidelines for Tug Boats and Barges Against Piracy and Sea Robbery which can be found online at www.recaap.org. It also points out that the Best Management Practices for Protection against Somalia Based Piracy (BMP4) can be successfully adapted for use in South-East Asia.

Steel makers reap benefits of retail sales

For India’s steel makers that started directly selling to customers three years ago through dedicated retail stores, it’s finally time to collect the dividends.

As customers turn increasingly brand-conscious in an economy starved of industrial demand, retail sales growth for India’s top three steel makers in the fiscal year that ended in March raced ahead of sales to auto makers and large construction firms.

Retail sales volume at JSW Steel Ltd grew 8% in 2014-15 against the company’s overall volume growth of 2%. For Tata Steel Ltd, the branded products, retail and solutions volumes grew 10%, against 3% overall sales volume growth in India. In the same period, retail volume at state-owned Steel Authority of India Ltd (SAIL) grew 2%, against a 3% fall in overall steel volume.

Essar Hypermart operates through a mixed model of franchises and company-owned stores, Tata Steel sells through the franchise model which includes some exclusive branded showrooms and SAIL operates through dealerships. JSW Steel stores are fully franchisee-owned.

To be sure, retail sales volume are still lower than bulk sales. In 2014-15, retail contributed 16% to JSW Steel’s overall sales volume and 5-6% to SAIL, while branded products, retail and solutions contributed 36% to Tata Steel’s total sales volume.

JSW Steel is bullish on the retail segment, said Jayant Acharya, the company’s director, commercial and marketing. “Demand in the smaller markets in the country, driven by demand from construction in these areas, is doing better than that for larger cities… In addition, demand for branded steel is seeing improvement as more customers are now looking for quality. These factors have contributed to retail sales,” Acharya said.

SAIL added 213 dealers to its retail network in 2014-15, a 9% increase over the previous fiscal year. “In view of our capacity expansion and the opportunities available in the retail sector, we are focussing more aggressively on expanding the volumes in retail,” a SAIL spokesperson said.

In the last three years, the company has spent close to Rs.35,700 crore on capacity expansion to reach a saleable steel capacity of 20.2 million tonnes in the current fiscal year, from 12.8 million tonnes in the last fiscal year.

An email sent to Tata Steel on 10 June was not answered.

JSW Steel has approached retail markets with a more segmented approach. It has three categories of retail stores—JSW Explore for metros and urban cities, JSW Shoppe for urban and semi-urban markets and JSW Shoppe Connect for semi-urban and rural markets. “We are working on the last-mile reach. Focus would be on adding more stores on the Connect side,” JSW Steel’s Acharya said. The company, which currently runs 480 stores, plans to add 200 more stores in the current fiscal year.

“If the total steel demand in the country grows at 6% this year, retail is likely to grow at 8%. Most of this growth would be driven by construction and demand from small and medium enterprises,” Acharya said.

Retail stores are normally located closer to warehouses, from where goods are directly transported to the customer—who is either an individual or a small company or a small manufacturer.

“The smaller ‘mom and pop’ shops, specifically in rural areas, are shutting down. The bigger companies, in turn, are eating into this space as smaller shops have not been able to compete with them on the cost side,” said Chirag Shah, director of equity research and head analyst of building materials, metals and mining at Barclays Capital Plc. Shah expects this retail growth trend to continue.

In May 2014, Essar Steel merged its steel processing centre and distribution unit with its steel retail chain Hypermart. Hypermart has also started selling non-Essar steel products, which contributed to 30% to the steel retail chain’s total revenue in the last fiscal year.

According to Ravi Singh, chief executive officer of Essar Hypermart, the 2014-15 revenue of Rs.3,500 crore is not comparable to 2013-2014, due to the merger. However, Singh believes total revenue for Hypermart will double in the current fiscal year.

“Medium and small enterprises are filling in for the lack of demand from large industries. That is where we see the demand coming from,” Singh said. Essar Hypermart contributes 20% to Essar Steel’s total revenue.

Online channels are also being tapped. SAIL last year tied up with India’s largest online vendor Flipkart to sell kitchen sets. Steel products were sourced from SAIL’s Salem steel plant in Tamil Nadu, which is renowned for kitchenware.

“The response from buyers on Flipkart has been so encouraging that plans are afoot to expand this list of products to at least 40 items (currently 12 items) in the next few months,” the SAIL spokesperson said.

Industry experts were baffled when the steel companies initiated their retail push, since they traditionally focussed on the bigger buyers. Three years later, the retail success has vindicated the companies’ strategic focus.

Categorised in:

This post was written by Atlantic Admin