France-based CMA CGM, the world’s third-biggest container carrier, sees India as an “alternative” for building small, liquefied natural gas-powered box ships, chairman and chief executive Rodolphe Saade said, after signing a letter of intent with Cochin Shipyard for constructing six such ships for about $300 million. This is the first container ship order ever to be placed by a global mainline ship operator in India and an inflection point for the industry.Saade expressed admiration for Prime Minister Narendra Modi, saying, “What was impressive is… I had the feeling I was talking to a business leader and not a Prime Minister because we spoke business… he said, ‘You need to do more.’” Modi is not only a great political leader, but also a great business leader, said the CEO.
Alternative to China, S Korea
The deal is something of a holy grail for local shipbuilders seeking to make a mark on the global stage on the back of a Rs 69,725-crore package approved by the Cabinet in September to crank up the industry’s capabilities and help it compete with those in China, South Korea and Japan. Each box ship will have a capacity to carry 1,700 twenty-foot equivalent units or TEUs–a common measure of capacity in the container business–and will be powered by LNG, of which CMA CGM is a big votary in the path to decarbonisation of the global shipping industry.
India’s shipbuilding industry is currently ranked 16th in the world, with less than 1% of the market share and the deal will help catapult it into the big league. India aims to break into the top 10 by 2030 and top five by 2047.
“In the last few years, we have been ordering essentially in China and South Korea, especially large container vessels,” Saade said in an interview. “What we would like is an alternative for smaller ships that we could now build in India… It’s only the beginning of a long success but at least India is now a country where you can build small LNG-propelled ships.”
The order follows CMA CGM’s move to reflag four container ships with Indian colours in the last few months, honouring a commitment given by Saade to Modi when he visited the French container line’s headquarters in Marseille on February 12. It was one of the rare visits by an Indian Prime Minister to a global shipping company, underlining the importance that the government attaches to the industry, considered a backbone for trade and commerce.
The six box ships ordered at Cochin Shipyard “will also be flagged in India,” Saade revealed. The French group has a presence in India’s shipping and logistics space, but Saade said the investment that his company is about to make in building ships is of a “different magnitude.”
The process kicked off with the visit of the PM and President Emmanuel Macron, Saade said. “We had a very interesting interaction with PM Modi, and he was basically challenging me to invest in India and said we would help you out,” said the CEO. “And, after a few months, thanks to good teamwork between the government, the shipyard and ourselves, we have been able to confirm an order for six, LNG-propelled container ships of 1,700 TEU capacity each.”
