BL reported that Indian shipping firms are expanding their fleet size and buying larger vessels to cash in on record freight rates, hoping their revenues to swell in 2008-09.

As per report, Shipping Corporation of India Limited will invest USD 3.5 billion to buy 68 new vessels and has placed orders for 28. Great Eastern Shipping, Mercator Lines, Varun Shipping, among others also have such plans.

Mr Harish Mittal executive chairman of Mercator Lines said that "The dry cargo, tankers segment are all very high growth businesses. We are anticipating demand, and the rates too to continue to be firm for at least the next 2 to 3 years."

Mercator has earmarked USD 1 billion CAPEX over 2 years and has already ordered a very large crude carrier and two dry cargo vessels. Industry officials and analysts are expecting at least 20% to 35% return on equity in 2008-09 on these new assets.

Mr Yudhishthir Khatau director of Indian National Ship owners' Association said that "Contribution of larger ships is large. The end user sees a major gain as he gets a cheaper cost per tonne. If you take a large vessel, the turnaround time cargo loading, berthing, un berthing time is reduced."

In 2007-08 fiscal, Indian ports handled 519 million tonnes cargo up by 12% YoY. Throughput at Jawaharlal Nehru Port trust was 55.8 million TEUs up by 23% YoY. Large vessels would add pressure on terminals, in terms of draft or depth of waters, loading or unloading efficiency, storage areas and ease of operations.