FE reported that, Mercator Lines' foray into dredging and coal mining business coupled with demand for vessels, its transformation into complete logistics solution provider and contract renewals at higher rates will provide a boost to the earnings growth of the company.

To minimize earnings volatility, it has employed 70% of its shipping fleet in long term fixed charter rates, while another 30% of the fleet is deployed in spot markets to cash in on high spot rates.

Analysts believe that carrier freight rates will firm up by 10% to 15% on the back of increasing demand for oil, coal and iron ore from non Organization for Economic Co operation & Development nations, which is India and China. This will benefit companies like Mercator Lines in the form of higher day rates for existing and newer contracts.

Mercator has acquired two coal mines in Indonesia and Mozambique, which will provide revenue generation through sales of coal in domestic and international markets, and trans-shipment of the coal through its own ships. Also these businesses will de-risk the company’s earnings from the cyclicality related to shipping freight revenues.

It is also set to gain from the demand for vessels. An estimated 5 million barrels per day of refining capacities coming up in India and the huge demand seen in power and steel capacities will benefit Mercator Lines considering the company is a bulk carrier of iron ore, steel, coal, cement and agriculture products.