With its new office establishment in Mumbai, Maersk Tankers India is well-positioned to contribute to India's growing energy demand and strengthen its service offerings to its customers and partners. Mehul Bhatt, Managing Director, Maersk Tankers India, in an interview, speaks about how with an access to a vast talent pool, the company plans to expand its workforce in the country over the coming years.
What kind of opportunities do you see in India and how you can leverage them?
India is set to become the world's third largest oil consumer, behind the US and China, by 2025 and according to the International Energy Agency (2018), the country, together with China, is estimated to contribute nearly 50 per cent of the demand growth from today to 2023. India's oil demand is expected to grow at a CAGR of 3.6 per cent to 458 million tonne of oil equivalent (MTOE) by 2040, while demand for energy will be more than double by 2040 as the economy will grow to more than five times its current size.
With India's oil consumption increasing, at the same time we see that the refining capacity in India is also growing. This also means that apart from bringing in oil and consuming oil, India will start exporting more oil. Considering our leadership in oil movement, we believe that this naturally will benefit us and our customers and partners. Overall, we feel very positive about the kind of opportunity India is providing to players like us.
The energy market of India is growing at 5 per cent, like the oil consumption market. All the pointers are in the right direction and as one of the largest global company which runs high quality safe fleets, we believe that we are in a position to benefit.
How is Maersk trying to digitise the entire ecosystem of logistics?
We have been very clear about our ambition to be the world's first digital company and when we talk about digitisation, it could mean a lot of things. If we look at it in the Indian context, the fact that there is so much talk about digitisation in the country. This makes the whole ecosystem very interesting. Now, when we talk about digitisation in our tanker world, it means a few thing and we are trying enough to make one piece at a time.
So what we want to do is, we want to make sure that we use the data and the technologies that are available today.
We are developing a lot of in-house technologies which will make sure that the company not only simplifies the way we work as a company, but how the same will benefit our customers and partners too. By digitising the entire ecosystem, we want to make sure such steps will have a positive impact on the industry.
If I get into more specific details around it, there are three keys things that we are starting to work on. The first thing that we are working on is to make sure that the overall contract management that happens in this particular space is simplified.
The second key thing that we are trying to do is to make sure that the vessel positioning is optimised with the help of historical data. You won't believe it, but we have a fleet data of around 90 years. This data optimisation will certainly benefit our partners that our vessels are at the right place, at the right time and carrying the right cargo.
The third thing that we are trying to do is bunker optimisation. One of the largest expenses in our industry is the use of fuel that we use to run our ships, we call it bunker. And, we are trying to use a lot of sensors to collect data from ships to better manage our bunkers. Due to data optimisation, we managed to lower the fuel consumption. This shows how digitisation can help players like us to operate vessels efficiently.
You mentioned several times that digitisation will benefit your partners and customers. Tell us how?
The fact is we see a huge growth potential in the Indian economy. We foresee that with the improvement in oil consumption, the need for efficiently consumption of oil is also increasing. If we talk of specific examples where we are able to benefit the end-user, let's say the bunker optimisation. Now, one of the largest ships that we operate is quite expensive. They also cost a lot of money on a daily basis to run and operate, so the more we can optimise on the running cost of these vessels, the more benefit we can pass on to the end-users because the cost of the movement of fuel goes down. So by focusing on bunker optimisation, we are one of the best in the world. We ensure that the cost of transportation decreases, which according to our customers and partners, is a positive move. At the same time, if we reduce the cost of overall transportation, it also means that India can potentially be competitive in exports of finished oil products which are again beneficial to the Indian economy.
The growth that you mentioned, is it in terms of talent growth or business?
I would say both. We setup this office as our global service hub in January this year, so most tankers have been one way or the other operating in India for the last eight years through other Maersk entities. Considering many oil and oil services companies are moving to India to provide services to their customers and partners, we decided that we want to have a much more significant and meaningful presence in India too. Hence, in January this year, we decided to open this particular office where we have a total of 400 headcount, which is quite a significant number. We have put up this particular team to provide more integrated end-to-end services to our customers and partners. Through this establishment, we look at all the core aspects of running a tanker shipping company from here in India. One of the important aspects is the available talent pool.
Currently, we are making 160 port calls in India and lifts around 3,000 mt cargo, equalling around 3-4 per cent of its global business, while the revenue generated from India is around 2-3 per cent of its global business. These numbers have increased over the last three years and the company expects a continued growth in the coming years.
How relaxation of cabotage law has helped your company and the industry?
India's GDP is growing at 7-7.5 per cent every year. And, if you look at the base from which India is growing, it is huge. No single country in the world has the capacity to fulfill the amount of opportunities this country alone is providing, and we are not only talking about imports, but also exports and infrastructure too.
A lot of countries around the world have different types of cabotage laws. Recently, India has relaxed cabotage law so that there will be swift movement of cargo from one port to another port in India. As a company, we believe that the first step taken is very positive and we really want to closely observe that and work together to make sure that we are able to participate in the overall growth story of India.
As a global company, what is your stand on USA's sanctions on Iran?
We have a very clear thought process as a company on that and as a global company, we have a specific stand taken. When the US announced that they are going to seize their participation, we have publically stated that any contracts that we have entered before May 8 with Iran, will be fully obliged as per the contractual terms. I am not in a position to comment whether it is right or wrong for either of the countries but as a company, the stand that we have taken is that we are going to respect that and before November 4, we will exit all the Iranian contracts. However, if there are any changes, we will assess the situation and then change our stand, taking necessary legal opinion.
Will that be a loss of business for you?
I don't believe so. The good thing with us is that we are a global player. We are diversified but at the same time, the movement of oil needs to happen. If it is happening from Iran, it is great, if it is happening from some other countries, that is also fine. We are in the business of making sure that we are able to keep the world moving in a way or another. If we are moving jet fuel or petrol or diesel, we want to make sure that we are able to get the products right across the country without any issues. From that perspective, we will continue moving on, maybe from some other location but that is how our stand is.
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- RAHUL KAMAT