Articles by Upfani

India is witnessing a significant shift in the way crude oil and petroleum products of bundesliga points table are transported across the country, leading to remarkable cost savings and improved supply chain efficiency. With a growing energy demand driven by rapid industrialization and urbanization, reducing transportation expenses has become a critical priority for oil companies and distributors.

The backbone of this transformation is Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL), the major state-owned oil companies working together with logistics providers to optimize transport routes and modes. Pipelines remain the most economical and reliable method for moving large volumes of crude oil and refined products, with the Mumbai-Manmad and the Salaya-Bina pipelines playing a crucial role in connecting refineries and consumption centers efficiently.

Rail transport, especially through dedicated freight corridors, is also emerging as a cost-effective alternative to road transport, reducing transit times and lowering carbon footprints. Indian Railways has upgraded its freight services, enabling bulk movement of petroleum products to key markets such as Delhi, Kolkata, and Chennai at a fraction of previous costs.

Moreover, port facilities in Mumbai, Kandla, and Vishakhapatnam have enhanced their capabilities to handle large oil shipments with minimal delays. This, combined with innovative logistics software and real-time tracking, has minimized inventory costs and ensured smoother delivery schedules.

As a result, India’s oil sector is reducing dependency on expensive road transport and inefficient logistics, which benefits both the economy and consumers by stabilizing fuel prices. The combined efforts of government agencies and corporate players signal a promising future for affordable and sustainable oil transportation in India.

Since the Ukraine war, India has benefited from steep discounts on Russian crude oil, but the shipping rates charged by Russia-arranged entities remain high and opaque, according to sources. Russian oil is billed to Indian refiners at just below the $60 per barrel price cap imposed by the West, but shipping costs are between $11 and $19 per barrel, twice the normal rate. This is significantly higher than rates for comparable distances from other regions.

Following the Ukraine invasion, European buyers and some Asian markets shunned Russian oil, leading to discounted prices. Indian refiners, now the largest buyers of Russian oil due to demand issues in other markets, have ramped up purchases to capture the discounted oil. However, discounts have been shrinking as refiners negotiate deals with Russia separately. If refiners negotiated together, larger discounts could have been achieved. Indian Oil Corporation is the only company to have entered into a term deal, while other refiners continue to buy on a tender basis. Before the Ukraine invasion, India imported a relatively small amount of Russian crude. Now, Indian purchases of seaborne crude from Russia have surpassed those by China.

India buys oil from Russia on a delivered basis, with Moscow arranging shipping and insurance. Although the invoicing for oil is around $60 per barrel, the shipping and insurance rates are determined by three agencies that cannot be independently evaluated, making them opaque. The actual sale price of Urals crude is about $70-75 per barrel, with a large portion of revenues going to these agencies. The G7 imposed a price cap of $60 per barrel on Russian oil in an effort to limit Moscow’s ability to finance the war in Ukraine.

According to sources, Russia is setting the price of oil in its invoices at USD 60 or lower in order to include the cost of shipping and insurance. The Baltic Exchange, a London-based clearinghouse for the shipping industry, used to provide standardized benchmarks for shipping costs through its TD6 and TD17 indicators. However, since late 2022, Russian crude is no longer sold in Rotterdam and Augusta, and the Baltic Exchange no longer lists TD17. Furthermore, the TD6 indicator has been modified and may not be applicable to Russian cargoes. Additionally, the cost of a single voyage is not transparent due to the booking of additional tankers on a time charter basis, which is not facilitated through Baltic Exchange shipping brokers.

As a result, there is a lack of information regarding the actual costs. In May 2023, only 46.3% of Russian oil-loaded ships were insured in the EU, G7, or Norway, compared to 78% in February the previous year. Despite this decrease, these countries still continue to provide tankers for shipping Russian oil. In May 2023, more than 28% of oil tankers transporting Russian oil originated from the EU, G7, or Norway, which is a decline from 58% in the pre-war era. UAE-registered tankers accounted for 37% (compared to 13.4% in the pre-war era), and 12.3% came from China, including Hong Kong. The origin of the remaining 22% is unknown.

The Uttar Pradesh government plans to utilize eight rivers as inland waterways to improve connectivity and transportation of goods. The rivers that will be used for this purpose include the Yamuna, Gomti, Assi, Ghaghra, Rapti Betwa, Chambal, and the Varuna. This move aligns with the BJP-led Centre’s Maritime India Vision 2030, which aims to increase the share of inland water transport to five percent by 2030.

The Chief Minister Yogi Adityanath-led Uttar Pradesh government is determined to support this plan. The proposed waterways authority will consist of officials from various departments, including transport, irrigation, and tourism. Initially, the transport department officials have been assigned the task of surveying prospective waterways. Inland water transport is considered the most cost-effective mode for bulk cargo, such as coal, iron ore, cement, food grains, and fertilizers. The plan is still in the survey phase, and the extent of its implementation will be determined based on the survey’s findings and feasibility on different rivers.

The government aims to increase the share of inland water transport from two percent to five percent. The recent Ganga Vilas luxury cruise has given momentum to the plan of utilizing waterways for public transport. In addition to cargo, the government also plans to improve public mobility through water taxis on feasible rivers. The survey will be followed by fairway development to ensure sufficient depth for the movement of water taxis and cargo boats. Work is already underway under the Maritime India Vision 2030 to improve the depth of the National Waterway 1 on the Ganga. The government is expediting the work on waterways with the formation of an inland waterways authority, which is expected to be approved by the state cabinet in the coming months.

Logistics companies have experienced positive growth in the first five months of 2023, with stabilized oil prices and customers adjusting to higher transportation costs. This has established a new normal for pricing in the logistics industry. However, there are potential challenges on the horizon, such as the delayed monsoon and its potential impact on demand. Despite these challenges, analysts remain optimistic about select stocks in the sector.

Logistics companies are benefiting from two main factors. The first is overall economic growth, which is supporting the industry as a whole. The second factor is the increasing share of e-commerce companies in trade and commerce, which is driving specific growth within the logistics sector.

A new tailwind has recently emerged in the form of state elections. The first election in Karnataka has already taken place, and there will be more elections in the next two quarters. During election periods, there is typically an increase in money supply and economic activity. Inflation numbers have also seen sporadic spikes during these times.

Many logistics companies have made adjustments to meet the challenges posed by new-age logistics platform companies in recent years. Some have demerged their e-commerce businesses, while others have focused on their core large-scale logistics operations. This has led to an improvement in margins for these companies, making them more attractive to analysts.

A list of logistics companies with a target upside potential of 33 percent has been compiled from the latest Stock Reports Plus report as of June 23rd, 2023. The list includes companies with an overall rating of “Strong Buy” or “Buy” and has been sorted to highlight the stocks with the highest potential at the top.

A shocking incident occurred during a flight from São Luis to Salvador on June 12 when the cargo door of the aircraft opened mid-air. The event was captured on video, showing passengers remaining calm despite strong winds. Brazilian singer and songwriter Tierry was onboard, along with his team, but fortunately, there were no injuries reported. Investigations are underway to determine the cause of the incident, considering potential mechanical failures or procedural errors.

The video, shared on Twitter by Breaking Aviation News & Videos, highlights the safe landing of Tierry’s aircraft at São Luis Airport despite the malfunctioning cargo door. Users on social media reacted to the video with shock and amazement at the calm demeanor of the passengers in such a situation. Some even added a touch of humor, commenting on the “breezy ride.”

Although the incident is alarming, it serves as a reminder of the strength of modern aviation safety measures and passenger composure. The investigation into the mid-air opening of the cargo door will help identify any mechanical failures or procedural lapses that may have contributed to the event.

Safety in aviation is of utmost importance, and incidents like these spur assessments and enhancements to prevent similar occurrences in the future. The video serves as a reminder of the importance of proper maintenance, inspections, and preventive measures for a smooth and secure air travel experience for everyone involved.

The Inland Waterways Authority of India (IWAI), which is responsible for the inland waterways in the country, has transported its first consignment for the expansion of the Numaligarh Refinery Limited (NRL) capacity. The Memorandum of Understanding (MoU) for the transportation of 24 ODC (Over Dimensional Cargo) and Over Weight Cargo (OWC) for NRL was signed between IWAI and NRL last year.

The transportation of the ODC from Kolkata to Numaligarh using inland waterways is a significant event for Assam. It is a realization of Prime Minister Narendra Modi’s vision of transformation through transportation. The capacity expansion of NRL would not have been possible without the smooth transportation of the ODC and OWC. Under Modi’s leadership, the Ministry of Ports, Shipping & Waterways has prioritized the development of India’s waterways, and this transport is a testament to that commitment. The successful arrival of the first ODC at NRL highlights the crucial role of inland waterways in empowering the growth of Assam and Northeast India.

The ODC was transported by an IWAI ship named MV Marine 66 from Kolkata to Numaligarh Refinery Jetty via the Indo Bangladesh Protocol Route (IBPR). The DHT reactor, weighing 485 MT in net and 521 MT in gross weight, has dimensions of 31.5 meters in length, 8.250 meters in height, and 8.00 meters in diameter.

The ODC began its journey from Kolkata on 18 March and reached Numaligarh after almost three months of travel through Bangladesh. IWAI, with the assistance of the Dredging Corporation of India (DCI), utilized three dredgers across five locations in Dhansiri to ensure the smooth transportation. These dredgers, named CSD Mandovi, CSD Brahmini, and HSD Jia Bhoroli, played a vital role in making this transportation a success.

On Wednesday, Air India’s joint venture firm AISATS and Yamuna International Airport Pvt Ltd announced that they have signed a concessionaire agreement for a multi-modal cargo hub at the upcoming Noida international airport. The cargo hub will be designed, built, financed, and operated by Air India SATS Airport Services Private Limited (AISATS) on 87 acres of land.

The aim of the facility is to provide India’s logistics sector with a cargo processing and transportation grid that will reduce costs, streamline coordination, and improve efficiency in the supply chain. The AISATS cargo hub at Noida will play a vital role in providing just-in-time cargo facilities for the north India region and will contribute to the growth and development of the logistics and air cargo sectors in India.

The strategic location of the cargo hub will connect multiple modes of transportation and provide consolidated ancillary and value-added services. This will establish an efficient route for cargo throughput across India and abroad. For SATS, establishing an integrated logistics gateway in Noida through the AISATS joint venture with Tata Group’s Air India will help develop the region into a strategic air cargo and export hub. This development also supports SATS’ growth strategy in expanding its global air cargo hub handling capabilities.

Ports Minister Sarbananda Sonowal will be present to welcome the first Indian cargo ship arriving at Myanmar’s Sittwe Port on May 9. During a press conference in Assam’s Dibrugarh, Sonowal stated that this will mark the beginning of regular cargo ship movement between Kolkata Port and Sittwe Port, which will significantly boost the economic potential of the entire Bay of Bengal region.

The inaugural cargo ship, carrying 1,000 metric tonnes of cement in 20,000 bags, was initiated from Kolkata on Thursday by Union MoS for Ports Shantanu Thakur.

The construction of Sittwe Port in Myanmar’s Rakhine state has been funded by India as part of the Kaladan Multimodal Transit Transport Project (KMTTP).

Sonowal stated, “We have successfully expedited the construction of Sittwe port in Myanmar to enhance trade opportunities for Northeast India in the coming years.”

In addition to benefiting India and Myanmar, this port will also create significant commercial opportunities for Bangladesh, Bhutan, and even Nepal, as it acts as a bridge connecting South Asia and Southeast Asia.

Sittwe Port has been developed based on an agreement between India and Myanmar for the construction and operation of a multimodal transit transport facility on the Kaladan River, linking Sittwe Port with Mizoram.

The port connects to Paletwa in Myanmar through an inland waterway and then from Paletwa to Zorinpui in Mizoram via road.

Once fully operational, KMTTP will offer an alternative connectivity route from India’s eastern coast to the northeastern states via the Sittwe Port, according to Sonowal.

He added, “This route will be more feasible for trade and commerce compared to the existing route through Siliguri to Kolkata, as it will save time, money, and ensure efficiency.”

Furthermore, the use of marine transport will not only reduce road traffic but also bring down the environmental cost of transportation by reducing fossil fuel carbon emissions, Sonowal explained.

The main exports from Sittwe Port will include rice, timber, fish and seafood, petroleum products, garments, and textiles. The major imports will consist of construction materials such as cement, steel, and bricks.

Last month, Turkey implemented a requirement for proof of insurance for oil-carrying ships following the implementation of European Union sanctions on Russia. This has resulted in a standoff over sanctions and insurance, causing a congestion of oil tankers at the Bosphorus shipping strait. The situation escalated on Thursday, with millions of barrels of crude oil now stuck.

The Turkish Transport Ministry has faced pressure from the US, UK, and the insurance industry to change its rules. However, the ministry emphasized that the large number of vessels waiting at the strait should not be used as a means to pressure Ankara over its insurance requirements.

The ministry declared that laden tankers without insurance letters will be removed from Turkish waters, though it remains unclear if this approach will free up any of the blocked vessels to sail into the Mediterranean.

According to Bloomberg shipping data, as of Wednesday, there were 26 tankers carrying over 23 million barrels of oil from Kazakhstan unable to pass through the Bosphorus and Dardanelles straits. These waterways are crucial chokepoints for the transportation of crude and other commodities from the Black Sea. Kazakh authorities estimated a smaller backlog, indicating that the Turkish ministry’s estimation stands at 15 vessels.

The ministry’s statement outlined the following points:

• Northbound tankers will require proof of insurance, hindering tankers entering the Black Sea to collect cargo.
• Valid insurance coverage has been required since 2002.
• Eleven out of the 15 halted oil tankers are bound for the European Union.
• Ships in the Sea of Marmara will be removed from Turkish waters.
• Owners have the option to provide a new insurance policy that covers their time in Turkish straits.
• Turkey is open to “all solutions” offered by flag states.

Turkey announced last month that passing tankers would need to provide letters from their insurers, confirming that they were covered to navigate the straits. The straits witnessed the flow of nearly 700 million barrels of crude over the past year. Turkey’s decision was a response to European Union sanctions on Russia, which disallow insurance coverage for vessels carrying oil priced above $60 per barrel.

US and UK officials have been urging Turkey to reconsider the proof-of-insurance requirement, particularly as shipments from Kazakhstan are not subject to sanctions. US Treasury Secretary Janet Yellen insisted that Kazakh shipments are not subject to a price cap and therefore should not face additional procedures. She stated that the US is in talks with Turkish authorities to address the situation.

Turkey stated that it considers it “unacceptable” for protection and indemnity clubs, which provide insurance for risks such as collisions and spills, to not provide confirmation letters to their commercial customers. The ministry clarified that the required letter is solely meant to confirm that the ship’s insurance is valid during its passage through the straits.

The Turkish Ministry also mentioned that it is working on a separate solution for ships without insurance letters that were bound for Turkish refineries, citing the “public good and national interest.” Previously, insurance verification was typically conducted through insurers’ websites, which are regularly updated.

The latest round of sanctions states that a ship carrying Russian oil is only considered to have industry standard coverage if its cargo was purchased at $60 per barrel or less. While the majority of the blocked ships are from Kazakhstan, Turkey’s rules apply to any tanker carrying a cargo, regardless of its origin.