Beyond tech and policy: What will truly reshape the shipping industry in 2025?

Over the past few years, the Indian government has shown a marked commitment towards bolstering the shipping industry through increased budgetary allocations, with Rs 1,527.55 crore earmarked in 2021-22 for the Ministry of Ports, Shipping, and Waterways. This figure witnessed a steady rise, reaching Rs 2,395 crore, as per the Revised Estimates for 2023-24 (see chart ‘Budget Trends’). For 2024-25, the Budget Estimates stand at Rs 2,377.5 crore, lower than the previous year’s revised figures but still reflecting a substantial investment compared to earlier years.

This trend underscores the government’s dedication to strengthening India’s shipping and port sector as part of its larger economic development and trade facilitation goals. The ripple effects also include robust economic growth and the creation of job opportunities, benefitting multiple sectors.

However, the geopolitical turmoil has significantly disrupted global trade routes, extending transit distances and pushing freight rates to unprecedented levels. According to Ravi Singh, Senior Vice President–Retail Research at Religare Broking, the shipping industry is in recovery mode after the pandemic, with a higher demand for global trade, supply logistics, and continually increasing orders of new vessels. “However, high fuel costs and geopolitical tensions are a challenge. Medium-term we’ve to be cautiously optimistic, with sustainability and innovation driving change in this industry,” he says. His insights highlight the mixed landscape: while opportunities abound, sustainability efforts and geopolitical stability will play pivotal roles in shaping the industry’s future.

However, Amar Ambani, Executive Director at YES Securities, cautions: “Freight rates have touched new highs, while the order book for new ships has waned. This needs to be watched.”

Maritime growth

The shipping sector has seen a notable surge in the market capitalisation of some major companies between October 2022 and September 2024. A review of five key players showcases impressive growth figures, reflecting a robust period for the logistics and shipbuilding sectors.

According to this year’s BT500 list, the Great Eastern Shipping Company—ranked 377th in 2024 compared to 363rd in 2023—demonstrated solid 56.2% growth in average market capitalisation, which rose to Rs 15,040 crore. This reflects the company’s strong market positioning and recovery within the logistics sector. The company shows a robust Return on Equity (ROE) of 23.1%, indicating effective management and competitive profitability (see table ‘Trim and Stability’).

The Shipping Corporation of India broke into the Top 500 this year, at No. 478. In the June 2024 quarter, the company’s sales revenue surged by 26.2%. Its average market capitalisation surged by 83.4%, jumping to Rs 10,106 crore during the BT500 study period. This significant increase suggests robust performance and strategic initiatives that have fortified its market position. However, with a modest ROE of 9.4%, the company is behind its peers, suggesting room for improvement in leveraging equity effectively.

The shipbuilding sector showcased even more pronounced growth. Mazagon Dock Shipbuilders made a remarkable leap from 221st place in 2023 to 138th in the 2024 list, driven by a 177.3% increase in market capitalisation (m-cap), which rose from Rs 21,510 crore to Rs 59,643 crore. With an impressive ROE of 32.9%, the firm has demonstrated strong profitability and efficient use of equity, standing out as a leader in its sector.

But the company that has shown the most substantial growth happens to be Cochin Shipyard, with an astounding 332.8% increase, elevating its m-cap from Rs 7,935 crore to Rs 34,339 crore, leaping from the 402nd spot to 211. The company had an ROE of 16.6%, reflecting solid returns but still lags behind some of its peers in profitability.

Lastly, Garden Reach Shipbuilders and Engineers also logged notable progress, advancing from the 472nd spot to 389th. It posted a 131.4% increase, with m-cap reaching Rs 14,216 crore from Rs 6,145 crore. Matching its peers, the firm also boasts an ROE of 23.1%, showcasing its strong financial health and efficient equity utilisation.

These figures underline the strong momentum in the shipbuilding and logistics sectors, highlighting significant contributions to India’s industrial and economic growth. This growth finds further validation in the container shipping sector, which emerged as a standout performer in 2024. The sector’s improvement in container and overall cargo volumes underscores enhanced efficiency in cargo handling while reinforcing the critical need to expand infrastructure to sustain this upward trajectory.

“Programmes like the Sagarmala initiative and the Maritime India Vision (MIV) 2030, have played a pivotal role in improving port infrastructure and operational capacity to streamline the overall operations within the sector,” says Nikhil Agarwal, President of CJ Darcl Logistics Ltd.

“While container shipping also faces challenges such as port congestion, fuel costs, and environmental regulations. To address these challenges, the industry needs to embrace new technologies,” Agarwal adds.

On the other hand, the cargo traffic handled at the country’s major ports increased at a steady rate year-on-year for the third consecutive month ending August 2024. It grew by 6.8% in the month of June 2024, followed by a growth of 6% and 6.7% in July 2024 and August 2024, respectively.

The cargo traffic handled at the country’s minor ports also rose in July by 2.8%. Overall, the cargo traffic at the ports across the country increased by around 3.3% during the first two months of the September 2024 quarter. The rise in cargo traffic at the country’s ports is likely to support the industry’s top line in the second quarter of the ongoing financial year, per the latest CMIE industry report.

Outlook 2025

The shipping industry in 2025 is poised for transformative changes, driven by advancing technologies, evolving global dynamics, and a strong push towards sustainability. A significant factor shaping its future is the increasing adoption of digitalisation. Advanced technologies such as IoT, blockchain, and AI are expected to enhance supply chain transparency, streamline inventory management, and enable better decision-making by predicting bottlenecks before they arise.

This shift will mark a new era of efficiency in maritime operations.

Equally pivotal is the government’s focus on strengthening the sector through targeted initiatives. The development of new ports, implementation of favourable policies, and substantial infrastructure investments are set to boost operational efficiency.

Meanwhile, as per experts, the growth of global trade along with the e-commerce boom will further fuel demand for efficient and reliable transportation. The industry is expected to thrive by meeting this increasing need for swift and dependable goods movement across borders. However, sustainability remains a pressing challenge.

Experts note that in 2025, the sector must embrace cleaner fuels, energy-efficient vessels, and strategies to reduce its carbon footprint, ensuring that its growth aligns with the imperatives of environmental stewardship. Together, these developments promise to redefine the shipping industry’s role in the global economy.

With the increasing consumer demand for faster and more convenient delivery options, a robust shipping infrastructure becomes imperative to sustain the growth of the e-commerce industry.

By investing in cutting-edge technologies, the shipping industry can enhance efficiency, reduce costs, and provide exceptional service to e-commerce businesses and their customers.

As CJ Darcl Logistics’ Agarwal notes, “Overall, the outlook for the shipping industry in 2025 is positive. By adopting sustainable practices, the sector can position itself as an efficient logistics service provider in the rapidly evolving global marketplace.”

@imNavneetDubey