PACRA maintains the Entity Ratings of Pakistan National Shipping Corporation

The ratings reflect Pakistan National Shipping Corporation's (“PNSC”, “the Corporation”) strong ownership and its strategic significance as the country's national flag carrier. The Corporation operates under a "One Vessel, One Company" model and currently manages a fleet of 12 vessels with a combined carrying capacity of 938,876 tons, serving a variety of global trade routes. The average age of the fleet is 18 years. PNSC is actively working on fleet modernization to align with IMO regulations. The focus of the vessel acquisition strategy will be on acquiring new ships built to specifications that meet PNSC's trade needs, though the possibility of purchasing secondhand vessels will also be considered to take advantage of market opportunities. The shipping industry is experiencing strong performance, with the Clark Sea Index averaging $24,000/day in Q1, 35% above the 10-year trend, continuing the positive momentum from 2023. Seaborne trade volumes rose by 3% in 2023 to 12.4 billion tons, with a projected 2% increase to 12.6 billion tons in 2024. Container markets saw a boost from Red Sea rerouting, doubling spot freight rates and increasing charter rates by 37% since December. Bulk carriers are off to a strong start with steady cargo volumes and limited new build orders. Fleet growth is projected at ~3%, reaching 2.5 billion dwt in 2024. PNSC transported around 9.94 million tons of cargo in FY24, down from 10.83 million tons in FY23. This includes both liquid and dry cargo, with liquid cargo accounting for a larger portion at 8.647 million tons in FY24, compared to 9.26 million tons in FY23. The Corporation revenue clocked at PKR: 10,839mln in 1QFY25 (1QFY24 PKR: 13,296) and PKR: 46,363mln for FY24 (FY23, PKR: 54,597mln). This decline was driven by various factors including lower exchange rates and a correction in AFRA rates, which had previously surged due to exceptional market conditions influenced by the Russia-Ukraine conflict. The Corporation exudes a veritable financial structure with a high of amount of cash lying on the balance sheet; working capital is effectively managed through internal cash generation. However, the planned acquisition of new vessels will require significant capital investment, leading to higher gearing and impacting its strong financial metrics over time.
The ratings are constrained by intense competition in both the dry and wet markets, excess capacity, subdued freight rates, and significant regulatory changes in the shipping industry, particularly the shift toward cleaner fuels. However, comfort is derived from the enactment of the State-Owned Enterprise (Governance and Operations) Act, 2023 (SOE Act), as well as the issuance of the State-Owned Enterprise (Operation & Management) Policy (SOE Policy) in November 2023. According to section 9(a) of Chapter 3 of the SOE Policy, the Corporation has been classified as a Strategic SOE by the Cabinet Committee on State-Owned Enterprises. The ratings depend on the Corporation's ability to generate sustainable cash flows following its expansion. In the meantime, maintaining prudent financial discipline remains crucial.

About the Entity
PNSC, majority (89.13%) owned by the Government of Pakistan (GoP) through Ministry of Maritime Affairs, functions as a holding company with 19 wholly owned subsidiaries and an associate. PNSC group, operating on a one-ship one-company model. PNSC’s revenue emanates from two sources both from owned and charter vessels; liquid cargo and dry bulk. Dry bulk can further be subdivided into slot charter and bulk cargo. A small proportion of revenue comes from rental income too. Major customer of PNSC are the Oil refineries of the country. Over the years, the contribution from liquid cargo has increased and constitutes the largest share, followed by slot charter and bulk cargo. Mr. Sultan A.Chawla is the Chairman of the board.