Indian ports look forward to next stage of progress
Indian ports look forward to next stage of progress
Performance of Indian ports
How are the Indian ports performing? All the major ports are saturated and their full capacities are being used. In order to cater to the additional traffic, minor ports are being used increasingly. The high traffic in Mundra Port and Karaikal Port developed by private players is a case in point. There are also problems plaguing Indian ports, which need long term solutions.
$250 billion exports
India’s phenomenal 41% growth in exports has aided development and utilisation of its ports to the fullest level. Exports crossed the coveted $250 billion mark in 2010-11 for the first time. There are some doubts expressed about these numbers, but in any case, RBI has put the figure of export growth at 37.4% in 2010-11, which is not far different from the 40% growth projected earlier. During the year, the number of ports covered by Electronic Data Interchange (EDI) had increased from 36 to 86. What is the advantage of EDI ports? Instantly the information will be transferred to the Customs server, helping in better and timely capture of the relevant data. For Special Economic Zones (SEZ), an online portal has been developed. Now individual SEZs need not be approached for export information.
Congestion in Chennai port
Kochi Port has taken a decision to offer a 30% concession in vessel-related charges to foreign container feeder vessels calling at International Container Transhipment Terminal (ICTT) for a period of six months with effect from October 1. Madras High Court has ordered shifting of coal operations from Chennai Port to Ennore Port. Now Chennai Port is now planning to maintain its revenue flow. It may handle foodgrains and processed stones, which are non-polluting in nature. The management of the port feels burdensome to the extent of Rs.214 crore to retain the 1500 employees, who were handling coal cargo at the port. Union Shipping Minister G K Vasan has ordered action to reduce congestion at Chennai Port. Officials have been instructed to resolve the issue in a reasonable time. As part of the measures, operating time of the two gates at the Port for container traffic will be increased. There is also a proposal to open an additional bay near the 0 Gate, demolishing the wall. To decongest the port, trailer operators have demanded suspension of export movement for a week.
New Mangalore port handles increased traffic
For the first six months of the current financial year, New Mangalore Port has reported a 5.65% increase in its traffic because of handling of coal, crude oil and petroleum products and LPG. The port handled 16.04 million tonnes of cargo from April to September as against 15.18 million tonnes in the corresponding period of the previous year. Mangalore Refinery & Chemicals is one of the chief users of this port. It imported 6.71 million tonnes of crude oil during the period as against 5.79 million tonnes in the corresponding period of the previous year. Following a ban on mining activities in Bellary, iron ore handling in this port came to a standstill.
Water supply and lease renewal are problems in Kochi Port
The management of Kochi Port has decided not to renew the lease of the Port land beyond 2012. This has put the business people in an uncertain situation. The leaseholders have represented to the Port authorities to permit genuine leaseholders to carry on their activities. But the management has not clarified as to what will happen beyond the deadline 2012. Kochi Port plans a desalination plant. It has invited private sector for the project. It has also invited bids for a water supply facility on Willingdon Island on a revenue sharing basis. It has been estimated that water requirement may go up to 2500 kl for commercial sector and to 4000 kl for ships over the next five years period. The port is at present facing an acute water shortage with Kerala Water Authority being able to supply only 2000 tonnes. The Water Authority has promised to augment supplies to 32000 tonnes by 2013. How can the Water Authority step up its water supply to such a high level in a short period of time? Will it keep its promise? Will it continue its supplies at such a high level? These are the questions that are worrying the port authorities. Not willing to take any risk, they have conferred for private participation in the water supply programme.
Dwindling traffic in Paradip worries government
At Kolkata Port, three cargo vessels were damaged when one of them hit two others at the anchorage of Nataji Subhas Dock. Kerala Government has signed pact to develop Ponnani Port. A concession agreement has been signed with the Chennai-based Malabar Ports Private Ltd for the development of Ponnani Port on BOT basis. Floods in Orissa have affected the Dhamra port rail movement. Dhamra Port has been jointly promoted by Tata Steel and L&T. There are more severe concerns about the dwindling business of Paradip port. Its iron ore exports are dwindling and coal imports are also on the decline. Number of export rake carrying iron ore to the port has decreased to one or two a day against six to seven previously. Kottayam Port in Kerala is to start its operations shortly. A 500-tonne ‘bollard pull facility’ has been installed by the Cochin Shipyard Ltd at Vizhinjam. Bollard pull test is a test conducted to determine the static pull that a ship is capable of exerting under practical operating conditions with its own propulsion system.
PSA-ABG bags JNPT’s order
Jawaharlal Nehru Port Trust (JNPT) is India’s most important port operating at the financial capital Mumbai. For its 4th terminal, Singapore’s PSA-ABG consortium has won the contract. The project cost is estimated at around Rs.6700 crore. This will be the single largest foreign direct investment in the Indian port sector. The terminal is capable of handling 4.8 million TEUs annually. It will more than double JNPT’s capability. PSA-ABG has agreed to offer 50.8% of the revenue generated to the government. But questions have been raised about the performance of PSA-ABG group in the Kandla port handling.
Congestion outside the port also
National Shipping Board has suggested that all the major and minor ports in the country to be brought under the control of the Central government because of the security issues being faced by the nation. But this is practically not possible as private sector participation is on the increase in ports handling. MARG’s handling of Karaikal Port efficiently is a case in point. In fact, the government should corporatize the major ports and disinvest its stake in the major ports for their efficient operations. Many port managements are struggling to meet growing container traffic. Chennai Port is a classic example. Port users are blaming the management for the current crisis. With just two container terminals, single gate and limited infrastructure, the port is struggling to cope up with the 15 to 20 per cent annual growth in its container volume. The inventory of export and import containers has shot up to 18500 with excess capacity of 6000 containers. Exporters used to bring their consignment two days before the arrival of the vessels. But of late, they are unable to do even this as vehicles are stranded on the road. Construction of metro rail system is attributed as the reason for this.
JNPT is India’s largest port
JNPT accounts for more than 50% of India’s container traffic. Here also it is always congested. Recently the Commerce Ministry has approved it to go ahead with its proposal to set up a Rs.3000 crore port-based multiproduct special economic zone (SEZ). The SEZ will be within the port similar to Jebel Ali port in Dubai. Half the area will be reserved for processing industry and the remaining half for setting up supportive logistic units, housing and commercial complexes. Land is no problem as the entire earmarked land of 277 hectares is in its possession already. Roads have already been laid and water and electricity supply has also been already catered for. Importing materials in the containers through the port’s private container terminals has become costlier with shipping lines doubling the Chennai trade recovery surcharge to $130 for a TEU. Severe congestion has caused this doubling of the charges. On the other hand, all the cargo is cleared from the Karaikal Port handled by the private company MARG within twenty four hours and in many cases in less than seven hours time. In fact, a lot of cargo is being diverted from Chennai Port to Karaikal because of its efficiency. Moreover, Karaikal Port is sandwiched between Chennai Port and Tuticorin Port.
Colombo port grows at the expense of Indian ports
At the moment, Colombo Port in Sri Lanka flourishes at the expense of Indian Ports. If the government makes available more shipping services to Indian shippers in facilities like Vallarpadam, it will go a long way to shaping up the prosperity of Indian ports, which are languishing at the moment. Colombo port traffic was at 3.46 million TEUs. It increased by 18.9% to 4.10 million TEUs in 2010. In 2009, Colombo Port ranked 30th place among the top thirty container ports worldwide. Its rank improved to 28th in 2010. JNPT, Mumbai enjoys a rank of 25 in this scheme of things. But JNPT could grow only by around 11% in 2010 as compared to around 19% by the Colombo Port.
Facilities alone are not enough, competitive rates are equally important
India’s exports and imports in 2010-11 is $250 billion and $381 billion respectively. Sri Lanka’s exports and imports in 2010 are $8.3 billion and $12 billion respectively. When Sri Lanka’s total exports and imports are only a fraction of India’s exports and imports, how can the Colombo port handle such a huge traffic? Is it not unrealistic? One can smell something fishy in it. Yes, you are right. Nearly 80% of Colombo’s container traffic represents cargo transhipped from Indian ports. If India develops its Kochi Port to handle more cargo, then much of the cargo handled by Colombo will be retained by India, which will be to its benefits. Even private sector can be romped in the development if the government faces any financial constraints. For example, Ascent Capital has invested Rs.200 crore recently in Karaikal Port expansion plans. Already Kochi Port management has shortlisted 5 firms for Rs.200 crore multi user liquid terminal. But mere development alone is not enough. Vallarpadam in Kochi should match the Colombo rates to attract cargo. Nobody will come to Kochi with his cargo simply for the sake of patriotism. Profit and cost savings are things that matter to the business people. If the neighbouring Colombo Port is offering low tariff, why should an Indian businessman load his cargo in an Indian port at a high cost just for the sake of patriotism? A container vessel of GRT 11998 capacity will attract port charge of $16936 at Vallarpadam in Kochi compared to $3517 at Colombo. Kerala timber importers have decided to boycott Kochi Port for timber imports because of the blocking of duty refunds.
ICTT disappoints
In 2011, Antwerp port handled more than six million tonnes of cargo from India so far. The port has offices in Mumbai and Pune. It expects to attract more logistics providers and exporters and also investors from India in future. Huge ships of 14000 TEU capacity can call on the port twice every week. The port has a deep draught of 15.5 metres. Goa is a major iron ore producing State in India. Goa has registered its highest ever exports of the mineral at twin ports of Mormugao Port and Panaji Minor Port last year with a total of 54.45 million tonnes of iron ore. Out of this, 42.23 million tonnes was the iron ore from Goa State itself. The remaining ore was from Karnataka and Maharashtra. Now that mining activity in Bellary has been stopped because of the Supreme Court order (only NMDC is allowed mining there now), this figure for the Goa ports will drop in the current year. The government has allotted Rs.22000 crore for the development of nine new ports in the next five years. India is negotiating with Bangladesh to use Chittagong and Mongala ports. Indian government has also decided to relax cabotage in order to benefit the Vallarpadam International Container Transhipment Terminal ICTT at Kochi Port. Cabatoge means allowing foreign flag vessels to carry cargo along India’s coast. ICTT has been built at a cost of more than Rs.3000 crore and operated by DP World, the international container terminal operator based in Dubai. ICTT has not been doing well because of lack of cargo. Authorities attribute this to inadequate coastal shipping facility. France’s number one container operator CMA CGM withdrew from ICTT and returned to Colombo Port because containers delivered by it at ICTT took more than 36 days to be transhipped to the destination port. What is the cause of the delay? There are only about a dozen container ships operating from ICTT and the total capacity of these container ships is just over 12000 TEUs. With this inadequate capacity, how can you achieve the set target of 7.75 lakh TEUs for ICTT in the first year? The relaxation of cabotage will help ICTT to move towards its target and avoid delay to some extent.
Gangavaram port’s plans
The share of coal in Gangavaram port’s cargo handling is set to gradually decline as the port authorities propose to target more non-coal traffic in the coming days. Right now, 70% of the port’s traffic is taken up by coal (10 millions out of 14 millions). The port’s capacity is set to rise to 45 million tonnes per annum in 2014. At that time, coal will form less than 50% of its traffic. The port is expanding at an investment of Rs.1200 crore. The port authorities are confidant of handling bauxite, alumina, fertilisers, limestone, slag, containers and LNG. Vedanta group has to import alumina and bauxite for its smelters in Orissa plant. Fertiliser cargo is not remunerative rate-wise. At present Gangavaram port suffers from several infrastructural bottlenecks. Cargo imported is evacuated very slowly. Railway wagon movement is also slow. There is a restriction on railway wagon movement for eight to ten hours in a day to facilitate movement of employees of Vizag Steel Plant across the railway track. Importers are also using the port premises for storage purposes. The port has invited bids for dredging. The port is located on the coast of Andhra Pradesh and started its operations three years back. The scope of the proposed dredging work involves removal of about 3.5 million cubic metres of silt over a period of 5 to 6 months.
Impressive performance by Cochin Shipyard
Kochi port plans to float global bids for ship repair yard. It is part of the plan prepared by the port to redevelop its water front and other facilities that are idling following the commissioning of Vallarpadam Container terminal. The port trust will allocate 850 m of water front at Mattancheri channel and 45 acres of adjoining land for the project. This is in addition to the existing workshop and other facilities available. Last fiscal, Cochin Shipyard registered an impressive performance in its financial growth by increasing its turnover four times from Rs.373 crore in 2005-06 to Rs.1426 crore in 2010-11. Net profit increased by 13 times from Rs.18 crore to Rs.238 crore. Cochin Shipyard is the leading ship building and ship repair yard in India. Recently Cochin Shipyard delivered a rig supply vessel to a Norway company. This is the first time that such a high tech offshore vessel has been constructed in India and delivered to a foreign country. But Cochin Port Trust is likely to shelve its Rs.272 crore International Cruise Terminal project because it considers it as unviable.
MARG Karaikal port excels
MARG Karaikal Port has now added container handling services to its cargo-mix. The first container Ruhunupura called at the port to discharge and load containers. Phase-I of the port development has been completed at an investment cost of Rs.450 crore. It comprises two berths, one for coal and the other for general cargo. The port has commenced the second phase development at an investment cost of Rs.1500 crore. This involves setting up of nine berths – two for coal, three for containers, two for general cargo and a liquid jetty. Supreme Court has cleared way for VOC Port to convert cargo berth to box terminal at an investment cost of Rs.322 crore. East Coast ports in India are set to play a major role in coal imports in the coming days to alleviate the power shortage gripping the nation. There is a huge shortage of domestic coal supply. New coal plants cannot be established because of environmental reasons. As a majority of these new proposed coal plants are situated inside forest areas, entire forests have to be destroyed for making way to opening of these coal plants. This will cause environmental setbacks and also disturb the living of the tribal people in the forests, which will become a big political issue. Therefore the only way to overcome the shortage of coal is to import foreign coal. The east coast ports are ideal to achieve this as the majority of the power plants are located on the east coast.
International trade will grow if domestic ports are taken care of
Krishnapatnam Port has tied up with Container Corporation of India (CONCOR) to provide seamless movement of container traffic from the port to the hinterland by developing railway infrastructure. Myanmar is planning to develop a port in its southern region. The shipping ministry is not intent in allowing West Asian and Chinese companies bidding for Indian port projects because of security reasons. There are labour issues and mechanisation problems affecting port cargo handling companies. In order to survive, they are rethinking on options like diversifying into freight movement, multi modal transportation and buying smaller ships. For Indian ports, thinking of going global makes no sense at this point of time. They have to pool their energy to improve port services at home. Therefore the Indian government’s proposal to invest Rs.2500 crore ($557 million) for overseas ports to boost international trade makes no sense. There is no doubt that international trade is on the increase and will further increase in the coming days. Shipping Corporation of India’s plans to acquire 110 more vessels in this decade is a clear proof for that. But international trade will be better served by expanding and increasing the quality of domestic ports rather than to go for investing in overseas’ ports. The government should rethink on its policy.
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