Clever Cats

In a face-to-face with Radhika Rani G, Managing Director Bill Smart dwells on things that can be worked out in India for container shipping lines in general and feeder services in particular.

They are wild cats in their own way. If one is ferocious, the other is suave. If one pounces and prowls the jungles, the other gently tees off his way forward in the seas. Both have sophistication in their manner and movement. And to explore the world around them is their mission. That’s the Bengal Tiger and the BTL Feeders, the latter ruled by men and named after the famed direct line in the game of golf.

The interview in Maritime Gateway.

The economy is getting back on track and the trade of merchandised goods is likely to pick up pace and pave the way for growth in feeder ports and transshipment hubs in the Asia Pacific context. The increased demand for point-to-point service requires the use of hubs to obviously coordinate feeder services for imports and exports. Having already made a mark for itself in feeder services between exim destination India and transshipment hubs in Singapore and Colombo, the Bengal Tiger Lines is all set to prowl further afield.

BTL’s beginning

Chairman Joachim von der Heydt saw the travails of early container shipping services rotating around several Indian ports. Since local delays were inevitable and extended the overall voyage time – owing to port inefficiencies, he came up with a simple 'shuttle concept' – one port in India and one hub port – thereby ensuring a regular and reliable service structure. Thus was born BTL in 1986.

If the “hands-on” Joachim von der Heydt has ensured a hassle-free connectivity by conceiving the 'Tiger Line' and taking it from China and Southeast Asia to the Gulf via the Bay of Bengal, managing director Bill Smart has been his able and smart lieutenant. His job requires crisscrossing borders too often, 40 per cent of his work time to be precise, to ensure tonnage is moving and trade is going and growing by the day

With 22 vessels in their fold and a 22-member staff overseeing trade and transactions of close to 800,000 TEU per year at their Singapore head office, does BTL ever face a Catch-22 in its operations with India? “Obviously,” says Bill Smart, “we have strong views on the continuing poor port infrastructure in Kolkata, the commercial centre of the East.” He hints at the perennial problems in Haldia, the only big facility in West Bengal handling container vessels and serving a widespread hinterland in the neighbouring states, the North-East and the land-locked Nepal and Bhutan.

“From ongoing draft limitations to inadequate handling equipment and the delay in appointing a competent full-time chairman to lead KPT (Kolkata Port Trust) out of its current quagmire,” D is quite an issue. It stands for those persistent delays and demands for a realistic draft.

It is for reasons like these that feedering services in India are sort of going through a state of change, according to Bill Smart. Since there is quite a lot of port development taking place, opening up opportunities for direct calls, “the feeder business will partly migrate to some of the smaller ports or those which have physical limitations,” he observes. But predominantly India is still a 60-per cent feedered market with the predominance of mainline calls in the west coast, but any change will take time. 

Hub speak

And when the Vallarpadam transshipment container terminal swings into action, will it attract enough shipping lines? Vallarpadam hub in Cochin, Bill Smart opines, is obviously a vision, but something which is perhaps 15 years too late. “The success of Colombo was because in India we did not provide transshipment hub facilities. Therefore, we somewhat missed the train but the concept of trying to bring cargo back to India, say to Cochin or Chennai, is something which depends on changing the existing player's routing patterns.”

Since the main lines have so far been hubbing at Colombo, Singapore or the Gulf, one cannot get the critical mass unless there is a change in the main line's operations. As per his observation, there is a lot of work that still needs to be done and a lot of persuasion of the lines to obviously change their patterns which in these days is dictated by cost. “This,” he says, “will be largely difficult as main lines are traditionally quite conservative because a lot of them are working alliances and consortiums.”

Additionally, convincing the main lines to change their hub choice is an onerous task since there are terminal windows and operational aspects to be taken into consideration as well as market concerns. “One line may have a preference to a particular market sector whereas the other line may not; [and] to get everyone into an agreement to make a change to the hub facility is something which people are naturally risk averse. They would rather stay with what they have.”

So there is a lot of background work to be developed to have all the key components come together. Not perhaps a revelation for the powers that be!

Cost concerns

In general too, container shipping worldwide, according to Bill Smart, will face a tough situation for the next one to two years as oversupply will continue to depress rates. “But economics must prevail and operators should not be pushed into untenable service provision. This means keeping costs under control and doing the best possible job till the trade recovers.”

However, port tariff levels have been relatively higher in developing countries and India is no exception. “Indian port marine charges,” he admits, “are exorbitant (eight times more than international ports and charged by gross registered tonnage) and in many cases unreflective of the service provision levels – the current lack of pilots/boats in Chennai being an example.”

The more you pay in some ports in India, the less service you get; so there is a dire need for the government to look into the archaic charge structure, more so now as trade is growing. A feeder facilitator like BTL, which has been associated with India for over two decades, also wishes the cabotage regulations were relaxed to enable more foreign players to ply along the Indian coast. Cabotage flexibility on the container front, according to Bill Smart, can enable connectivity from the small and minor ports to the major ones. “It should not be seen as a competitive trend, but as a trade building exercise,” he advises.

In general, there is a lot of potential in India that could be easily realised in terms of infrastructure development, he notes. “Industrial investment relies on good infrastructure, including road and rail port access, and too many times trade is being hindered by bottlenecks and delivery delays – a comparison with China shows the success of guaranteeing such smooth facilitation of cargo movements.”

Despite all odds, what keeps BTL going is its neutrality in business, with no foes or favourites in trade or competition with the main lines. “We have also proven ourselves in reliability,” Bill Smart adds. With a big daddy in Heinrich Schoeller, who owns 70+ vessels and manages over 300 ships, the BTL subsidiary has some good tonnage and is sure a name to trust in the feeder business. 

Having offices in Singapore, India and Sri Lanka together with agents and representatives in China and Dubai, the Tiger Line has come a long way in providing cost-effective services. Its trajectory is only growing by the day; and with it, newer targets.