The Indian maritime sector needs to sustain steady headway towards capacity creation for meeting the needs of a growing economy.
by Radhika Rani G.
Capacity of Indian ports will reach 3,130 million tonnes by 2020, says Union Minister of Shipping G K Vasan. The minister hints at the activity being steered around creating, building and sustaining infrastructural needs of the country through the vision document for the decade.
The Maritime Agenda attempts a policy framework to facilitate enhanced private investment, service quality and competitiveness, apart from expansion of capacities in the country. The action plan, if driven towards the goal, will catapult India to the premier league of maritime nations in the world. From the present traffic of 870 million tonnes, a four-fold increase to 2,495 million tonnes by the end of this decade only means mission accomplished.
As part of the government plan, 23 projects have already been identified for the fiscal year 2011-12 under the Public Private Partnership (PPP) mode calling for an investment of Rs 16743.92 crore. These projects are likely to increase the capacity of major ports by 236.63 mpta (million tonne per annum).
For the current year however, “top priority is being given to modernising ports through expansion / upgradation projects for berths, construction of new berths/terminals, installation of new and modern equipment, upgradation / replacement through higher capacity of cargo handling equipments, mechanisation of cargo handling operations, deepening of channels/berths,” the minister explains. And under the National Maritime Development Programme (NMDP), 276 projects have been identified for mechanisation and 69 have been completed.
Along with this, schemes for quicker evacuation of cargo through road and rail connectivity are also been implemented. In the wake of growing domestic demand from end-user industries, the outlook for cargo growth remains favourable, notes ICRA. “The main cargoes, the volumes of which are expected to drive growth include coal, crude oil and containers. Accordingly, port ventures with an exposure to these cargo categories stand to gain,” it says in its latest rating feature.
But speed is an issue. “Yes, it is,” agrees K Mohandas, Secretary, Ministry of Shipping. “But when you work in a government system, and that too in a transparent setup, we have to go through the well-defined process. There are some delays but these are inevitable as part of the transparent process that we are following. Improvement of course will be possible,” the secretary says.
As for industry outlook towards capacity creation initiatives, it has been swaying between certainty and scepticism depending on the nature and time taken for implementing the projects. The industry seeks continual support from the government and a two-way interface to make things happen.
The prime concern is port infrastructure on the west ports, says Capt Deepak Tewari, President of Container Shipping Lines Association.” The major port that handles practically more than half of India’s import and export trade like Nava Sheva does not have the necessary infrastructure. Its draft is low at 12.5 metres and does not have the capacity to handle larger ships.
"If one port is constrained by draft, then obviously the vessels are not full and are not optimised. So service optimisation is not there, leaving the shipping lines in despair,” he adds.
There is also the requirement for more terminal capacity, says Capt Dinesh Gautama, Advisor of CSLA. “As about 45 per cent of the containerised throughput of India goes via Nhava Sheva, it is important to all shipping lines,” he says.
Chairman of Jawaharlal Nehru Port, L Radhakrishnan, agrees. “Creation of capacity should be in proportion with demand,” he concurs. Capacity of major ports, he says, is hindered as the ports have limited authority. Delegation of powers is required at major ports,” he opines.
“The powers vested with port trusts like us are too less and one needs to go through the approval process every time. Even, the delegation for buying port equipment is very low.” This is one of the main reasons for the delay in carrying a project forward, Radhakrishnan notes.
Also, there is the need to consistently relook PPP agreements. “The time period is usually 30 years and the technology and the business environment change with time. So it would be reasonable to have at least two such reviews in this period.”
Calling on the need for collective approach to make the optimal use of capacities created, Ennarasu Karunesan, CEO, DP World, Chennai says, “All that the world class terminals require is the support of the local system. Then only the terminals can deliver result. Chennai has an age-old system in place. Projects are launched here in Chennai, but there they are not time-bound.”
Elaborating further, Suresh Amirapu, Managing Director, Portman India Pvt Ltd, says better connectivity, capital dredging, tax concessions and quicker implementation of projects are required to make maritime sector the most viable sector in the country. As compared to all the major Ports of India, Chennai has issues like low land availability and a congested urban city in the vicinity.
All the major ports are no doubt in expansion and modernisation mode. However, the problem is on inland logistics front, says Ajeya Kallam, Chairman of Visakhapatnam Port Trust. Kallam, who is also the chairman of Indian Ports Association, feels that “we are not planning connectivity between the port and hinterland.”
He says, “A situation might arise where port capacities are ready but connectivity is still not addressed. Pollution is going to be another serious issue and has to be factored while planning and executing port expansion projects.”
In this regard, the growing cargo demand in general can be met if connectivity (road, rail and approach channel dredging) can be improved to all the existing ports in a steady manner, smooth passage of traffic flow is ensured inside the port, gate complexes with multiple lanes are built to increase efficiency and shallow water berths are deepened and strengthened from time to time.
As for private ports, connectivity has been a major issue. MLN Acharyulu, Executive Director of Marg group that operates Karaikal Port stresses the need for better roads and rail network. He too lays the onus on collective participation for developing connectivity infrastructure. And that by itself is a challenge.
“From our experience we have seen that excellent berths can be created, good cranes can be purchased, complete dredging and receive a vessel at the port. But one can realise the problems only when the traffic at the port increases. We are fortunate and unfortunate to have more traffic. Fortunate, because the traffic is growing. In the first year of our operations, we did 4.8 million tonnes. Unfortunate, because other systems such as road, rail to handle this cargo are lacking. There is no owner for constructing roads, as National Highways, State governments and other agencies are involved. This requires much more effort more than constructing a port. Unless we work in tandem these things do not move,” he adds.
According to Amit Bhatnagar President, Ahmedabad Steamer Agents Association, two important points that can improve capacity at ports are cost-effectiveness and efficiency. “Healthy completion promotes cost-effectiveness. This would not only help existing exporters to bag more orders, but also encourage entrepreneurs to start new ventures,” he explains. As for efficiency, it is the key to enhance capacities at ports, he says.
“There were times when vessels used to anchor for days to discharge and load cargo before they could sail. Today technology has improved to an extent that ports are able to provide fixed window to carriers and they guarantee moves per hour such that no vessel is at berth for more than 24 hours.” Efficiency, he notes, can further be improved by having more and more skilled laborers. “There is a need of more institutions that specialise in maritime education. MBA courses being offered across the country can add port management and allied courses in their content,” he adds.
On a macro level, the hurdles, as detailed by shipping lines, are:
a) Capacity at Terminals: Although the government has been emphasising on having PPP in terminal creation and has also permitted 100 per cent foreign direct investment for construction and maintenance of ports and harbours, the projects need to be speeded up.
b) Dredging: Indian ports are not deep enough to take mega container ships (capacity of 10,000 teu plus) and thus there is a need to increase the draughts to 16 m or 17 m. For instance, Nhava Sheva is a tidal port with a draft of 12.5 m. Kolkata and Haldia have perennial draught problems.
c) Rail/road connectivity: Ports are bogged down either due to bottlenecks in the roads or lack of enough roads for evacuation of cargo.
d) Antiquated regulation: It is time to revise and amend dated policies. For instance, while the Tariff Authority of Major Ports is the economic regulator for major ports, with the main function as tariff setting for major ports and private terminals commissioned therein, the non-major ports, operating in the same environment do not have any economic regulator and non-major ports including private ports have liberty to fix their own tariffs. As a result, there is no level playing field, the government admits.
To hasten development, there is a need for a regulator for all the ports for setting, monitoring and regulating service levels, technical & performance standards, the ministry notes.
The Maritime Agenda justly seeks simultaneous multiple interventions to achieve goals. Its decade plan, in a nutshell, aims to
- Create port capacity of 3,200 MT for handling about 2,500 MT of cargo (necessitates an investment of Rs 3 lakh crore)
- Improve port performance on par with the best in the world
- Increase tonnage under the Indian flag as well as under Indian control (needs an investment of 1.20 lakh crore)
- Increase coastal shipping and facilitate hassle-free multimodal transport
- Increase India’s share in global ship building to 5 per cent
- Promote use of the inland waterways for cargo movement
- Increase the strength of Indian seafarers to 9 per cent of the global strength by 2015 and sustain above this level
While creating capacities is a continual and time taking process, the action plan needs focused efforts, especially at this juncture when India’s global trade is growing. The stakeholders need to walk the talk to build a robust maritime India – the bedrock to the economy. While the potential is there, propulsion is what is needed now.
