AGENDA for SHIPPING & WATERWAYS
Transhipment
"Our own container traffic is moving away from Colombo or Singapore to Indian ports. Bangladesh is also looking to India," -- Shipping Secretary.
Domestic transhipment was boosted as foreign vessels can now ply domestic routes (for export or import destined cargo only), which are cost-efficient and profitable for good operators. It becomes more cost-efficient when extended to Bangladeshi ports. An agreement to this effect is in the offing. According to Indian Cotton Export Council, it will save 5-7% in export costs. Bangladeshi forwarders say it will stop diversions to Singapore or Malaysia for westbound shipments, and save time.
Colombo handles 65% of India's Exim trade, but this share will come down by half in the next 3 years. Private ports, Mundra (on the west coast) & Krishnapatnam (east coast) are well-prepared to accept business. JNPT and other major ports have to develop capabilities in order to compete. In the long-term, Govt wants to develop 1 dedicated transhipment port on W & E coasts.
Coastal shipping
An agreement with Bangladesh to use Chittagong port will speed up transit between NE states and rest of India through coastal shipping. For example, the sea route from Kolkata to Agartala takes 2/3rd of time vs road. Goods from Mumbai will take just 3-4 days by sea vs 15-20 days by land. Coastal shipping is expected to transform the sub-regional economies of Bangladesh and NE India. Cost of living of NE citizens will fall as will export costs. Small enterprises will benefit from new trading opportunities.
Waterways
Ganga waterway (1620-km, Rs 4,500cr) is under construction, between Haldia and Allahabad. A 900-km (Rs 5,000cr) waterway will connect Haldia in West Bengal to Brahmaputra river in Assam by passing through Sundarbans & Padma river in Bangladesh. Freight costs will fall by 70%.
Port modernisation and capacity expansion
Ship turnaround times (a measure of operational efficiency) have improved 25%, as has labour productivity due to modern equipment. As a result, profits at major ports have surged 75% to Rs 3,400cr in 2017-18. Sagarmala port modernisation drive is expected to further improve performances to reach close to global standards. Volumes are also rising: Kandla & Paradip ports have crossed 100mT cargo.
Sagarmala is a phased programme. 255 projects (Rs 2.6lakh cr) out of 605 projects (Rs 8.8lakh cr) have been awarded. In 3 years it has led to a 50% increase in total capacity to 1450 MTPA. Another 190 MTPA is due by 2020. Investments are targetting cost, efficiency, sustainability and safety to reduce logistics cost for domestic & international Exim cargo. In turn, this will improve EODB, improve export competitiveness and lower prices of goods & services.
In lieu of adding more capacity, major ports may bid for stressed private port assets. This is discussed here:
https://www.livemint.com/Politics/R4Nbd5Og57WKoFbiNaWkpL/Govt-weighs-plan-to-acquire-stressed-private-port-assets.html
Port led development
Port-rail and port-road links are being built for faster cargo evacuation. Ports will now buy freight wagons and run them independently of Indian Railways. Wagon investment scheme will not only reduce the financial burden on IR but also reduce costs & delays in freight movement.
Sagarmala project is expected to create jobs and economic growth around ports. Besides the emphasis on export-oriented manufacturing at SEZs, boosting agro- and aqua- exports, power generation (esp solar & wind) and desalination plants, cruise tourism and smart cities are on the agenda. Agricultural exports are high on priority as India moves into surplus food production. Fisheries & Aquaculture will be developed under the Rs 7,000cr blue economy initiative of Sagarmala.
Ports are encouraged to cogenerate power from wind & solar (called hybrid model). Kandla Port has proposed a 2000MW facility for supplying power at Rs 2.4/unit. Power ministry & NTPC will become partners. Desalination plants - coupled with low-cost power - can make freshwater at just Rs 30/m3. It can help meet drinking water needs for urban & rural populations (in water-stressed regions), industrial sector and perhaps even agricultural purposes. 3 pilots will be set up at Tuticorin, Kandla & Paradip.
Cruise terminals will be built at all major ports, to cater for domestic and international tourism. Minor and private sector ports are asked to do likewise. Govt has given Rs 800cr to Shipping Corp of India to buy cruise boats. As a start, cruise services have started from Mumbai-Goa. A service on river Krishna is expected soon.
Transhipment
"Our own container traffic is moving away from Colombo or Singapore to Indian ports. Bangladesh is also looking to India," -- Shipping Secretary.
Domestic transhipment was boosted as foreign vessels can now ply domestic routes (for export or import destined cargo only), which are cost-efficient and profitable for good operators. It becomes more cost-efficient when extended to Bangladeshi ports. An agreement to this effect is in the offing. According to Indian Cotton Export Council, it will save 5-7% in export costs. Bangladeshi forwarders say it will stop diversions to Singapore or Malaysia for westbound shipments, and save time.
Colombo handles 65% of India's Exim trade, but this share will come down by half in the next 3 years. Private ports, Mundra (on the west coast) & Krishnapatnam (east coast) are well-prepared to accept business. JNPT and other major ports have to develop capabilities in order to compete. In the long-term, Govt wants to develop 1 dedicated transhipment port on W & E coasts.
Coastal shipping
An agreement with Bangladesh to use Chittagong port will speed up transit between NE states and rest of India through coastal shipping. For example, the sea route from Kolkata to Agartala takes 2/3rd of time vs road. Goods from Mumbai will take just 3-4 days by sea vs 15-20 days by land. Coastal shipping is expected to transform the sub-regional economies of Bangladesh and NE India. Cost of living of NE citizens will fall as will export costs. Small enterprises will benefit from new trading opportunities.
Waterways
Ganga waterway (1620-km, Rs 4,500cr) is under construction, between Haldia and Allahabad. A 900-km (Rs 5,000cr) waterway will connect Haldia in West Bengal to Brahmaputra river in Assam by passing through Sundarbans & Padma river in Bangladesh. Freight costs will fall by 70%.
Port modernisation and capacity expansion
Ship turnaround times (a measure of operational efficiency) have improved 25%, as has labour productivity due to modern equipment. As a result, profits at major ports have surged 75% to Rs 3,400cr in 2017-18. Sagarmala port modernisation drive is expected to further improve performances to reach close to global standards. Volumes are also rising: Kandla & Paradip ports have crossed 100mT cargo.
Sagarmala is a phased programme. 255 projects (Rs 2.6lakh cr) out of 605 projects (Rs 8.8lakh cr) have been awarded. In 3 years it has led to a 50% increase in total capacity to 1450 MTPA. Another 190 MTPA is due by 2020. Investments are targetting cost, efficiency, sustainability and safety to reduce logistics cost for domestic & international Exim cargo. In turn, this will improve EODB, improve export competitiveness and lower prices of goods & services.
In lieu of adding more capacity, major ports may bid for stressed private port assets. This is discussed here:
https://www.livemint.com/Politics/R4Nbd5Og57WKoFbiNaWkpL/Govt-weighs-plan-to-acquire-stressed-private-port-assets.html
Port led development
Port-rail and port-road links are being built for faster cargo evacuation. Ports will now buy freight wagons and run them independently of Indian Railways. Wagon investment scheme will not only reduce the financial burden on IR but also reduce costs & delays in freight movement.
Sagarmala project is expected to create jobs and economic growth around ports. Besides the emphasis on export-oriented manufacturing at SEZs, boosting agro- and aqua- exports, power generation (esp solar & wind) and desalination plants, cruise tourism and smart cities are on the agenda. Agricultural exports are high on priority as India moves into surplus food production. Fisheries & Aquaculture will be developed under the Rs 7,000cr blue economy initiative of Sagarmala.
Ports are encouraged to cogenerate power from wind & solar (called hybrid model). Kandla Port has proposed a 2000MW facility for supplying power at Rs 2.4/unit. Power ministry & NTPC will become partners. Desalination plants - coupled with low-cost power - can make freshwater at just Rs 30/m3. It can help meet drinking water needs for urban & rural populations (in water-stressed regions), industrial sector and perhaps even agricultural purposes. 3 pilots will be set up at Tuticorin, Kandla & Paradip.
Cruise terminals will be built at all major ports, to cater for domestic and international tourism. Minor and private sector ports are asked to do likewise. Govt has given Rs 800cr to Shipping Corp of India to buy cruise boats. As a start, cruise services have started from Mumbai-Goa. A service on river Krishna is expected soon.
Government plans waterway freight corridor via Bangladesh to northeastern states
economictimes.indiatimes.com
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- Transhipment agreement with Bangladesh
--------------------------------
Agreement with Bangladesh for coastal shipping covers only direct trade -- it doesn't cover transhipment, where Bangladesh trades with rest of the world. As a result, Indian ports have denied Bangladeshi cargo for want of a good arrangement. It makes sense to allow this: firstly Chittagong is congested and secondly, Bangladesh doesn't have a deep sea port, so a short trip to Chennai, etc is more cost-effective.
Shipping activity with Bangladesh to help North-East---------------------------------------------
1. India will get formal access to Chittagong & Mongla ports in Bangladesh for goods meant for NE states. India pays charges under GATT & agrees to use Bangladeshi transport. 4 routes are identified, eg Agartala (Tripura); Dawki ( Meghalaya).
2. Chittagong port will provide the fastest access to NE. For example, the sea route from Kolkata to Agartala is 2/3rd travel time vs road. Goods from Mumbai take 3-4 days by sea vs 15-20 days by road/ rail. Thus it strengthens connectivity & trade with rest of India.
3. It will also improve the trading activity of Tripura (eg), as NE states are land-locked. Despite duties, taxes plus transportation fees to Bangladesh, the overall cost is much reduced. Small industries will find markets outside the region. Cost of living for NE citizens will decrease as imports will be cheaper.
4. Two-way benefit will transform the sub-regional economies of Bangladesh (revenue from charges) & NE (lower prices, higher trade).
5. Chittagong port will increase connectivity within Assam (by waterways).
REPLY 25w - 1. Port modernisation and expansion
==========================
1a. Impact of Sagarmala-------------------------
Ports profits have surged 75% to Rs 3,400cr in 2017-18. Ship turnaround times or operational efficiency is has improved by 25%. Labour productivity has improved. Sagarmala port modernisation drive is expected to further improve performances to reach close to global standards. Investments are targetting cost, efficiency, sustainability and safety to reduce logistics cost for domestic & international Exim cargo. In turn, this will improve competitiveness, ease of doing business & lower cost of traded goods & services.
Kandla & Paradip ports have crossed 100mT cargo handling per year. Sagarmala has in 3 years led 50% increase in total capacity to 1450 MTPA. Another 190 MTPA is expected by 2020. Private sector investment is now Rs 20,000cr for adding 270 MTPA capacity. Sagarmala is a phased programme. 255 projects (Rs 2.6lakh cr) out of 605 projects (Rs 8.8lakh cr) have been awarded.
1b. Capacity expansion through acquisitions-----------------------
Major ports may bid for stressed private port assets in a bid to increase capacities for rising demand.
https://www.livemint.com/Politics/R4Nbd5Og57WKoFbiNaWkpL/Govt-weighs-plan-to-acquire-stressed-private-port-assets.html
REPLY 25w - 2. Beyond port development per se
a) Port connectivity and private rail freight
b) SEZ, smart cities
c) Renewable energy and desalination plants
d) Blue economy and agriculture incl export facilities
e) Cruise terminals, services, ownership of cruise ships
Port- rail and port-road links are being built for faster cargo evacuation. Ports will now buy their freight wagons and run them independently of Indian Railways. Wagon investment scheme will not only reduce the financial burden on IR but reduce costs & delays in freight movement.
Sagarmala project is expected to create jobs and economic growth around ports. Besides the emphasis on export-oriented manufacturing at SEZs, boosting agro- and aqua- exports, power generation (esp solar & wind) and desalination plants are on the agenda. Agricultural exports are high on priority as India moves into surplus food production. Fisheries & Aquaculture will be developed under the Rs 7,000cr blue economy initiative under Sagarmala.
Ports are encouraged to cogenerate power from wind & solar (called hybrid model). Kandla Port has proposed a 2000MW facility for supplying power at Rs 2.4/unit. Power ministry & NTPC will become partners. Desalination plants - coupled with low-cost power - can make freshwater at just Rs 3/m3. It may help meet drinking water demand for urban & rural regions, industrial sector and perhaps even agricultural needs. 3 pilots will be set up at Tuticorin, Kandla & Paradip.
Cruise terminals will be built at all major ports, to cater for domestic and international tourism. Minor and private sector ports are asked to do likewise. Govt has given Rs 800cr to Shipping Corp of India to buy cruise boats. Cruise services have started from Mumbai-Goa. A service on river Krishna is expected soon.
3. Purchase of stressed ports by major ports
4. Promotion of coastal shipping and IWT
5. Transhipment port, deep sea ports, dredging
REPLY 25w REPLY 25w - Gadkari, Union minister for shipping & waterways, says he favoured waterways and coastal shipping instead of roads which he stated would not be able to keep up with traffic growth.
◘ In water transport, under Sagarmala, we aim to harness the 7,500 km seafront that our nation has been blessed with. We have 12 major ports and will build six more, along with 200 private and minor ports. We will link 111 rivers, of length around 20,000 km, and convert them into riverways. The total outlay of Rs 16 lakh crore includes Rs 4-5 lakh crore budget for modernisation, port mechanisation, port road connectivity and port rail connectivity.
◘ On the Brahmaputra, we are building jetties. Overall 60 locations are planned. We are working to improve the draft at Haldia.
◘ We have plans for our own railway, wherein a separate corporation will have a budget of Rs 1 lakh crore. We will build a line from Indore to Manmad and link Kasara directly to the JNPT. In Orissa, we are building a Talcher-Paradip line.
◘ In Maharashtra, we are creating four dry ports. Here again, the railway connectivity and station will be our responsibility. We aim for all consignments from Gujarat to be offloaded at Bhayander, where we will create a minor port, and go to JNPT via barges. This will ease the Vasai bridge congestion. We are actively pursuing SEZ at JNPT, which would provide employment to 1.24-1.5 lakh people.
Sagarmala in Mumbai: 24 companies with Rs60,000 in JNPT SEZ--------------------------------------------------------------
Union Shipping and Ports Minister Nitin Gadkari today said 24 companies have offered to invest over Rs 60,000 crore in a special economic zone adjoining the country’s largest container port JNPT.
“Twenty-four companies have already offered to come and set up ventures in JNPT SEZ who will use it for exports. This will create employment for 1.25-1.50 lakh people,” Gadkari said.
Prime Minister Narendra Modi had laid the foundation for the facility months after being sworn-in in May 2014 and the government was targeting to create 1.50 lakh jobs in the facility. Without disclosing the name of the company, Gadkari today said one of the companies has said it “on an affidavit” that it alone will invest Rs 6,000 crore and create employment for 40,000 people.
The comments from the minister came in the backdrop of recent media reports that said Taiwanese contract manufacturer Foxconn may be one of the interested companies, which will create the high number of jobs for mobile handset manufacturing at the facility.
The government was also hopeful of getting Tesla, arguably one of the most respected companies in the world, to the SEZ, but Gadkari had recently said the battery and transport major is not interested.
JNPT, which has also awarded an over Rs 7,900-crore project to more than double its container handling capacity, is investing Rs 4,000 crore in the SEZ which is supposed to be spread over 277 hectares.
Gadkari today said works of over Rs 2 lakh crore have already started under the ambitious ‘Sagarmala’ project and added that port-rail connectivity will alone witness an investment of Rs 1 lakh crore under the project. He said the ministry is constructing the Indore-Manmad railway line at an investment of Rs 6,000 crore and is also looking to connect neighbouring Thane district’s Kasara and JNPT directly.
In order to reduce the container traffic passing through the financial capital and suburbs, it has asked for land near Vasai on the outskirts, from where the containers can be sent directly on barges to JNPT via the water route, he said.
It is also investing Rs 1,000 crore to build a cruise terminal in the financial capital, Gadkari said, adding that the first of the Mumbai-Goa cruise ships will be sailing before the end of December.
freepressjournal.in - #IndiasRoadAhead live updates: Nitin Gadkari, prominent panelists discuss India's Road Ahead | Free Press Journal
REPLY 25w - On inland waterways, the ecosystem needs to develop. Is the software component capable for collection and taxation requirements? Not likely. A lot of procedures need to be in place – taxation, cabotage and so on. There is a strategic planning element to be put in— China’s exports travel around 150 km to get to the coast, whereas for India the figure is 700 km.
The opportunity in this space is immense when you factor in the Bharatmala and Sagarmala projects. We will see new industries emerging—sand manufacturing, the aircraft MRO business. Manufactured sand is not an industry that exists in India, but we are not going to build this level of infrastructure out of river sand. MRO for aircraft is a new industry that will get created, today we do itsy-bitsy amounts of it. Same is the case for even non-core service activities at transit points like stations and airports.REPLY 25w - 25w
REPLY 25w - Off a dusty stretch of coast under the scorching Gujarat sun, dredgers are reclaiming hundreds of hectares of land from the Arabian Sea in the latest challenge to India’s once-dominant state-owned ports: a private deepwater terminal that will handle 20m tonnes a year of everything from textiles to cement.
Essar Ports, which is developing the Hazira site, is one of several companies to have spied an opportunity as government facilities struggle to keep pace with India’s booming international trade. The big 12 state-owned ports’ share of the country’s shipping by volume has slid from 72 per cent to 55 per cent in less than a decade.
The future of these marine gateways is crucial to the country’s economy — now the fastest-growing of any leading nation, with an annual growth rate above 7 per cent. To maintain that pace, India needs to handle ever-larger volumes of trade. And if the government is to realise its hopes of boosting India’s status as an exporting power, it will need to narrow the logistical gap with rivals such as China.
To some, the answer is a continued shift away from the public ports. “Productivity and efficiency are much higher at the private ports,” says Subhas Das, the Hazira port’s chief executive. “None of the state ports are yet modern.”
But Nitin Gadkari, minister for road and maritime infrastructure, is fighting back against such criticism with a vast campaign to improve the state ports’ efficiency and scale that has earmarked Rs8tn ($124bn) in spending over the next 18 years.
"It will be the biggest project in the history of the country,” Mr Gadkari said in December of the Sagarmala scheme, which includes upgrades to the big 12 state ports, the construction of six new large ports and dramatically improved ship-to-rail links.
The government sees it as a main plank in its ambitious plans for infrastructure in India, which has already witnessed blistering growth in sea trade since the liberalisation of the 1990s.
Its container shipping volumes, which in 1991 amounted to just 602,000 twenty-foot equivalent units, hit 13.2m TEUs last year. Given this was still only about half that of South Korea, Malaysia or Japan, and one-fifteenth that of China — whose economic growth rate India continues to outstrip — the government expects the rapid expansion to persist.
Yet little detail has been given on the funding for the Sagarmala programme. And the state’s performance in other industries gives grounds for scepticism about its ability to compete with the private sector.
State-owned flag carrier Air India has racked up eight annual losses in the past decade after losing share to more efficient private airlines. India’s state-controlled banks labour under a stressed loan ratio of nearly 16 per cent — more than triple the level at private-sector banks.
Nonetheless, the government’s focus on port improvement is sparking optimism for the likes of Cyril George, vice-chairman of the Port of Chennai.
The port, one of India’s oldest, is working to boost efficiency through measures such as automated gates that allow trucks swifter passage — but it is still hampered by “legacy issues” including a large manpower surplus, Mr George warns.
By comparison, he says, the private ports “enjoy a lot of freedom in all respects” — a gap he thinks will be closed by the passage of a bill giving greater autonomy to the state ports to invest and form partnerships with private companies.
Progress on the ports is being keenly tracked by companies such as Sigma Electric, an export-focused maker of metal products in the western city of Pune. Sigma’s products typically spend three to six days in limbo between entering an Indian port and setting sail, which weighs on the company’s margins by tying up working capital, says chief executive Viren Joshi.
Beyond questions of efficiency, port development has been raised by some as a means of protecting Indian trade from international shocks. The limited depth and handling facilities of Indian ports mean few of the world’s largest intercontinental vessels dock at them. As a result, much Indian cargo has to be transferred to or from these ships at more developed Asian ports, adding time and expense.
A quarter of the containers that passed through the main state-owned ports in the 2016 financial year had to be “trans-shipped” elsewhere. Half went through Sri Lanka, where Chinese port investment has been the most visible and contentious manifestation of Beijing’s growing sway over Colombo.
Suresh Subudhi, a partner focused on infrastructure at the Boston Consulting Group, predicts a shift towards domestic trans-shipment at new ports with the capacity to service the latest supersized cargo vessels.
The Adani group is developing one such port in the south-western state of Kerala at a cost of about $1bn. The government is building another at Enayam on the country’s west coast — one of at least six new “megaports” that are a centrepiece of its port policy.
Shailesh Garg, India head for maritime consultancy Drewry, says the government should focus on the expansion of all ports to reduce the need for trans-shipment, rather than spending billions on new ones.
But in its plans for the existing main ports, too, the government is showing a clarity of focus that contrasts sharply with the “laxity and inertia” of the past, says Jose Paul, former chairman of Mumbai’s Jawaharlal Nehru Port Trust, the country’s biggest port.
JNPT is undergoing an expansion that will double its container capacity to 10m TEU a year — equivalent to more than 80 per cent of the country’s entire container shipping volume in the 2016 financial year.
“I have not seen such a concerted effort to develop the port sector,” Mr Paul says. “For the sheer survival of the major ports, the government has to give them greater powers to compete.”
https://www.ft.com/content/b6892980-2e68-11e7-9555-23ef563ecf9aREPLY 25w - 25w
- Private sector
1. Model Concession Agreement (MCA) aims to make port projects more investor-friendly and attract new investment. This includes rent for additional land, royalties over revenue sharing, exit after just 2 years, royalties are index-linked with WPI.
https://worldmaritimenews.com/archives/239690/india-working-to-attract-more-investors-to-its-port-sector/
Efficient customs
2. Under Direct Port Delivery, cargo is moved rapidly, with minimal clearances, to inland warehouses, thus allowing space for other cargo at portside. Now, customs rules for these "inland container depots" will be revamped to improve efficiency & speed up distribution in the country. There is also a need for more warehousing capacity & proper geographical distribution.
https://economictimes.indiatimes.com/industry/transportation/shipping-/-transport/cbic-revamping-policy-for-inland-container-depots/articleshow/65694710.cmsREPLY 25w - Essel Grop wants to invest $100m in cruise tourism, which will be ready in 1-2 years. It sees enormous employment prospects (upward of 1m!!).
REPLY 25w
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