Mumbai/Bangalore: In an attempt to promote coastal trade, ease road and railway congestion and trim transport costs, the government proposes to change a law that regulates domestic commercial shipping. Small ships ferrying merchandise will be able to sail over longer distances between the country’s ports once the change is made.
Vessels engaged in coastal shipping, also known as short-sea shipping, are much smaller than ships that ply international waters. But the same provisions of the Merchant Shipping Act, relating to construction, equipment, operation, certification and safety, are applicable to all vessels irrespective of size and business profile.
Boom time : A ship at Mumbai port. Coastal shipping in India accounts for just 7% of total domestic cargo, compared with 43% in the EU. (Photo: Ashesh Shah/Mint)
Now, to remove the anomaly, India’s maritime administration, the Directorate General of Shipping, proposes to exempt ships engaged in coastal trade from some of the provisions of the Act, subject to some conditions.
A comprehensive exemption order is likely to be issued for ships of less than 3,000 gross tonnage used exclusively in coastal trade, said Samuel Darse, deputy director general of shipping. Ships used for international trade are much bigger, with a capacity of at least 30,000 gross tonnage.
“A draft of the proposed conditions (Indian Coastal Ship Safety Code) that such vessels will have to comply with in order to avail of the exemption from some of the provisions of the Merchant Shipping Act is being circulated,” Darse said.
The new code, once notified, would mean striking a balance between local and international laws in case of safety equipment and procedures on-board for plying longer distances—six nautical miles from the coast.
“This will enable vessels plying on the coast to move longer distances,” said Anil Devli, executive director of Shreyas Shipping and Logistics Ltd, India’s top coastal container shipping firm.
For instance, he said, a small coastal vessel with a capacity to carry 100 containers can now sail to the plant of cement maker Sanghi Industries Ltd in Kutch, Gujarat, from the Dharamtar jetty in Maharashtra. “This is not possible today,” Devli said.
“By moving cement along the coast, we are able to cut down on our transportation costs. Transporting cement by rail or road between Gujarat and Maharashtra takes longer and also costs more,” said S.K. Gupta, joint president, ports and shipping, at Ambuja Cements Ltd, a part of the Gujarat Ambuja group, which owns seven ships that transport about 200,000 tonnes of cement a month between Gujarat and Maharashtra.
Taxation and regulatory issues have curbed the growth of coastal shipping, limiting its share of India’s domestic trade. Coastal shipping accounts for just 7% of total domestic cargo despite a 7,517km coastline, dotted with 12 government-owned major ports and more than 200 smaller ones.
Gupta of Ambuja Cements said his firm had problems hiring crew to run the ships. “The qualification criteria for crew are the same for coastal ships and ocean-going ships. But the crew on coastal ships pay income tax while those on foreign-going ships are exempted from paying tax. So, we cannot attract good people,” he said.
A report on coastal shipping prepared by Tata Consultancy Services Ltd said about 4 million tonnes (mt) of cargo a year can be diverted to coastal shipping from rail and road without any increase in transportation costs. The extent of diversion could be as high as 10mt a year by 2012, the report said.
“Coastal shipping is the future,” said H.D. Gujrati, group general manager for strategic planning at state-owned Container Corporation of India Ltd.
In the European Union, coastal shipping has a 43% share of cargo transportation and it is rising further. In the US, it has a 15% share of the total cargo moved by road, rail and air.
“Coastal shipping is a cost-efficient, environment–friendly way of shipping goods within the country. Half of the cargo handled at Antwerp port is moved to the hinterland using barges,” said Georges Leysen, senior adviser for marketing, sales and business development at Antwerp Port Authority, which runs Europes’ second biggest port by cargo handled.