Bangalore: Cargo volumes at India’s dozen Union government-owned ports grew only marginally by 2.13% in fiscal 2009 compared with 12% growth in the previous year, as world trade declined in the face of a global recession.
In the 12 months ended March, these 12 ports handled 530.35 million tonnes (mt) of cargo such as crude oil, petroleum products, iron ore, coal, container cargo and fertilizer. In fiscal 2008, the 12 ports handled 519.15 mt of cargo.
Cargo growth at these ports in the last fiscal may have been meagre compared with previous years when it averaged growth rates of at least 10%. But the 12 ports are operating at peak capacity. In fact, the cargo handled by the 12 ports in the last fiscal exceeded the designed capacity of 529 mt.
Beyond capacity: A file photo of the container terminal at the Kochi port in Kerala. In fiscal 2009, the cargo handled by the 12 ports owned by the Union government exceeded the designed capacity of 529 mt. Sivaram V / Reuters
“The capacity utilization at some of these ports is as high as 90% and in some cases it is even more than 100%. If you are operating at a capacity utilization of 90%, it is not a very good sign because it leads to waiting period for cargo and delay in turnaround time of ships,” said Shailesh Garg, general manager at the Indian unit of London-based maritime consultancy Drewry Shipping Consultants Ltd.
The 12 ports are located in Kandla, Mumbai, Navi Mumbai, Kochi, New Mangalore, Mormugao, Kolkata, Paradip, Visakhapatnam, Chennai, Tuticorin and Ennore.
Operating ports at peak capacity has its pitfalls. It hurts efficiency. It currently takes about five-seven days for a ship to unload and load cargo at these 12 ports and sail off. That compares with 6-8 hours in Singapore, the world’s busiest container port.
“This (operating at peak capacity) means that congestion is accepted at the expense of port users and eventually Indian producers/consumers,” the Port of Rotterdam said in a recent report.
Port of Rotterdam, Europe’s biggest by cargo handled, was hired by the Union government to advise the 12 ports in preparing their business plans.
“The growth in cargo volumes at the 12 Union government ports has been phenomenal over the past few years whereas the concurrent growth in capacity has not been able to keep pace with it,” said a report prepared by a high-level committee headed by former shipping secretary A.K. Mohapatra that was set up to recommend ways to reduce the waiting period for cargo at the 12 ports.
The Union government plans to almost double the cargo handling capacity of the 12 ports to 1.016 billion tonnes by 2012 from 529 mt now as economic growth strains existing facilities. About 90% of external trade by volume and 70% by value in the world’s second fastest growing major economy goes through ports. The 12 ports handle some 72% of India’s external trade shipped through the sea route.
The additional 487 mt capacity creation will require an investment of nearly Rs55,401 crore, out of which Rs36,868 crore will come from the private sector and the balance from the internal resources of the ports and government budgetary support, according to the shipping ministry.
The planned capacity augmentation at the 12 Union government ports will not be sufficient to meet cargo demand of 1.59 billion tonnes a year by 2012. The gap will be bridged by ports owned by coastal states, some of which have been given or may soon be awarded to private firms for development and operations.
There are some 200 ports owned by the coastal states such as Andhra Pradesh, Gujarat, Maharashtra, Tamil Nadu, Karnataka, Orissa, Goa, Kerala, West Bengal, and the Union territory of Puducherry. A few are functional while others are being auctioned to private firms because the state governments do not have the money to develop them.
These ports currently handle some 196 mt of cargo as against a capacity of 228 mt. The cargo handling capacity of these ports is being raised to 574 mt from the existing 228 mt. The additional capacity expansion of 346 mt will require an investment of Rs35,933 crore. Of this, 80% or Rs28,664 crore is expected to come from the private sector, according to the shipping ministry.
Unlike the 12 ports, where tariffs are set by a regulator, the Tariff Authority for Major Ports, firms operating private ports in the coastal states are free to set their own tariffs.
This is a big attraction for private firms.
“Flow of investments into India’s ports won’t stop if regulations are free and fair,” said Prakash Tulsiani, managing director of Gujarat Pipavav Port Ltd, the operator of Pipavav port in Gujarat, which is 54.8% owned by APM Terminals Management BV, the port operating unit of Danish shipping and oil conglomerate AP Moller-Maersk A/S.
Among the maritime states, Gujarat has been the most pro-active in developing its ports. “Currently, we have four operating ports in Hazira, Mundra, Pipavav and Dahej that are run by private firms,” said Atanu Chakraborty, vice-chairman and chief executive officer of Gujarat Maritime Board, the maritime regulator tasked with developing Gujarat’s ports. “Another eight ports are in various stages of development.”
The ports owned by the Gujarat government handled 153 mt of cargo in 2008-09, accounting for some 20% of the 730 mt of cargo handled at all the ports in India.
Experts say India needs to ease pressure on the ports’ hinterland (where cargo is generated) by improving connectivity. “Rail capacity in India for cargo evacuation to and from the ports is constrained,” said Arvind Mahajan, national industry director, infrastructure and government, at KPMG Advisory Services Pvt. Ltd. “With the current growth in traffic, it is necessary to develop adequate capacity for all modes of evacuation, including rail and road,” he wrote in a note on Indian Maritime Landscape.
Development of inland waterways and promotion of multi-modal operations are required for improving the availability and efficiency of hinterland logistics, Mahajan said.