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Will Singapore’s PSA become a lucky mascot for Kolkata port?

Kolkata port’s revival has been led by a container loading facility run by Singapore’s PSA International Pte Ltd, the world’s biggest container terminal operator fully owned by Temasek Holdings Pte Ltd, Singapore’s state-run investment firm. Photo: Bloomberg Premium
Kolkata port’s revival has been led by a container loading facility run by Singapore’s PSA International Pte Ltd, the world’s biggest container terminal operator fully owned by Temasek Holdings Pte Ltd, Singapore’s state-run investment firm. Photo: Bloomberg

Port officials say the new container handling equipment erected by PSA, higher productivity were making a difference to the way customers are looking at Kolkata port

In dire straits since 2008, Kolkata port, India’s oldest and only riverine port, is showing signs of revival. In the first five months of the fiscal year that began in April, Kolkata port loaded 21.264 million tonnes (mt) of cargo, a 23% increase over the same period last year. Only two more ports out of the 12 owned by the Indian government have grown at over 20% during the April-August period—V O Chidambaranar port and Mormugao port.

Kolkata port is India’s biggest revenue-earning state-owned port; yet, it is a loss-making entity. In 2014-15, Kolkata port loaded 46.292 mt of cargo, generating a revenue of 1,867.69 crore, but it ended with a loss of 68.46 crore, its third straight yearly loss. The port reported losses of 298.22 crore in 2012-13 and 70.23 crore in 2013-14.

Kolkata’s revival has been led by a container loading facility run by Singapore’s PSA International Pte Ltd, the world’s biggest container terminal operator fully owned by Temasek Holdings Pte Ltd, Singapore’s state-run investment firm. During April-August, the PSA terminal, which started operations on a 10-year contract in November 2014, loaded 267,000 twenty foot equivalent units, or TEUs, up from 255,000 TEUs a year earlier. Kolkata is now India’s third biggest state-owned container port after Jawaharlal Nehru port and Chennai port. A TEU is the standard size of a container and a common measure of capacity in the container business.

As a mark of confidence in Kolkata port, two top logistics firms—Allcargo Logistics Ltd and Transworld Group—leased 17 acres and 4.5 acres of land, respectively, at the port through a public auction a few days ago to start container freight stations (CFS)—an off-dock facility licensed by the customs department that serves the container terminal by clearing container cargo. The planned CFSs will add to the four already servicing Kolkata port.

Kolkata port has vast tracts of unused land, some 3,765 acres—the largest such unutilized land among the 12 ports.

The port’s hinterland (cargo originating and destination area) covers West Bengal, eastern Uttar Pradesh, Bihar, Jharkhand, Madhya Pradesh, Assam and the North East hill states. Four neighbouring countries—Nepal, Bhutan, Myanmar and Bangladesh—also fall in the hinterland of Kolkata port.

Kolkata’s finances will also benefit from a decision to auction permits to shore handling agents at its dock complex in Haldia to load and unload cargo on a revenue share basis. So far, the shore handling agents were issued permits by collecting an annual licence fee. The agents were not obliged to share any revenue with Kolkata port. The port has two docks—one in Kolkata and the other in Haldia.

Out of the 46.292 mt of cargo handled by Kolkata port in 2014-15, about 20 mt were handled by such stevedores and shore handling agents. While Kolkata has concluded the auction to pick shore handling agents at its Haldia dock complex, a similar process will be flagged off at Kolkata dock shortly, following a policy finalized by the shipping ministry for all the 12 state-owned ports. This will boost the revenue of Kolkata.

Port officials admit that the new container handling equipment erected by PSA, higher productivity and the brand name of the Singapore firm were making a difference to the way customers are looking at Kolkata port to ship their containers.

The revival sign is an indication that the worst days are behind Kolkata, say port officials. But the port that is closely linked to the British Empire when it ruled India (the port built by the East India Company was the premier port in British India) continues to grapple with legacy issues such as some 35,000 pensioners and about 7,500 employees, who soak up most of the revenue earned by Kolkata port.

The port’s revival over the long term also hinges to a large extent on the commercial utilization of the huge tracts of land lying unused. In this, Kolkata will benefit from the guidelines issued by the shipping ministry for land management by the 12 state-owned ports that seek to ensure that land resources fetch the maximum value when it is licensed/leased to private firms through auctions.

It would also help if Kolkata port authorities can find a way to cut the huge money spent on maintaining the port’s channel. It spends about 350-400 crore every year just to maintain the water depth at the current level of 7-7.5 metres and the dredging bill is fully funded by the Indian government that owns the port. The port, as such, is easily India’s biggest dredging customer.

In May, India and Bangladesh signed an agreement on coastal movement of goods between the two nations. Indian ports, mainly Kolkata, which serves as a trans-shipment port for Bangladesh cargo will derive benefits by way of enhanced volumes as a result of the Indo-Bangladesh coastal trade. Bangladesh is now India’s largest trade partner in South Asia. Kolkata and PSA have a lot to look forward to.

P. Manoj looks at trends in the shipping industry.

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