BackChennai port users await a lasting solution for congestion
Chennai port users await a lasting solution for congestion
PremiumInfrastructure hurdle: A file photo of a logjam at Chennai port.
Chennai: Even as manufacturers and traders develop workarounds to adapt to the Chennai port’s long-standing congestion problem, which has been somewhat alleviated recently by a drop in traffic and measures by the port management, they still await lasting solutions.
“Over the last month, perhaps due to stoppage of coal and iron ore handling by the port, we have seen some improvement in the situation," said a spokesperson for Hyundai Motor India Ltd.
The persistent congestion at India’s second busiest container port has had users seeking alternative routes and strategies to avoid delays and production disruptions.
Poor road access to the Union government-controlled port had caused container trucks to form slow-moving queues of several kilometres and miss scheduled vessels. The problem took a turn for the worse around July-August, prompting a few container carriers to levy trade recovery surcharges.
Over the last month, however, “the situation is almost normal and the vessels are able to leave the port (at the) scheduled time," said Walter D’Souza, chairman of the southern region of the Federation of Indian Export Organizations (FIEO), pointing to short-term measures such as the creation of four-lane traffic at the single gate that the port keeps open during day-time for import and export traffic; the opening of more gates at night; and the swift removal of import cargo.
Still, “the need of the hour is to expand and develop the minor ports and improve the infrastructure facilities in the port," D’Souza said. “Congestion in the major ports resulting in heavy demurrage and loss in foreign exchange has become a major cause of concern for my members."
Importers and exporters have been coping with congestion-related delays in various ways.
The congestion issue had become such a fixture that auto parts maker Valeo India Pvt. Ltd began factoring it into their plans. “It kind of became a norm," said P.R. Dhaamodharan, managing director of Valeo India.
“From Europe, if you receive a container, you know it comes on so-and-so date. You can optimize inventory according to those levels, and your working capital is minimized. Here we always have some uncertainty. But when people started planning for uncertainty, it became a plan," Dhaamodharan said.
The problem has been a “significant challenge" for Ford India Pvt. Ltd, said Tom Chackalackal, executive director, manufacturing, Ford India. The company exports its Figo small car, as well as engines and transmissions out of its Chennai factory, and imports parts from several countries.
“In our opinion, reducing congestion and improving the road access to the port are both equally important," Chackalackal said.
Some port users, such as Hyundai, are bound to the Chennai port by agreements, but some others have walked away. “Of late, we have been using Tuticorin and Karaikkal ports for our coal imports and come to Chennai only when it is a must," said V. Srinivasan, chief executive of the diversified Siva Group.
The Chennai port delays have led Lapp India Pvt. Ltd, which manufactures cables at a factory in Bangalore, to consider receiving its copper imports at the Nhava Sheva port in Maharashtra, managing director Srinivas P. Kamisetty said, adding that the use of the Nhava Sheva port would also be optimal when the company’s Bhopal factory is commissioned this year.
Companies such as Nissan Motor India Pvt. Ltd and Toyota Kirloskar Motor Pvt. Ltd have chosen the Ennore port, 20km away, over the Chennai port for car exports.
Long-term solutions such as port access improvement projects are progressing on schedule, Chennai port chairman Atulya Misra said. A four-lane ₹ 1,655 crore expressway officially launched in 2008, but in the planning for a decade, is scheduled to be completed in 2013.
Another plan to connect the Chennai and Ennore ports by road at a cost of about ₹ 600 crore was launched in January 2011.
Lighter traffic over the last month has led to the faster movement of containers, some said. The Hyundai spokesperson attributed it to the fact that coal and iron ore cargo had been moved to the Ennore port starting October, following a Madras high court order that the Chennai port stop handling dusty cargo due to pollution complaints from the local community.
While that may have made container shippers happy, it has meant a significant revenue loss for the port, according to Misra. The port is legally fighting the order. “We have lost 20 million tonnes of cargo (a year)," he said. “Our workers have been hit. We had a 5-million-tonne shortfall in Q3 (ended December)." From Apri-November 2011, the volume of cargo handled at the port was 15% below target.
While port business grew 15-20% in 2010-11, it is likely to grow at just 5-6% this fiscal, Misra said.
Meanwhile, FIEO would like to see the iron ore facility at the port converted into a container facility.
“According to estimates, more than 40% of cargo originated in this region goes to other ports due to port issues, and Chennai port surely can get it back if it solves its issues," FIEO’s D’Souza said.
vidya.p@livemint.com
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