Minor Ports to Drive Port Capacity Expansion in India

In India, the ports capacity augmentation and administration is governed both at the federal and at the state level. The federal government through Ministry of Shipping controls 13 major ports while state governments of 8 coastal states oversee the development of respective minor ports.

Extraordinary Growth Rate

We have examined the traffic volume statistics of last 20 years (refer the following table). Over the last two decades, state ports traffic has grown at a CAGR of 19.4%, almost triple the growth rate of major ports. In FY08 major and minor ports traffic stood at 519.2 million tonnes and 203.6 million tonnes respectively. We expect that minor port traffic will overtake major ports volume in another 8-10 years due to their higher growth rates.

Similar growth pattern is seen in telecom sector, where the compounded growth rate in the mobile phones in last 10 years is nearly 67%, much higher than that of landline phones (~6%). Today, as much as 89% of phone users use mobile phones.

Traffic Handled at Indian Ports (million tonnes)

In near future, with the setting up of numerous coastal power plant projects, increasing coastal refinery capacity and several upcoming Greenfield multi-user port projects, minor ports traffic volume is expected to grow significantly. Therefore, it will become more and more imperative to develop integrated port policy/regulations to monitor the development of state ports in order to streamline coastal development, competition, excessive capacity build-up issues etc. The new policy should also take into account the industrial development in the coastal region.

Minor ports due to relaxed regulations, reduced clearance hurdles coupled with returns from SEZs real-estate development and minimal sharing of revenues have made these projects considerably profitable. Historically, the returns witnessed by private parties in the minor ports are significantly higher than the major ports (through the PPP mode). Mundra Port is a grand testimony to this fact.

Business Opportunities

In the foreseeable future, minor ports are expected to present numerous business opportunities and infrastructure developers and investors may find these ports much more attractive with greater upside than major ports.

We, at i-maritime, firmly believe that minor ports would be the drivers of port capacity expansion in the short and medium term.

If you wish to know more about opportunities in minor ports please contact Sachin Danave (+91 98201 54485) or Ramesh Singhal (+91 98203 40418) or drop a mail at project@imaritime.com.

Piracy at Sea

Blogger - Mandeep Julka

Piracy is in news these days, and not because of Captain Jack Sparrow.

It was a moment of pride for India when INS Tabar took down a Somali pirate ship. The action was touted as India’s arrival as the global marine security provider and won us oodles of laurels. However, keeping the histrionics aside, was this act of aggression a display of India’s strength and bravado or is there more to the story?

PIRACY MENACE

§ Expanding Web

Originally, Strait of Malacca was the center of piracy attacks. Lately, Horn of Africa has come under scanner. The route of Gulf of Aden – Suez Canal, one of the busiest international trade routes and thus extremely lucrative too, connects Asia and Indian subcontinent to Europe and the East Coast of the United States. About a third of India's total fleet of 900 cargo ships deployed in international waters is at risk on this route.

As facts go, pirates attacked 92 ships and hijacked as many as 36 ships with their crews in 2008. Fourteen ships are still controlled by the pirates and of the 682 crews kidnapped, 243 are still held hostage. The culminating point was hijacking of the 320,000-ton oil tanker, Sirius Star, carrying cargo worth more than USD 100million, on November 15’ 2008. Although Sirius Star, due to its size, had taken the alternative trade route through Cape of Good Hope, still it was nabbed by the pirates, showing the extent to which the menace has spread. So effectively, both of the prominent trade routes, between Asia to Europe and Asia to East Coast of the U.S, are severely affected by piracy.

If not checked soon, this crisis has the potential to paralyze major component of world trade, especially trade of Indian sub-continent.

§ A Business?

Apart from the geographical extent, the problem seems to have assumed another sinister twist. Given the political turmoil in Somalia, the economy has been in shambles since ages. What is feared is the rise of piracy as an industry / business in itself. Lack of other means of employment and lure of easy money are attracting an increasing number of unemployed Somali youth in this so-called profession. Lack of deterrents such as internationally coordinated preventive measures or sufficiently damaging rejoinders are fueling this trend. As if this was not enough, political conflict with adjoining Ethopia as well as involvement of US has further worsened the state of affairs. Unconfirmed reports point a finger at US for providing financial assistance

§ Increasing ruthlessness

The situation has become perilous as previously, pirates were known to be armed with knives and pistols, and concentrated on thefts and robberies. Now, however, they are armed with AK47S, M16s, rifle grenades, rocket propelled grenades and the latest technology such as satellite phones and GPS systems making the aggression ruthless and bloody.

§ Greed

Pirates’ ambitions have scaled up too. The hijacked Ship MV Stolt Valor, which carried 18 Indian nationals on board, was reportedly released after a payment $2.5 million by the Japanese firm, which owned the ship. Luxury French Yacht Le Ponant was released after a week in exchange for an undisclosed ransom. Effectively, the revenue of this business model is estimated to be somewhere in the range of $13-$16 billion[1] every yr, considering that countless piracy attacks are not reported in the fear of a rise in insurance premiums!

INDIAN CONTEXT

A large volume of India’s export-import trade, including oil, passes through the Gulf of Aden. In fact, in 2007, the country imported approximately USD 48million and exported approximately USD 60million worth of goods respectively. The human cost of this terror is frightening. Facts say that the 24 Indian flagged merchant ships cross the fatal Gulf of Aden route every month. Also, a lot of foreign vessels also comprise of Indian nationals as India has a very large seafaring community.

The action of Indian navy, in the above context, was thus more than plain brawn. India’s stake is quite high in one of the most important international trade routes of the world, which also unfortunately has become notorious for being worst affected by piracy in recent times.

CONCLUSION

However, no matter how brave and complementary our reaction was, has the piracy menace become just short of insurmountable? Or worse, has sea-piracy spread its tentacles to liaison with other rogue groups, making the menace much more globalized than is currently apparent? Pirates are increasingly becoming organized militia, and there are reports that piracy is coming under the umbrella of terrorism; unconfirmed reports point out that ransom money is being routed to the global terror network, and terrorist organizations are colluding with pirates to fund procurement of arms and ammunition.

The need of the hour is to redefine the mandates of multilateral security arrangements to ensure that political bottlenecks encountered during countering piracy are removed. The importance of a well coordinated international action, keeping Somalia Govt. in loop can not be stressed enough. From a long-term perspective, only solution to the present crisis is to bring an end to Somalia’s political unrest.

On the home-front, India’s forceful response has underlined her ability to protect the security of her own as well as international shipping in the region. The opportunity is there to carry the trend forward and translate India’s growing economic strength into greater global military and political clout. Any takers…?

[1] Source: http://uniorb.com

Green dredging!

Blogger - Rohan Mittal

Background
Dredging is the mechanical/hydraulic removal of underwater sediments from one location and disposal at some other location, which may be on land or in water. Dredging is primarily used for building and maintaining waterways. At times it is also used for creating coastal protections, beach nourishment or land reclamation in the sea.

More often than necessary, in-appropriate methods of dredging lead to disruption in local eco-systems of marine flora and fauna. This has led to the common belief that dredging is environment unfriendly. In reality, it is the faulty design of dredging or incorrect methods of disposal that are to blame and not the whole practice as such. “Green dredging” is a term coined to represent environment friendly dredging techniques.

Uses of Dredged Material
Environment friendly disposal of excavated material is one of the most important aspects of dredging, a concept that is being increasingly followed in developed nations. The idea is to treat the dredged material as a valuable resource that can be beneficially used elsewhere. Such material primarily finds use in engineering works, agricultural land and environmental projects.

Land reclamation/restoration and offshore berms are some of the common applications where dredged material can be put to use. All types of soil (clay, silt and gravel) can be efficiently used for such projects. Also, the material (especially gravel) can be used for building road embankments/foundations and noise barriers. The former is a very economical way of reducing the cost of a green-field project in an undeveloped area (roads/rail connectivity is low). The latter is an efficient way of building/expanding ports near human habitats, as noise pollution from cargo handling operations is huge deterrent in such projects.

Fine silt and clay finds excellent use for replenishment of agricultural top-soil. Being rich in minerals and sediments, it can be used for enriching the top soil in forests/farms where the same has been depleted of valuable nutrients due to prolonged usage over a period of time.

These days, environmental scientists and dredging experts are exploring the uses of dredged soils in environmental projects such as creation/nourishment of wetlands and building habitats for fisheries. Such practices are still being explored and thus do not find universal application.

Checklist for Green Dredging
Adequate planning involving pre-operation studies such as soil surveys, bathymetry studies and hydrographic studies are a prerequisite for enabling environment friendly dredging. The onus should not be restricted to the dredger operator or the port alone, but should be shared in ratio of one’s domain competencies. One effective method of implementing “Green Dredging” is to prepare an Environment Impact Assessment report for dredging alone. Most of the countries stipulate the preparation of such reports for ports/waterways but not for dredging on a piecemeal basis.

An Environment Impact Assessment (EIA) report is basically an amalgamation of existing environmental conditions at the location; project background and rationale; proposed techniques of dredging; an assessment of the potential effects of the project on local flora-fauna; methods that will be used to circumnavigate the potentially baneful effects and long term benefits of the project.

The basic premise behind making an EIA report is to ensure that the dredging operations conform to environment protection through sound engineering techniques and do not pose any adverse challenge to the environment on short/long term basis.

The Future
In the near future, dredging will find numerous applications in tackling the adverse effect of climate change. Seal levels are rising at an alarming rate which will lead to destruction of existing coastal habitats and also decrease the land available for the growing population. Moreover, sea-based natural calamities have increased in frequency and intensity. Dredging will be a tool for combating all such problems through land reclamation and creation of coastal protections.

A Google Earth Image of Palm Islands and World Islands - Dubai

Above captured Palm Islands and the adjoining World Islands in Dubai, represent the largest land reclamation project in history of mankind. The services of the three largest dredging companies in the world – Jan de Nul, Van Oord and Royal Boskalis are being extensively used for building these islands and upon completion they will house more than a million people. Many such projects are envisaged to be implemented in the future.

The Verdict
With the increasing trade volumes being catered through waterways, dredging is becoming an integral part of the market mechanics. Thus propagation of environmentally sound dredging techniques will go a long way in preserving the natural eco-systems on the planet and pave way for successfully employing technology in projects aimed at supporting mankind’s existence on this planet.

“Thank you - You are Having Orissa & You are Entering W.B…”

P.W.D. (ROADS DEPTT.) GOVT. OF W.B.

Blogger - Anshuman Singh

The following travelogue is the first hand experience of the author. The blog is not meant to draw any conclusion or public opinion.

… this is what a mile stone read when I crossed Udaipur, the last village in Orissa, and enter Digha, oops!!! New Digha, (I could not draw the line separating New Digha from Digha or Old Digha whatever you choose to call it). Sometimes I feel the correct line should have been “Beware - You are Leaving Orissa & You are Entering W.B.”, though the feeling was not the same until I visited West Bengal recently on one of my official tours.

As we crossed the border our taxi was stopped and surrounded by at least 10 odd people waving sticks as if they were ready to hit me. For once I got scared and asked the driver to rush and not to stop the vehicle (we had hired our vehicle from Bhubaneshwar). Our driver was smart enough and he stopped saying - “Agar nahi roka to ye log gaadi ka sheesha tod denge” (if I don’t stop the vehicle these people will break the window panes of the vehicle.). The people around started yelling at the driver in Bengali, and I could not understand even an iota of what they said.

With my heart thumping, I got down from the vehicle and asked if anyone knew Hindi to which all of them replied – “Haan boliye!!!” (yes speak up.). Trying to be as polite as I could get, without revealing that I was scared, I enquired about the matter. I was told that a West Bengal registered vehicle without a permit (one needs to get a government permit after paying the road tax while crossing state border in a taxi) had entered Orissa and was held up there by the police for not having all the papers. In retaliation West Bengal taxi union had decided to stop all the Orissa registered taxies until a decision was taken on the issue.

I requested to allow us to go back to Orissa to which they disagreed saying that I might take another route and enter West Bengal (of course they were smarter than I was.). I was held up in New Digha for almost two hours and I decided to utilize the time for lunch in a restaurant where I was the only customer. After two hours my driver came and told me that the problem has been sorted out and all the vehicles have been released after collecting Rs. 200, equivalent to what the West Bengal taxi had to pay in Orissa.

(…to be continued)

Indian Major Port’s Traffic– A Slowdown!!

Blogger - Chetan Pandey

A quick analysis of the latest half yearly data seems to indicate that the trade slowdown is finally here in India. The traffic at all the major ports has started to stagnate following the global economic slowdown that has impacted the global trade.

As per our latest analysis based on half yearly data, traffic at all the major ports which saw an impressive year on year growth of 12% in 2007-08 has grown moderately at 7% in 2008-09. The following table exhibits these facts.

As per our analysis of the latest data available, all major ports with an exception of Kandla port trust has shown a slowdown in traffic. Infact ports like Mumbai Port Trust and Cochin has shown a negative growth rate while ports like Haldia and Ennore have stagnated at FY08 levels.

Kandla is expected to emerge as the largest cargo port in India followed by Vizag and JNPT. Infact the half yearly box traffic at JNPT has grown with a moderate growth of 9.9% in FY09. It would be prudent to remember that the same terminal handled around 4.06 million TEUs in FY08 with a growth rate of 23% over previous year.

According to latest interviews conducted with an official in a port authority, the impact on the overall traffic at all the major ports could be even great in the next half year. So that’s the information part of it, how about some action now!! We have been advising various stakeholders on various models of profitability during slowdown (shall I call it a recession?) and trust me, it’s a great learning experience. Perhaps I will share it in my next blog.

Container Transshipment – Basic Definitions

Blogger - Chetan Pandey

Transshipment is broadly defined as the act of shipping containers to an intermediary destination prior to reaching their eventual destination. Typically (though not always) transshipment of containers is the most economic option for the shipping lines to move containers from one point to another.

There are various terminologies that have been floating around in the container domain and I intend to use this forum to educate readers on the same through analogies:

Transshipment Terminology	Definition	Example - Mumbaikars
Transit	Transit may be defined as movement of containers from the hinterland through sea/ inland waterway mode (barges) to the ocean going vessel. The container per se is called as transit container. Even other wise all containers destined to the hinterland across multiple modes may be designated as transit containers. Containers that are loaded onto barges in the Hoogly river for further unloading / loading operations at Haldia may be considered as containers in transit.	For Mumbaikars a travel from home to office and vice versa can be considered as ‘containers in transit’.
Interlining	Interlining may be defined as movement of a container between two or more parallel running services operated either by one shipping line or a consortium of shipping lines serving different ports between originating and destination ports in such a manner that weekly service at each of the intermediate ports is maintained. Port of Singapore, Port Said etc are ports where interlining takes place.	The classic example is that of movement of passengers in the Mumbai suburban train services. A passenger willing to move from Mahim to Virar would perhaps first take a slow local to Andheri and then a fast local to Virar (subject to crowd). The same passenger has the option of waiting for a slow train at Mahim, however, since the waiting time is high he boards the slow train at Mahim and switches over at Andheri reaching his final destination in the most optimal time. The passenger is embarked from Mahim on a slow local, transshipped at Andheri, and continues his journey from Andheri on a fast local. Both Mahim and Andheri are serviced at a set frequency and yet a passenger opts for transshipment!! Replacing the passenger with container and suburban train/s as container liners explains the phenomenon
Relay	Relay is a typical movement of container from a main line vessel to another main line vessel on a different route. Typically relay happens on a junction of two main lines routes. Las Palmas near West Africa is some sort of a meeting point of trade routes from South America-EU and EU-Singapore (via Cape of Good Hope)	Dadar station is Mumbai is a classic example of a Relay terminal. There are two main routes viz. CST-Kalyan and Churchgate-Borivali. Dadar is typically used when a passenger from Thane wishes to move to Bandra.
Feedering	Classic feedering is defined as transportation of containers on a smaller vessel from a smaller port to a hub port for further movement on a larger vessel. Typically feeder movements are short haul in nature as they are cost effective. Movement of containers from East coast of Indian sub continent (Kolkata/ Haldia/ Chittagong) to Port of Singapore is considered as Feedering.	In the current context of Mumbai suburban system, Feedering may be defined as movement of passengers from Colaba to CST/ Churchgate or for that matter movement of passengers from Worli to Dadar in BEST buses. Typically BEST buses are acting feeders to the suburban train network.

A container typically travels through various modes encompassing our definitions of Transit, Interlining, Relay and Feedering. Similarly a passenger also uses various modes for his movement.

The underlying criterion in both these cases is to achieve combination of cargo safety, optimal cost and time or it may be euphemistically called as ‘better service’.

For Mumbaikars - May be!!

India – Emerging Asian Monster ?

Blogger - Amol Dhanvij

India and China unarguably are the most promising economies in the coming years. They share at least two characteristics: Both have population of more than billion people and most importantly, both have vast and expanding ‘skillful’ labour base. Moreover, both the nations share same ideologies and have their respective civilization going back some 5,000 years.

China and India both have shown remarkable economic growth in the past few years. However, when it comes to seaborne trade the Chinese are far ahead than India. Infact there exist a lot of differences between the two Asian giants. For e.g. the overall seaborne trade of China was almost 10 times that of India in the year 2007. The container trade of China was staggering 16 times of India in the same year.

China has about 18,000 kms of coastline with almost 1,400 ports, which means on an average a port at almost 13 kms of coastline whereas India has 7,500 kms of coastline and nearly 200 ports implying on an average a port at 37 kms.

Six of the container ports of China are among the top 20 world class container ports and the overall container traffic handled by China stood at nearly 114 million TEUs whilst for the whole India it stood at 7 million TEUs.

The main reason that can be attributed to the Chinese story is that Chinese economy opened as early as 1978 whilst in India it was in early 90’s. Also, the growth story of China is more on the shoulders of manufacturing and trade whilst for India it depends more on services.

The other reason for this difference is the fact that the processes in India are slow with more of the policymaking regulatory functions in the port sector being centralized whereas in case of China it is more decentralized. The port reforms in china were more encouraged by private partnership and foreign investments, affecting the overall trade picture.

Another reason is port induced infrastructure. Chinese were able to connect and improve their overall connectivity not only in terms of road and rail but also the inland waterways and airports making them an international destination base. India lags in this regard.

Other differences include the overall approach of the Indian and the Chinese governments. For e.g. In China SEZ’s were seen as test reforms which were ultimately adopted nationwide while in India SEZ’s are not regarded as reforms but just another means.

The port sector development in India rests on the overall development and more of the private participation which will bring in more authority and decision-making capability. Moreover, the government should act as a supporting authority in developing the ancillary infrastructure rather than the governing body.

No doubt that India can have its own share of pie and become comparable to China but for the fast paced development, the emerging Asian monster needs to look deep inside its policy making and overall decision making process.