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