23-03-2016

JNPT not applying for cabotage law relaxation: Neeraj Bansal

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State-owned Jawaharlal Nehru Port Trust (JNPT) does not require relaxation from a so-called cabotage law to boost its volumes, Neeraj Bansal, deputy chairman of the country’s biggest container gateway, said.

Only Indian registered ships are allowed to ply on local routes for carrying cargo, according to the cabotage rule, which is a sovereign right used to protect the local shipping industry from foreign competition and for the purpose of national security.

“We do not have a very significant number of transshipment container volumes,” Bansal said in a phone interview on Tuesday.

A transshipment container is one that arrives in a port, JN Port, for instance, on a ship, and is unloaded and then re-loaded on to another ship and taken out of JN Port to its destination either in India or abroad.

“If you look at the total volumes, JN Port is handling hardly 1-2% of transshipment containers. So, we are primarily a hub port where direct export-import containers are shipped. In that sense, cabotage is not an issue which really affects JN Port. So, we are not applying for the relaxation,” he said.

JN Port, located near Mumbai, handled 4.467 million twenty-foot equivalent units, or TEUs, in the year ended March 2015. A TEU is the standard size of a container and a common measure of capacity in the container business.

An existing container handling port should have transshipped 50% or more of the containers handled in a year to secure the status of a transshipment port and be eligible to get relaxation from cabotage rule.

Transshipment ports that are eligible for cabotage relaxation will enable foreign container lines to carry export-import (EXIM) laden and empty containers between that port and other Indian ports for aggregating containers, according to a 7 March circular issued by the shipping ministry.

Bansal said that cabotage restrictions affect the whole industry. For JNPT, Bansal said, it can have a significant impact when demand supply ratio changes.

“Now the demand is very high. But, if the scenario changes, then the business flow can also change with more coastal ships coming to JN Port. Tomorrow, the definition of coastal shipping may undergo a change. Today, it means 300 TEUs of local containers arriving at a port from other Indian ports. At some point of time, the whole economics can change with a ship carrying 3,000 TEUs of local containers coming to JN Port from other Indian ports. That is future scenario. Cabotage relaxation is a welcome step from the central government. The policy is good. But, as far as JN Port is concerned, it has a very limited impact,” Bansal said.

The port will seek approval from the Union cabinet to deepen its 33.54km long channel to 15m from the current 14m to allow bigger container ships to dock.

“In February, the board of trustees of J N Port cleared the channel deepening proposal which is estimated to cost over Rs.2,000 crore. This will have to be cleared by the cabinet,” Bansal said.

Deepening the channel to 15m is the maximum limit the port can achieve. “The feasibility study was for either 15m or 16m draft. The berths at JN port are older, so it cannot withstand a 16m draft. That’s an infrastructure problem. So, we cannot go for a 16m draft. Otherwise it might have been much better if we had gone for 16m draft. So 15m is the limit to which we can go to,” Bansal said.

“To be a truly international port, we have to align ourselves as per the trade demand. If the trade has to realign because of limitation of the ports, it’s a bad sign,” the deputy chairman added.

At a depth of 14m, the port can currently berth ships with a capacity to carry 6,000 TEUs. But, with the help of tide, the port last week berthed a ship that can carry 11,000 TEUs.

On 1 April, the port is set to receive an even bigger ship with a capacity to load 13,900 containers, Bansal added.

Source: Live Mint

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