Bulk cargo accelerating growth at Major Ports

Bulk carg

World trade has been low. India’s exports and imports have dipped. Yet, the goods moved by the country’s Major Ports have surged in 2015-16.

Consider this: The monthly cargo traffic at Major Ports has risen steadily from a low of 46.85 million tonnes in September 2015 to 52.22 million tonnes in January 2016, nudging up to the record 53.72 million tonnes moved in March 2015. The cargo handled between April 2015 and February 2016 was 27 million tonnes more than in the same period of FY 15. Seven of the 12 Major Ports reported traffic growth in January 2016.

Surprisingly, the growth has been in an environment of slowing external trade. Global merchandise trade fell from $1,521 billion in November 2014 to $1,124 billion in February 2016. India’s exports and imports too shrank in this period.

Manish Sharma, Partner - Infrastructure, PwC, thinks the jump in cargo traffic in FY16 over the previous fiscal was due to a growth in bulk traffic at Kolkata, Haldia, Paradip, Mormugao and Kandla. “The key reasons for growth are an increase in coal shipments (coastal and imports), restart of iron ore exports (from mid-year) and increase in edible oil imports.”

But, he says, “Five months is not a significant period to suggest a trend as seasonal changes and global externalities can have a big impact on such short time periods.”

While there has been a definite improvement in the cargo handled, Major Ports continue to operate well below their capacity. The traffic handled between April 2015 and January 2016 was 522 million tonnes, while the ports have a capacity to handle 893 million tonnes.

Besides, over time, Major Ports have lost significant market share to the non-major ports. The total traffic handled by both the major and non-major ports for 2014-15 was 1,052 million tonnes. Lack of operational efficiencies and competitive pressures have eroded major ports’ market share from 75 per cent in 2001-02 to 55 per cent in 2014-15.

“Unlike non-major ports, which have the freedom to charge tariff based on market forces, major ports’ tariff are regulated by the Tariff Authority of Major Ports (TAMP). The role of TAMP and issues related to tariff regulations have been questioned by industry, with many believing that present system penalises performance and efficiency,” says Sharma, explaining the challenges.

In this backdrop, the Sagarmala Port project recently unveiled by Prime Minister Narendra Modi recently appears well-timed. The Rs. 8-lakh crore investment envisaged under the Sagarmala project over the next couple of years is expected to increase port capacity and operational efficiencies of the Major Ports. An emphasis on the port sector and national waterways can bring down transportation costs significantly. The cost of transporting goods through waterways is a third of that by road and half by rail.

A Balasubramanian, Port management expert and lawyer, J Sagar Associates, says: “Sagarmala has an underlying strategy to provide missing connectivity to the major ports among others and aims to minimise cost and time for cargo evacuation.” But simultaneous improvement in both Major and non-major ports is required to address the needs of the country, say experts.

“The lack of timely berth availability for coastal vessels at Major Ports is a key issue impacting Coastal Shipping economics. With coastal traffic envisaged to increase manifold, there will be critical need to have presence of low-cost non-major ports along the coastline outside Customs notified areas to cater to coastal traffic,” says Sharma.  

Source: Daily Shipping News

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