30-01-2018

‘PSA terminal will elevate JNPT to a new position’

As Singapore’s PSA International Ltd looks set to open a new mega container terminal, its fifth, at the Jawaharlal Nehru Port Trust (JNPT) near Mumbai in the next few days, BusinessLine spoke to Neeraj Bansal, the Deputy Chairman at India’s busiest container port, on what it means to be a government-run port, the shipping lines and the trade/users. Excerpts:

How will be new facility change the cargo flow dynamics at JNPT?

The first big purpose it will serve is for the last several years we did not have, in the real sense, a capacity addition project at JNPT. We had hit a plateau of 4.2 to 4.5 million TEUs. There was a demand for more supply/more infrastructure. So it meets the requirements of the trade. All of a sudden, our capacity will rise from 4.8 m TEUs to 7.2 million TEUs. Now the supply is more, but this positive side has got its own challenges – demand has to built up.

Second, it brings huge competition. Each terminal has to be conscious about its performance because PSAs come with their own standards. So when supply is more and demand is not up to it and since building critical mass takes its own time, there will be a lot of churning till that time. So everybody has to improve their efficiency; everybody has to look at the flip side which was there earlier; how to improve so that trade remains committed with those terminals.

How does the new terminal stack up against the existing ones?

The PSA terminal will be able to dock mother vessels, handle the biggest container ships from a quay length of 1 km, and cranes that can reach 22 rows wide or greater. So they are in a different league all together. Here, PSA will not have any competition because it can attract the super-rich clients. This will elevate JNPT to a new kind of exalted position.

What effect will it have on competition?

With the opening of the PSA terminal, there will be intense competition, which will bring a huge relief to the trade, resulting in lower costs to the trade/users.

It’s good for the trade, but not good for the existing terminals because the established business will face stress and have to change the methodologies and improve performance. There will be stress in the system, which may not be good for the existing terminals which had its hand full all these years and were sitting comfortably. But for the trade, it is immensely beneficial.

How will the existing terminals evolve?

JNPT was never a slow port, we are already among the best. But the excess supply brings more competition. Necessity is the mother of all invention. In similar fashion, this competition will bring further best out of the four existing terminals at JNPT. They will be fighting to retain the cargo, so pricing will come under stress/threat.

As they will be under stress, they’ll have to look at innovative ways to create value for the trade so that trade remains committed with them. The efficiency improvements at existing terminals will bring huge value to the trade and more loyalty to a particular facility and deepen the relationship. It has another huge benefit for JNPT as a port because we will be creating more competition for other players on the western coast. So first is churning within. Second is churning on the vessel costs.

On its part, what is JNPT doing to create value for the trade/users?

Since there was no infrastructure additions for many years, the trade re-aligned at the available space. Now when the supply comes back, when excess supply is there, the trade has an option to pick the best terminal in terms of creating value for them. And since it creates intense competition within JNPT terminals, bringing further improvements, the chances of getting newer cargo would be very high.

Competition will force all the four existing terminals to step up our marketing activities. We are already geared up for that. The four dry ports which we have conceived in the hinterland is ultimately for that – creating cargo aggregation centres. Besides, with the port-based special economic zones, we are targeting dedicated cargo. Our port is prepared for the next wave of reforms, where we are creating more value centres for the trade.

Source: The Hindu Business Line

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