priority on efficiency

8/8/2019 Priority on Efficiency

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Priority on Efficiency

Ports and maritime trade serve in a big way to enhance the logistics and

eventually the GDP. Ports have finally come into the spotlight, and PPP

investments have sped up implementation. But building ports is just half the

battle won. Global maritime trade sets high benchmarks in business excellence to

which Indian ports are adapting only now. Dipal Gala reports

To sustain India's present high rate of growth, India has to increase its share in world trade.Since 95 per cent of India's external trade by volume and 70 per cent by value takes place

through ita ports, it is imperative to augment and upgrade port infrastructure.From 2003 to 2010, traffic through major ports grew at a Compounded Annual Growth Rate

(CAGR) of 8.45 per cent. Traffic volumes at major ports increased from 345 million tonnes perannum to 561 million tonnes per annum, an increase of 63 per cent.

Simultaneously, there has been tremendous growth in the traffic handled by non-Major Portsand their share in total traffic handled has increased from 10 per cent in 1995 to 31.5 per cent in

2010.This growth in traffic, has resulted in the capacity utilisation of more than 90 per cent at major

ports with some experiencing more than 100 per cent capacity utilisation. This connotes

congestion and very high berth occupancy. For efficient port operations, 70 per cent capacityutilisation is considered to be optimum.The Shipping Ministry expects traffic at major ports is likely to grow at a CAGR of 8.03 per

cent from 561 million tonnes in 2009-10 to 1,215 million tonnes by 2019-20, whereas the trafficat non-major ports is expected to grow at a CAGR of 16 per cent from the present level of 289

million tonnes to 1270 million tonnes. Thus, the anticipated traffic at Indian ports would be 2485million tonnes by 2019-20 from the present level of 850 million tonnes at a CAGR of 11.32 per

cent.To meet this anticipated traffic, the major and non-major Ports have formulated plans for

development of new terminals, upgrading existing berths and modernising operations byinducting state of the art cargo handling equipment. Considering the objective of 70 per cent

capacity utilization, it is necessary to increase the overall capacity of Indian Ports to 3230 milliontonnes by 2020 which is more than three times the present level of 963 million tonnes.

This will entail large-scale investment and induction of newer technologies to reduce cost andto bring in efficiency in operations. This is not possible without involving private sector as active

partners in development.

The PPP Experience

In the port sector, the experience with PPPs has been very encouraging. The port sector has notonly been able to attract private investment for large number of infrastructure projects but has


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also benefited from cost effective and efficient port operations ushered in by private players. Theterminals set up through PPP mode have achieved performance levels which match the best

internationally in terms of efficiency and cost effectiveness.Attracting private capital through PPP projects has been achieved in the Port sector because of

a favourable and investment friendly policy framework that was put in place by Government of

India.As a result, 24 PPP projects involving an investment of Rs.6,486 crores have been completedand are under operation. Another 19 PPP projects are under implementation involving an

investment of about Rs.12,498 crores and 21 more projects are under bidding. In the last 18months alone, 19 PPP projects have been awarded a dozen projects are scheduled to be awarded

before the end of this financial year.These projects include International Container Terminals at JNPT, International Container

Transhipment Terminal (ICTT) at Vallarpadam, LNG Regasification Terminal at Cochin, MegaContainer Terminals at Chennai and Ennore, new coal berths in Paradip, Tuticorin and Vizag

among others.All the big names in the international maritime sector and leading Indian operators have

invested in BOT projects in the Port sector.Though the experience with PPP projects has been successful, it has not been without

challenges. There have been considerable delays and uncertainty in getting clearances fromvarious Ministries and agencies. Litigation during tendering process also takes its toll on some

PPP projects. There was thus a need to streamline the clearance processes and ensure thatdecisions are taken within a timeframe, promptly.

Shipping minister Vasan is of the view that a robust regulatory framework needs to be put inplace for the port sector for all operators, public or private, and all ports, major or nonmajor, to

have a level playing field. At present, tariffs are fixed for major ports by the TAMP while non-major ports are free to fix their own tariff. There are concerns that some non-major ports with a

locational advantage, charge exorbitantly from the trade. The role of TAMP also needs to bereviewed in the changing context.

The Ministry of Shipping is in the process of drafting a comprehensive legislationconsolidating the Indian Ports Act, 1908 and the Major Port Trusts Act, 1963. There are

suggestions that Port Trusts should adopt the 'Land Lord' port model in the long run to ensuremore efficient service and to promote exim trade.

The highlights of some of the policy initiatives taken by the Shipping Ministry :

100 per cent Foreign Direct Investment (FDI) under Port development projects automatic route.

100 per cent income tax exemption for a period of 10 years.

Standardisation of bidding documents to ensure uniformity and transparency in the award ofprojects.

Model Concession Agreements have been standardised and simplified.

Tariff setting mechanism modified with tariffs being set upfront by Tariff Authority for Major

Ports (TAMP).


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Port Management

The latest on the radar of Indian ports is

a gamut of technology driven

management processes

[email protected]

Efficiency will be the keyword in port

management. To manage the expected increase in

trade volume, several ports have brought in

efficiencies at various levels.

High Turnaround

Reducing berth occupancy and increasing its

utilization is often the central policy of port

managements to manage higher volumes.

Technology

Technology comes to the rescue: a highly

mechanised terminal operating system at ports such

as Mundra has been able to bring in drastic

improvement in port management. The global

standard is complete online operations, so that

operators do not have to come to the port to resolve

details.

The Mumbai Port has installed a Vessel Traffic

Management System (VTMS) to handle high-density

traffic efficiently. Many ports in southern India

including the Chennai port are in the process of

finalizing deals to install the VTMS and may become

the order of the day in port operations.

Material Tracking

At the Krishnaptanam port, trucks that move with

loaded material are all on RFID and the customers

can track every kilo of their material, anywhere

within the port or outside.

Surveillance Systems

Also, required is a high level of security. Between the

hundreds of vehicles involved in loading and

unloading, and the massive storage houses, ports


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and their warehouses need high surveillance.

Security systems also help to avoid accidents that

were a earlier a regular occurance in many ports.

Speedy Freight

Ports like Pipavav have Container Freight Station

(CFS) within the port limits for consolidating cargo

moving to or from the immediate hinterland. As a

result, containers can typically be moved from the

CFS to the vessel in a really short span, a clear time

and cost savings advantage for both cargo owners

and shipping lines.

Communication

Within a port are a large number of players and one

or more terminal operators. Besides these there are

ship agents, truckers, cargo agents, freight

forwarders, etc. For efficiency there has to be a good

communication system to interact with each other

and avoid duplicity of operations by data sharing.

This can be brought about through Port Community

System (PCS).

Ports are also considering various other options to

increase productivity. A Dock Aid System for can

help eliminate accidents while berthing vessels;

Automatic Mooring System avoids the need for

human intervention; Oil Spill Detection system using

radars and Fertilizer Cargo Complex System speed

up bagging process are gaining prominence.

Is there a significant shift in maritime trade - ie

from East coast of India to East Asia - where new

world markets are?

Growth in the cumulative volume of cargo handled

by Indian ports in 2009-10 was a 15% yoy increase.

India is an exporter of iron-ore and it imports coal

(thermal/coking) in bulk quantities. Further, there

are various other break bulk and bulk commodities

which constitute the maritime trade of India.

Majority of this trade is with the Asia/Australia and

on other side extending to Middle East/Africa.

The iron ore trade grew at CAGR of around 10%

during 2003-2007 and export of iron-ore from India

to China tripled during the same period. More than


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threefourth demand of sea borne trade of iron-ore

comes from Asia and hence east coast of India being

in close proximity to China and other Asian countries

is a preferred choice against west coast.

Similarly, demand for import of Coal is increasing

with the increase in energy requirement and

expansion of steel industry. The coal traffic at Indian

Port has increased by about 23% in five years,

wherein India's thermal coal import has increased by

35% from 2003-2007. Australia/South

Africa/Indonesia contributes more than 60% of the

trade and east coast being at a closer proximity to all

these countries, a majority of coal (thermal/coking)

cargo is being imported from these countries via

East Coast. The same is expected to increase in

future, with greenfield/brownfield expansion of

steel plants and power plants as well as increasing

port capacity in the East Coast.

Other major factors for shift in the trade from

West to East Coast of India include inadequate draft,

congestion at ports on the western coast and

constraint of availability of land for large storage

area.

D.V.S. Raju, CMD, Gangavaram Port


8/12

Advertisement

Links


9/12

Port Management

The latest on the radar of Indian ports is

a gamut of technology driven

management processes

[email protected]

Efficiency will be the keyword in port

management. To manage the expected increase in

trade volume, several ports have brought in

efficiencies at various levels.

High Turnaround

Reducing berth occupancy and increasing its

utilization is often the central policy of port

managements to manage higher volumes.

Technology

Technology comes to the rescue: a highly

mechanised terminal operating system at ports such

as Mundra has been able to bring in drastic

improvement in port management. The global

standard is complete online operations, so that

operators do not have to come to the port to resolve

details.

The Mumbai Port has installed a Vessel Traffic

Management System (VTMS) to handle high-density

traffic efficiently. Many ports in southern India

including the Chennai port are in the process of

finalizing deals to install the VTMS and may become

the order of the day in port operations.

Material Tracking

At the Krishnaptanam port, trucks that move with

loaded material are all on RFID and the customers

can track every kilo of their material, anywherewithin the port or outside.

Surveillance Systems

Also, required is a high level of security. Between the

hundreds of vehicles involved in loading and

unloading, and the massive storage houses, ports

and their warehouses need high surveillance.


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Security systems also help to avoid accidents that

were a earlier a regular occurance in many ports.

Speedy Freight

Ports like Pipavav have Container Freight Station

(CFS) within the port limits for consolidating cargo

moving to or from the immediate hinterland. As a

result, containers can typically be moved from the

CFS to the vessel in a really short span, a clear time

and cost savings advantage for both cargo owners

and shipping lines.

Communication

Within a port are a large number of players and one

or more terminal operators. Besides these there are

ship agents, truckers, cargo agents, freight

forwarders, etc. For efficiency there has to be a good

communication system to interact with each other

and avoid duplicity of operations by data sharing.

This can be brought about through Port Community

System (PCS).

Ports are also considering various other options to

increase productivity. A Dock Aid System for can

help eliminate accidents while berthing vessels;

Automatic Mooring System avoids the need for

human intervention; Oil Spill Detection system using

radars and Fertilizer Cargo Complex System speed

up bagging process are gaining prominence.

Is there a significant shift in maritime trade - ie

from East coast of India to East Asia - where new

world markets are?

Growth in the cumulative volume of cargo handled

by Indian ports in 2009-10 was a 15% yoy increase.

India is an exporter of iron-ore and it imports coal

(thermal/coking) in bulk quantities. Further, there

are various other break bulk and bulk commodities

which constitute the maritime trade of India.

Majority of this trade is with the Asia/Australia and

on other side extending to Middle East/Africa.

The iron ore trade grew at CAGR of around 10%

during 2003-2007 and export of iron-ore from India

to China tripled during the same period. More than

threefourth demand of sea borne trade of iron-ore


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comes from Asia and hence east coast of India being

in close proximity to China and other Asian countries

is a preferred choice against west coast.

Similarly, demand for import of Coal is increasing

with the increase in energy requirement and

expansion of steel industry. The coal traffic at Indian

Port has increased by about 23% in five years,

wherein India's thermal coal import has increased by

35% from 2003-2007. Australia/South

Africa/Indonesia contributes more than 60% of the

trade and east coast being at a closer proximity to all

these countries, a majority of coal (thermal/coking)

cargo is being imported from these countries via

East Coast. The same is expected to increase in

future, with greenfield/brownfield expansion of

steel plants and power plants as well as increasing

port capacity in the East Coast.

Other major factors for shift in the trade from

West to East Coast of India include inadequate draft,

congestion at ports on the western coast and

constraint of availability of land for large storage

area.

D.V.S. Raju, CMD, Gangavaram Port


12/12

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