WaterwaysLogistics Management

Shivakumar B031Sunil Ramavarapu C041

Prashant E008Aditya Anand E009Chandrasekar E035Sudipto Sur E052

Agenda

• History & Evolution of sector• Cost comparison with other modes of transport & KPIs

used to measure efficiency• Types of transportation vehicles and differences

(Barges/ships/tankers etc)• Major Indian waterways/ports and connections to

Indian/int'l hubs• Differences between Indian and Int'l waterways• Major players & major industries using waterways in

India• Role of Government / Major Initiatives• Growth drivers & Current trends• Leveraging Technology • Future outlook

Introduction• Ports and the shipping industry plays

a crucial role in the development of an economy by boosting trade and commerce within and across countries;

• India is blessed with a long coastline about 7517 km with 13 major ports across the country and approximately 70 non-major operational ports;

• Cargo traffic stood at 545.8 MMT in FY’13;

• Transportation via waterways is the cheapest mode from operational perspective;

• Waterways both inland and coastal is considered to be environment friendlier than other modes of transportation

Source: Ministry of Shipping: Aranca ResearchIndia Brand Equity Foundation: Report on Ports in India

Solid

• Iron Ore• Coal• Fertilizer etc

• 54% - Share

Liquid

• Liquid Petroleum

• Oil• Lubricants

• 34% - Share

Container

• 22% - Share

Cargo ProfileCoastal Shipping & Inland waterways(Share arrived at by calculating btkm)

Source: http://iwai.nic.in/

Introduction - Contd

• By 2015 – schemes to be introduced by government to increase the current share of coastal and inland waterways transportation to 15%;

• Mix of various modes of transport, known as multi-modal transport systems to boost coastal and IWT btkm;

• PPP for development of port infrastructures in India to promote increased cargo traffic;

• India adopting innovative intermodal logistics – eg – Roll-on Roll-off, LASH, Sea train etc.

History & Evolution

The landmark inventions in water transportation:

Cornelis Drebbel invented the first submarine in 1620 AD

First practical steamboat demonstrated by Marquis Claude -1783 AD

Steamboat invented – 1787 AD

First diesel-powered ship – 1912 AD

Hovercraft invented – 1956 AD

First nuclear powered ship launched – 1958 AD

History & Evolution

Before Container Shipping:

Mankind has been shipping goods for thousands of years, but process has never been easy.

The loading and unloading of individual goods in barrels, sacks and wooden crates from land transport to ship and back again on arrival was slow and cumbersome.

This process, referred to as break-bulk shipping was the only known way to transport goods via ship

The loading and unloading of the ship was very labor intensive.

There was also high risk of accident, loss and theft.

There were some basic systems in place to make the process more efficient, such as the use of rope for bundling timber, sacks for carrying coffee beans, and pallets for stacking and transporting bags or sacks.

History & Evolution

Origins of Container Shipping:

The first shipping container was invented and patented in 1956 by an American named Malcolm Mc Lean.

Prior to this, cargo was loaded and unloaded in odd sized wooden crates. The process was very slow and certainly not standardized.

Malcolm then purchased Pan Atlantic Tanker Company, and re-named the new shipping company Sea-Land Shipping.

He tried for better ways to load and un-load trucks and ships.

His ideas were based on the theory that efficiency could be vastly improved through a system of "intermodalism", in which the same container, with the same cargo, can be transported with minimum interruption via different transport modes during its journey. 

After many experiments, his final design is what we know now as the Shipping Container.

Element TechnicalNon-technical (Service)

WATERWAYNautical indicators (depth, width, max. height, ton-miles)

Navigability, Information Services

VESSELSTechnical features (mechanical, electric, electronic)

Liner service, departures per week, punctuality, IT-performance

INLAND PORTS

Process performance in trans-shipment & storage, bi- & tri-modality

Opening hours, customer awareness, flexibility, IT-performance

KEY PERFORMANCE INDICATORS

CRITICAL SUCCESS FACTORS

COMPARISON AMONG OTHER LOGISTIC MODESKPMG India, 2012 report says that the share of coastal shipping in the overall domestic cargo movement is significantly lower than that in road (57 percent) and rail (30 percent) due to the following reasons:

COMPARISON AMONG OTHER LOGISTIC MODES

Types of Ships

Classification Criteria Intended Cargo

Size (DWT)

Other Features

Bulk Carriers: They are broadly defined as ships carrying dry unpacked goods in big lots.

The major commodities being transported in bulk are coal, iron ore, food grains, phosphate, steel, cement and fertilizers among others. 1. Geared Bulk Carrier2. Gearless Bulk Carriers3. Combined Carriers4. Self Dischargers5. Bulk In, Bags out6. Open hatch Carriers

14

6

Container Carriers: The cargo is packed in standard-sized containers on site and then transported via ships

Lift-on lift off (LoLo) vessels

Roll on Roll off (RoRo) vessels

Tankers: Products carried by tankers are oil, liquefied petroleum gas (LPG), liquefied natural gas (LNG), chemicals, fresh water, wine etc.Oil and oil product tankers -  These are used for bulk transport of oil. The various petroleum products produced at refineries, such as, petrol, paraffin, diesel, lubricating oil etc.,

Chemical tankers - Chemical tankers are designed considering the specific requirements of the type of the chemical to be transported.

Gas tankers -  Gas tankers are used to transport liquefied chemical gases in bulk. Types: Fully Pressurized Gas Carrier, Semi- Pressurized ships, Liquefied Natural Gas Carriers

Specialized Carriers1. Floating, Production,

Storage & Offloading (FPSO)

2. Offshore Vessels3. Barges4. Crane Vessels5. Passenger Ships

1

3

5

Size Differentiation

INDIA'S TRANSSHIPMENT HUB PLANSMajor Shortcomings of Indian Ports:• Inadequate facilities• Distance from

international shipping routes

• Draft restrictionsJawaharlal Nehru Port Trust (JNPT) and Mundra Port are the only ports along the west coast that receive mother vessels of around 4,000 TEUs.

VALLARPADAM INTERNATIONAL CONTAINER TRANSSHIPMENT TERMINAL• ICTT will be constructed on 115

hectares of land at Vallarpadam• a special economic zone inside Cochin

Port• phase I will be developed with 600

metres of quay designed to handle 1.0 million TEUs

• Phase II will add another 300 metres of quay with a capacity to handle 0.5 million TEU

• Phase III will add 900 metres of quay with a capacity to handle 1.5 million TEUs

• terminal will have the facility to berth mainline vessels and feeders together with the possibility of exchange of containers

INLAND WATER TRANSPORT IN INDIA  Advantages of Inland Water Transport• An economical means of transportation of coal,

minerals and other bulky dry and liquid raw materials for industries

• A highly efficient mode of transport in terms of energy consumption

• Immediate access wherever water exists with no investment required in line haul capacities

• A smaller amount of investment for maintenance

Limitations of inland water transport• This form of transport is slow as compared to other

forms of land transport• Navigable waterways are not perennial in many

areas due to seasonal fluctuations in water levels• Heavy capital investment required in construction

maintenance and dredging operation of canals

REGULATION OF INLAND WATER TRANSPORTATION: INLAND WATERWAYS AUTHORITY OF INDIA

OPPORTUNITY FOR PRIVATE SECTORThe government has envisaged the private sector to carry out the following:• Construct and operate terminals and river

ports• Provide mechanised handling systems, and

maintain navigational facilities• Provide pilotage facilities• Own and operate vessels for cargo and

passenger movement

India has 4,400 km of recognized inland waterways out of 14,500 km of navigable waterways; 7,551 km of coastline

India vs Global

Country Proportion of waterways in inland freight transportation

Netherlands

46%

Bangladesh

32%

Brazil 14%

USA 17%

China 10%

India <1%

Country Proportion of short-shipping in domestic cargo

China 43%

European Union

42%

USA 15%

India 7%

Particulars India Global

Turnaround Time 4.67 days 7-10 hours

Pre berthing delay (hrs) 55.7 3-5

Average output per ship berth day (‘000 tons)

10.74 45-60

India Singapore USA China UAE

LPI Rank 54 5 9 28 27Length of inland waterways (in km)

14,500 >30 41,009 110,000 -

Cost in USD/day 246 161.5 460.5 247 -

Cost in USD/KM 1.3 10.8 5.2 2.5 -

% of shipments meeting quality criteria

67 92 87 76 88

Number of agencies & Forms

3 & 4 1 & 1 3 & 3 3 & 5 3 & 2

India vs Global

Cargo category and ideal mode of transportation

Major commodities with feasible Waterways

Commodity Key routes

CementMundra – Cochin

Cuddapah - Krishnapatnam - Haldia- BurdwanCuddapah - Krishnapatnam - Cochin

FertilisersKandla to Mangalore

Haldia to VizagParadip to Chennai

Food grains

Panipat – Kandla – MangalorePanipat – Kandla – Kochi

Panipat – Kandla – ChennaiGuntur – Vizag - Haldia

SteelJamshedpur - Chennai

Rourkela - Chennai

MarbleUdaipur – Kochi

Udaipur – Chennai

Salt

Gandhidham – Kandla – MangaloreGandhidham – Kandla - Kochi

Tuticorin - HaldiaTuticorin - Paradip

SugarVellore – Chennai – Paradip – Bhubaneswar

Vellore – Chennai – Haldia – Kolkata

Belgaum - Mangalore – Kandla - Ahmedabad

Automobiles (# of cars)

Pune - ChennaiPune – Kochi

Gurgaon - Kochi

TilesMorbi – Mundra - Chennai

Morbi – Mundra – Mangalore - Bangalore

Major Players in Waterways Logistics

Jindal ITF – Infrastructure Transportation Fabrication Subsidiary of Jindal SAW

GATI has exited shipping line in July, 2014 The Shipping Corporation of India Ltd

May exit loss-making container shipping business

Essar Shipping Provides logistics and energy-based

services Mercator Limited

Largest private sector player by tonnage Gujarat Pipavav

Complements shipbuilding with shipping

Government Initiatives

• The Planning Commission of India in its 12th Five Year Plan expects a total investment of Rs 180,626 crore(US$ 30.05 billion) in the ports sector.

• The government has allowed FDI of up to 100 per cent under the automatic route for projects related to the construction and maintenance of ports and harbors;

• A 10-year tax holiday has been given to enterprises engaged in the business of developing, maintaining and operating ports, inland waterways and inland ports.

• Ganga Rejuvenation for development of transport and tourism along the river Ganga

Government Initiatives

• Through its Maritime Agenda 2010-2020, the Ministry of Shipping has set a target capacity of over 3,130 MT by 2020,largely through private sector participation.

• It aims to encourage private investment in both major and non-major ports and bring port performance at par with international standards;

• Government will be investing INR2,870 billion in generating total port capacity of 3,200 MMT and cater to expected cargo traffic of 2,500 MMT by the end of 2020

Current Trends

• Around 95 per cent of India's trade by volume and

70 per cent by value happens through maritime

transport;

• During 2013-14, India's major ports handled 555.50

million tonnes (MT) of cargo as compared to 545.83

MT handled in 2012-13, registering a growth of 1.8

%;

• Cargo traffic at non-major ports increased at a CAGR

of 13 percent over a CAGR of 2 percent at major

ports

Current Trends

• Cargo traffic at Indian ports stood at 911.5 MT in FY

12 and is expected to touch 1,758 MT by FY 17;

• Cargo traffic registered an increase of 4.8% as

compared to last year.

• Of the major ports, Mormugao Port posted highest

growth in traffic (24.48 %)

Technology AdvancementsIncreasing Importance of IT Infrastructure

• Information technology (IT), especially Internet-based systems, can be used effectively to streamline and improve supply chain processes, enhance cooperation between carriers and their customers by enabling instant communications, and eliminate many burdensome procedures and regulations.

• Most developed countries have already implemented a variety of strategies and policies to develop information infrastructure.

• In many countries, port information systems have been transformed into integrated logistics information systems through interconnected efforts with other logistics-related information systems.

• Example: INTIS at the Port of Rotterdam, ADEMAR+ at the Port of Le Havre, DAKOSY at the Port of Hamburg, SEAGH at the Port of Antwerp, and FCP80 at the Port of Felixstowe, are ports with IT systems that facilitate electronic submissions and clearance of shipping information.

• The Indian maritime industry has been giving greater emphasis on IT infrastructure. Initiatives such as Electronic Data Interface (EDI) are being implemented across various ports.

• The Government has initiated development of PORTNET, which is designed to integrate the ports with various users such as shipping agents, shipping lines etc, and with each other. This is expected to streamline information flow and improve process efficiency.

• Indian Customs is developing a risk management system to expedite various procedures.

Technology AdvancementsShipping Industry revolutionizes with Big Data

• Hong Kong-headquartered CargoSmart is a Software-as-a-Service (SaaS) global shipping and logistics solutions provider that enables shippers, NVOCCs consignees, logistics service providers, and ocean carriers to automate and improve their shipment management processes.

• It's often difficult to determine whether it was justifiable when a vessel went off-route. Multiple factors--weather, seasons, ocean currents, timing--can cause a vessel to change directions or speed. Moreover, different vessels may respond differently to virtually identical incidents.

• The only way to justify a vessel going off-route is by comparing it with others, like studying the ripple effect of an incident in the area. Big Data comes to help in this case. The service gathers data from multiple sources to provide insight and analysis towards vessel-movement. The sources of data range from publicly available weather conditions to private vessel schedules and real-time routing data, as well as Automatic Identification System (AIS) information tracked by different maritime authorities. Vessels can be tracked by the AIS base stations along the coast lines, or by satellites when they travel out of range of terrestrial networks.

• It can automatically detect three major data subsets of each of the 5,500 vessels, updated every 15 minutes: (1) actual time departure (ATD) from port, (2) actual time arrival (ATA) to port, (3) observed difference between the planned route and actual route. This information represents 80% of the global trade volume," he said, "allowing the system to offer industry benchmarking information.

• It helps in the offering industry benchmarking information and also help in tracking oil smuggling.

Technology Advancements

Save fuel with Skysail technology called “Kite”

• To achieve savings in freight costs, WFP Shipping has engaged the services of Beluga GMbH of Bremerhaven, Germany to deliver shipments of food assistance using wind powered technology. The shipping line has deployed SkySail technology to offset the demands of the shipboard power units thus reducing fuel consumption.

• The ‘kite’, which is tethered to the bow of the ship, uses ocean winds to pull the ship through the ocean.

• Under ideal conditions the use of the SkySails can reduce fuel consumption by 10-30%.

• In a ship of 5000MT-6000MT size, such savings can equate to a fuel savings of between 1.5 and 4.5 MT per day over a 30-day average transit time.

• This dramatically reduces the amount of carbon and related emissions that are released into the environment thus reducing WFP’s carbon footprint.

Future Outlook

• Increasing Private Participation: Strong growth potential, favourable investment climate, and sops provided by state governments will encourage domestic and foreign private players to enter the Indian ports sector.

• Setting up of Port based SEZs: SEZs are being developed in close proximity to several ports, thereby providing strategic advantage to industries within these zones. Plants being set up include

1. Coal-based power plants to take advantage of imported coal 2. Steel plants and edible oil refineries. 3. Development of SEZs in Mundra, Krishnapatnam, Rewas and few others is underway• Focus on drafting depth: All the Greenfield ports are being developed at

shores with natural deep drafts and the existing ports are investing on improving their draft depth. Higher draft depth is required to accommodate large sized vessels. Due to the cost and time advantage associated with the large sized vehicles, much of the traffic will be shifting to large vessels from smaller ones, especially in coal transportation.

• Specialist Terminal Based Ports: Terminalisation: Focus on terminals that deal with a particular type of cargo. This is useful for handling specific cargo such as LNG that requires specific equipment and hence high capital costs. Forming specialist terminals for such cargo result in optimal use of resources and increased efficiencies. Examples of specialist terminals: ICTT in Cochin, LNG terminal in Dahej Port

References

• KPMG “All aboard! Insights into India's maritime community (2014)

• www.deloitte.com/assets/Dcom-India/Local Assets/Documents/Thoughtware/Intermodal and Multimodal Logistics.pdf

• http://www.livemint.com/Opinion/hkC9ZcvCbqlWbB141LnDwK/After-years-of-neglect-India-wakes-up-to-coastal-inland-wa.html

• India Brand Equity Foundation

• CRISIL Research Report

THANK YOU