Customer Perspective: Key issues and concerns

Key issues and concerns

While there have been significant improvements in capacity addition and efficiency in port operations over the past few years, a lot still remains to be done.

Some of the key factors influencing port users are:

  • Market considerations: One of the key considerations for users is what the market is like, either actual or potential. For ports, the market is the hinterland from where they receive cargo.
  • Cost effectiveness: This is determined by the rates being charged by shipping lines and the trade-off between cost and efficiency. 
  • Operational considerations: This relates to both land-side and marine-side infrastructure. Whether the port offers opportunities for economies of scale is an important aspect for customers, and this further leads to the question of draught availability.
  • Policy considerations: The local and national regulatory environment in which the port operates is another important area for customers.  

Key issues and challenges faced by shipping lines

Container line operators expect consistency from terminal operators. Container schedules are fixed on the basis of productivity levels of ports, and any deviation from productivity norms impacts shipping lines’ schedules adversely.

The reliability of a schedule is very important from the point of view of shipping lines. If a ship gets delayed at one port, this setback has a cascading effect down the line. At present in India, terminal productivity is not fixed. There is lot of variation in productivity levels caused by traffic congestion, strikes, etc. This impacts profit margins of container ship operators. Moreover, tariffs at a few terminals are not transparent.

Another concern highlighted by shipping lines is that Indian ports do not undertake capacity expansion until they reach 100 per cent utilisation. Achieving 70 per cent utilisation in a container terminal should be made the yardstick to initiate port expansion. Further, more investments have been made in terminals in south India, whereas this should have been the case in ports like the Nhava Sheva International Container Terminal or those in Gujarat, where utilisation levels have remained over 100 per cent.

Port infrastructure is very important from a customer point of view. At present, most ports face some limitation or the other. There are ports such as Mumbai and Haldia where there are draught restrictions, while in others, the number of berths or pipeline infrastructure is inadequate to meet industry demand. This results in long waiting times at ports, leading to unnecessary overheads for shipping companies. Further, since India imports 90 per cent of its crude oil requirement, oil companies aim to transport the crude oil in very large crude carriers (VLCCs). However, there are several ports in India where these VLCCs cannot berth, and only a few ports have single-point mooring facilities.

The charges for petroleum products at most private ports are also quite high as compared to government-owned ports, and these need to be rationalised.

Another major issue is the lack of upgradation of existing infrastructure facilities. For example, the pipelines at Kandla have not been replaced since 1965 and the pipelines from Jawahar Deep to the refineries of Indian Oil Corporation (IOC) and Bharat Petroleum Corporation Limited are almost four decades old, and have high maintenance costs. Since these pipelines are very old, there are often leakages and fires at the port, which does not have adequate firefighting facilities.

The way forward

The container market is currently at a 30-year low, and the stakeholders (ports, terminal operators and shipping lines) should all be working together towards addressing the current situation.

Ports should be market driven and be allowed to set tariffs at their own discretion. In the coming years, port services should be privatised as regulation by the market results in greater efficiency.

India has world-class marine-side operational efficiency. The focus should be on improving land-side operational efficiency to bring Indian ports at par with world standards. Proper traffic planning is also essential before making investments or creating infrastructure at any port. w

Based on remarks by Julian Bevis, Senior Director, Group Relations, Asia, AP Moller-Maersk Group; M. Navin Kumar, General Manager, Crude, Shipping and Supplies, Hindustan Petroleum Corporation Limited; Captain Sarveen Narula, Director, Liner and Passenger Services, Shipping Corporation of India, and K.S. Rao, Deputy General Manager, Operations, IOC