The first nine months (April-December) of the current fiscal year (2016-17) have been rather good for the port sector. Major ports witnessed a growth of 7.55 per cent during the first nine months of 2016-17, over the corresponding period of the previous fiscal year. This positive outcome can be attributed to the slew of measures taken by the Ministry of Shipping (MoS) to improve the performance of major ports.
Indian Infrastructure analyses the performance of major ports in the current fiscal year…
Overall performance
The MoS has set a target of 644.35 million tonnes (mt) for major ports for the year 2016-17. During the first nine months (April-December), major ports have already met close to three-fourths (74.67 per cent) the target, handling 481.2 mt of cargo traffic.
In terms of year-on-year growth, during the first nine months of 2016-17, Indian major ports registered an increase of 7.55 per cent. The growth was a result of an increase in all cargo categories except coal and fertilisers. Petroleum, oil and lubricants (POL), container and iron ore registered an increase of 9.80 per cent, 1.02 per cent and 153.88 per cent respectively. The port sector as a whole benefited from the introduction of new policies that have played a crucial role in creating a positive environment.
Port-wise analysis
As in the past, Kandla port was at the apex of the list of major ports handling the highest traffic volumes. The port handled 80.96 mt of cargo in the first nine months of 2016-17 as against traffic volumes of 73.87 mt in the corresponding period of 2015-16, an increase of over 9.60 per cent. Kandla was followed by Paradip port which handled 64.92 mt of cargo in the first nine months of 2016-17, a growth of 17.75 per cent over the corresponding period of 2015-16. This was due to the increase in iron ore and POL traffic handled by the port. Iron ore traffic has rebounded at Paradip port following the resumption of mining activities in Odisha after a long gap. In the first nine months of the current financial year, iron ore handled at Paradip port increased to 7.3 mt from only 2.2 mt in the corresponding period of 2015-16.
However, the performance (in terms of yearly growth) has been even more impressive at Mormugao port. A growth of over 60 per cent was recorded during April-December of the current fiscal year. The port, which was badly hit by the mining restrictions and the ban on iron ore exports, is slowly recovering. Iron ore traffic at the port increased to 9.34 mt during April-December 2016-17, compared to only 1.49 mt in the corresponding period of 2015-16, after the lifting of the mining ban in Goa and Karnataka.
During the first nine months of 2016-17, three ports witnessed negative growth. These are Kolkata (-3.17 per cent), Kamarajar (-3.44 per cent) and the Jawaharlal Nehru Port Trust (JNPT) (-4.32 per cent). Notably, Kamarajar port which had been consistently achieving the traffic target set by the MoS over the past three years witnessed a decline of 3.44 per cent. The contraction in total cargo volumes at Kamarajar can be attributed to a 6.1 per cent decline in coal traffic to 16.93 mt during April-December 2016-17. This decline from July 2016 is a result of the Tamil Nadu Generation and Distribution Corporation rationalising its coal imports by reducing stock supply.
Commodity-wise analysis
The traffic volume at major ports during the first nine months of 2016-17 was dominated by POL at 158.24 mt (32.88 per cent), followed by coal (thermal and coking) at 106.37 mt (22.1 per cent) and container cargo at 92.13 mt (19.1 per cent). In terms of a commodity-wise share in total traffic, no significant changes were seen in the period under consideration over the previous year.
The growth in traffic at major ports can be attributed to an increase in iron ore shipments, and container and POL traffic. Iron ore witnessed the maximum increase at over 150 per cent, followed by POL at 9.8 per cent and containers at 1.02 per cent. The first nine months of the current financial year witnessed an astounding growth in iron ore traffic. The restart of iron ore mining in Goa, Karnataka and Odisha led to a significant increase in traffic from 12.78 mt during April-December 2015 to 32.45 mt in the corresponding period of 2016-17. The maximum traffic of around 28 per cent of the total iron ore traffic was handled by Visakhapatnam port.
However, total coal traffic declined by over 6.6 per cent from 114 mt during the first nine months of 2015-16 to 106.37 mt in the corresponding period of 2016-17. The thrust on domestic production of coal following the allotment of new coal mines has resulted in a fall in the import of coal at major ports during the period under review.
Outlook
The outlook for the port sector seems bright with the series of recent initiatives by the government. Sagarmala, the flagship programme of the MoS, is also expected to increase port capacity and improve operational efficiencies at major ports. The fall in coal traffic has been compensated for by a surge in iron ore exports and has raised the hopes of major ports in terms of their achieving the MoS targets for 2016-17. However, according to Sajith Sreedharan, deputy managing director, BMT Consultants (India) Private Limited, “Iron ore exports are feeding into a world market where there is already significant oversupply so these may be variable over the next few years. Other forms of traffic such as POL and coal fluctuate even more with no real patterns. POL and containers should see long-term volume increases and attention needs to be paid to capacity addition and the nature of that capacity in terms of meeting market requirements.”
Government focus on two key areas is needed if sustainable growth is to be maintained – growth of container handling volumes (if port-led economic development is to be successful) and the management of port-adjacent land. “Container volumes, however, are not as simple as saying volume must grow therefore capacity must grow. Attention needs to be paid to the level of real competition among the ports. In larger ports, the increasing concentration of volume handled by large carriers may become a problem and will need to be addressed in the near future. Meanwhile, in smaller ports the lack of variety of commodities for feeder vessels of subregional container ships is already a concern,” says Sreedharan.
Greater focus is also needed on connectivity, frequency and reliability of services, which should be aimed at reducing total logistics costs. Going forward, the redressal of these key issues is essential if the targets are to be met.