Hurdles to Growth: Operators raise concerns and propose solutions

Operators raise concerns and propose solutions

Private participation in the port sector has increased significantly over the years. However, there are several issues that need to be addressed to sustain private interest in the sector.

A major area of concern for operators is the lack of adequate and efficient evacuation of cargo. This has led to increased logistics costs for operators. The port sector is the most competitive segment of the logistics sector in India. However, there are several hidden costs, which increase costs for operators, and need to be addressed to enhance competitiveness. Ship sizes too are increasing and this will lead to greater movement of cargo. The railways and other service providers will have to gear up to meet the growing demand.

So far, much focus has been laid on the development of ports on the west coast, while those on the east coast have been neglected. Even today, traffic from Jharkhand or Chhattisgarh finds it cheaper to find its way to the Jawaharlal Nehru Port Trust (JNPT), rather than to Visakhapatnam or Paradip ports.

The land policy for major ports has been long delayed and needs to be finalised soon. The lack of specialised manpower is another key area of concern and adequate training facilities need to be provided.

In a positive for the sector, the government has become more proactive and has taken several initiatives to promote sector growth. In fact, there is now close coordination between industry stakeholders and the government. The launch of Sagarmala, a comprehensive, holistic programme for the maritime sector, has brought optimism into the sector.

The Ministry of Shipping (MoS) is relooking at the model concession agreement, the role of the Tariff Authority for Major Ports, etc., to meet stakeholder demands. There is also greater emphasis on modernisation, mechanisation and digitisation of ports. Ease of doing business is another focus area and steps in this direction are being taken by many ports. The logistics data bank set up at JNPT, which provides a real-time update on container movement, is expected to bring in greater efficiency in the logistics and supply chain environment. Ports are also taking steps towards gate automation, acquiring bigger cranes and improving productivity.

The Indian Port Rail Corporation has been set up to provide last-mile connectivity to ports. Environmental clearances are coming faster. Enterprise resource planning is under way at five ports and tenders for these have already been invited. Besides, the port community system is expected to bring in transparency and make Indian ports more efficient.

Going forward, there is a need to innovate on both the customs and logistics fronts to bring economies of scale and reduce costs. The option of having bigger terminals and ports, instead of developing too many new ports, should also be looked at. The development of coastal shipping and inland waterways can also help reduce logistics costs.

The container industry is likely to witness consolidation in 2017. With trade staying flat, transshipment increasing at high performing terminals, and new alliances being formed, business dynamics will change significantly for certain countries as well as certain ports.

Going ahead, ports need to focus on new areas of growth such as cruise shipping, bunkering, providing ship-repair facilities, etc. to diversify their business portfolio and earn additional revenue. Environment protection will play a key role in future port development and the use of non-polluting and noiseless equipment is bound to increase.

“Looking eastwards” should be the way forward, as most of the developments in the sector as well as trade is expected to happen with Southeast Asia and South Asia.

An improvement in customs procedures, greater mechanisation and an increase in the share of railways in the modal mix can lead to significant growth in the country’s gross domestic product. w

Based on a panel discussion among Sanjay Bhatia, Chairman, Mumbai Port Trust; Captain Ravinder Singh Johal, CEO, Nhava Sheva ICT (DP World); Krishna Kotak, Chairman, JM Baxi and Company; Captain Sandeep Mehta, President, Adani Ports and Special Economic Zone Limited; and Captain B.V.J.K. Sharma, Joint Managing Director and CEO, JSW Infrastructure, at a recent India Infrastructure conference