Modest Growth

Traffic performance at major ports during 2016-17

Major ports handled 647.63 million tonnes (mt) of cargo traffic in 2016-17, a year-on-year growth of 6.79 per cent. The growth was supported by an increase in all cargo categories except fertilisers and coal. Iron ore, petroleum, oil and lubricants (POL) and containers registered an increase of 163.67 per cent, 8.16 per cent and 1.08 per cent respectively.

The sector as a whole has benefited from the improved macroeconomic environment and the introduction of new policies. Besides, several ports have taken technological initiatives to improve efficiency which enable them to handle greater traffic volumes. These include the implementation of new smart gates at Nhava Sheva International Container Terminal Private Limited (Jawaharlal Nehru Port Trust [JNPT]), the introduction of continuous gate-in facility for exporters at Gateway Terminals India Private Limited (JNPT), the installation of radiological detection equipment at entry gates at V.O. Chidambaranar (VOC) port, the implementation of a vessel traffic management system at Kamarajar port and the introduction of radio frequency identification access control systems at most other ports.

In 2016-17, seven of the 12 major ports – Paradip, Visakhapatnam, Cochin, New Mangalore, Mormugao, Mumbai and Kandla – met the targets set for them by the Ministry of Shipping (MoS). The remaining five ports fell short of the traffic target, with the shortfall ranging from 1.04 mt at VOC port to 5.98 mt at Kamarajar port. JNPT which had achieved its target in 2012-13, failed to do so in subsequent years.

Notably, only Kamarajar port has been consistent in achieving its traffic targets over the past three years. Corporatisation of the port could be the primary reason for this, as it helps the top management take decisions quickly, leading to greater operational efficiency.

Reportedly, efficiency indicators at most major ports have also improved. During 2016-17, total turnaround time came down to 3.44 days as against 3.64 days during the previous year. Likewise, the average output per ship per berth day increased to 14,583 tonnes in 2016-17 as against 13,748 tonnes during 2015-16. With respect to the development of port infrastructure, 56 projects with a capacity of 103.52 million tonnes per annum (mtpa) were awarded during 2016-17, involving an investment of Rs 94.91 billion, as against the target of 102 mtpa.

On the policy front, the MoS initiated several policy measures during 2016-17. The New Captive Policy guidelines were issued in July 2016 to ensure uniformity and transparency in the procedure for awarding captive facilities at ports. The New Stevedoring Policy was also implemented in July 2016, which is intended to improve port productivity, efficiency and safety. The New Berthing Policy came into effect in August 2016. This policy provides for a standardised framework for the setting of norms, specific to the commodity handled and the infrastructure available at the berth.

Meanwhile, the MoS is in the process of revising the existing model concession agreement (MCA) of 2008. The revisions will include changes in the equity holding to provide an exit route, refinancing provisions, provisions for the mid-term review of concessions and a grievance redressal system, among others.

Port-wise analysis

For the tenth year in a row, Kandla port retained its number one position among the major ports in the country. The port handled 105.44 mt of cargo in 2016-17, an increase of over 5 per cent over the traffic volume of 100.05 mt handled in 2015-16. With this, for the second time in a row, Kandla port was the only major port and the second among all Indian ports (after Mundra) to handle over 100 mt of cargo in a year.

Paradip port too, has come a long way. From being ranked fifth four years ago (2012-13) in terms of traffic handled, the port has been in second position for the past four years. In 2016-17, it witnessed a growth of 16.45 per cent, primarily due to an increase in iron ore and POL traffic, which increased by 282.3 per cent and 34.7 per cent respectively.

In terms of year-on-year growth, Mormugao port posted the highest increase at 59.7 per cent. The port, which was badly hit by mining restrictions and the ban on iron ore exports, is slowly recovering. Iron ore traffic at the port increased to 15.05 mt in 2016-17, compared to only 3.97 mt in 2015-16, 758,000 tonnes in 2014-15 and 44,000 tonnes in 2013-14, after the partial lifting of the mining ban in some parts of Goa and Karnataka in 2015. Thermal coal traffic at the port witnessed a fall from 3.73 mt in 2015-16 to 2.51 mt in 2016-17. The figure for coal traffic was as high as 20 mt in 2014-15.

Other ports which witnessed significant growth were Cochin (13.16 per cent) and New Mangalore (12.26 per cent). Two ports which witnessed negative growth rates were Kamarajar (-6.79 per cent) and JNPT (-3.13 per cent). Kamarajar port witnessed a decline due to a fall in coal traffic from 25.61 mt to 23.1 mt, following lower demand from Tamil Nadu’s generation companies, which have started wind power generation.

Commodity-wise analysis

The growth in traffic at major ports was attributed to an increase in iron ore, POL and container traffic. Iron ore witnessed the maximum increase at 163.67 per cent, followed by POL at 8.16 per cent and containers at 1.08 per cent. Fertilisers (finished and raw) and coal (thermal and coking coal) traffic witnessed negative growth rates of -23.88 per cent and -15.53 per cent respectively.

Coal import growth rates have been lower than in previous years due to the increase in domestic coal production, leading to reduced demand for thermal coal imports by power utilities. Container traffic growth has been negatively affected by the global economic slowdown which has adversely impacted exports, though imports continue to grow.

Outlook

The outlook for the port sector looks positive due to a series of initiatives taken by the government. The Sagarmala project, centred on port modernisation and infrastructure development, is aimed at increasing the competitiveness of the Indian maritime sector. As a part of Sagarmala, more than 400 projects involving an investment of Rs 7 trillion have been identified in the areas of port modernisation and new port development, port connectivity enhancement, port-linked industrialisation and coastal community development.

Besides, other policy initiatives such as giving greater autonomy to port trust boards, revising the MCA, bringing clarity in tariff rate fixation, promoting coastal shipping and inland water transport, increasing ease of doing business, forming dedicated special purpose vehicles for last-mile connectivity projects, etc., are expected to revive investor interest and speed up the pace of project execution.

The overall export-import traffic is expected to grow, though at a modest rate, with some increase in global trade projections. The increase in domestic coal production is expected to continue, which will affect coal imports. Likewise, an increase in the production of iron ore could lead to a fall in iron ore traffic. However, this may be compensated for by an increase in the coastal traffic of these commodities.

However, resolving key issues such as inadequate infrastructure, limited hinterland connectivity and regulatory bottlenecks is crucial if traffic targets are to be met in the coming years.

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