Increasing Containerisation: Ports taking steps to increase traffic and efficiency

Ports taking steps to increase traffic and efficiency

Indian ports handle around 9 per cent of global container traffic and the domestic containerisation level stands at around 40 per cent, as compared to 44 per cent globally. Indian ports cumulatively handled 15.07 million

twenty-foot equivalent units (TEUs) in 2017-18, compared to 11.53 million TEUs in 2014-15. Given the importance of container cargo in overall trade growth, the country is attempting to increase its share as well. According to Ministry of Shipping estimates, container traffic in the country is expected to reach 19.1 million TEUs by 2019-20 and 30.4 million TEUs by 2024-25.

Indian Infrastructure analyses the current trends in container cargo traffic and evaluates the progress of Kandla International Container Terminal (Private) Limited (KICT).

Trends in container cargo

During the period 2009-10 to 2017-18, container traffic grew at a compound annual growth rate (CAGR) of 9 per cent. In 2017-18, the year-on-year growth of container traffic was around 16 per cent, as against the 9 per cent recorded in 2016-17.

The share of container traffic handled by minor ports increased from 13 per cent in 2007-08 to around 42 per cent in 2017-18. While container traffic handled by the major ports grew at a CAGR of 4 per cent from 2009-10 to 2017-18, the traffic handled by minor ports has grown at 24 per cent for the period under consideration. Also, east coast ports handle around 28 per cent of the total container traffic and during the past 10 years, container traffic has grown at a CAGR of 8 per cent on the east coast and at 7 per cent on the west coast. In 2018, the Jawaharlal Nehru Port Trust handled the highest volume of containers at 4.83 million TEUs, followed by Mundra port at 448 million TEUs and Chennai port at 1.55 million TEUs. In terms of CAGR for the four-year period 2014-15 to 2017-18, Kandla port emerged as the frontrunner, growing at a CAGR of 240 per cent, followed by Krishnapatnam port at 90 per cent and Katupali port at 62 per cent.

KICT – A case study

Having commenced operations in January 2017, KICT is a relatively new terminal. The Deendayal Port Trust (DPT) awarded the contract for the development of its existing berth nos. 11 and 12 to KICT, a unit of the JM Baxi Group. The terminal, developed at a total cost of Rs 2 billion, has a 545 metre long berth and a well-developed backyard of around 40 acres. It currently handles around 22,000 TEUs per month.

Various initiatives have been taken by KICT to increase its operational efficiency. Simulation studies were successfully conducted to show that the terminal could handle ships with larger length overall (LOA) of up to 330 metres. In August 2018, the DPT permitted KICT to handle vessels with larger LOA and it recently handled a vessel of 304 metres. The use of larger vessels will help in increasing the terminal’s efficiency and result in better utilisation of the available infrastructure. Further, efficient dredging has helped in increasing the draught at KICT to 13.5 metres. Through proper planning and enhanced gate efficiency, the port has been successful in reducing the turnaround time of trucks coming to the terminal from two hours to 45 minutes. Earlier, the trucks made around 18 trips each month, and this has been increased to almost 28 trips per month, leading to a reduction in cost and enhanced efficiency.

With the development of KICT, around 20 million square feet of covered warehousing space is available at a low cost in close proximity to the port. Further, dedicated marketing efforts have resulted in the registration of 96 lines at the terminal for export-import movement. Similar tie-ups are in place for coastal volumes. The tie-ups have helped in increasing the average parcel size from 395 TEUs per vessel in 2016-17 to 990 TEUs per vessel in 2018-19. Container traffic at the terminal has grown 150 per cent from 75,123 TEUs in 2017 to 207,619 TEUs at present. In 2019, KICT’s container traffic is expected to cross the 250,000 TEU mark.

Conclusion

The container segment is expected to maintain its strong growth trend over the next few years. In order to maintain the increasing traffic volumes, there is an urgent need to build additional dedicated berths, and provide supporting infrastructure and adequate hinterland connectivity. Going forward, growth in container traffic will offer multiple business opportunities to contractors, developers, freight forwarders and logistics service providers, technology and equipment suppliers, and container shipping lines.

Based on a presentation by K.K. Krishnadas, President and Chief Operating Officer, JM Baxi Group, at a recent India Infrastructure conference