Focus on Cargo

Growth in traffic and capacity; proactive policies needed

The maritime sector accounts for about 90 per cent of the export-import (exim) trade by volume and 70 per cent by value. Indian maritime transport growth is driven by developments in the global as well as domestic economy. The world maritime trade lost its momentum in 2018, with volumes expanding at 2.7 per cent, below the historical averages of 3 per cent and 4.1 per cent recorded in 2016 and 2017. Treading on the same lines, Indian major ports registered a flat growth of 2.9 per cent in 2018-19 over the previous fiscal year. However, cargo handling at major ports has started showing signs of recovery and is expected to gain momentum in the coming months.

Indian traffic scenario

Cargo traffic at Indian ports grew at a compound annual growth rate (CAGR) of 6.46 per cent between 2014-15 and 2018-19, reaching 1,282 million tonnes (mt). The growth was primarily led by non-major ports, which witnessed a CAGR of 8.74 per cent, as compared to 4.73 per cent for major ports.

In 2018-19, the major ports handled 699 mt of traffic, registering a year-on-year growth of 2.95 per cent, as against 4.78 per cent during 2017-18. Non-major ports are evolving faster than the major ports. The share of non-major ports increased from 41.54 per cent in 2012-13 to 45.48 in 2018-19, resulting in a consequent decline in the share of the major ports from 58.46 per cent to 54.52 per cent.

Commodity-wise, cargo growth has been largely driven by containers, coal and crude which comprised 75 per cent of the total traffic. In 2018-19, petroleum, oil and lubricants (POL) accounted for the lion’s share in total traffic at both the major and non-major ports – 33 per cent at major and 34 per cent at non-major ports. POL is followed by containers for major ports and coal for non-major ports. Primarily, POL and containers are filling the gap created by weak coal cargo volumes at Indian ports.

In particular, containers have been reporting strong activity due to the thrust given to increasing the level of containerisation at Indian ports. In 2018-19, the total throughput of Indian container terminals stood at 16.99 million twenty-foot equivalent units, a year-on-year growth of 10.5 per cent. With respect to containers as well, the share of non-major ports in the total container traffic handled has increased manyfold in the past decade. Their share increased from 0.3 per cent in 2004-05 to 36.8 per cent in 2018-19.

Sagarmala programme – Progress so far

Launched in July 2015, the flagship programme of the Ministry of Shipping aims to promote port-led development (both direct and indirect) and provide infrastructure to transport goods to and from ports in a quick, efficient and cost-effective manner. The projects under Sagarmala have been identified across four pillars – port modernisation, port connectivity, port-linked industrialisation and coastal community development. As of September 30, 2019, under the port modernisation component, 46 projects have been completed, 36 projects are under implementation, 11 projects are under tendering and the remaining 43 projects are in the preliminary stage (detailed project report [DPR] to be prepared, DPR under preparation and DPR prepared).

Key suggestions – Needs and requirements of Indian ports

Although a plethora of initiatives have been taken to improve the overall performance of Indian ports, the sector still craves more reforms. There is a need to develop at least six new major ports with a combined capacity of 200 million tonnes per annum – four on the east coast and two on west coast. The east coast ports can serve as transshipment hubs for neighbouring countries such as Bangladesh and Myanmar. In addition, the future ports need to be developed in a triangular fashion (with port, airport and the city area forming a triangle) to ensure holistic development and expansion of all three entities without any conflict. One of the issues faced by Indian ports is that a lot of inland cargo is moved through barges. The port authorities are averse to allowing these barges to enter the port area. There is a need to have an aggregation point wherein exim cargo from inland terminals can be aggregated and then sent to the port area. Another issue faced by the port sector is that most of the cargo is generated in the hinterland. Moving this cargo from the hinterland to the ports involves high costs. This, in turn, increases the logistics cost of moving cargo, making India uncompetitive as compared to its global counterparts. There is a need to shift exim-oriented industries towards ports and inland waterways in order to reduce the logistics cost. Inefficient minor ports handling less than 5 mt of traffic should be closed in a phased manner. Subsequently, all existing ports handling more than 20 mt of traffic need to be digitalised with seamless connectivity to avoid congestion in and around the port area. In order to increase the share of coastal shipping and inland waterways in the total traffic handled, concessional rates should be offered to operators using waterways as a mode of transportation.

In sum, Indian ports require a holistic approach and integration of all activities in and around the port area to improve their efficiency and make them better utilised.

Based on a presentation by Devdatta Bose, Group Sector Head, Ports and Harbour, Tata Consulting Engineers Limited, at a recent India Infrastructure conference

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