Improving Linkages: Recent trends and developments in port connectivity

Recent trends and developments in port connectivity

Port connectivity is one of the vexed issues faced by Indian ports. However, there is huge variance in the first- and last-mile connectivity modes to these coastal facilities.

The modal mix of a port’s connectivity infrastructure is determined by a range of factors. These include type of commodity handled at the port, geological conditions around the port, and type of port. Although a number of initiatives have been taken to improve connectivity from the port to the hinterland, it still remains the biggest cause for concern for the logistics sector, and ports in particular.

Trends and developments in modal evacuation of cargo

Currently, railways and roads account for the lion’s share in the overall modal evacuation of cargo, with pipelines, conveyors and inland waterways having a paltry share. While for dry bulk, container and liquid bulk traffic road and rail modes have been the mainstay of cargo evacuation from ports, pipelines are the main medium of evacuation for crude oil. Between roads and railways, roads have been the most preferred mode owing to ease of connectivity till the last mile. However, railway is also emerging as a preferred mode owing to the government’s increased focus in this direction.

Port-rail connectivity

The total inbound and outbound cargo evacuated at major Indian ports through rail stood at 138.25 million tonnes (mt) during 2019-20. Port-wise, Paradip port accounted for the highest volume of inbound and outbound cargo movement through rail at 10.67 mt and 21.46 mt respectively. Besides, the ports of Kolkata, Visakhapatnam and Mormugao also had significant shares in the total inbound and outbound cargo carried by rail during 2019-20.

Earlier, port-rail connectivity projects were solely financed by the Ministry of Ports, Shipping and Waterways (MoPSW) (erstwhile Ministry of Shipping). However, in 2012, a policy on participative models for rail connectivity and capacity augmentation projects was introduced, with five formats for private participation aimed at enhancing port connectivity to the hinterland. The non-government railway and joint venture models were highly successful in setting up port-rail connectivity infrastructure.

In order to further stimulate the overall growth of the port sector and enable rail connectivity to major ports, Indian Port Rail Corporation Limited (IPRCL) was incorporated in 2015 under the administrative control of the MoPSW. As of December 2020, IPRCL had completed 16 projects entailing an investment of Rs 3.49 billion. Meanwhile, works on 16 projects worth Rs 14.89 billion are in progress.

Port-road connectivity

The total inbound and outbound cargo evacuated at major ports through road stood at 237.76 mt during 2019-20. The Jawaharlal Nehru Port Trust had the highest volume of cargo movement through road at 20.56 mt and 28.29 mt respectively.

At major ports, road connectivity projects are financed by the respective port authorities or by the MoPSW, with roads being built primarily within port premises. First-mile connectivity projects are also undertaken by the National Highways Authority of India.

As of December 2019, the MoPSW had taken up 15 port-road connectivity projects at major and non-major ports. These projects entail an investment of Rs 29 billion. Of these, 10 projects worth Rs 25.92 billion have been completed and five projects amounting to Rs 3.07 billion are under implementation.

Key issues and the way forward

The port connectivity infrastructure in the country has witnessed significant development in the past few years. However, at the same time, the segment is marred with multiple issues such as paucity of funds, land acquisition issues, delays in securing regulatory clearances, and uncertainties regarding traffic volumes. These issues must be addressed to facilitate efficiency in port connectivity projects.

The overall outlook for port connectivity is largely linked to a host of other developments. From port-level initiatives and tie-ups to the Integrated National Logistics Policy, which is currently in the offing, all developments are interconnected and will have a notable bearing on the port connectivity infrastructure in the country. Upcoming projects such as the dedicated freight corridor and investments in programmes such as Sagarmala will bode well for the segment but will take a while to fructify. According to Asian Development Bank estimates, the modal share in cargo evacuation is expected to witness significant changes following the conclusion of the Sagarmala programme in 2025. The share of inland waterways is expected to double from the current level of 6 per cent to 12 per cent whereas the share of railways is expected to increase from 29 per cent to 35 per cent. Moreover, the share of roads is expected to drop to 46 per cent from the existing level of 58 per cent.