Dry, liquid and container cargo traffic at Indian ports has witnessed a steady increase over the past few years. Several capacity augmentation projects have been undertaken in order to meet the increasing traffic volumes. Moreover, the launch of the Sagarmala programme has provided a stimulus to port development, modernisation and capacity creation.
Commodity-wise, the growth has been largely driven by the 3Cs – containers, coal and crude – which accounted for around 74 per cent of the total traffic in 2019-20. At both major and non-major ports, petroleum, oil and lubricants (POL) accounted for the highest share in traffic, followed by containers for major ports and coal for non-major ports.
Over the past few years, the commodity composition at Indian ports has changed significantly. Containers have been reporting intense activity given the focus on increasing the level of containerisation at Indian ports. POL volume has continued to grow on account of the rising demand, whereas iron ore and coal volumes have remained stagnant.
Dry bulk cargo handled at Indian ports mainly consists of coal, iron ore (including iron pellets) and fertilisers (both raw and finished). The total dry bulk cargo (both mechanical and conventional) handled at major ports stood at 264.29 million tonnes (mt) during 2019-20 as against 157.20 mt in 2015-16, registering a compound annual growth rate (CAGR) of 13.87 per cent. Meanwhile, the total dry bulk cargo handled at non-major ports stood at 231.77 mt during 2019-20 as against 175.59 mt during 2015-16, registering a CAGR of 7.19 per cent.
The major ports in India have witnessed significant growth in dry bulk cargo volumes over the past few years. Mechanised handling of dry bulk cargo has also increased at major ports. During 2019-20, mechanical dry bulk cargo accounted for nearly 47 per cent of the total dry bulk cargo handled as compared to 45 per cent in the previous year.
Of the total dry bulk traffic handled at major ports, coal accounted for the maximum share of 43 per cent during 2019-20. During April-December 2020-21, coal accounted for the lion’s share of 58.89 per cent of the total dry bulk traffic handled at major ports (156.45 mt). Between 2015-16 and 2019-20, the total coal traffic at major ports registered a negative CAGR of 2.27 per cent, whereas traffic at non-major ports increased at a CAGR of 5.35 per cent. In terms of year-on-year growth, coal witnessed a negative growth at major ports (8.49 per cent) and a positive growth at non-major ports (5.53 per cent) in 2019-20. During 2019-20, among major ports Paradip port handled the highest coal traffic of 38.99 mt. Meanwhile, Gujarat handled the highest traffic of 77.25 mt among maritime states.
The volume of coal handled at Indian ports is expected to rise in the coming years due to various reasons. As per CRISIL estimates, transportation accounts for 25-35 per cent of the cost of power produced by a plant that is located about 1,000 km from the mine. Since coastal shipping is more economical than transportation by rail, power plants are expected to prefer the coastal route once the loading infrastructure at ports is ready and rail connectivity projects come on stream. The bulk of coastal movement of coal in the country happens through Mahanadi Coalfields Limited via Paradip and Dhamra ports. Hence, coastal movement is expected to get a major impetus as these two ports ease their capacity constraints, complete the ongoing port-rail connectivity projects, drive coastal volumes and undertake coal-linked policies.
Between 2015-16 and 2019-20, the total iron ore traffic at major ports increased at a CAGR of 33.29 per cent. The non-major ports registered a CAGR of 23.64 per cent during the same period. During 2019-20, the share of iron ore in the total dry bulk cargo traffic handled at major and non-major ports stood at 6.87 per cent and 6.34 per cent respectively. Among major ports, Paradip port handled the highest iron ore traffic of 22.95 mt, whereas Gujarat handled the highest traffic of 13.7 mt among maritime states in 2019-20.
As far as iron ore volumes are concerned, India has a rich endowment of iron ore reserves, estimated at around 23 billion tonnes, translating into approximately 6 per cent of the global reserve base. Most of these deposits are in the eastern part of the country, with the catchment area for ports located on the east coast. In a bid to ramp up domestic ore mining, the government has taken a number of initiatives such as launch of fresh auctions and laying out of plans to establish an integrated steel hub. Hence, coast-wise, ports on the east can expect a gradual pickup in iron ore traffic in the times ahead on the back of higher production from catchment areas due to initiatives such as Purvodaya and fresh mine auctions in Odisha.
In 2019-29, fertiliser and raw material (FRM) traffic accounted for a share of 2.2 per cent in the total dry bulk cargo traffic handled at major ports and a share of 2.59 per cent at non-major ports. During the five-year period 2015-16 to 2019-20, the total FRM traffic at major ports registered a negative CAGR of 0.56 per cent, whereas traffic at non-major ports increased at a CAGR of 1.26 per cent.
Fertiliser production in the country has been witnessing an upward trend over the past few years. This can be attributed to various government policies aimed at easing the agrarian crisis. Despite an increase in domestic production, the overall dependence on imports is likely to persist. Urea, which accounts for more than two-thirds of the overall fertiliser consumption in the country, was imported to the tune of 24 per cent in 2018-19.
Liquid cargo traffic at Indian ports consists of POL, high speed diesel, edible oil, liquid fertilisers, naphtha, etc. POL traffic at major and non-major ports in 2019-20 stood at 237.17 mt and 203.72 mt respectively. Between 2015-16 and 2019-20, the total POL traffic at major ports increased at a CAGR of 4.83 per cent, whereas non-major ports registered a CAGR of 3.01 per cent. Port-wise, Deendayal port handled the maximum POL traffic of 63.07 mt among major ports during 2019-20. Meanwhile, Gujarat handled the highest traffic of 200.68 mt among maritime states.
The volume of POL traffic at Indian ports is expected to maintain an upward trajectory as the country’s dependence on oil imports has increased over the years, from 81 per cent in 2015-16 to around 84 per cent in 2019-20. In order to handle the increased volume of liquid bulk, the demand for liquid cargo handling infrastructure, storage and distribution at ports, and hinterland connectivity will continue to rise. The government’s plans to increase liquefied natural gas import and regasification capacity to 56.5 mtpa by 2025 are also expected to increase the demand for liquid cargo handling infrastructure.
During 2019-20, the total container traffic at major and non-major ports stood at 146.91 mt and 89.29 mt respectively. Between 2015-16 and 2019-20, the container traffic at major ports increased at a CAGR of 5.06 per cent, whereas non-major ports registered a CAGR of 16.23 per cent. During 2019-20, the Jawaharlal Nehru Port Trust handled the maximum container traffic of 60.94 mt among major ports. Meanwhile, Gujarat handled the highest traffic of 79.23 mt among maritime states.
Transshipment container traffic stood at 9.98 million twenty-foot equivalent units in 2019-20. Colombo port accounted for the highest share of 45 per cent in the total container transshipment volumes at Indian ports. Singapore was the second largest hub for transshipment traffic with a share of around 15 per cent.
The major growth drivers for container traffic at Indian ports include adequate container handling capacity, improved road and rail connectivity, better draught levels, and modern equipment and technology for faster cargo evacuation. Moreover, there is a huge potential for transporting containers through more cost-effective modes of transport such as coastal shipping and the inland water route.
The way forward
The long-term outlook for the port sector is highly positive owing to a series of government programmes and initiatives. Going forward, the Sagarmala programme, the government’s enhanced focus on modernisation and mechanisation of ports, and the measures taken to improve port connectivity are expected to drive growth in cargo traffic.
In the short term, however, some uncertainties prevail due to the mixed performance of individual commodities, and execution of capacity augmentation and connectivity projects. Moreover, the Covid-19 pandemic has adversely affected traffic volumes at Indian ports. That said, the impact of the pandemic is only expected to affect the port sector in the short term. Once other sectors of the economy revert to the pre-Covid level of operations, the functioning of the maritime sector will also normalise.