Digging Deeper: Key trends and outlook for the dredging industry

Key trends and outlook for the dredging industry

In the past few years, dredging has emerged as a distinct industry in itself. The industry is driven by compounding demand from ports and waterways. As per the Maritime Agenda 2010-20, 10 out of 12 major ports owned by the government have already achieved a minimum draft of 14 metres except Kolkata, which is a riverine port. The Ministry of Ports, Ship­p­ing and Waterways is now planning to increase the draft levels to 17 metres, enabling the por­ts to handle bigger-size vessels.

On the operations front, new technologies, designs and equipment are being incorporated to achieve greater efficiency and enhanced productivity in dredging activities. Lately, the indigenous manufacturing of dredgers has also emerged as a focus area.

Going forward, significant growth is expected in the dredging segment. Most of this grow­th is expected to be driven by the government’s pla­ns to develop new greenfield ports and modernise the existing ports. Further, the governme­nt’s ambitious plan of developing 106 new waterways and maintaining the navigatio­nal ch­a­nnel of the five existing national water­ways (NWs) bodes well for the segment. These ini­tia­tives are expected to increase the dema­nd for dredging significantly in the years to come.

Dredging so far…

The Indian dredging market primarily includes capital dredging (deepening and widening of draughts to create depths) and maintenance dredging (maintenance of existing depths). During 2018-19 and 2019-20, about 137.99 mi­llion cubic metres (cum) was dredged at major ports (maintenance and capital). During 2019-20, the maximum capital dredging was ca­rried out at Paradip port (1.05 million cum), follo­wed by the Jawaharlal Nehru Port Trust (0.44 million cum). In recent years, overall dre­dging expenditure at major ports has varied significantly as capital dredging expenditure has dropped.

The ongoing dredging projects in India mainly involve maintenance. In particular, 31 projects with an investment of Rs 14.6 billion have been identified under the Revised Model Concession Ag­ree­ment, 2021. These projects are expected to be awarded by 2024-25.

Dredging activities are also undertaken at inland waterways (rivers, canals, lakes, etc.) and shipyards (maintaining depths at chann­els). Further, dredging is used for beach nou­ri­sh­ment, land reclamation and the laying of pipe­lines. The Inland Waterways Authority of India is making rivers and canals navigable for commercial use. The government has declared 111 NWs, of which 16 are operational at present and 23 have been identified for potential movement.

Of late, there has been increased focus on ensuring sustainable dredging due to the environmental cost of dredging activities. The Dred­ging Guidelines 2021 mention sustainable dred­ging using modern technologies as one of its focal points. The guidelines promote the ad­op­tion of the “waste-to-wealth” concept, which in­­volves the use of dredged material. A number of major ports have undertaken the required steps in this direction. For example, Haldia port has recently started the treatment of dredged sand to sell it for construction purposes, albeit on a small scale. Cochin port also sells dredged sa­nd, generating income. Moreover, the ports of Paradip, Visakhapatnam and Chen­nai have un­dertaken beach nourishment works to avoid excess soil erosion.

Private port operator’s perspective

According to private contractors, the dredging industry has evolved over the past few years. There has been a shift towards automation and other technologies such as multiple building-information modelling.

Even though the outbreak of the pandemic posed many challenges, it has positively im­pa­cted the industry by allowing it to handle project execution in a new way by means of digital interventions. Contractors are of the view that an increased focus on automation in capital dredging can result in reducing the costs involved.

Some of the major challenges faced by the dredging industry are cost escalation, shortage of skilled manpower, and difficulties in crew ex­change during lockdown, etc. Going forward, it is essential to create skilled manpower in the dredging industry. This necessitates the creation of a training institute for officer cadre, besides imparting technical education. Detail­ed soil data is another vital part of dredging contracts since improper soil invest­igati­on ten­ds to have a negative impact on dredging. To this end, proper soil investigations and detail­ed environmental studies need to be un­der­ta­ken to avoid any delays and cost escalations.

Early involvement of the contractor in any dredging project will help in ensuring better execution and timely completion of the project. Further, the shipping ministry, private sector and technology institutions need to collaborate more often.

In addition, there is a need to streamline processes so that environmental clearances are obtained before the tendering process starts. Meanwhile, it is essential that all security and environmental clearances are in place before inviting tenders.

Other issues

Despite the much-needed technological interventions, dredging activities in the country are marred by a plethora of issues. These include heavy siltation and morphological issues, difficulty in identification of disposal ground and maintaining dredging depth in upstream areas, increased bank erosion and sudden changes in water levels, high flood risk in downstream areas, and logistical issues such as transportation of fuel/material to dredgers.

In addition to this, Indian dredging companies, except for the subsidiaries of international companies, have become complacent due to permanent and continuous dredging works in the maintenance segment. Meanwhile, the dredging guidelines don’t focus on contract conditions suiting Indian contract law for dredging works and risk sharing is not done in a fair way, leading to disputes.

Role of digitalisation

The dredging industry is deploying smart technology solutions to enhance operational efficiency. It has evolved with increasing use of te­ch­nology, artificial intelligence and other smart applications. Connectivity has improved tre­me­n­dously with satellite, 5G and other technology equipment.

Some of the key dredging equipment are trailing suction hopper dredgers, cutter suction dredgers, grab dredgers, backhoe dredgers and water injection dredgers. With regard to the dredger fleet, the Dredging Corporation of In­­dia, the biggest public sector entity, owns a fleet of 17 dredgers. Of these, till date, Royal IHC has supplied 10 dredgers. Overall, Royal IHC has supplied over 100 dredgers to both pu­blic and private ports in India till date.

In order to ensure effective execution of dred­ging projects, there is a need to focus on sustainable solutions along with tech­no­logical innovation.

In sum

Going forward, significant growth is expected in the dredging segment. Most of this growth is ex­pected to be driven by the government’s pla­ns to develop new greenfield ports and waterways, and modernise existing ports. In­vest­me­nts worth over Rs 12 billion are being planned under the Sagarmala programme for dredging at major and non-major ports. Further, the government’s ambitious plan of developing 106 new waterways and maintaining the navigational channel of the five existing NWs bodes well for the segment. These initiatives are ex­pec­ted to increase the demand for dredging significantly in the years to come.

The various maritime sector poli­cies/pro­gra­m­mes including the Sagarmala programme; Na­tio­nal Waterways Act, 2016; New Model Con­­ce­ssion Agreement, 2021; and Dredging Guide­lines for Major Ports, 2021, bode well for the dredging segment.

Based on the proceedings at a recent India Infrastructure conference on “Dredging in India”