Growth Opportunities: Port trends and future outlook

Port trends and future outlook

India has a significant maritime sector with 12 major and 200 plus notified minor and intermediate ports, along with one of the longest coastlines of 7,500 km. With such a vast network of navigable waterways, the sco­pe for increasing the trade volume in the country is enormous.

At the recent “Infrabuild India” event, Dev­datta Bose, Group Sector Head, Port and Har­bours/Maritime Business, Tata Consul­ting Engineers, talked about the experience so far in the port sector, the top Indian container terminals, port operations and key performance indicators, the impact of Covid-19 on Indian port operations, and upcoming op­p­ortunities. Excerpts…

The Indian port sector has witnessed significant improvement in the past few years, especially in non-major ports. In 2020-21, the non-major ports accounted for 46 per cent of the total cargo at Indian ports, which was due to a significant shift in traffic from major ports to non-major ports. The cargo handled at both the major and non-major ports has seen a steady rise in the past 10 years, until the Covid-19 pandemic hit. However, the cargo handling capacity of these ports is likely to rise in 2021-22 to the levels of 2019-20.

The cargo profile of ports consists of solid, liquid and container segments. Of these, the container segment has a direct correlation with the development of the country. It has shown steady growth in the past few years. The total installed container ha­nd­ling capacity (east and west coasts) in 2019-20 was 31.8 million 20-foot equivalent units (MTEUs) and the total container traffic handled in the same period was 16.7 MTEUs, which increased to 17.3 MTEUs in 2020-21.

India is performing better than the world av­e­rage in terms of container movement, but in comparison with the best performing ports, there is still room for im­provement. India’s ship calls in 2020 were recorded at a mere 10.56 per cent of Chi­na’s ship calls. These were al­most equal to countries such as Italy and the UK. In­dia still holds a huge potential to grow in the container sector.

The Covid-19 pandemic has negatively impacted the economy in the past two years. Maritime trade and port traffic have also witnessed a decline due to increased workload and labour shortage, blank sailings for container vessels, cancelled cruise calls and shortage of container stacking yards due to congestion, among others. The pandemic has also resulted in increased turnaround time and waiting time.

The impact of Covid-19 was also seen on freight rates. From mid-2020, high demand and limited capacity led to skyrocketing of spot fr­e­i­ght rates. The vessel supply capacity re­main­­ed limited whereas idle container shipp­ing capacity levels started to decline. Con­tai­ner shortages, port congestion and delays re­sulted in higher freight rates, fees and surch­arges. The increase in rates boosted profits of global container shipping companies.

The pandemic has accelerated digitalisation at Indian ports. However, many ports still lag in terms of electronic commerce and data exchange. This needs to be implemented at the every level of the EXIM value chain, al­ong with the elimination of unnecessary in­termediaries. Smart ports would create an eco­system with increased productivity and efficiency, improved safety for workers and environmental safety.

The increasing investment and cargo traffic point towards a healthy outlook for the In­dian port sector. In the Maritime India Summit 2021, the Ministry of Ports, Shipping and Wa­terways identified a total of 400 projects worth $31 billion across the 7,500 km coa­stline. Additionally, as part of the Sa­garmala project, more than 574 projects worth $82 bi­llion have been planned for im­plementation bet­­we­en 2030 and 2035. Many port developments such as development of deep Draft Var­d­havan port, Bha­vnapadu port, Ramanapa­du Port, Machili­patnam Port, Subarnerekha port etc., are also in line. Moreover many shipyards like Cochin Shipyard Limited, Garden Reach Ship­builders & Engineers Ltd, etc. are also planning massive expansions.

Going forward, the port sector has many opportunities to offer. In order to grow at a st­ea­dy pace, the Indian port sector must ad­opt measures such as mechanisation, re­mo­val of connectivity bottlenecks, last-mile connectivity, conservation of water and focus on the use of renewable energy aggressively. The non-major ports should adopt the Gujarat Maritime Board model for privatisation of ports. How­ever, there should be a coordination cell bet­ween state and central port projects to ensure better return on investments. Public and private ports must work closely. Private players must be encouraged for industry developments and cargo generation. Thus, industry-led port development sh­ould be the main focus.

Future outlook

The government is undertaking several initiatives to accelerate the development of the sector. To promote the expansion of port infrastructure and facilitate trade and commerce, the Major Port Authorities Bill has also been passed by Parliament. The bill aims to decentralise decision-making and reinforce excellence in major port governance.

Devdatta Bose, Group Sector Head, Port and Harbours/Maritime Business, Tata Consulting Engineers