Maritime Progress: Industry outlook on port sector developments and opportunities

Industry outlook on port sector developments and opportunities

The port sector has witnessed significant improvement in terms of capacity growth, better utilisation of information technology, improvement in efficiency through enhanced mechanisation and digitalisation, and decline in congestion at ports. The past two years (since March 2020), however, have been tough for the maritime sector on account of disruptions caused by the outbreak of the pandemic.

At a recent Ports in India conference organised by Indian Infrastructure, sector experts, Rajiv Agarwal, managing director and chief executive officer, Essar Ports; Manish Gupta, senior vice president and unit head, Paradip Port, JSW Infrastructure; Rajiv Jalota, Chairman, Mumbai Port Trust; Krishna B. Kotak, Chairman, JM Baxi; and Sanjay Sethi, Chairman, Jawaharlal Nehru Port Trust, discussed the recent developments in the port sector, the impact of Covid-19, digitalisation and technological interventions, and upcoming opportunities in the sector. Excerpts…

Rajiv Agarwal, Operating Partner, Infrastructure – Essar and Managing Director, Essar Ports Limited

Despite the outbreak of Covid-19, India has seen a growth in EXIM cargo this year and it is expected that this trajectory will continue in the future. The growth in major ports is expected to be 5-6 per cent in the coming year as compared to the pre-pandemic period. The quality of services being offered is what the sector should stress upon moving forward.

The government is taking many steps like the introduction of the Major Ports Authority Act 2021, and deregulation of tariffs to help the sector grow. However, there are challenges that the sector is facing especially by existing PPP projects. The majority of national port capacity is still not free from the tariff regulation. The deregulation of tariffs would help both the government as well as ports in increasing the revenue share and offering state-of-the-art services, which can be benchmarked across the globe.

Apart from this, the funnel for funding has been quite restricted for a few years now. There is no project funding (long term and low cost) prevalent in the port sector like earlier. The­re­fore, some kind of infrastructure funding needs to be in place. It is important that debt funding is made available to the port sector for infrastructure development so that private investment can start coming in. Additionally, the port sector should be treated like the manufacturing industry and the new tax regime of 25 per cent on corporate taxes should apply to the port industry as well.

Essar Ports is looking at increasing the cus­to­mer base at the existing terminals, and the new opportunities in the national infrastr­uc­ture pipeline. Typically, the east coast is the resource-rich area of our country and a lot of movement of the mineral resources takes place from the east to the west. The west is a large consumption centre and exports largely take place from the west coast. In the coming years, exports from the west coast would grow and large commodity movements from the east would continue to grow too.

New areas like semiconductors and initiatives like green hydrogen could be pushed, whi­ch would significantly contribute to the economy. Also, if this growth rate has to be mainta­ined, it needs to focus on bringing back investments in the manufacturing and port sector.

Manish Gupta, Senior Vice President and Unit Head, Paradip Port, JSW Infrastructure

JSW Infrastructure Limi­ted (JSWIL) has a diversified presence over the east and west coast of India and has shown substantial growth in the last 10 years. The number of ports and terminals has increased from two in 2010-11 to nine in 2020-21. Mean­while, the capacity has increased from 23 million tonnes per annum (mtpa) to 150 mtpa in the last decade (O&M contract of 24 mtpa in Fujairah Port, ME is in addition to this). Going forward, we wish to expand our footprint with organic and inorganic growth opportunities and achieve our vision of 200 mtpa capacity by the financial year 2024. With concentrated ef­forts, the share of third-party business has grown to over 30 per cent.

The total traffic of Indian Ports in 2020-21 has dropped to a two-year low, 5.3 per cent lower than in 2019-20. The lower volumes in 2020-21 were due to the contraction in cargo traffic during the first five months of 2020-21 (ranging between 9 per cent and 22 per cent on a year-on-year basis), attributable to the pandemic led disruptions. The total traffic at Indian ports in 2021-22 is estimated at 1,400 million tonnes. The recent trends witnessed by the port sector include increased private participation in ports/terminals/logistics/shipping, focus on draft department, adoption of technological solutions like vessel traffic service and vessel traffic monitoring systems, and rising traffic at non-major ports. The Ministry of Ports, Shipping & Waterways has recently announced plans to develop a National Logistics Portal (marine) to assist exporters, importers and service provi­de­rs with end-to-end logistics solutions.

Going forward, the Gati Shakti programme and Sagarmala programme will offer substantial growth opportunities. In addition to this, automation and adoption of artificial intelligence are other segments that will be explored.

Rajiv Jalota, Chairman, Mumbai Port Trust

Mumbai port is the second oldest port in the co­untry. It is facing chall­en­ges in sustaining itself and it is gearing up to ad­d­ress the challenges of the modern shipping industry. Despite the outbreak of Covid-19, Mu­mbai port continued to function throughout. It was the only port in the country to help evacuate more than 11,500 seafarers who were stu­ck at sea. The Government of Maha­ra­shtra played an active role in this initiative of the Mumbai Port Trust.

Mumbai port largely receives crude and petroleum oil products. There was a significant fall in crude and petroleum oil products at Mumbai port in the first six months of Covid-19, due to the decline in traffic. At present, cru­de and petroleum oil products at the port have gone up to more than 20 per cent compared to the pre-pandemic level. The other cargo that comes to the port like iron and steel has also witnessed a growth post-pandemic, on both the export and import fronts.

The cargo profile of Mumbai port shows that during 2017-18 it was around 61 million metric tonnes (mmt), which then showed a downtrend in 2018-19 and then again picked up in 2019-20. Due to Covid-19, there was a huge shortfall in crude and petroleum in 2020-21. In 2021-22, the industry is picking up and it is assumed that Mumbai port will achieve around 59-60 mmt by the end of the year.

The major ongoing projects of Mumbai port include a floating storage regasification unit for LNG transfer from oceangoing vessels for storage, a third chemical berth, crude oil tankages at Jawahar Dweep, an international cruise terminal with a facility for handling cruises up to a capacity of approximately 5,000 passengers, the Kanhoji Angre lighthouse near Alibaug, among others.

As part of the Indian Maritime Vision 2030, Mumbai port is also focusing on the completion of certain action plans like allotment of a harbour wall berth on a PPP basis, licensing for cement silos, licensing of warehousing plots, a floating dry dock for ship repair, among others.

Krishna B. Kotak, Chairman, JM Baxi

Cargo volumes in the port sector have been affected in the past 12 months, th­e­reby affecting the volu­m­es handled by ports. The sector has witnessed robustness and resilience after the outbreak of the pandemic. The credit for the same is owed to the regulatory authorities, workers and the labour force who have tirelessly worked to ensure that the sector faces minimum damage due to Covid-19. Cargo volumes are expected to rebound and grow substantially in the coming 12 months. The sector will witness significant infrastructure growth in the next five years as it is backed by government policies and programmes. In the context of containers, in the coming two to three years, Indian ports will be able to handle ships of up to 17,000 twenty-equivalent units (TEUs) foot capacity, thereby enabling trade and throughputs. Meanwhile, a robust revival of non-container trade (backed by agricultural exports) will be witnessed in the future.

The outbreak of the pandemic has led the regulatory authorities and the private sector to work in integration. Digitalisation and technological interventions have been brought into focus in terms of customs clearances, passing of documents, etc. It is expected that once the country moves back to normalcy, digital practices will continue to help the sector grow. One of the key challenges faced by the sector is achieving the benchmarked growth (in terms of new terminals, capacity and new ports) and ex­pansion plans. Apart from this, getting adequate capital at good prices, development of the shipbuilding industry, adaptation to chan­­ges in terms of fuels, engine designs and electrification within the port terminal and shipping are other challenges that the sector is expected to face in the near term. The policy issues faced by the sector have largely been streamlined. The Sagarmala programme and the Gati Shakti programme define the footsteps that the governance is following.

The company aims to achieve efficiency and excellence in operations in each of its terminals. It is also focusing on the economic-social-governance factor, wherein in the first phase the company aims to shift its operations from non-diesel/fossil fuel-driven to electricity-driven. In the second phase, the company aims to adopt solar power. Going forward, the sector will witness a greater amount of growth in terms of more terminals getting built in both brownfield and greenfield ports. The sector is showing overall positive progress.

Sanjay Sethi, Chairman, Jawaharlal Nehru Port Trust

The Covid-19 pandemic had adversely impacted the port industry in India. However, barring the first quarter of Covid-19, where the Jawaharlal Nehru Port Trust (JNPT) was also adversely affected by the pandemic, it was operational throughout the period. In calendar year 2021, JNPT handled a record cargo of 5.63 million TEUs. This was a significant increase of ar­ound 25 per cent over the previous year. It is the highest ever container traffic handled in a year since the inception of the port and the highest EXIM container traffic handled by any port in India.

The challenges of Covid-19 included shortage of drivers, unavailability of vendors for services and impact on all the infrastructure projects. JNPT made sure that port operations did not suffer. It has taken several initiatives in recent times. It started a centralised parking plaza (CPP), which has helped immensely by providing a one-stop shop for all exporters. The CPP is helping in taking care of the congestion at the port that was being faced earlier. It is also providing state-of-the-art facilities like stay for the drivers. All terminals can have slots and people coming in from the hinterland do not have to wait. The CPP has been a successful experiment in the last 1.5 years and is a big contribution to saving time and cost.

In terms of digitalisation, JNPT has laun­ched a mobile application and an e-wallet for the CPP to allow users to get live data of the CPP. It also helps in getting the details of the waiting tractor-trailers, access to the 12-hour tractor-trailer movement and other data on tractor-trailers.

JNPT has also operationalised three X-ray scanners, which can scan up to 21 containers per hour, and with the drive-through and rail scanners coming in place, it will help increase the movement speed and the evacuation process drastically.

In terms of expansion, JNPT has started works for the construction of the fourth container terminal in partnership with PSA Singapore to take the current capacity of 7.5 million TEUs to 10 million TEUs. It entails an investment of Rs 80 billion. JNPT has also completed the infrastructure works of the two dry ports at Jalna and Wardha to tap the hinterland in Maha­rashtra. JNPT has also been given the responsibility for the development of Vadhavan port. The project entails an investment of Rs 700 billion, of which JNPT is responsible for infrastructure development worth Rs 350 billion.

In sum

The traffic handled by Indian ports is expected to revive and reach pre-Covid levels in 2021-22. The overall outlook and development of the port sector are positively backed by big-ticket programmes such as Sagarmala and Gati Shakti. The policy thrust in the past few years has also been encouraging. It is expected that in the future, better digitalisation and technological practices will be adopted, which will help in providing real-time information to shipping lines and users.