India’s maritime sector is contributing significantly towards the growth of the economy. Meanwhile, conducive policies and regulatory action are enhancing private participation in the sector. There is an increasing focus on digitalisation and smart port development. Rizwan Soomar, chief executive officer and managing director, DP World Subcontinent, shares his views on the maritime sector’s progress, key government initiatives, emerging trends, challenges and outlook…
What has been the progress in the ports and shipping sector over the past one year?
India is one of the fastest growing economies in the world and the country’s maritime sector is one of the many reasons behind this progress. India’s ports are its backbone for international trade and coastal shipping, enabling high trade growth and economic development.
Cargo traffic at India’s 12 major ports saw an 8.9 per cent increase in the first quarter of 2022-23, vis-à-vis cargo traffic managed in the corresponding period of 2021-22. Non-major ports also performed exceptionally well during this period, managing 10.5 per cent more cargo traffic as compared to the same period last year.
Over the past year, the sector has witnessed an increased focus on modernisation, mechanisation and digitalisation, supported by favourable policy measures that led to the development of coastal economic zones, improved port connectivity and increased private participation. The National Logistics Portal (Marine) initiated by the Indian Ports Association is one such step towards digitalisation. Likewise, port terminal operators are deploying gate automation and truck movement automation systems to streamline the evacuation of cargo from ports and ease connectivity.
“Increasing the capacity of ports has helped in reducing overall logistics costs and turnaround time for vessels.”
What has been the impact of the key initiatives taken by the government?
The government’s Sagarmala programme and Gati Shakti National Master Plan will play a key role in the development of crucial infrastructure for the ports and shipping sector. With the identification of rail and road connectivity projects, modernisation of terminal equipment, berth and yard improvements, and creation of economic zones adjacent to ports, the Sagarmala programme will help in focused development of the sector. The Gati Shakti National Master Plan will help bring together information about interdependent projects from other sectors such as highways, railways, inland waterways, power generation and industrial zones to provide a holistic view of overall infrastructure development, enabling the government and the private sector to identify crucial projects that need to be prioritised, while also ensuring that redundant capacity is not created.
Increasing the capacity of ports has helped in reducing overall logistics costs and turnaround time for vessels. There has been a decline in average turnaround time for containers at ports from 44.7 hours in 2013-14 to 26.58 hours at present. Increased efficiency has, in turn, helped India achieve $400 billion of goods exports in 2021-22.
The country’s port sector is currently witnessing growth that has surpassed even pre-pandemic volumes. In addition, 31 projects across nine major ports have been identified under the National Monetisation Pipeline, which will give a boost to private investments in ports and shipping in India through the public-private partnership model.
What are some of the key emerging trends in digitalisation?
Maritime transport has been the backbone of the global economy. With businesses across sectors accelerating their digital transformation journey, the port and shipping industry is also navigating its way through the era of digitalisation.
Modernisation is at the centre of port development in India, and the trend is skewing towards building smart and connected ports. Going forward, ports will be better integrated and connected digitally, supported by a combination of software such as enterprise business systems, hardware such as radio frequency identification technology, and robust underlying infrastructure through features such as improved wireless connectivity. This will also lead to a seamless flow of data between different stakeholders at the port, resulting in improved operational efficiency and reduced paper trails.
Another key emerging trend is the visibility and transparency of the supply chain via digital platforms. For instance, at DP World, we are building an integrated platform, CARGOES.com, which allows our customers to avail of all the offerings from DP World, including end-to-end EXIM, terminal-related services, rail, coastal shipping and air cargo services, domestic trucking, as well as warehouse and storage services, with just a few clicks. In addition, CARGOES Finance – DP World’s trade finance service offered through CARGOES.com – bridges the trade finance gap by leveraging data and technology to connect business owners with suitable financial institutions and solve the working capital needs of importers, exporters and logistics companies.
“With larger and larger ships berthing at Indian ports, dredging has become the need of the hour for Indian ports and inland waterways.”
What are the key challenges that remain unaddressed?
Dredging has been one of the most prominent challenges faced by the ports and shipping industry in India. With larger and larger ships berthing at Indian ports, dredging has become the need of the hour for ports and inland waterways to accommodate these vessels.
There is also a strong need to migrate all old concession agreements to a unified market-driven tariff mechanism, which creates a level playing field across major and non-major ports in the country. Over the years, port concessions have evolved in various ways. Typically, the concessions at non-major ports do not have their tariffs regulated, while all terminal concessions at major ports are operating under a regulated tariff regime. There are variations within the regulated tariff regimes that add to the complexity. New and upcoming port terminal concessions have the flexibility to set their own tariffs under newly enacted laws. This creates a non-level playing field and defeats the purpose of encouraging competition in the sector. It is, therefore, necessary to migrate all concessions to a mechanism that does not regulate tariffs and allows terminal operators to set tariffs on the basis of market forces of supply and demand.
Multimodal connectivity at ports is a key factor that needs to be addressed. It is imperative that ports are better connected to the hinterland through road, rail and pipelines (as needed) to facilitate the efficient movement of cargo from/to the generation or consumption points of the hinterland. Dedicated freight corridors are one example of steps being taken to meet this requirement. Creating multimodal cargo handling facilities at strategic locations will further enhance accessibility to ports.
What is the sector outlook for the next one to two years?
The projects and outcomes envisioned by the Sagarmala programme and the Maritime India Vision 2030 (MIV 2030) are essential for achieving the growth of the ports and shipping sector in the coming years. Over 150 initiatives covering 515 key activities across 10 themes, encompassing all the facets of the maritime sector, have been identified
under MIV 2030 to form the building blocks for the future of the Indian maritime sector.
MIV 2030 envisions an overall investment of Rs 3,000 billion-Rs 3,500 billion across the ports, shipping and inland waterways categories. This investment amount excludes projects already at the implementation stage as part of Sagarmala. This vision roadmap is estimated to help unlock more than Rs 200 billion worth of potential annual revenue for Indian ports. Further, it is expected to create an additional 2 million jobs (direct and non-direct) in the Indian maritime sector.
The private sector will continue to play a significant role in the growth of India’s ports and shipping industry. At DP World, we are proud to be one of the leading port terminal operators in the country and look forward to continued collaboration with the government and other stakeholders to create the world’s leading ports and shipping sector.