Rapid Growth: Key traffic, policy and technology trends in the port sector

The Indian ports and shipping sector has witnessed significant improvement in ter­ms of cargo traffic, capacity, efficiency and infrastructure development. The governme­nt is ta­king several initiatives to support public-private partnerships (PPPs) in the sector. The Mi­ni­s­try of Ports, Shipping and Waterways (MoPSW) has identified 81 PPP projects, with an expected cumulative value of Rs 423 billion, for the development of berths, terminals, oil jetties, etc. at major ports till financial year 2025.

Indian Infrastructure takes a look at some of the key trends and developments in the sector…

Surge in port traffic and increase in capacity

Major ports have witnessed a significant inc­rease in cargo traffic and grown at a compo­und annual growth rate (CAGR) of 2.12 per cent during the period 2016-17 to 2021-22. However, non-major ports have been leading the overall growth in the sector as traffic handled in the maritime states (non-major ports) increased at a CAGR of 4.29 per cent during the same period. Further, significant capacity has been added bo­th at major and non-major ports, by way of the deepening of berths and terminals, mechanisation, modernisation initiatives, etc.

The cargo traffic at major ports increased by 9.4 per cent to 711.55 million tonnes (mt) in April 2021-February 2023 from 650.14 mt during the corresponding period of the previous year. With regard to commodities at major ports, during April 2022-February 2023, other coal recorded the highest growth in traffic at 89.2 per cent, followed by cement at 30.6 per cent and thermal coal at 21.4 per cent. Meanwhile, cargo traffic at non-major ports increased by 9.1 per cent to 589.03 mt during April 2022-February 2023, from 539.66 mt handled during April 2021-February 2022. Overall, the significant increase in cargo traffic can be attributed to the soaring prices of crude oil and imported oil.

As per the Economic Survey the capacity of major ports has increased from 871.5 million tonnes per annum (mtpa) in March 2014 to 1,534.9 mtpa as of end March 2022.

Policy initiatives

A number of policy initiatives are being taken by the government for the growth of the ports and shipping sector, such as increased budget allocation and inauguration of the National Logistics Portal (marine). Efforts are also be­ing made to promote the emerging inland passenger and vehicle movement ecosystem in the country.

Under the Union Budget 2023-24, the MoPSW has received an allocation of Rs 22.19 billion (budget estimate), an increase of 23.8 per cent as compared to the revised estimate of Rs 17.93 billion for 2022-23. Of the total allocation, the centre has provided a grant of Rs 9.92 billion to the Inland Water Transport Authority of India, Rs 696.3 million for the de­velopment of minor projects and Rs 2.5 billion to the Kolkata Port Trust. It has provided Rs 1.12 billion for assistance to shipbuilding, re­search and development. Meanwhile, funds wo­­­­­rth Rs 4.5 billion have been earmarked for the Sagarmala Programme. In addition, coastal shipping will be promoted as the energy efficient and low-cost mode of transport for both passengers and freight, with viability gap funding through PPP mode.

Apart from the budget allocation, the MoPSW inaugurated the National Logistics Portal (marine) in January 2023. This portal is a one-stop platform that connects all stakeholders in the logistics community using information te­ch­nology. It aims to improve efficiency and transparency by reducing costs and time delays.

The MoPSW has directed major ports to extend the exemption of port- and vessel-related charges for roll-on, roll-off passenger (ro-pax) fe­rry services for a period of one year with effect from January 22, 2023. Earlier, on July 22, 2022, the ministry had directed the major ports to grant exemption from port- and vessel-related charges for ro-pax ferry operations for a period of six months. Also, all the major ports and state maritime boards have been requested to provide berthing to ro-pax ferry vessels.

Technology initiatives

The MoPSW and port authorities have undertaken various modernisation, technological and digitalisation initiatives to reduce dwell time and transaction costs. For instance, the Deendayal Port Authority has commissioned West Gate-2, the second gate of the e-Drishti Project Phase I, with a radio frequency identification (RFID) access control system for entry and exit at the port. RFID technology plays an important role in tracking assets, equipment and machinery over long distances and in large numbers. The port’s management aims to co­ver all entry and exit gates with an RFID-based access control system. The port authority has also launched a mobile application for the pre­stigious e-Drishti project. Besides, an advan­c­ed CCTV network was commissioned to enhance security coverage at the port.

Container scanners facilitate non-destructive methods of inspecting and identifying goods in transportation systems. These scanners en­sure operational efficiency and also increase se­curity at ports. For instance, customs authorities at Nhava Sheva port have set up drive-through container scanning for truck cargo passing through PSA Mumbai, also known as Bharat Mu­mbai Container Terminals. This will significantly reduce cargo dwell times for import loads.

Green initiatives

Under the Green Shipping initiative of the Ma­ritime India Vision 2030, major ports have im­plemented and initiated various activities to help reduce greenhouse gas emissions from the ports and shipping sector. Some of the gr­een port initiatives are the acquisition of equipment for monitoring environmental pollution, acquisition of dust suppression systems, development of shore reception facilities for waste from ships, development of renewable energy generation projects, provision of shore power to ships at berths, etc. As envisaged in the Na­tional Hydrogen Mission, the MoPSW has identified and nominated Paradip port, Deendayal port and V.O. Chidambaranar port for developing them as hydrogen hubs, capable of handling, storage and generation of green hydrogen by 2030. The ministry intends to increase the share of renewable energy to 60 per cent of the total power demand of each of its major ports from the current share of less than 10 per cent. The ports have also aimed to reduce carbon emissions per tonne of cargo handled by 30 per cent by 2030.

Other trends shaping the sector

Other key trends in the ports and shipping sector are the acquisition of assets and promotion of indigenous shipbuilding. In addition, PPPs are being considered as an effective tool for attracting investment in the sector. In a notable development, the Jawaharlal Nehru Port has become the first major port in the country to operate as a 100 per cent landlord port, with all berths being operated on the PPP model.

There is a growing trend of acquisition acti­vities in the shipping sector. ArcelorMittal Nip­pon Steel Shipping and Logistics acquired two Ka­msarmax bulk carriers in October 2022. These bulk carriers have 81,000 deadweight tonnage each and were registered recently at the Mer­cantile Marine Department in Mumbai. Further, AM/NS India is planning to expand its vessel fleet for better operational control of cargo movement.

In another development, the Competition Commission of India (CCI) cleared the acquisition of a stake in Hindustan Ports Private Limi­ted (HPPL) by the National Investment and In­frastructure Fund (NIIF) in February 2023. The proposed transaction involves the NIIF’s acquisition of up to 25 per cent stake in HPPL. Besi­des, the CCI has approved the merger of Hin­dus­tan Infralog Private Limited into HPPL.

Significant progress has been made to­war­ds indigenous shipbuilding. Arnala, the first of eight anti-submarine warfare (ASW) shallow wa­ter craft (SWC), was launched in December 2022 in Chennai. The ship was built by Garden Reach Shipbuilders and Engineers for the Indian Navy. The ASW SWC ships will have over 80 per cent indigenous content to ensure that large-scale defence production is executed by Indian manufacturing units, thereby generating emp­loy­ment and building capability in the country. In Nov­ember 2022, the Indian Navy launched Iksh­ak, the third of the four survey vessels (large) (SVL) project at Kattupalli in Tamil Nadu. Besi­d­es, two indigenously desig­ned and built diving support vessels, Nistar and Nipun, were laun­ch­ed in September 2022 in Visakhapatnam.

On the inland water transport front, the MoPSW has inaugurated multiple projects for the development of the inland waterways and the marine sector in the Konkan region of Goa and Mangaluru in October 2022. The Haldia multimodal terminal in West Bengal was inaugurated in January 2023. The terminal has been developed under the Jal Marg Vikas Project.

Future outlook

The outlook for the ports and shipping sector seems promising, with an increasing focus on improving port governance, addressing low ca­pacity utilisation, modernising berths and creating new channels for port connectivity and green shipping. Meanwhile, the government is looking to resolve issues in the land leasing policy of ports to better utilise vacant land with Indian ports. Going forward, the key priority ar­eas for the MoPSW are coastal shipping and more PPP initiatives at Indian ports.