INDIAN COASTAL SHIPPING

1. Current status of Coastal Shipping in India

Economic reforms in India have triggered a high rate of economic growth in the country and this in turn has led to an increase in transport demand. This demand is being met mainly by the rail and road transport systems. About 60-65% of the freight traffic is carried by road , 30-35% is by rail and only about 7% by coastal shipping.

Though coastal vessel number and tonnage increased from 244 / .60mgt in 2003 to 662/1.0 mgt in 2009, actual number of cargo carrying fleet is very small. The major percentage of fleet is comprises of passenger – cum – cargo vessels, passenger vessels, dredgers etc. The increase of growth in coastal shipping in India is much lower compared to China, USA and Europe.

In China the inland water / coastal freight transport grew from 350 billion tons-km in 1989 to 1112 billion tons-km in 2005. Through carefully managed public policy, Europe has achieved transporting over 40% of its domestic freight by water. By investing in port infrastructure, promoting coastal shipping operations, and streamlining customs processes, the European Union is planning to move even substantially more freight by sea.(Source- “Towards A Future Maritime Policy for the Union: A European Vision for Cleaner Seas and Clearer Oceans,” International Chamber of Shipping and International Shipping Federation, Preliminary Comments on EC ‘Green Paper,” June 2007.) Coastal shipping contributed substantially to the success of Americans in building the world’s largest economy. Unlike the above mentioned countries, we do not have Ro-Ro or Lo-Lo services which can carry trucks from one port to another to reduce the cost of double handling.

2. Current Status of Coastal cargo movement

The commodities carried by coastal shipping are mainly bulk and break bulk cargo. Available studies and reports show that the cargo mix has not undergone any significant changes over the years. Major commodities carried by coastal ships are crude oil, POL products, thermal coal, iron ore & pellets and cement & clinkers. Most of the bulk cargo movement taking place presently is captive to specific industry requirements. Broad level traffic estimates show that the coastal traffic handled would reach 222 million tons per year by 2011-12 from 108 MTPA in 2001-02.(source TCS 2003) .

The cargo movement pattern and magnitude is mostly dependent on the production/availability, consumption/demand and the distance separating production centres from points of destination.TCS has made projections of coastal movement of commodities and the summary is as under .


The above given cargo projections are in respect of the commodities traditionally moved through coastal shipping and does not seem to include commodities like cars , electronic goods and other high value low volume items. These findings, therefore are to be treated as indicative only.
Due to the concessional rates made applicable by railways for commodities like food grains ,at present coastal shipping is not viable for such commodities and will not attract new commodities / customers unless measures are taken to promote coastal shipping. Selected minor ports should be developed so as to identify specific origin –destinations on which identified cargo could be moved at lower coast through coastal shipping . Selection of minor ports have to be a step in the right direction as the production and the consumption centers will fall closer to ports thereby reducing the road haulage to the minimum in addition to saving considerably on port handling cost as major ports have established labour unions and costly infrastructure which would result in higher port handling , storage costs.

3. Factors affecting the growth of coastal shipping in India

The main reasons for coastal shipping being low are the double handling cost, higher charter hire and the poor facilities available at the ports. Lack of active policy measures to promote coastal shipping and low investment in this area against road and rail transport also are reasons for the slow growth . Most of the production and consumption centers are land locked and hence the road transport with door to door facility gained more acceptance over rail and coastal transport.

Based on the studies conducted by various committees in the past , the other important factors that have caused slow growth of coastal shipping are

· Cumbersome and lengthy customs procedure
· Cabotage law based restrictions
· Non availability of concessional finance for the acquisition of coastal vessels
· High import duties on bunker oil and spares
· High manning scales which increase operational costs
· Stringent specifications relating to construction of vessels leading to higher capital costs
· Incidence of corporate for coastal as against tonnage tax for ocean going vessel and
· personal income tax which discourages quality officers from continuity on India coastal vessels.
· Lack of separate berthing facilities at Major ports and inadequate cargo handling facilities at the minor ports