Saturday, August 9, 2014

Indian Port Sector


International seaborne trade grow and fall in tandem with the developments in world economy and global merchandize trade. Maritime transport is the backbone of international trade and a key engine driving globalization.  Indian economy is at the threshold of a golden age of growth and maritime trade has a significant role to play. Around 95% of Indian trade by volume and 70% by value are carried by sea.  It is anticipated that the surge in trade will demand enhanced sophistication in logistics infrastructure and services across modes.

Goldman Sachs economists say that over the next 50 years,  the BRIC economies (Brazil, Russia, India and China) could become a much larger force globally. The Goldman Sachs economists predict that India will overtake Italy in 2015, France in 2020, Germany in 2023 and Japan in 2032.   Also they say: “India has the potential to grow the fastest over the next 30 to 50 years.” Its GDP growth rate will stay above 5 per cent till 2050 (Source : Report of working group for the port sector for the 12th five year plan (2012-2017) , GoI, MoS, October 2011).
Indian Port Sector
India has an expansive coastline of about 7517km, studded with 12 major and 200 notified Non-Major  ports.  The 12 Major Ports are administered by the Central Government, while the 200 Non-Major Ports are under the state governments and union territories. 

India’s Major Ports, with the exception of  Ennore, are administered by port trusts  under the Major Port Trusts Act, 1963. The Port Trusts function as semi-autonomous bodies under the administrative wing of the Ministry of Shipping. The major ports are Kandla, Mumbai, Jawaharlal Nehru Port Trust (JNPT), Mormugao, New Mangalore, Kochi and Port Blair on the west coast; and Kolkata, Paradip, Vishakhapatnam, Ennore, Chennai and Tuticorin on the east coast . Ennore, a satellite port of Chennai, has been corporatised with the Government of India holding a two-third stake, and the Chennai Port Trust the rest. 

The responsibility for the development of Non-Major Ports vests with the concerned state government.  They are  administered under the Indian Ports Act, 1908. The department in charge of ports or the State Maritime Board is responsible for formulation of  policies and plans, regulating and overseeing the management  , attracting private investments  , enforcing environmental protection standards and so on. Maritime boards have so far been constituted in Gujarat, Maharashtra and Tamil Nadu.

Traffic Trends
The volume of cargo traffic handled by ports depends mainly on the performance of the global and domestic economy. Trend in cargo traffic handled both at Major and Non-Major ports are given in the below table
Cargo Handled at Indian Ports (Million Tonnes)

Ports/Year
2010-11
2011-12
2012-13
2013-14
 
Major Ports
570.09
(1.6)
560.19
-(1.7)
545.83
-(2.6)
555.49
(1.8)
Non-Major Ports
315.36
(9.1)
353.74
(12.2)
387.92
(9.7)
420.24
(8.3)
All Ports
885.36
(9.1)
913.93
(3.1)
933.75
(2.2)
975.73
(4.6)


Note : Figs in parenthesis indicate growth over the previous year, Source : Update on Indian Port Sector 31.03.14, Transport Research Wing, MoS, GoI

Commodity Profile
The cargo composition of traffic handled in major ports in 2013-14 is POL 33.7%, Container 20.6%, Others 19.9%,Coal 18.8%, Iron Ore 4.5% and Fertilizer 2.5%. It is to be noted that about 53% of the traffic handled in Major port is POL and Coal, two major energy sources. Coal and POL shows a growth of 20.4% and 3.6% respectively with respect to the previous year and the upward trend is expected to continue in the coming years too. Container, fertilizer and Iron ore slipped by 4.4% (-3.3% in terms of TEU) , 7.4% and 9.2% respectively. The decline in Iron ore is mainly due to the restriction of mining of iron ore in Karnataka and the ban in Goa.

Container traffic depends mainly on manufacturing sector and the negative trend is the reflection of world economy slowdown, especially the advanced economies.  The only major ports which showed growth in container traffic during 2013-14 are Vizag, Tuticorin, Cochin and Mangalore. JNPT and Chennai continue to be the No.1 and 2 ports in container handling at a rate of 55.8% and 25% respectively in terms of TEUs.

Non-Major ports handled about 43% of the total seaborne trade of India in 2013-14. Gujarat, Andhra Pradesh and Maharashtra are the leading maritime states in promoting Non-Major ports. Mainly POL and Coal accounted for about 70% of the cargo handled at Non-Major Ports.  

Traffic Projections
The economic slowdown in the world trade and domestic growth slowdown  adversely affected cargo traffic handled by Major Ports in 2012-13, growth was -2.6%.  However , 2013-14 shows a positive growth rate of 1.8%. For Non-Major Ports, the annual growth in cargo traffic is assumed at about 10-11%. Keeping in view the trends in the share of commodities, total cargo traffic at Indian ports is estimated to increase from 976 million tonnes in 2013-14 to 1,278 million tonnes by 2016-17. 

Commodity wise traffic projections (in million tonnes)from 2016-17 to 2031-32 are as under  

Year/         2016-17     2021-22     2026-27    2031-32    CAGR%

Cargo       

POL                468              569             693                843            4

Iron Ore        107              118              131                144            2

Coal                258              379              556                817           8

F&FRM            42                 49               56                 65             3

Container     206              302            444                652              8

Others           198              278             390                 546           7

Total            1,278          1,695       2,269             3,068 

Source : NTDPC Report,2014. 

Port Capacity
The existing capacity available in million tonnes at Major Ports as on 31.03.14 for each commodity is as under (Source : Update on Indian Port Sector 31.03.14, Transport Research Wing, MoS, GoI):                 

                          Commodity      Port Capacity

                                                 In Million Tonnes

POL                291.90

Iron Ore           72

Coal                  65.95

Fertilizers         11.30

Containers      140.21

Others             219.16

Total              800.52

From the above traffic projections and the existing capacity status, it is evident that port capacity needs to be planned and developed in a big way , separately for each commodity group as each requires different facilities. The international practice for ports is to plan for cargo handling capacity of 30% more than the projected traffic so that pre-berthing detention of ships is minimised.

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