COASTAL SHIPPING – AN INTERNATIONAL PERSPECTIVE

Coastal shipping is an important logistic solution for cargo flows internationally and forms a vital link in their overall transportation infrastructure. The European Union for instance actively promotes Short Sea shipping (SSS) as an alternative to road transport in order to reduce road congestion and to reduce the environmental footprint of freight transport. Globally, countries are adopting transport modal shift programmes by providing incentives as a financial reward for switching the transport mode from road to waterways.    A comparison of the share of coastal shipping / water transport in movement of domestic cargo of other important maritime nations of the world is given in Fig. 1

Fig:1.

Global Comparison of Costal Shipping Share in Movement of Domestic Cargo

1.       Europe

Europe is termed as the role model of the world for developing short sea transport to its advantage.  Today the EU transports about 43% of its domestic goods by way of Short Sea shipping (Coastal Shipping) .The reason behind the European success is their vision in making short sea transport as a part of an integrated transport network. Short Sea Shipping (SSS) has been effectively utilized to develop an efficient multi-modal transport system for meeting existing and future transport requirements, to achieve modal balance, to reduce pollution, congestions, and accidents etc.EU faced many bottlenecks, similar to the ones India is facing today, while promoting Short Sea Shipping such as:

•      Lack of infrastructure in the specific short sea terminals

•      Lack of service levels frequencies and intermodal connections

•      Lack of logistics service providers offering a door-to-door service

•      Traditional stance of cargo owners, who perceive it easier to arrange door-to-door road transport than an intermodal transport chain

The EU has tackled these bottlenecks with a variety of policies and programmes Further, the continuous evolution of supportive policies and programmes such as the Marco Polo scheme and Motorways of the Seas has ensured that bottlenecks are addressed and remedial measures are provided to make the system viable and economic.

i.                          The Marco Polo Program:The largest and the most comprehensive modal shift programme in the world is the European Union’s Marco Polo Programme (MPP) . In the 2001 white paper, the EU launched the Marco Polo programme as a follow up of the Pilot Action for Combined Transport programme. Though in principle MPP aimed at promoting modal shift from road to other transport modalities, the program specifically made efforts to utilize the advantages of short sea shipping. The Marco Polo Program financially supported new intermodal services and made sure that such intermodal services indeed contributed to the objective of shifting cargo movement from the roads to other modes of transport such as Short Sea Shipping (SSS).

ii.                      Motorways of  the Sea (MoS) :Motorways of the Sea (MoS) were particularly aimed at the maritime infrastructure needed for the promotion of Short Sea Shipping as an alternative to freight transport on road motorways.The European Union allotted a budgeted amount of  EUR 450 million on its “Motorways of the Sea” initiative to divert road traffic to coastal shipping. The aim was to develop MoS as a real alternative to land transport, thus improving access to markets in Europe and relieving the overstretched European road system. MoS do not exclude rail and inland waterways, but it is primarily aimed at Short Sea Shipping.The programme has two components namely, (a) Modal Shift action and (b) Catalyst action as highlighted below.

a)       Modal shift actions: provide Start-up aid for new services in the non-road freight market under which, 30% of the costs of setting-up a new service may be co-funded. After a maximum of three years of funding, these actions should be viable on their own. Their goal is to maximise traffic shift in order to reach the modal shift objectives of the programme.

b) Catalyst actions: provide aid which is also limited in time, and should lead to viable non- road freight services. However, these actions are more ambitious than modal shift actions i.e. they should tackle existing structural market barriers, which hinder the further development of non-road freight services. One example would be the setting up of “motorways of the sea” or high-quality international rail freight services, managed through a one stop shop. These actions should change the way non-road freight transport is conducted in Europe. The maximum aid level is 35%.

iii.                               Short Sea Network : Understanding the importance of Short Sea Shipping in the late 1990s, several EU countries established short sea promotion offices to create awareness among stake holders. These offices were set up closer to the market and thus better positioned to actively promote short sea shipping.  Their tasks are to inform cargo owners and transport providers about the possibilities that Short Sea Shipping has to offer, to provide information on national and EU support programmes, to keep an updated inventory of intermodal services and to take away biases against Short Sea Shipping in the transport market. In 2000, the European Short Sea Network (ESN) was established.

2       China – Transport Blue Print

China has the largest inland waterway system, with more than 5600 navigable rivers, 2000 inland ports and I,10,000kms of navigable waters.  China’s Ministry of Communications announced its traditional end-of-year official blueprint for the future development of Highways, Coastal Ports and Inland Waterways in all major regions through to 2020. Five new inland river ports, Yibin, Chongquing, Nanning, Guigang and Wuzhou are to be built along with 23 channels connecting the Yangtze and Beijing to the Hangzhou Grand Canal. This will be 4,200 km in total and would include the setting up of new ‘State-Class’ comprehensive transport hubs in Shanghai, Nanjing, Hangzhou, Ningbo, Wenzhou, Xuzhou and Lianyungang.

      Since 1990, the growth of container traffic has dominated overall traffic growth on the inland waterway system. The volume of containers carried to or from Major River ports grew by 38.6 % per annum. By 2020, Coastal Ports are expected to reach 750million tons and the container throughput of coastal ports is expected to reach 27 million TEU. A major effort is going on to increase the number of shipping channels above the third grade. Mileage is expected to reach 28,360 km by 2020.

In China, the number of coastal vessels available at present is estimated to be between 11,000 and 12,000 . And it is also estimated that one billion metric tonne of coal, steel, grains and fertilizers move via coastal shipping currently.  

3       USA – The Marine Highway Initiative

The US, which currently utilized only limited coastal shipping, is also gearing up to expand short sea shipping in domestic waters to accommodate the anticipated increase in domestic freight movements, especially containerised goods. In the United States, in spite of the Jones Act (which requires that all goods shipped among US sea ports be carried by US built, flagged, operated and crewed vessels) about 14% of the domestic freight traffic is moved by waterways.

The US inland navigation system is nearly 12,000 miles of commercially navigable inland and coastal waterways. More than 630 Million Tonnes of cargo moves annually on the inland waterway system. The US Maritime Administration (MARAD) placed considerable emphasis on increased utilisation of marine transportation system through Short Sea Shipping (using inland/coastal waterways) to manage projected trade growth and to, relieve growing surface congestion, improve mobility, create jobs in ports, terminals & merchant marine, enhance national security and mitigate pollution. Inland navigation operates much like the highway system. Main stream waterways, the Mississippi, Ohio, Illinois, and Tennessee rivers and the Gulf Intra-coastal Waterway, are like interstate highways, and these routes carry most of the traffic.

The recent ‘Marine Highways’ initiative of the U.S Government to get a sizeable portion of its container transport from road ways to coastal shipping and river systems deserves special mention. An amount of US$ 30 million under the “Transportation Investment Generating Economic Recovery (TIGER)” has been sanctioned by the US Government as federal grant. 

INTERMODAL TRANSPORT - CONNECTING THE MODES OF TRANSPORT

Intermodal transport is the chain that interconnects different links or modes of transport – sea, air and land- into one complete process that ensures an efficient and cost effective door-to-door movement of goods/containers under the responsibility of a single transport operator, known as a Multimodal Transport Operator (MTO), on one transport document.

Due to containerization, maritime transport could be easily integrated with land transport modes to formulate an efficient and cost effective intermodal transport system.   Action must be taken to ensure fuller integration of the various modes as links in an efficiently managed transport chain which will join up all the individual services. This is essential for meeting the growing freight flows of the country.

Source : ; https://www.google.co.in/search

Fig: 1

Multimodal Transport – Connecting all modes.

Intermodal logistics is designed to cut transit times, decongest landmodes and is beneficial to the shippers in terms of increasing flexibility and reducing cost of logistics. More specifically, the benefits are:

a.       Single point of contact: Shipper has to deal with only the multimodal operator (MTO) like a coastal shipping line or forwarder, who acts as an agent for the shipper. Their relationship is governed by a single multimodal transport contract. The MTO, in turn, enters into separate contracts with transporters, cargo consolidators, ports, airports etc., coordinates customs procedures and thus manages end-to-end freight movement.

                                                 

Source: Deloitte Report, Intermodal and Multimodal Logistics,2012

Fig: 2

Multimodal Transport Operator – Single point of contact

b.       Reduces burden of documentation and formalities: A single contract can be negotiated with the MTO instead of having separate dealings with all the transport operators like road and rail.

c.        Saves time and cuts pilferage at the points of transhipment: The MTO provides marine containers and maintains necessary communication links and co-ordinates with each party throughout the door-to-door logistics chain. This will reduce the risks of loss of time, pilferage and damage to cargo at transhipment points.

d.       Reduces cost: The MTO can manage to get attractive freight rates from the transport operators due to regular volume support. This brings down the overall logistics cost for the shipper and in the long term, increases demand.

e.        Makes the best of each mode: It is possible to combine the specific advantages of each mode in the trip such as flexibility of road haulage, larger capacity of railways and the lower costs of water transport in the best possible fashion. Eg Piggy back , Fishy Back and Tranship systems.

f.         Frees up working capital: In the present supply chain management system, the transport vehicles are treated as moving warehouses. An indirect benefit to the shippers is that shorter transit time allows companies to keep less inventory on hand which in turn frees up working capital.

g.       Better distribution of wealth: Multimodal transport brings down the virtual distance between the origin and destination of cargo. This helps in shifting industrial growth from the traditionally developed coastal regions to the landlocked interiors of the country.

The multi-modal transportation in India is governed by the Multimodal Transportation of Goods Act 1993.

           Multimodal Transportation of Goods ACT,1993

The Indian government recognized the benefits of multimodal transport way back in the early 1990s and came up with the Multimodal Transportation of Goods Act in 1993 with the objective of encouraging growth of exports from India. Through the Act the government aimed at developing international multimodal transport which would reduce logistics costs and thus make Indian products more competitive in the global market. The Act established licensing requirements, contractual terms (through the Multimodal Transport Document) and liability regime. The Act was again amended in the year 2000 to give more protection to shippers.

According to trade, the Act needs to be strengthened to address issues such as liability regime, setting of service standards and registration of service providers, to provide transparency in operations. Trade estimates that these amendments should bring down transit time for transport of goods by 40-50%.In view of the overall efficiencies associated with this system, Government should develop policy interventions encouraging companies to use this.