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

All about REEFERS

Reefers or refrigerated containers are used to carry mainly chilled or fresh produce and frozen foods. Warm cargo like pharmaceuticals , wine , biscuits etc are also carried by Reefers. Reefer traffic is growing together with increase in standard of living. Due to the global village concept and the free trade , we get all kinds of fruits & vegetables in India which we have seen only in pictures few years back. However, before shipping refrigerated cargo always verify that it can withstand the transit time.

Reefer containers are fabricated out of steel frame to with stand the rigors of the long transit , very heavy poly urethane foam insulation for thermal efficiency , white exterior walls for better temperature management and aluminium / steel T-bar floors to allow air flow under and around the cargo inside. Thermoking, Diakin and Carrier are the top 3 makers of the refrigeration units. All units are equipped with vents to create a more suitable atmosphere for vegetables and fruits. Fresh air can be removed and replaced at the rate of 0-260m3 / hr. For frozen foods ventilation should be closed. Humidity also can be reduced up to 55% and controlled at this level. Reefers are available in 3 major classifications, Classic( +35 to -5 ), Magnum ( -5 to -30) and Deep frozen(-30 to -35).

Most of the Reefer containers are equipped with a data recorder. All information & problems during the trip are recorded and the recorder can store about 9 months data . Data Extraction can be done with a handheld PC or Logman with compatible software (Carrier /TK / Daikin) .

Pre Cooling of Reefer Container.

The container should not be pre cooled if proper loading bay, where the temperature in the cold storage and the container is identical, is not available. If warm humid air enters the container during stuffing condensation on the evaporator coil results in the formation of ice. This condition demands frequent de-frosting and eventually affects the cooling capacity required for the cargo.

Also, high condensation occurs on the interior surface of a reefer container if hot air enters during stuffing this eventually results in ice building up for frozen cargo and causes damage on packages for perishable cargo. Ice build up on frozen cargo is one of the reasons for overweight and also restrict the air circulation inside the container.

Pre Cooling of Cargo

Proper pre-cooling of the products is crucial as it rapidly removes heat from commodities before shipping , storage and processing. Reefers’ capacity to absorb heat produced by the cargo is limited. These containers are built to maintain the temperature of the product , not to decrease it. For eg, With a reefer container , it takes more than 5 days to decrease the cargo temperature from 5°C to -18°C and during these 5 days, the cargo continue to develop some bacteria until the temperature reaches -11°C . Whereas With a Cold storage, it takes just a few hours to decrease the temperature of 20 tons of meat from 3°C to -20°C . Also proper product pre-cooling reduces the water loss and spoilage for many perishables and helps maintaining freshness and quality.

Airflow inside Reefers

Air always takes the path of least resistance. In the case of fruits and vegetables, which represent a large percentage of chilled cargo, air has to be forced through vents in the boxes, inorder to remove the heat generated by respiration. In the case of frozen cargo , there is no respiration, so airflow around the cargo is sufficient to maintain the cargo temperature.

Cargo stowage in the container

Cargo can be palletized or bulk , but in both cases solid block stowage is recommended, leaving no space between the cartons and between the cartons and container walls. Be careful to select the correct packing material and correct stowage procedures. Also should be careful to spread the cargo over the entire floor space so as air flow from floor could force up through the cargo.

Why controlled atmosphere ?

For some chilled products such as avocados and asparagus, shelf life can be extended by applying new reefer technologies. By using a natural process to adjust the composition of the air inside the container can increase the shelf life & quality of product and decrease dehydration.

Measurements of a Ship -Tonnage,LOA,Beam,Draft

  Tonnage Measurement

Ship’s cargo carrying capacity generally describe in ‘tons’, but it does not refer to the weight ton at all. It was originally derived from the word ‘tun’ , referred to the 252-gallon barrel used in the wine trade in olden days. Then the convenient way of estimating a ship’s size was to calculate how many of such barrels she could carry and that figure was used as ship’s “Register Tonnage”

Gross Tonnage & Net Tonnage

 From the above mentioned tradition , the Gross Register Tonnage (GRT) and Net Register Tonnage (NRT) evolved. Though GT & NT (new system, came in force from 1994)are called as "Tonnages' actually they are the cubic measurements based on an international formula for comparing the overall size of ships. GT is used by ports as the basis for levying vessel related expenses like berth hire , pilotage , port dues and NT is used by customs as a basis for calculation for Light House dues (ILH = NRT x Rs8).

GT - The internal cubic measurement of all the enclosed spaces within the ships hull and superstructure.

NT - The GT minus the space which is not used for commercial purpose such as crew accomodation area, engine room etc.

Displacement Tonnage – The actual wt. of a ship, the weight of the body is equal to the weight of water it displaces ( Archimedes Law).

Light Displacement – Actual wt. of the empty ship (without fuel , cargo , stores etc)

Deadweight (dwt) – Difference in tons between the light and loaded displacement. Represents the total weight a ship can carry (cargo + fuel + stores + fresh water etc)

Measurements of ship

Below given are the important dimensions of a ship which determines whether ship can safely enter canals,locks , port approach chanels, berths etc.

Length Over All (LOA) - The length of a a ship from the foremost point on the bow to the mostaft point on the stern.

Beam - The maximum breadth of the ship, which is in the amidships( the area between forward and the aft portion) body.

Draft - The distance between the bottom of the ship (the keel) to the level of water on the ships side (water line)

ü The more cargo the ship loads, greater her draft would be. Every state of the ship’s draft there is a corresponding total dead weight

ü The draft of a port refers to the depth of water available at the port channels / terminal basin

Air Draft - The distance from the waterline to the highest point on the ship's super structure ,usually the top of the mast.

Prospects of Coastal Shipping in India

India is emerging as a modern economy. The Government is committed to ensure that economy grows at 7 to 8 percent per year in a sustained manner over next decade. In order to realise this growth potential, the attention also needs to be given to development and modernisation of our economic infrastructure. To become globally competitive, utmost importance must be given for development of infrastructure in sectors like roads, airports, sea-ports, railways in general and maritime transport in particular.

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.

In spite of a 7517 km coastline, dotted by 12 major and 185 minor ports, coastal shipping in India is playing a marginal role only in the transport system. With higher than average traffic growth is projected at several corridors, substantial capacity enhancement will be required over the next 10-15 years. This makes imperative the need to look closely at the potential of the coastal shipping transport systems to ease the pressure on surface transport modes and arrest the continuous damage caused to environment. It is estimated that the nation would save Rs. 15-20 billion through diversion of 5% of cargo from road apart from reduction in pollutants by 6% and savings in fuel .

Coastal Shipping (Short Sea Shipping) refers to the movement of cargo and people over water without crossing a major ocean. In the sea, we have an old medium awaiting revived use. A comprehensive strategic transportation plan, national and intermodal in its scope , is the need of the hour. Coastal shipping could complement, not compete with, trucking and rail and have to play an important role in the growing economy. Our goal should be to reduce the stress on road and rail and also on environment by diverting a sizable percentage of cargo moved by rail and road to coastal shipping. Minor ports, now underused, could enjoy all the benefits of a new economic development. A relatively modest investment in our nation’s coastal sea routes would bring substantial benefits by reducing burden on present transportation system, traffic congestion and pollution.

What does 'CLEAN BILL OF LADING' mean ?

The carrier will issue a Clean Bill of Lading after thoroughly inspecting the packages for any damage, missing quantities or deviation in the quality.In a clean bill of lading, the carrier is declaring that the goods have been received in an appropriate condition, without any defects. Often, a clean bill of lading is issued to fulfill the requirements of letters of credit. Many purchasers rely on letters of credit to pay for imports and banks may refuse to supply the funds if a 'claused bill of lading' is presented. A 'claused , dirty ,unclean or foul ' bill of lading is issued when the received product is damaged or does not meet specifications.

In the present scenario, carriers will not (should not) issue Clean B/L as the carriers do not have any control on cargo stuffing. The stuffing happens in the customers premises or in a CFS and the responsibility of the liner starts only when the containers gated inside the port yard. The cargo and the quality / condition of it is purely the shippers' responsibility. In the B/L it would be shown as "Shippers' stow and count".

ICDs & CFS - What are the functions ?

Definition

 

A common user facility with public authority status and offering services for handling and temporary storage of import/export laden and empty containers carried under customs control . Clear goods for home use, warehousing, re-export, temporary storage for transit .

 

Why ICD / CFS ?

 Generally ports are located in the proximity of densely populated areas and are already mainly space pressed and plagued by congestion . ICD s & CFS are the most viable alternatives to reduce the impact of congestion on ports. Also helps to relieve local communities from the negative externalities generated by increasing  cargo flows to/from sea ports.

 

The extended gate concept .

 

      To resolve the complexities associated with terminal gate management and to reduce congestion in the proximity of the port, the extended gate concept has been proposed.The extended gateway would allow truck operators to move containers to a hinterland location, ideally making use of  road ,barge or rail connection. In this way the terminal would reduce congestion at its gates as well as reducing pressure on its yard capacity.

Distinction between an ICD/CFS

 

ICD is a consolidation node for containers, where as CFS aggregates individual consignments into containers (stuffing) .

 

Both are transit facilities, which offer services for containerization of break bulk cargo and vice-versa. 

 

An ICD is generally located in the interiors (outside the port towns) of the country away from the servicing ports

 

Where as the CFS, is an off dock facility located near the  port which helps in decongesting the port by shifting cargo and Customs related activities outside the port area. Also, CFS function might be added to the ICD

   

 

FUNCTIONs OF ICDs/CFSs

The primary functions of ICD/CFS may be summed up as under:

 

•Receipt and dispatch/delivery of cargo.

•Stuffing and stripping (de-stuffing) of containers.

•Transit operations by rail/road to and from serving ports.

•Customs clearance.

•Consolidation and desegregation of LCL cargo.

•Temporary storage of cargo and containers.

•Reworking of containers.

•Maintenance and repair of container units.

  

The operations of the ICDs/CFSs revolve around the following centers of activity

i) Rail Siding (in case of a rail based terminal)

• The place where container trains are received, dispatched and handled in a terminal. Similarly, the containers are loaded on and unloaded from rail wagons at the siding through overhead cranes and / or other lifting equipments.

ii) Container Yard

•Container yard occupies the largest area in the ICD.CFS. It is stacking area were the export containers are aggregated prior to dispatch to port, import containers are stored till Customs clearance and where empties await onward movement. Likewise, some stacking areas are earmarked for keeping special containers such as refrigerated, hazardous, overweight/over-length, etc.

 

Warehouse

•A covered space/shed where export cargo is received and import cargo stored/delivered; containers are stuffed/stripped or reworked; LCL exports are consolidated and import LCLs are unpacked; and cargo is physically examined by Customs. Export and import consignments are generally handled either at separate areas in a warehouse or in different nominated warehouses/sheds.

iv) Gate Complex

•The gate complex regulates the entry and exist of road vehicles carrying cargo and containers through the terminal. It is place where documentation, security and container inspection procedures are undertaken.

 

BENEFITS OF ICDs/CFSs

- Concentration points for long distance cargoes and its unitisation.

- Service as a transit facility.

- Customs clearance facility available near the centres of production and consumption

-Reduced level of demurrage and pilferage

-No Customs required at gateway ports.

-Issuance of through bill of lading by shipping lines, hereby resuming full liability of shipments.

-Reduced overall level of empty container movement.

-Competitive transport cost.

-Reduced inventory cost.

-Increased trade flows.

 

Factors Influence Development of ICDs

¢To be developed where there is a market potential.

¢Requires public support

¢Requires support of local entrepreneur or public official to ensure momentum in the development 

¢The attitude and overall strategy of the local and national administration is also crucial

¢The efficiency of the rail/road transport services is critical 

¢Need to have a clear ownership structure and transparent organisation

 

Main Features of ICD

 

¢Is an intermodal terminal which is situated inland.

¢Has rail / road connection to the gateway port with scheduled and Reliable to/from service

¢Offer all services available at sea ports such as storage / maintenance of containers, customs clearance, forwarding facility , road/rail haulage

 

Benefits of ICD / CFS

¢One – stop – shop concept

¢Provide seamless seaport inland intermodal access

¢Reduce port congestion and thus save cost

¢Helps to penetrate interior market to widen the service access of port

¢Add competitive advantage to the port

¢Offers service to the EXIM trade at par with the seaport facilities

¢Helps to reduce total cost in the supply chain.

What is the difference between a Liner & Tramp services ?

Who is a Liner ?

A shipping company who transports goods in containers by sea , with a fixed route and schedule (timetable) , and with a high level og cargo safety is called a Liner. This is similar to an air line or bus line(service), on a route with fixed stoppings as per predetermined timetable. These services will continue to run irrespective of whether the airoplane/bus is full or empty as they have to strictly keep their timings and route. Similarly cargo liners too have to stick to the fixed schedule and route irrespective of whether the vessel is full or not.

What is Tramp service ?

The dry bulk and liquid cargoes are generally refered as 'Tramp Trades' and the vessels used to transport these cargoes are called 'Tramp Ships' . Tramp services will not have a fixed route . The ships goes from one port to other depending up on the cargo availability. Tramp services could be compared to a taxi service which is hired to go from one place to another for a single travel. After completing that trip, next employment must be seeked.

What is chartering ?

Chartering is a term used in shipping for hiring a ship. Depending on the type of ship and the type of charter, normally a standard contract form called a charter party is used to record the exact rate, duration and terms agreed between the shipowner and the charterer. There are various types of chartering , they are

1. A voyage charter is the hiring of a vessel and crew for a voyage between a load port and

a discharge port.

2. A time charter is the hiring of a vessel for a specific period of time;
3. A bareboat charter is an arrangement for the hiring of a vessel whereby no administration

or technical maintenance is included as part of the agreement.

4. A demise charter shifts the control and possession of the vessel; the charterer takes full

control of the vessel along with the legal and financial responsibility for it.