INDIAN SUBCONTINENT\\\


In India, however much concrete is poured, infrastructure development never quite seems to keep pace with demand and the existing port infrastructure struggles to handle trade flows effectively. Bimal Kanal, Safmarine’s India country manager, reports. Steps are being taken to ease the


The coastline has 12 major ports and 139 operable minor and intermediate ports which between them handle over 90% of the country’s foreign trade. The major container terminals are Mundra, Pipavav, JNPT (Jawaharlal Nehru Port Trust, near Mumbai), Vallarpadam (Cochin),


Chennai,


Visakhapatnam (Vizag), Tuticorin, Kolkata/ Haldia. Smaller ones include Kandla, New Mangalore, Mormugao and Tuticorin are some of the smaller container terminals. The key container terminals are


over-utilised and hence congested. Ports are considered to be congested


when capacity utilisation is over 70-75%, but on the west coast, the figure for JNPT is over 100% and for Chennai on the East Coast it is above 90%. Even the smaller ports of Pipavav on the west coast and Vizag on the east have utilisation levels of around 90% and 85% respectively and for the feeder port of Tuticorin it is above 95%. The situation in these terminals is so delicate that even a minor disruption can cause massive congestion – for example the recent truckers’ strike at Chennai or the six-week cashew import season at Tuticorin caused congestion at the terminal.


situation, but there is still a long way to go. A contract has been awarded for a fourth terminal at JNPT, which was expected to improve the situation there, but various issues have delayed the commissioning - which means that congestion is expected to worsen. Another planned initiative,


the Chennai


Mega Terminal, has still not been awarded. The situation is aggravated


by a lack of road connections; poor quality roads at the Chennai Terminal oſten prevent the easy evacuation of cargo – and there is


then a domino effect as congestion there translates into congestion at Vizag for cargo moving to that port. New ports are still in the early


stages of development, although with Hazira coming up later this year, the congestion at JNPT is expected to improve, to a small extent. DP World’s new terminal at


Vallarpadam is operational but under-used, largely due to Indian cabotage regulations. Currently, the cabotage law does not allow a foreign flag ship to carry export or import cargo between Indian ports which has been transported on the same shipping line – and even empty containers


cannot


be transhipped between Indian ports on a foreign flagged shipping line. For example, today a foreign flag vessel which calls Pipavav and is bound for Nhava Sheva is not


allowed to carry export-


Safmarine sees real prospects of growth in reefer


Having already established the Indian Subcontinent (ISC) as one of its three core markets, regional shipping specialist Safmarine now plans to grow even further in this market by increasing its focus on the region’s reefer sector. Bimal Kanal, Safmarine’s India


country manager, explains: “Not only is the reefer sector one in which Safmarine has been active for many decades and where we have years of experience, but the needs of those shipping perishable and temperature-sensitive cargo, and the challenges associated with doing so, are an ideal match for Safmarine’s particular brand of shipping services. These are about providing a highly personal, accessible shipping service based on product and service competitiveness and excellence.” The ISC currently exports more


than 106 000 40-foot equivalent (ffe)


Bimal Kanal


reefer units annually and believes


there is


“enormous scope” for Safmarine India to grow this business in partnership with local shippers. “The ISC currently exports large volumes of seafood, fruit (grapes), vegetables, meat and poultry products as well as pharmaceutical products across the globe and volumes are


expected to grow by more than 10% a year over the next five years.” Containerised shipments of


pharmaceutical products are one of Safmarine India’s high- potential, high-growth sectors. Although Safmarine had carried pharma products in reefer and dry containers since 2007 out of


India to Europe, the 2010


‘ash cloud’ incident (which hit airfreight to Europe) presented the perfect opportunity to grow what it now regards as a niche business and an increasingly significant component of its total export reefer volumes ex India. Bimal Kanal adds: “Refrigerated


pharma cargo is high-value and we work closely with our customers to ensure that it is taken care of and protected in every sense. This type of cargo also requires a special focus on service and we have made it our business to provide a service that is suited to the needs of this particular sector.” Providing the right type and


quality of containers is important in this sector. “In the case of reefers, the equipment has to comply with strict industry regulations on cleanliness and we also need to be able to accommodate our customers’ requests for particular


types of equipment,” says Kanal. Safmarine, which has been


operating in the ISC since the 1980s, says India is one of its top import and export countries globally and the ISC, together with Africa and the Middle East, one of three core regions in Safmarine. Bimal Kanal sees the Indian


Subcontinent as “a region of opportunity.” Not only does it offer a diversified range of cargo types catering for both exporters and importers but it also offers competitive manufacturing costs


and experienced suppliers who already provide a number of global multi-nationals with items such as machinery, textiles, automotive products and reefer commodities. “With container volumes growing at an average of 11% per annum, the ISC is likely to remain strategically important to Safmarine, particularly if the region’s growth is supported by ongoing investments in infrastructure and positive developments in trade policies that fuel both imports and exports.”


Issue 5 2012


35 Over 150 ports – but still there is congestion


import cargo for Nhava Sheva from Pipavav, even if it has space. This increases costs to customers since they have to depend on coastal Indian flag feeders or those that have permission from the Shipping Directorate General to carry such cargo. The cabotage restriction also puts


further pressure on the road and rail transport system in India. As a result, it is cheaper for


shipping lines to tranship export- import cargo in neighbouring foreign ports like Colombo, Dubai and Singapore, rather than using Indian flag operators to tranship cargo between Indian ports. Those services


that are available are


largely unscheduled and there is oſten not enough capacity and spread to meet demand, thus causing delays and incremental costs throughout the logistics chain. Hence, Indian export-import cargo is being transhipped extensively through foreign ports like Colombo, Dubai and Singapore. With regard to rail and road


infrastructure, one of the key developments in India is the Dedicated Rail Freight Corridor (DRFC). This project has the potential to change the way inland logistics is managed in the country and would result in reduced congestion at container terminals, as well as reducing the burden on the existing common carrier rail network. The DRFC would ensure faster evacuation of cargoes from container


terminals, resulting


in quicker turnaround time for containers and reduced logistics costs and costs spent in holding the inventory during transit. The project was inaugurated in 2006 and was to be completed by 2012, but it has been delayed and the new completion date is March 2017. Despite all these difficulties,


there is growth, however. The rise in containerised trade between India and some of the emerging economies of the Far East, West Africa and Latin America has outpaced that between India and some of the developed economies of Europe, compensating for the temporary slowdown from some of the developed economies. It is estimated that the growth in India’s containerised trade in 2012 would be 8-9% compared to 8.5% in 2011. According to recent WTO reports,


India has the world’s fastest growing exports at 16.1%, ahead of China. A huge portion of this trade is directed towards the EU and the US. Trade


volume with the Middle East and Africa continent is also set to grow. In fairness, the government has


made a sustained effort to cut red tape and an EDI programme has been vigorously pursued. According to the 2010-20


Maritime Agenda, the government has proposed a paperless regime, and ports will be required to gear up for complete automation at port and port community levels. In addition, the government is


also working on a centralised, web- based Port Community System (PCS),


intended to integrate the


electronic flow of information and function as a central hub for Indian ports and other stakeholders like shipping lines/agents, surveyors, stevedores, banks, container freight stations, government regulatory agencies, customs house agents, traders and the railways through a common, secure interface. Steps have already been initiated to implement PCS at all major ports and other ports in India are also interested in it. The ultimate aim is to seamlessly integrate all members of the port community and also to provide an electronic platform to act as a single window to exchange messages. Elsewhere in the region, there


is potential to move containers for north east India through Bangladesh. Chittagong and Mongla ports have enough spare capacity for Indian transit goods and the former’s capacity port is planned to be increased by 1.2m teu soon (Its present capacity is about 1.8m teu. Mongla has a capacity of 50,000teu a year. India-Pakistan


trade was


around US$2.5bn in 2010/11 but the government has set a target to double this in next five years through the diplomatic route. There has been substantial progress, with Pakistan agreeing to grant India ‘Most-favoured nation’ (MFN) status by the end of 2012, which could lead to an increase in direct containerised trade between India and Pakistan. Sri Lanka plays a strategic role by


transhipping boxes from Colombo to Indian ports and an estimated 70% of Colombo’s total container traffic is to or from its larger neighbour. Here, there is no problem with infrastructure. Colombo International Container Terminal (CICT), the joint venture between China Merchant holdings (85%) and SLPA will be the first terminal to commence operations under the south harbour project in July 2013.


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