Looking to get out of the economic morass

The 6th edition of the Indian Ports & Shipping International conference was held on March March17th & 18th, 2009 at Hotel Taj President, Mumbai. It served to focus on issues that could put the maritime industry on the path to recovery.

Held by India’s premier organisation - the Bombay Chamber of Commerce & Industry - the deliberations centred round the theme The Maritime Industry - Catalyst for Economic Growth. The event drew several players from the logistic and maritime sector in the hope of finding some ready solutions to help wriggle out of the recessionary conduit.

There was a consensus that now was the time to build capacity and bring in efficiency. Infrastructure development would ensure better connectivity and help reduce cost. As ship building, ship breaking, dredging, offshore, inland and coastal water tourism and transport, manpower development, etc., was seeing a significant growth there was plenty of scope for investors.

“China has been able to sustain a 9% economic growth because it gave importance to this sector,” pointed out S. Hajara, chairman and managing director of Shipping Corporation of India (SCI) and president of the Indian National Shipowners’ Association (INSA). “In the present stage of economic development, India’s liner trade will see a high growth area. The average terminal capacity utilization at the country’s premier container terminal viz. JNPT was 90% vis-à-vis global average of 70% to 75%. We need to create more capacity.”

“We need to develop capacity so that we can operate at an acceptable level of 70%,” concurred Dr Anup Chanda, chairman of the Indian Ports Association. “We must go in for vertical expansion and not just horizontal. Unless we develop the coastal and inland waterways connectivity we will have to continue falling back on road and rail transport which besides being costly, cause pollution and congestion.”

Capt Sandeep Mehta, CEO, Mundra Port & SEZ Ltd, said, “The downturn should be considered as a time which is offering a breathing space to bring in to place the required infrastructure so that when the next spurt comes in we should not be caught napping.”

“The multiplier effect of growth in shipbuilding can create a total investment of Rs 37,000 crores in the Indian economy by 2012 and around Rs 2,22,000 crore by 2017,” stated Vijay Kumar, managing director of Bharati Shipyard Ltd. and president of the Shipyards Association of India. “This can enhance the overall economic output to around Rs 3,42,000 crore by 2017. Because of the shortage of shipyards capacity in India, the Indian Navy will get a large number of vessels constructed from outside India. The Navy also plans to take over the Hindustan Shipyard Ltd. The coast guard too is looking to having a large number of vessels constructed which may happen in foreign shipyards. Considering the massive employment opportunity and the benefit to the economy the government should restore the subsidy to make the shipyards competitive.”

Considering the importance of connectivity S. S. Hussain, chairman of JNPT did not want financial outlays made for developing connectivity to be considered as expenditure but as an investment. He welcomed the government plans for going ahead with the dedicated multi-modal high axle load freight corridor in the Eastern and Western corridors at an estimated cost of Rs 28,181 Crore.

“Most of the Indian Containers are trans-shipped at Colombo, Singapore and Dubai because Indian ports do not have sufficient draft and lack supporting infrastructure to handle fifth and sixth generation vessels,” observed Maya Sinha, Deputy Chairman JNPT. “With the increase in container traffic, shipping lines are in a position to provide their customers in India direct sailing, especially to destinations in Europe and North America which will lead to an increase in percentage of larger vessels coming to India subject to increase in available draft and other infrastructure.”

Competitive ports need a deeper draft as a pre-requisite in order to cater to increased traffic, accommodate main line vessels operating in the shipping trade, enhance capacity of the ports through construction of new ports or expansion and development of the existing ones and create hub port services for the trans-shipment of containers.

Rakesh Srivastava, Jt. Secretary, Ministry of Shipping, Government of India, outlined some of the present projects. Capital dredging for major ports with a target to increase the draught to between 14m to 17m is underway at JNPT, Paradip, Mumbai, Visakhapatnam, Tuticorin, Cochin and Ennore Ports at a total cost of Rs. 2382 Crore. “With the deepening and widening of the entrance channel at Paradip, Visakhapatnam, Chennai, Ennore, Tuticorin, New Mangalore it would facilitate larger size vessels to call at these ports,” he said.

He also informed that 9 projects were under implantation at each of the major ports to provide a minimum of 4-lane connectivity at a total cost of Rs. 1859 Crores. Besides, each Major Port would have double line rail connectivity and in this regard eight projects totalling 961.56 km were under implementation at a total cost of Rs. 2118.84 Crore. Besides, two dedicated high axle load freight corridor each on Western and Eastern routes is underway.

Bhavesh Gandhi, Executive Vice Chairman, Pipavav Shipyard Ltd., too projected the immense opportunities that existed in ship building. He pointed out that INSA has projected that about 50% of the Indian fleet (about 37 vessels) have to be scrapped within the next five years to comply with the International Maritime Organisation’s regulations. Besides, the Association has projected an expansion of the Indian fleet to 830 vessels or 12 million Dwt by 2012.

Making a comparison he stated that the fuel consumption for every tonne/km of cargo carried through waterways is only 15% of that consumed by road and 54% of that by rail. Studies have shown that diverting 5% of road cargo to coastal shipping shall result in a saving of Rs 15-20 billion annually. In order to be competitive more cargo would be seen getting transported by the coast and inland waterways. Hence, there would be further demand for ship building.
Mr A. P. V. N. Sarma, Union Shipping Secretary the chief guest at the function in his theme address informed that the Ministry of Finance has been asked to consider a stimulus package for the ports and shipping sector. He emphasised that he was working towards facilitating all-round growth in the shipping, ports and associated sectors, with focus on increasing the national tonnage, identifying and implementing public-private partnership (PPP) projects, improving connectivity, innovating in dredging and other areas, and enhancing training standards.