INTERVIEW INDIA'S LOGISTICS COSTS DEDICATED FREIGHT LOGISTICS Raj Chopra Container Logistics Cost: CORRIDORS Data You Can Director, Freya Shipping Myth VS Facts Bringing the Modal Shift Bank On! south asia’s premier mariti me business magazine R100

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RNI NO: TELENG/2009/30633 POSTAL REGISTRATION NO: HD/1137/2019-2021 DATE OF PUBLICATION: 25/03/2020 DATE OF POSTING: 28/03/2020 IMO 2020 AND THE COVID-19 CURSE

MARITIME TRADE QUARANTINED China is gradually recovering from the pandemic which is spreading to other parts of the globe bringing them under quarantine, once again highlighting the vulnerability of the global supply chain

APRIL 2020 | MARITIME GATEWAY 3 FROM THE EDITOR

PANDEMIC TEACHES RESILIENCE

hile the actual impact of COVID-19 digital technology to organize and collaborate to the global economy is still with suppliers, thereby ensuring supplies reach Wunknown, but the very basic measure the people who needed the most. to prevent from getting bitten by the virus - In China’s major cities, home delivery of social distancing will surely give more pain to the Indian economy already reeling under items purchased online can be made within 20 slowdown. Prime Minister Narendra Modi minutes. This is largely down to the deployment appealed to citizens to stay at and work from of digital technology. Alibaba’s Cainiao network, home to curb the coronavirus outbreak. The for example, supports the supply chains of the People services sector, which accounts for about 55 per merchants it serves via an AI-enabled digital leveraged cent of India’s GDP is poised to be the worst hit. inventory system that links the online and offl ine Social-distancing measures could mean a dent to shopping worlds, in which merchants’ physical digital productivity and consumption because of job or stores serve an extended distribution network. pay losses. If we have a widespread community As a result, almost as soon as the lockdown technology to outbreak then GDP could fall as low as 3.5 per was declared in Wuhan, Alibaba was shipping organize and cent starting April 1. medical and food supplies into the province. collaborate Public discourse is focused on the practicalities In the past fi ve years, Alibaba Group, JD.com, of life under lockdown: How will people get MTDP (Meituan Dianping) and many other with suppliers, food supplies? Can the medical services cope? companies have transformed the purchasing Will people get paid? Some insights emerging behaviour of Chinese consumers, moving thereby from China point at how we can cope with the them away from bricks-and-mortar shopping ensuring social and commercial disruption. A key driver, into online spaces, often consolidated through it turns out, is digital technology. a so-called “super app.” The combination supplies reach of consumer digital maturity and digitally For the past few months, China’s cities with supported supply chains has enabled supplies the people empty streets and deserted shopping malls reach people in self-quarantine. looked like the set of a post-apocalypse TV who needed series. In Wuhan when the lockdown was We hope the global society soon emerges out the most. declared panic buying quickly emptied the of this pandemic with minimal loss to life and supermarkets. Yet in a matter of days, supplies economy. Till then stay sanitised and safe with began to fl ow into Wuhan as people leveraged your families.

R Ramprasad Editor-in-Chief and Publisher [email protected]

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EDITOR AND PUBLISHER EDITORIAL R RAMPRASAD, [email protected] ADVISORY BOARD GENERAL MANAGER - OPERATIONS RAVI TEJA, [email protected] SABYASACHI HAJARA FORMER CHAIRMAN, SCI CHAIRMAN EDITORIAL ADVISORY BOARD ASSOCIATE EDITOR OMER AHMED SIDDIQUI, [email protected] BILL SMART CHIEF EXECUTIVE, BENGAL TIGER LINES DESIGN TEAM DR A JANARDHANA RAO SR DESIGNER: VIJAY MASA MANAGING DIRECTOR INDIAN PORTS ASSOCIATION MARKETING & SALES JULIAN MICHAEL BEVIS SENIOR DIRECTOR, GROUP RELATIONS, NATIONAL & INTERNATIONAL : SATISH SHETTI SOUTH ASIA A.P.MOLLER-MAERSK MANAGER, [email protected] +91 99207 05534 CAPT DEEPAK TEWARI CHAIRMAN, CONTAINER SHIPPING LINES RESEARCH ASSOCIATION (CSLA) RAKESH ORUGANTI, [email protected] ADARSH HEGDE JOINT MANAGING DIRECTOR EVENTS ALLCARGO LOGISTICS MAYURI, MANAGER, [email protected] P JAIRAJ KUMAR CHAIRMAN & MD ADMINISTRATION OCEAN SPARKLE LIMITED KISHORE P, CHIEF MANAGER, GENERAL ADMINISTRATION SHARDUL THACKER MADHUKAR, MANAGER, [email protected] +91 93937 68383 PARTNER, MULLA & MULLA & CRAIGIE BLUNT & CAROE FINANCE DHRUV KOTAK C K RAO, GENERAL MANAGER MANAGING DIRECTOR, JM BAXI GROUP RAKESH U MANISH SAIGAL MD, ALVAREZ & MARSAL JASJIT SETHI CEO, TCI SUPPLY CHAIN SOLUTION CAPT DINESH GAUTAMA PRESIDENT, NAVKAR CORPORATION LIMITED CAPT SANJEEV RISHI ADVISOR, WORLDS WINDOW Maritime Gateway is printed by R Ramprasad published by R Ramprasad on behalf of Gateway Media Pvt Ltd, D.No. 6-2-984, #407, INFRASTRUCTURE & LOGISTICS PVT LTD 5th Floor, Pavani Plaza, Khairatabad, Hyderabad – 500 004, Telangana, India. NAVIN PASSEY MANAGING DIRECTOR, WALLEM Printed at M/s PVB Printers, 11-5-418/A, Ground Floor, Skill Adobe Apartment, Redhills, Lakdikapool, Hyderabad - 500004. Published SHIPMANAGEMENT (INDIA) PVT LTD at Gateway Media Pvt Ltd, D.No. 6-2-984, #407, 5th Floor, Pavani Plaza, Khairatabad, Hyderabad – 500 004, Telangana, India. REGD. OFFICE: D.No. 6-2-984, #407, 5th Floor, Pavani Plaza, Khairatabad, Hyderabad – 500 004, Telangana, India. CIN: U74900TG2007PTC054344 EDITOR: R Ramprasad Views expressed in the articles are those of the writer(s) and may not be shared by the editor or members of the editorial board. Unsolicited material will not be returned. COPYRIGHT: No material published here should be reproduced in any form without prior written permission from Gateway Media. FEEDBACK: Readers are advised to send all feedback and comments to [email protected]

6 MARITIME GATEWAY | APRIL 2020 APRIL 2020 | MARITIME GATEWAY 7 CONTENTS VOLUME 12 | ISSUE 07 | APRIL 2020 MARITIME TRADE QUARANTINED

24 COVER STORY China is gradually recovering from the pandemic which is spreading to other parts of the globe bringing them under quarantine, once again highlighting the vulnerability of the global supply chain 29 40 TECHNOLOGY MARINE FUEL ELECTRIC SOLUTIONS FOR TERMINAL OPERATIONS Once considered meagre value of combustion catalysts 30 and additives usage in EMISSION NORMS shipping, changed the version IMO 2020 AND THE after understanding the COVID-19 CURSE 42 necessity in using marine The COVID-19 outbreak has DEDICATED FREIGHT CORRIDORS fuel additives as ships shaken and stirred the already BRINGING THE MODAL SHIFT started using mixture of volatile bunker market. While The freight corridors will take various low-sulphur fuels the refi ners adjust their off 70 per cent of freight load from different sources capacities and shipping lines based on International in the form of goods trains choose their path to compli- Maritime Organisation (IMO) 2020 regulations for from the passenger network ance, the market dynamics are sustainable environmental practices. yet to reach an equilibrium and the logistics cost will be trimmed by 50 per cent 45 INTERVIEWS UPDATE RASUWAGADI BORDER TO 36 REMAIN CLOSED Dr Abhijit Singh Executive Director, Indian Ports Association India’s logistics cost is 35 high and there are several LOGISTICS elements in the logistics chain DATA YOU CAN BANK ON! which add to the logistics cost. 46 Raj Chopra 38 Director, Freya Shipping INDIA'S LOGISTICS COSTS CONTAINER LOGISTICS COST: MYTH VS FACTS India’s logistics cost is high and OTHERS there are several elements in the logistics chain which add to the 10 NUMBERS & GRAPHS logistics cost. Sunil K. Vaswani, 12 POINT BLANK Executive Director, Container 14 INTERNATIONAL NEWS Shipping Lines Association (INDIA) 16 BRIEF NEWS brings to the fore some of them 18 NEWS

8 MARITIME GATEWAY | APRIL 2020 APRIL 2020 | MARITIME GATEWAY 9 NUMBERS & GRAPHS

ASIAN BUNKER DEMAND GROWTH BY YEAR NO. COVID-19 BLANK SAILINGS (million b/d) ANNOUNCED, TRANSPAC & ASIA-EUROPE 2020* JAN-MAR, 2020 Gasoil 90 2019* 80 Naphtha 2018 70 2011-17 Mogas 60 50 LPG 40 JKero 30 20 FO 10 0 Others Week 6 Week 7 Week 8 Week 9 Week 10 -1.0 -0.5 0.0 0.5 1.0 1.5

*Forecast Source: S&P Global Platts Analytics GLOBAL CRUDE PRODUCTION BY QUALITY

Heavy Sour Ultra Light RIDING THE WAVE 11% 4% How China's role in seaborne trade has grown Light Sweet Heavy Sweet 18% Global share in 2003 2019 2%

Exports from China Light Sour 14% 12% 8% Medium Sour 8% 7% 45% 4% 2% More than 10% 1% . 0% Medium Sweet Container Chemicals Dry bulk Crude and Gas 11% Shipments commodities oil products

Imports to China 35% PERCENTAGE OF INVESTORS INTENDING TO INVEST OUTSIDE ASIA PACIFIC IN 2020 20% 18% 16% 11% 7% 4% 5% Korea 79% 18% 6% Singapore 56% Dry bulk Chemicals Gas Crude and Container Commodities oil products shipments Hong Kong SAR 41% Japan 41% Source: Clarkson Research Note: Figures exclude domestic China trade Mainland China 18% NET GASOIL EXPORTS BY THE ASIAN "BIG FOUR"

(million b/d) RATIO OF VGO HYDRO TREATING Jan-May - 19 TO FCC CAPACITY Korea 2018 2017 0% 15% 30% 45% 60% 2016 India North and Central Europe 60% 2015 North America 50% Russia and Central Asia 43% China Mediterranean 31% Asia-Pacific 29% Middle East 28% Japan Latin America 25% Africa 0% 0.0 0.1 0.2 0.3 0.4 0.5 0.6

Source: S&P Global Platts Analytics

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“The export sector is feeling the pinch with requests from buyers to hold back shipments. “With the blanking of sailings due The force majeure to headhaul volume shortfalls, there clause is likely to be are a lot of containers in destination invoked by buyers to regions that will not get their deny exporter claims." intended return trip back to Asia, either laden with backhaul cargo or - Sharad Kumar Saraf for empty repatriation.” President, FIEO - Alan Murphy CEO, Sea Intelligence

“To survive in the prevailing intense global competition, the shipping industry must be able to operate competitively from the location of Germany on an international scale. We’re not interested in privileges, but simply in equal opportunities.” - Alfred Hartmann President, German Shipowners’ Association (VDR) “Shipping is responsible for 90% of global trade and recognises its responsibility in helping tackle this global health issue whilst ensuring that the wheels of global “Every country will have to create trade continue to turn.” its own Post Corona virus Marshall - Guy Platten plan and take care of those in Secretary General, ICS society who are hit the hardest. Perhaps we too can build the foundations of a sustained global growth cycle.” - Anand Mahindra Chairman, Mahindra Group

12 MARITIME GATEWAY | APRIL 2020 APRIL 2020 | MARITIME GATEWAY 13 INTERNATIONAL NEWS

HAL is now seriously focusing a locker station within five MYANMAR on boosting exports in sync minutes' walk of every Housing DUBAI with the government’s priority Board block by end-2022. Upgrading Yangon- and identified South East Asia, Starting from late 2020, the Jebel Ali Free Zone Mandalay expressway West Asia and North Africa to Infocomm Media Development licence fees slashed sell key platforms like Tejas, Authority (IMDA) will roll out attack helicopter Rudra and locker stations in HDB estates, advanced light helicopter MRT stations, and community Dhruv. HAL is looking centres, with the aim of 1,000 at setting up maintenance stations by end-2022. The facilities in these four countries network will be owned by as having logistics bases is key the IMDA, and complements to sell the products and ensure existing commercial parcel after sales services. lockers and doorstep deliveries. In Singapore, around 200,000 BANGLADESH parcels are delivered daily, with e-commerce projected DP World, the owner of Jebel The Ministry of Construction Ali Free Zone, has slashed its will soon invite Expressions Supplying LPG for to grow at 12 to 20 per cent annually over the next five fees for licence registration and of Interest from the private North East administration for businesses sector for the upgrading years, Singapore’s last-mile operating in the free zone. The of the Yangon–Mandalay Indian Oil Corp (IOC) is now delivery infrastructure needs to cuts will be between 50-70 per Expressway. The project is one sourcing LPG or cooking gas be enhanced. cent. of the 58 national development from Bangladesh for supplying projects listed in the Myanmar to north eastern states to save “It’s a timely move to inspire cost of transportation all the JAPAN Project Bank. The project our customers towards way from Haldia Port in West involves upgrading the 524 pursuing their business targets Bengal. The eastern and north Opel opens the doors km expressway, currently the with greater confidence and most important transport route eastern states are catered through imports at Haldia. to Japan purpose,” said Mohammed Al in Myanmar, to international Muallem, CEO and Managing standard expressway with Since majority Indian users Director, DP World, UAE proper safety and road control get cooking gas at a subsidized Region and CEO of Jafza. facilities. The first 64 km from price, lower transportation cost “It’s specifically designed to Yangon to Bago is expected to will result lower subsidy per be upgraded with assistance cylinder. IOC is importing bulk create value and opportunities from the Asia Development LPG from privately-owned for the companies to channel Bank. Feasibility studies are Omera Petroleum and Beximco their resources to support now being conducted for the Petroleum of Bangladesh, their activities sustainably. remaining sections of Bago- covering a distance of barely We believe this forward- Phyu-Naypyitaw-Meikhtila- 250 km. This is a fraction of looking initiative will enable Mandalay. Work is expected the 1640 km road distance companies to do business in from Haldia to Agartala a smarter way and generate to start in fiscal 2020-21 and German brand Opel is to be complete by fiscal 2024-25. via-Siliguri Corridor. Road more business and create new start exporting vehicles to The project is expected to cost movement through Siliguri is jobs.” There are more than Japan after a break of more US$ 960 million in total and particularly costly due to use 7,500 businesses operating in than a decade as part of a additional financing will be of smaller vehicles beyond the free zone. DP World's UAE wider effort to sell to more sought. Guwahati, to negotiate the hilly operations contribute 33.4 per terrain. markets. The recent return cent of Dubai’s GDP. More to Russia and planned entry investments are flowing into into Columbia and Ecuador SRI LANKA the free zone and port. SINGAPORE are other examples of the HAL to set up logistics ongoing export offensive. “It is Parcel locker stations base currently planned that all Opel MALAYSIA for Singapore's models offered in Japan will Hindustan Aeronautics Ltd be imported from production Nippon Express (HAL) is looking at setting up logistics firms in Europe,” a company logistics bases in Malaysia, The Singapore government spokesman said. “Just like constructs Shah Alam Vietnam, Indonesia and Sri is launching a nationwide everywhere else, it is our top Logistics Center Lanka as part of initiatives network of parcel lockers priority to be profitable in to woo the countries to buy Nippon Express (Malaysia) - accessible to all logistics Japan and to reach a high level India’s light combat aircraft Sdn. Bhd., a local subsidiary of firms - with the aim of having of customer satisfaction.” Tejas and military helicopters.

14 MARITIME GATEWAY | APRIL 2020 digitization in the supply chain, cut through legacy data THAILAND systems and manual document handling, ultimately increasing Land transport potential by a significant 15 effected percent — a big figure when it comes to an industry that lives The Land Transport Federation or dies on razor-thin margins. of Thailand (LTFT) expects shipments overland to continue to drop because of VIETNAM the Covid-19 outbreak limiting demand worldwide. The Nippon Express Co., Ltd., has Da Nang strives to organisation is concerned food imports most of the essentials completed construction of the become Vietnam’s exports will be particularly from India. Biscuits, noodles, Shah Alam Logistics Center, affected as food products confectionery, dry meat, the Nippon Express Group's major socio-economic and goods shipped to China sausage and fruit juice are most extensive single-structure centre make up 20-21 per cent of among other packed foods multifunctional logistics total exports, where many that are imported from the warehouse outside Japan, cities have been quarantined aforementioned countries. in the Shah Alam Industrial in response to the virus. Park in the Malaysian state of Thongyoo Kongkhan, adviser Selangor. The Center started to the chairman of the LTFT, BHUTAN operations on March 9. The said Thailand’s export of food Shah Alam Industrial Park that products and goods to China Indian waterways for hosts this brand new Center account for 20-21 per cent of low cost trade is located near the capital city the total export market, most In a first, Bhutan will transport of Kuala Lumpur, Malaysia's of which travels via Vietnam’s about 50 trucks worth of largest consumption area, northern border. “Even though crushed stone aggregates to and very ideally situated as a the coronavirus outbreak in Bangladesh through a barge of logistics hub, with easy access China appears to be declining, IWAI, saving about 30 per cent to Malaysia's main sea gateway it will still take time to return transportation cost and eight- Port Klang and Kuala Lumpur to the normal situation,” he ten days’ time. Bangladesh will International Airport. Prime Minister Nguyen Xuan said. Phuc has approved a master send jute and rice to Bhutan in return journey in the same INDONESIA plan on socio-economic development in Da Nang NEPAL vessel, said Shipping Ministry Indonesia to use until 2020 with a vision to officials. These 1,000 tonnes of 2030 under which the central Import of edibles cargo being shipped in a single TradeLens to enhance city will become one of the from eight countries 2-000-tonne, self-propelled, supply chain efficiency major socio-economic hubs in vessel of IWAI is replacing Vietnam and Southeast Asia. stopped 70 trucks of 12 wheels or 50 trucks of 16 wheels, according Indonesia has recently Under the plan, the city has set The government has stopped to Pravir Pandey, Chairman, announced its intention a target of becoming a centre providing permit to import IWAI. The cost saving of 30 per to leverage blockchain for start-ups, innovation, food items from eight countries cent will be higher if the return technology at scale in tourism, trade, finance, that have been listed in cargo were to be taken into the logistics sector. The logistics, and information high risk for coronavirus. consideration, he added. Directorate General of technology; and one of the According to the Department Customs and Excise has major centres for culture, of Food Technology and Earlier, trucks of Bhutan used recently announced this is part sports, education and training Quality Control (DFTQC), to ply to Bangladesh with this of the country’s initiative to and health in the country. It it has stopped providing the cargo. At the border, cargo bring down shipping costs and is working towards average permit to import edibles from from Bhutan’s trucks were reduce inefficiency resulting annual economic growth of 12 China, South Korea, Japan, unloaded and reloaded into from manual, paper-based percent from 2021-2030, with Italy, Iran, France, Germany, trucks of Bangladesh. This also processes. The blockchain- the services sector accounting and Spain. The statistics of involved a customs clearance based platform chosen is for 67-68 percent of the the Department of Customs time and long queues of trucks Maersk’s TradeLens, which economic structure, industry shows that the eight countries taking a time of up to 20 days,” is powered by IBM’s Cloud and construction 31-32 per in the restricted list are Pandey explained. IWAI will and Blockchain. It claims to cent, and agriculture 1 per among top 20 suppliers of get a user fee of two paise per be able to scale information cent. commodities to Nepal. Nepal tonne per km.

APRIL 2020 | MARITIME GATEWAY 15 BRIEF NEWS

HOPES SOAR FOR KENDRAPARA’S RAIL CONNECTIVITY

Hopes for regular plying of trains on the newly laid Haridaspur-Paradip broad gauge rail route soared high after a multiple tower car successfully completed its second trial run on the track. The multiple tower car which started from Haridaspur railway BEYPORE PORT AWAITS station arrived at the Gop CALLS FROM MAJOR LINES station in Kendrapara. Even after the announcement of an operational incentive Almost 95 per cent of the work by the state government for promotion of cargo shipping has been completed. This is through minor ports, cargo delivery at the Beypore Port is yet the second time that a multiple to show an upward spiral. Major importers are of the view tower car had successfully that the crisis in the sector can be resolved only with better run for 43.8 km on this 82-km cooperation from multi-national vessel operators who could long unmanned rail route. The deliver cargo at minor ports like Beypore and Azhikkal. twin successful trial runs have boosted the chances of regular Though the latest Government Order promises vessel operators plying of goods train on the 50 per cent of the road transportation cost as incentive for 20 route. This will help place THE NEW HASHTAG feet containers movement between Kochi and Beypore Port, Kendrapara on the railway RESTO CAFE IN there are less takers for the offer. Even an enhanced incentive map of the country. The 82-km VISAKHAPATNAM of additional 30 per cent to promote the movement of 40-feet long unmanned rail route will containers too is yet to draw the desired attention. have stations at Chandikhole, Ratnagiri, and Lalitgiri in Low cost, modern and Jajpur district, Bajipada, funky – this was the three- Marshaghai, Kalaghar and word brief Ravi Teja gave Gop in Kendrapara district his architect and designer and Nuagaon and Siju in Santosh Reddy for the cafe he Jagatsinghpur district. The proposed to set up. The result route will reduce the distance was four shipping containers to almost half in ferrying of sliced and put together to look minerals from Banspani mines like a hashtag when viewed in Keonjhar district to the from top. Painted in vibrant Paradip port. yellow, red and orange, Hashtag Resto Cafe stands out in Lawson’s Bay. Opened in August last year, the cafe has joined ADANI HSFO CARRIAGE BAN BANGLADESH a list of a few others who COMES INTO EFFECT have seen merit in using PORTS PVT LTD shipping containers to set up Port state control authorities began to enforce the IMO fuel INCORPORATED restaurants. “They are easy carriage ban, whereby ships without a scrubber cannot carry to play around with, they high sulphur bunker fuel anymore. Major port state regimes are portable, so in case we including Paris, Tokyo and the US Coast Guard, have made Adani Ports has intimated the want to move all we have it plain that they will rigorously enforce the requirements. Bombay Stock Exchange and to do is to disassemble and Guy Platten, Secretary General, International Chamber of National Stock Exchange of relocate. Speed of installation, Shipping, warned ships face detention if they’re found to the incorporation of a wholly- cost saving on material and be carrying the wrong fuel. “The International Chamber owned subsidiary named Adani the capacity to re-use these of Shipping has been made aware that major port state Bangladesh Ports Pvt. Ltd in units makes them a serious inspection regimes including the United States Coast Guard Bangladesh. It will be carrying option for housing, cafes and and the Australian Maritime Safety Authority have made it out the business of dredging office space,” says Architect clear that detention of ships found to be non-compliant is and port and infrastructure Santosh. both possible and legally permissible,” Platten said. development.

16 MARITIME GATEWAY | APRIL 2020 ICD AT NEW NATIONAL DISTRIBUTION MAJOR JALPAIGURI CENTRE FOR BENETTON INDIA CONNECTIVITY DELAYED Future Supply Chain Solutions Limited (FSC) inaugurated PROJECTS IN the National Distribution Centre of Benetton India Pvt Ltd MUMBAI (Benetton India) at Koka, Jhajjar, Haryana. FSC, with its The delay in issuing a proven experience, is now a preferred partner for Benetton commercial notification for an India in streamlining their domestic supply chain and Navi Mumbai’s planning ICD has resulted in revenue expanding their business into new markets. agency has proposed the loss for the Railwàys as diversion of 45.2 hectares well as business for the New The built-to-suit warehouse spans 1,12,000 sq ft and reserved mangrove forest areas Jalpaiguri region in North serves as the primary distribution centre for Benetton for three different projects. The East. The Confederation of India Pvt Ltd. It has the capacity to handle an inventory proposals were submitted by Indian Industries has decided volume of over 4 million and more than 1,00,000 SKUs, City Industrial Development to approach the Railway as well as various value added services like product Corporation Ltd (Cidco) before minister regarding the impasse. kitting, customized packaging and returns management. the forest department. Incidentally, the first ever ICD It is equipped with shelving/racking storage, advanced in the North Bengal region and material handling equipment, dock levellers, packaging The first project is the also the first private Freight machines and a full back-up generator. construction of a 10.1-km six- Terminal of Northeast Frontier lane coastal road connecting Railways has come up at Amra Marg in Navi Mumbai New Jalpaiguri. The ICD has to JNPT area via the under- immense potential owing to construction Mumbai Trans the depot's location near four Harbour Link (MTHL). The international borders including first phase will connect Amra Nepal, Bhutan, Bangladesh and Marg to MTHL across 7.02km Tibetan Autonomous Region including a 1.2km Navi (China). Mumbai International Airport (NMIA) Link. Phase II will Once operational, it will also connect MTHL to JNPT across ease the load of Kolkata Port. 3.08 km. Around 1,500 containers are imported to North East and 800 The second project is the containers are exported through 26.7km Nerul-Belapur-Uran the Kolkata Port. OOCL’S VOLUMES & REVENUES UP railway corridor jointly IN Q4 & FULL YEAR 2019 conceived by Cidco and the Central Railways. The third project is also a 6.82 km coastal For the fourth quarter of 2019 (ended December 31, 2019), road connecting the Central OOCL’s total volumes were up 4.8 per cent from the same Business District of Belapur FREIGHTER FROM period last year. Total revenues increased by 2.3 per cent to sector 11 to sector 16 Jalmarg NASHIK TO NE ON $1,602.8 million. Loadable capacity increased by 2.6 per cent. at Kharghar. The overall load factor was 1.8 per cent higher than the same THE CARDS period in 2018. Overall average revenue per teu decreased by 2.4 per cent compared to the fourth quarter of last year. Spicejet has expressed interest For the full year of 2019 (ended December 31, 2019), total in starting cargo flights to volumes increased by 3.8 per cent over the same period ferry fruits and vegetables last year and total revenues recorded a 5.2 per cent growth. from Nashik to the North East. Loadable capacity increased by 4 per cent. The overall load Currently only grapes are being factor was 0.1 per cent lower than the same period in 2018. sent from Nashik to Guwahati Overall average revenue per teu increased by 1.3 per cent which takes about 5 days. It compared to the same period last year. will take only 3 hours if the consignment is to be sent by air to Guwahati. The commodity freight service will be under the Krishi Uddan Scheme. The capacity of the air cargo will be about 18-20 tonnes. Halco has developed an ICD and an air cargo complex adjacent to Ozar Airport which is equipped with a pack house, cold storage and other facilities.

APRIL 2020 | MARITIME GATEWAY 17 NEWS

blank sailings is falling and meeting on 27 March. As of SHIPPING the backhaul freight rates 30 September 2019, HMM’s are beginning to increase largest shareholders are Korea as shipping lines prefer to Development Bank and Korea S.Korea reposition empties rather than Ocean Business Corporation, overtakes China concern themselves about which have stakes of 12.94% the comparatively limited and 4.38%, respectively. in shipbuilding backhaul cargo. South Korea topped China The bulk of the blank sailings in shipbuilding orders in were announced during Rates are up as February, according to data companies listed as owners weeks 7 and 8. Weeks 9 and from Clarkson Research of a combined 3.63 million 10 have seen a clear tapering China returns to Services. South Korean teu, compared with 2.81 off in terms of new blank work yards won orders of 200,000 million teu attributed to sailings, and the level of new compensated gross tons German owners. Chinese announcements of blank (CGTs) to build eight ships in state-owned operator sailings is back to the normal February, 67 per cent of the COSCO Shipping Lines, level. This means that carriers global total. This was more which also owns a majority are seeing demand ramping than China, top in January, stake in Orient Overseas up back to normal levels over which only won 8,000 CGTs Container Line (OOCL), has the next few weeks as well. for one container ship. The been expanding its fleet by Philippines also topped China building mega container ships with 60,000 CGTs to build at its shipbuilding affiliates, four ships as did Japan with including five 23,000teu Hyundai 30,000 CGTs for one vessel. vessels ordered by OOCL Merchant Marine As quarantine periods have Disruptions to Chinese announced on 11 March. come to a close staff have returned to work in Chinese industry as a result of the Another reason for Chinese to rebrand as factories with the vast coronavirus are likely the dominance is that while HMM Co., Ltd cause of China's low order majority of factories back Germans were the main online. However, many of rate, but it is still the global tonnage providers to container leader based on order backlog these facilities are operating liner operators, the global at lower capacity than would with 26.16 million CGTs, financial crisis and European or 35 per cent of the market normally be the case, many banks’ consequent reduction at around 80 per cent. Inter- total. South Korea is second of their shipping portfolio with 21.28 million CGTs, or province trucking which gave opportunities to Chinese was a major pain point, has 29 per cent, and Japan is third finance lessors such as ICBC with 10.91 million CGTs, or also benefited from these Financial Leasing, Minsheng developments and is now 15 per cent. Ship deliveries Financial Leasing and Bank from China dropped by 96 per operating at about 80 per cent of Communications Financial capacity. cent in February compared to Leasing among others, which South Korean flagship January. They dropped by 54 are themselves subsidiaries mainline operator Hyundai per cent in South Korea and of Chinese banks and Merchant Marine (HMM) 39 per cent in Japan. shipbuilders, offering new will be renamed HMM Co., PIL embarks Ltd. The move had been building funds or the purchase on service and leaseback of vessels. planned for around two years, to reflect the company’s new rationalisation China is now the corporate identity, as the largest container Hyundai group is no longer PIL is embarking on a Lines race to HMM’s largest shareholder service rationalisation which ship-owning after swapping debt for equity will focus its efforts on key nation reposition with the company’s banks. markets in Asia, Middle East, empties as China An HMM official added, Africa, South America and The German Shipowners’ “Around 90% of our business Oceania. To better allocate Association (VDR), returns to work depends on ocean-going its resources to areas in President, Alfred Hartmann The impact of the Covid-19 vessels and the HMM name which it is growing, a leaner, has said that China has virus on the supply is waning is more familiar overseas.” more focused fleet profile is surpassed Germany as the fast according to Sea- HMM’s name change was required. Therefore, it has largest container ship-owning Intelligence, with the race confirmed during a board announced the sale of six country. Ship databases now on to meet the expected meeting on 9 March 2020 and 12,000-teu vessels—four to corroborate Hartmann’s increase in demand from is scheduled to be endorsed at Seaspan and two to Wan Hai observation, with Chinese China. The incidence of new the company’s annual general Lines.

18 MARITIME GATEWAY | APRIL 2020 Milaha is expanding its if the price crashes to $45 per management. In addition, Global tank facilities with the acquisition barrel. In case, prices again a 1.4 per cent year-on-year container fleet of a new floating dock to inch up and touch $55 a barrel, increase in transport volumes, support vessels repair and the import bill may drop by to more than 12 million teus up in 2019 dry docking. The dock is just $8 billion next year. (2018: 11.9 million teus), and The International Tank set to arrive at the Mesaieed a stronger Dollar exchange Container Organisation (TCO) Shipyard and will be fully rate against the Euro also operational in the second made a positive contribution estimates that as on January Hapag-Lloyd 1, 2020, the global tank half of this year. The to revenues. container fleet had reached dock acquisition is part improves 652,350 units worldwide, of the major upgrade and modernisation plan of the operating result compared to the figure of A.P. Moller- 604,700 on January 1, 2019, shipyard facilities announced in 2019 a year-on-year growth of 7.88 last year and will provide Maersk to per cent. However, reflecting key support to the local the downturn in trading government and private acquire conditions experienced by economy in all its maritime Performance and oil and gas sectors. many sectors of the container Team shipping industry, the number The Group’s President of tank containers produced and CEO, Abdulrahman A.P. Moller-Maersk has last year was lower than Essa Al-Mannai, said: The reached an agreement to in 2018. In 2019, a total of new floating dock will acquire Performance Team, 54,650 tank containers were accommodate vessels for On the basis of preliminary a US-based warehousing built, compared to 59,700 ship repair up to 230 m in and distribution company, in 2018, a decrease of some figures, Hapag-Lloyd’s length and up to 30,000-tonne EBIT for the FY2019 to further strengthen its 5,000 units over the previous lifting capacity. This will capabilities as an integrated year. significantly increased to supplement our ship repair €811 million (2018: €444 container logistics company, The industry continues to be and dry docking activities. million). EBITDA rose to offering end-to-end supply dominated on a global level by The dock will cater all €1,986 million (2018: €1,139 chain solutions to its a relatively small number of vessels from both local and million). The main drivers customers. As a leader in major tank container operators international markets, and of the positive business North America warehousing and leasing companies. The will be operational in the developments have been and distribution, Performance top 10 operators account second half of this year." improved freight rates as Team specialises in B2B and for over 235,000 tanks, well as rigorous cost and representing over 56 per cent revenue management. The of the global operators’ fleet India’s crude 2019 results include effects of 381,700 units. The top 10 from the first-time application leasing companies account import bill to of the IFRS 16 accounting for 240,000 tanks, about 80 standard, which amount to per cent of the total leasing decline approximately €31 million for fleet of 305,615. The top three If the Indian basket price the EBIT and approximately leasing companies account remains subdued around the €467 million for the EBITDA. for 154,000 tanks, over 50 current level of $50/barrel In the fourth quarter of 2019, B2C distribution solutions per cent of the total leasing through the next fiscal due both the EBITDA of € 475 within retail, wholesale company fleet. to the Coronavirus effect, the million (Q4 2018: €327 and e-commerce with 24 crude import bill may decline million) and the EBIT of warehousing sites. It has a by a massive $17 billion or 17 €169 million (Q4 2018: €144 track record of profitable per cent year-on-year in what million) were also above their growth of 17 per cent per Milaha acquires could give a big relief to the prior-year levels. year for the last four years, country’s current account. The new floating Revenues increased in the and revenue for 2019 of price of the Indian crude oil 2019 financial year by $525 million. Maersk is dock basket, which stood at $64 per approximately 9 per cent to targeting the warehousing barrel in January, dropped to €12.6 billion (2018: €11.6 and distribution component $55 in February. Imports may billion). This can be attributed to offer more supply chain fall to $84 billion in FY21, to an improved average freight options and flexibility against $101 billion this fiscal, rate of $1,072/teu for the year to its ocean customers. if the price of domestic crude as a whole, which rose by 2.6 Performance Team operates basket averages $50 per barrel. per cent year-on-year (2018: 24 warehousing sites covering Similarly, the fall in imports $1,044/teu) due to a stronger 800,000 sq. metres across may be to the tune of $25 focus on more profitable strategic supply chain billion in FY21 to $76 billion, trade lanes and active revenue locations.

APRIL 2020 | MARITIME GATEWAY 19 NEWS

parts of Alibaug. With this, customs bonded warehouses. LOGISTICS Mumbai becomes the first The e-sealing requirement metropolitan city in India to for deposit in and removal of introduce a RoPax service to goods from customs bonded Exports of fruits, its transport infrastructure. warehouses was originally vegetables from RoPax service enables people to come into effect from to ferry along with their August 15, 2018, which was Kerala slowdown vehicles on board between then deferred to October 1, The weak economic Mumbai and Mandwa. 2018. Its implementation conditions in West Asia With this, Mumbai, Alibaug was again postponed to have reduced the demand and the adjoining Konkan November 1, 2018, and then for fruits and vegetables region will experience a customer wanting to transport further to January 1, 2019. from Kerala over the past boost in tourism, hinterland his cargo in a streamlined The CBIC has deferred few months. Shipments connectivity. Maharashtra manner across global shipping the implementation of to the Gulf countries have Maritime Board and Mumbai routes, ECU Worldwide, mandatory electronic sealing now come down to 120-130 Port Trust have joined hands the global leader in LCL for deposit and removal tonnes a day from around with M2M Ferries Pvt Ltd consolidation offers seamless of goods from customs 200 tonnes earlier, said Dil (MFPL) in bringing this brand ocean freight services and warehouses for the fifth Koshy, Secretary, Agricultural new RoPax vessel, utilising customized cargo solutions time. In a letter to principal Products and Processed Food Mumbai’s waterways more across multiple trade lanes chief commissioners/chief Exporters Association. The effectively. including to and from Europe commissioners of customs, slowdown in shipments of to USA and Canada. A robust the Central Board of Indirect perishables comes at a time technological infrastructure when concerns have emerged with deployment of digital over the spread of the novel Rise in ocean tools and processes facilitates Coronavirus (Covid-19). freight as the tracking and tracing of Currently, there is no ban the cargo at every stage of on exports of fruits and airfreight the transport cycle. With vegetables to Gulf countries services nosedive ECU360, a state-of-the-art other than Kuwait, which online platform, it is possible has suspended all flight The decision by the US to get door-to-door rates and movements from the virus- Government to suspend air manage cargo transportation affected countries, including travel from Europe to the across a number of origin India. USA is bound to hold wide- and destination points ranging ramifications for within the USA as well as Taxes and Customs (CBIC) other countries, along with global air freight movement said the implementation of online freight visibility. Also with a foreseeable reduction the e-sealing norms stands strong relationships with Mumbai now has in belly space for cargo. This deferred. The CBIC had major global core carriers is likely to affect both cargo in June last year decided RoPax service enable ECU Worldwide with rates and volume capacity that RFID sealing shall be flexibility to offer transport required on the transport substantially. Major countries routes and schedules aligned around the globe have also of goods for deposit in a to the specific business warehouse as well as removal implemented preventive requirements of customers. measures and imposed therefrom. Therefore, Where restrictions on movement of ever the ‘warehousing people and goods worldwide. regulation’ prescribe affixing This has led to large-scale CBIC defers of a ‘one-time lock’, the rescheduling and cancellation importer or owner of the of flights which may result in Electronic goods shall use RFID anti- unforeseen delays and non- Sealing – Deposit tamper one time-locks. availability of space for air Representation has been RoPax M2M1 ferry vessel in and Removal received from e-seal vendors freight transport. commenced operations of Goods from to defer the implementation between Mumbai (Bhaucha As the space for air freight of the circular 10/2020 - Dhakka/Ferry Wharf) and movement gets constricted Customs Bonded Customs dated 7th February Mandwa. RoPax Ferry, a ferry and trade volumes shrink, 2020. The Board has decided that combines the features ocean freight transport is Warehouses to defer implementation of the of a cruise ship and a Ro-Ro emerging as a viable and The Central Board of Indirect said circular – Customs till service, has come much to cost-effective alternative with Taxes and Customs (CBIC) 30th April 2020 and the new the relief of daily commuters a wider reach for moving has deferred electronic date of implementation of the travelling between Mumbai cargo to destinations across sealing - deposit in and said circular will be on 1st and Mandwa and also other the globe. For the discerning removal of goods from May 2020.

20 MARITIME GATEWAY | APRIL 2020 by CONCOR through a CSR linkages, creation/expansion CWC develops initiative. Another project is of food processing and multipurpose commissioned at Ghazipur preservation capacities, Ghat (UP), New Azadpur agro-processing clusters and complex in (Delhi) and Raja ka Talab operation greens. To fill in the Bangalore (UP). gaps across the value chain and establishing the cold An official from Central Foundation stone has been chain grid, the ministry has Railway said that the cargo laid for Central Warehousing also sanctioned 39 mega food centre is being developed as a Corporation’s multipurpose parks and 298 integrated cold pilot project under the ‘Kisan complex at the KIADB IT chain projects throughout the Vision.’ The Railways already warehouse to support faster Park, Arebinnamangala, near country. has nine refrigerated vans cargo clearance, the ICD Kempegowda International will help reduce the overall Airport, Bangalore. The available on its network for transportation of perishable logistics costs by up to 30 per warehouse will store cent, while also providing commercial and industrial goods with a carrying Allcargo acquires capacity of 17 tonne, each operational transparency to products, in order to cope with additional stake customers. Until recently, market trends and to boost the for transportation of highly- perishable parcel traffic importers shipped their cargo commercial sector there by in GATI to Tuticorin Port where it was helping in growth of economy. developed and procured through the Rail Coach Allcargo Logistics has cleared by Customs, destuffed It is spread over 14.20 acres and kept at a warehouse. and separate projects will Factory. received an approval from come up in phases. In First SEBI to acquire an additional As per the customer phase, CWC will offer storage 26 per cent stake in Gati on its requirements the cargo was up to 4.5 lakh Sq Ft and in open offer to acquire nearly then moved by trucks from MoFPI focussing ` the second phase, it may offer 3.17 crore shares at 75 per Tuticorin to its final delivery a total of 8 lakh Sq Ft by on cold chain share. On full acceptance of point in and around Madurai. constructing 20 story building the open offer, it will take Exporters too had to pick for data warehousing in 40,000 infra Allcargo's stake in Gati to up empty containers from sq. ft. commercial office space 46.83 per cent. The company Tuticorin and bring them all related with logistics and further said that this will the way to their factories. data warehousing. After this mark the completion of the With ICD Madurai as a new new storage facility is fully acquisition process which was acceptance point, Maersk will operational it would generate initiated on December 5, 2019. help move the cargo directly employment for more than The open offer is expected to to Madurai, speed up the 1000 persons. be launched in March 2020 clearance process. and closed by April 2020. Preferential allotment and part Temperature- purchase of promoter shares The Ministry of Food have also been completed by DP World controlled Processing Industries Allcargo in January 2020. becomes cargo centre at (MoFPI) is focussing on As part of this process, two building an integrated cold directors of Allcargo have RENAULT F1 Lasalgaon chain infrastructure across been appointed on Gati Board. the country and aiming team global The biggest onion market in at seamless transfer of Asia, Lasalgaon, will soon logistics partner perishables from production Maersk’s new get temperature-controlled to consumption areas. It DP World and the Renault perishable cargo centre. The acceptance point is planning to implement F1 Team have signed an centre is being developed the plan under the Pradhan at ICD Madurai agreement making DP World under Central government's the global logistics partner scheme of the national cold Mantri Kisan Sampada Maersk has announced ICD Yojana (PMKSY), the and title partner of the team, supply chain for perishables. Madurai as a new acceptance which will become the In the recent Budget session, flagship project of the Union point, Maersk is getting Government. Renault DP World F1 Team Finance Minister Nirmala closer to its customers in the starting from the 2020 season. Sitharaman proposed to set The scheme for a cohesive hinterland of Tamil Nadu. Under the partnership, teams up a ‘Kisan Rail’ through the plan comprised of component With infrastructure spread from DP World, Renault PPP mode for a cold supply schemes was being over a total area of about 70 Sport Racing and Groupe chain to transport perishable implemented that include acres, the state-of-art ICD Renault will leverage the F1 goods. The cargo centre at integrated cold chain and is one of the largest in the global marketing platform Lasalgaon is being developed value addition infrastructure, country and will serve as a and explore opportunities to under the same pattern. The mega food park, creation major infrastructural hub for increase the efficiency of their project is being developed of backward and forward South India. Equipped with a supply chain.

APRIL 2020 | MARITIME GATEWAY 21 NEWS

standards-based open APIs are openly available to the CMA CGM launches CMA CGM+ entire community. CMA CGM launches CMA CGM+, a range of solutions that complement its traditional maritime transport and logistics services. Equipped with this comprehensive PORTS range of products and services, the Group aims to provide customised solutions to meet all customer expectations: whether it be to protect their cargo or grow their business, V. O. order with Wärtsilä was CMA CGM+ is specifically designed to address their needs. Chidambaranar placed in February 2020 by CMA CGM+ includes two categories of products and Port improves the Cochin Port Trust. The services: CARE and BOOST. Within this range of CMA technology group says that its CGM+ solutions, CMA CGM has assembled two main throughput upgraded VTMS will enable types of products and services that meet the service quality seamless coverage of the V. O. Chidambaranar Port, and growth objectives of the Group's customers, CARE and port’s radar and automatic known as the economic BOOST. identification system (AIS) engine of Southern Tamil for traffic monitoring and CARE products are designed to protect our customers’ Nadu, has handled 7.41 lakh control, thereby raising the business teus as on March 2, 2020, existing safety and efficiency in the process surpassing Guarantee: SERENITY cargo value guarantee, SERENITY levels. The Navi-Harbour container guarantee, COLD TREATMENT guarantee the previous financial year’s VTS software also provides entire container traffic of an interactive and user- Security: BARLOCK security device 7.39 lakh teus. The record friendly interface for the throughput was achieved Cargo: CLIMACTIVE controlled atmosphere, REEFLEX system’s operator. Wärtsilä with a growth rate of 9.51 per liquid-ready, PHARMA reefer division, AQUAVIVA and CoPT have also signed seafood solution, CONTAINER humidity control, cent over the corresponding a five-year comprehensive CONTAINER garment-ready, CONTAINER grade selection 6.76 lakh teus of the previous annual maintenance contract fiscal. Total cargo imports and for the upgraded system and BOOST products are designed to expand customers’ business. a six-year CAMC for the Trade: SHIPFIN trade finance and NETWORKING existing equipment. intermediation services Visibility: TRAXENS smart container Documentation: BILL OF LADING paperless Mumbai Port to Logistics: end-to-end services upgrade cruise SERENITY container guarantee joins CMA CGM+ terminal For the launch of CMA CGM+, CMA CGM is also The cruise terminal at introducing a new service to cover container damage: exports also hit an all-time Ballard Pier Extension will SERENITY container guarantee. This service limits high at the port during the be upgraded in line with container repair costs when unforeseen damages occur. ongoing financial year up international standards. The to March 2, at 33.11 million proposal includes increasing tonnes, up 5.30 per cent the total area of the terminal over the previous fiscal’s from 25000 sq.ft to 415000 First financial validate the authenticity of corresponding 31.44 million sq ft. The new terminal shipments using TradeLens’ tonnes. will consist of three storeys organisation extensive record of real- excluding the ground floor. joins TradeLens time data and document The ground and first floors exchange amongst the Port of Cochin will be passenger terminals, Standard Chartered Bank network of entities involved upgrades while the second and third has joined TradeLens, a in a shipment. TradeLens’ floor will be reserved for blockchain-enabled digital ecosystem consists of more Wärtsilä commercial and retail container logistics platform, than 150 members, including equipment businesses as well as a car jointly developed by AP more than 100 ports and parking lot for around 400 Møller – Maersk and IBM, terminals, over 20 ocean Wärtsilä will upgrade its vehicles. The revamped cruise making Standard Chartered carriers and intermodal Vessel Traffic Management terminal when ready will Bank the first financial providers, and in excess of System (VTMS) installed be able to cater to nearly 10 institution to enter a formal 10 government authorities. in the Indian port of Cochin lakh passengers per month agreement for use of the The solution has been by the end of July 2020. and 10,000 passengers at any platform. Standard Chartered commercially available The system was originally given time with the ability to Bank will be able to instantly since December 2018 and its delivered in 2008 and the handle around 500 ships.

22 MARITIME GATEWAY | APRIL 2020 Health Department of the port after examining the same Snowman HPA is in continuous contact with the help of new mobile Logistics with all partners. The port scanners. is engaging regularly in champions international and multi- Second project, of 220/333 FMCG delivery sectoral communication KV MUSS sub-station at to monitor the situation JNPT yard, was inaugurated A pilot project in stealth mode constantly and – if required with state-of-the-art 220 was launched in Mumbai – to implement targeted and 33 KV gas insulated late last year with Western measures. As always, all switchgears deployed to have margin of 43 per cent, Maharashtra as the focus. As arriving ships must submit a maximum power reliability. delivering profit attributable to part of the pilot, Snowman Maritime Health Declaration Sub-station is provided with owners of the company, before Logistics set up a collection (MDH) at least 24 hours SCADA and sub-station separately disclosed items, of centre in Manchar near Pune before calling at the port with automation system where $1,328 million, up 4.6 per cent to facilitate the collection of information on whether there information regarding any and EPS of 160.0 US cents. vegetables and fruits directly is any disease or indications fault is made available on Results highlights: revenue from farmers. The farm of disease on board. If there mobile phone of the concerned of $7,686 million; revenue produce is then shipped to the are indications of disease, engineers round-the-clock growth of 36.1 per cent driven Snowman Logistics sorting then the ship is inspected by to have better control on by acquisitions including P&O and grading centre located Hamburg Port Health Center sub-station operations, and Ferries (UK), Topaz Energy in Navi Mumbai, where before entering the Port of automated fire detection & Marine (UAE) and the two the farm produce is further Hamburg. All events of the and alarm system alongwith terminals in Chile (Puerto sorted, graded and packed Port of Hamburg that are not CCTVs are deployed. Central and Puerto Lirquen) for home delivery purpose. absolutely necessary have as well as the full year impact The new Centralised This is then transported to been or will be called off. In from Continental Warehousing Parking Plaza (CPP) and the six fulfilment hubs of the this respect, a series of specific Corporation (India); Cosmos buildings for container e-commerce player located inspections and determinations Agencia Maritima (Peru) and tractor trailers and Customs around Mumbai for onward will take place. Hence, Unifeeder (Denmark), and facilitation centre were delivery. After Mumbai, visitors, for example, will only the consolidation of Australia the pilot will be replicated be allowed to access critical also inaugurated, provided region. Like-for-like revenue in Delhi and other cities to work locations at the port if exclusively to integrate the increased by 2.3 per cent follow soon. this is absolutely necessary. parking of tractor trailers driven by 16.0 per cent growth carrying factory stuffed in non-container revenue. containers for exports at one location from the existing Port of Hamburg Infra projects multiple locations. This will inaugurated at help integrate document Adanis' offer for remains in processing by Customs with Dighi Port gets JNPT state-of-the-art facilities service and service provision in the NCLT nod Mansukh Mandaviya, parking plaza. The centralised Minister of State, Shipping parking plaza will provide The NCLT has approved (Independent Charge) and parking facility for trucks `650-crore resolution plan Chemicals and Fertilisers, carrying export containers submitted by APSEZ for inaugurated various and enable completing pre- debt-ridden Dighi Port, infrastructure projects gate entry formalities and located south of Mumbai. The resolution came with a at JNPT. The Minister documentation for export huge 79.2 per cent haircut inaugurated the mobile X-ray under one window system. container scanner facility to the lenders, as they had made a claim of `3,098 The port is actively of JNPCT. The designed crore. The successful bid undertaking following throughput for the new will give the Adanis access measures to prevent further mobile container scanner DP World to Maharashtra, where it had spread of coronavirus: is 20 containers per hour. This will help in scanning announces no presence, even though Obeying the recommendations the containers inside the financial results the group straddles the entire of the competent political terminal premises; thus coastline of the country institutions, the Federal security agencies will have DP World announced robust with 11 operational ports Government, the Senate advantage to take appropriate financial results for the year and an under-construction of the Free and Hanseatic action before the container is ended 31 December 2019. On transshipment terminal at City of Hamburg, the health allowed to exit. Trade will be a reported basis, revenue grew Vizhinjam in southern Kerala. authorities and the port’s benefitted with this initiative 36.1 per cent and adjusted It can be noted that Dighi Port medical service (Hamburg as DPD containers can be EBITDA increased 17.7 per was the first port to go for a Port Health Center). The allowed directly from the cent with adjusted EBITDA bankruptcy in April 2018.

APRIL 2020 | MARITIME GATEWAY 23 COVER STORY MARITIME TRADE QUARANTINED China is gradually recovering from the pandemic which is spreading to other parts of the globe bringing them under quarantine, once again highlighting the vulnerability of the global supply chain

BY OMER AHMED SIDDIQUI

he Corona virus outbreak has once again highlighted the vulnerability Tof global supply chain. China – still the source of 65 per cent of trans-Pacifi c containerized imports remains in the early stages of restarting production, following the pandemic outbreak. China’s exports contracted by 17 per cent in dollar terms in January and February, but port call data indicates activity at Chinese ports has begun to recover from early March. Economies dependent on China-based production are highly vulnerable to the adverse impacts on the modes of the supply chain, namely in commercial aviation, maritime shipping and overland.

24 MARITIME GATEWAY | APRIL 2020 APRIL 2020 | MARITIME GATEWAY 25 COVER STORY

The loss in global trade of goods and services is The number of port calls at Shanghai and estimated to be $320 billion per quarter Yangshang declined by 17 per cent of business disruption. in January, compared to the same period in the previous year. Global export losses are expected to peg at $161 billion Carriers have blanked 21 sailings on the trade route due to weak Losses to the global transport sector are forecast US-Asia Pacific demand in China. to be atleast $33 billion. California’s Long Beach Port: Covid-19 outbreak has removed more than Handled $38 350,000 containers from global trade. billion in Chinese goods last year. This year the activity has declined to more than half from normal levels. There have been 49 per cent fewer sailings by container ships from China China’s Shenzhen port: business has fallen off by an estimated 50 to 75 per cent. Shipping lines blank 46 per cent of capacity in the Asia-Europe trade Yangshan port in Shanghai: business declined by almost half 20-25 per cent drop in global shipping industry throughput

As the pandemic spreads to Europe (-2.5% q/q annualized) and Q2 (-1%) 2020. A strong dollar, lower commodity and the US, the shipping industry will now After a slight rebound by 1.6 per cent in Q4 prices and depressed demand will keep have to contend with falling demand there. 2019, global trade is expected to contract nominal trade in recession for the full Following the US-China trade war that by -2.5 per cent in Q1 (q/q annualized), and year 2020. A -10 per cent drop in the had slowed down the pace of global trade certainly to stay in negative in Q2. Global S&P GSCI commodity price index since growth to its slowest pace since 2009, the trade in volume terms edged down in the beginning of the Covid-19 outbreak Corona virus outbreak has given the next January 2020 and plummeted in February, signals a continuation of 2019 deflationary shattering blow to the global trade. As per following dire activity reports in China pressures. This coupled with the data published by Allianz Research, in the but also deteriorating new export orders appreciation of the dollar in a context of first quarter of 2020 the global trade has elsewhere, notably in Europe and Asia. high uncertainty would push prices down. suffered damage equivalent to a full year The International Chamber of Shipping In value terms, trade should also contract trade war between US-China. The loss in estimates that the Covid-19 outbreak has in the first half of the year, keeping the full- trade of goods and services is estimated removed more than 350,000 containers year figure in negative territory after -1.5 to be $320 billion per quarter of business from global trade. There have been 49 per cent in 2019. disruption. Export losses are expected to per cent fewer sailings by container peg at $161 billion as demand from China ships from China in the last four weeks, Disruption to maritime trade and Europe is expected to be subdued till according to the European Commission. The coronavirus outbreak has led to a the end of April. The return to normalcy The unprecedented scale of the disruption decline in the number of ships calling on of trade is expected to be very gradual and has forced carriers to blank 46 per cent Chinese ports including Shanghai and losses to the transport sector are forecast to of capacity in the Asia-Europe trade. The Yangshan in January, as factories across be atleast $33 billion. forecasted drop of 20-25 per cent in global the country remain closed or operating at This trade shock is already visible in shipping industry throughput will have a low capacity. The number of port calls at early trade indicators, which signal a trade corresponding impact on the port terminal Shanghai and Yangshang declined by 17 recession in volume terms both in Q1 industry. per cent in January, compared to the same

26 MARITIME GATEWAY | APRIL 2020 period in the previous year. Carriers have blank sailings since the outbreak began. show that throughput has taken a serious blanked 21 sailings on the US-Asia Pacific Even as Beijing relaxes its containment beating, said Peter Sand, chief shipping trade route with the primary reason being measures, demand is falling elsewhere analyst at Bimco. weak demand in China. The cancellations as the virus spreads. From Singapore to are in addition to 66 cancellations that took Rotterdam, many ports are seeing sharp Measures taken by ports place during the Lunar New Year resulting falls in activity. At China’s Shenzhen port, All major ports across the world have in 199,000 teu units of reduced capacity. the fourth-largest in the world by container adopted a 14-day quarantine period for On the Asia-Europe trade route, a total of volume, dock workers have informed that vessels arriving from or transiting through 61 cancelled sailings have been announced, business had fallen off by an estimated 50 China. Vessels arriving from China are representing a 151,000 teu capacity to 75 per cent. Yangshan port in Shanghai required to report regarding the health of reduction. has experienced similar declines. The the crew members and passengers prior to The US and EU being the major number of trucks coming in and out has berthing. Some of the restrictions placed by export markets of China have seen major dropped off by between 40-50 per cent. ports across the world are detailed below. disruption in maritime trade. California’s Rotterdam, Europe’s largest port and one Long Beach Port that handled $38 billion of the world’s busiest, saw traffic from China in Chinese goods last year has seen activity China fall 20 per cent from a year earlier. China is home to seven of the busiest decline to more than half from normal In Singapore, a critical hub for crude oil ports in the world. Although loading and levels. Los Angeles’ ports have seen 50 shipments to China, figures for February unloading operations are functioning normally, barge service is delayed at all ports. Few container depots in Shanghai, which is the busiest port in the world, were closed until February 10. India may impose duties on Chinese imports The government has implemented The Commerce Department is considering imposing duties on over 100 restrictions on some of these ports to products that India imports heavily from China in light of the Covid-19 contain the spread of the disease. Crew outbreak. The government is currently walking a tightrope, balancing disembarking has been completely its demand priorities with the ambition to knock out Chinese goods and restricted at all ports. Any vessels berthing push domestic products in local markets. It aims to quickly leverage at Tianjin, Dalian and Xiamen ports are domestic manufacturing when Chinese factories remain closed by required to provide a health declaration raising import duties on semi-finished or manufactured products. before berthing. Vessels with crew from However, India’s production capabilities remain limited for many Wuhan or the Hubei province are restricted of these items. “It’s tricky to increase imports at such a time. If the to berth at the Putian and Quanzhou ports. situation does not change quickly and prices of industrial components At the Ningbo Port, such vessels will be begin to rise, an increased import duty will have the opposite effect on placed under isolation for 14 days before both consumers and growth,” a senior official said. berthing. Substitution of crew at the Shanghai, The Confederation of All India Traders has warned that stuck Xiamen, Ningbo, Tianjin, Dalian, Qingdao shipments for basic commodities have started to quickly deplete and Guangzhou ports has been prohibited. available inventories at wholesalers and retailers, and that prices might Wearing facial masks and temperature rise if the situation doesn’t improve. On the other hand, industry bodies checks everyday has been initiated as a have also warned that importers haven’t been able to put in new orders preventive action for coronavirus. since mid-January. China is India’s largest source of imports with $70 billion worth of United States products reaching Indian markets from Chinese shores. Despite this, The US Coast Guard issued a notice on 02 a significant share of Indian importers across a broad range of sectors February 2020 stating that any passenger have continued to rely on regular trips to manufacturing hubs in China vessels or vessels carrying passengers, to place orders for products. With these visits now called off, importers which have been to China or embarked fear they would lose out once the situation normalises and importers passengers in China in the last 14 days, from other nations scramble to call in their own orders. will be denied entry into the US. Any passengers who exceed the 14 day period

APRIL 2020 | MARITIME GATEWAY 27 COVER STORY

will either be asked to self-isolate as a preventive measure or undergo further tests. Turkey Turkey has taken coronavirus safety measures to contain the spread of the infection by restricting cruise ships from Chinese ports from docking in the country. Cargo ships have been permitted to dock although they will undergo strict inspections. The country has placed 33 health inspection centers at various ports to carry out screening procedures. Escaping the COVID-19 Part of the solution may be to flee from high-risk areas. The US appears to be shifting away from China as a sourcing and are symptom-free will be allowed entry and vessels having crew of passengers who country, and the coronavirus will likely into the US. have come in contact with confirmed cases. strengthen that trend, given the single- Non-passenger vessels are allowed Passengers or crewmembers on all country risk that it has exposed. Container to operate in the US with restrictions if vessels departing or transiting through lines are expanding capacity on Asia to the they have been to China or embarked China will not be allowed to disembark North American East Coast services and passengers in China within the last 14 days from the vessel until a biosecurity officer limiting interim port calls in the Middle under the condition that there are no sick screens them for coronavirus and other East and Europe to make the services crewmembers. Any vessels with sick crew infectious diseases. Based on the advice faster; that is a direct reflection of the shift members are required to notify the nearest of the biosecurity officer, the passengers to southeast Asia sourcing. The compound Coast Guard Captain of the Port. growth rate of US imports from southeast Asia between 2011 and 2019 outpaced the Singapore rate of growth of US imports from China The Maritime and Port Authority of by a wide margin. Singapore (MPA) has implemented The CAGR of volumes from temperature screening at all sea In the first quarter of Southeast Asia to the United States rose checkpoints, including ferry and cruise 2020 the global trade 9.9 percent, compared with a 2.7 percent terminals. Visitors having a travel history in has suffered damage growth in China volume, according to Hubei or possessing PRC passports issued IHS Markit. However, the volume from in Hubei, will not be allowed to enter or equivalent to a full southeast Asia to the US is just one- transit through Singapore. year trade war between third of the volume from China, and the US-China. The return production and freight infrastructure Australia capacity of southeast Asia is already Australia initiated additional border to normalcy of trade showing its limits. screening and isolation measures on 01 is expected to be very However, industry experts believe February. Any vessels that have left China gradual and losses to the prolonged shutdown will be followed or transited through the country after 01 the transport sector are by an overwhelming surge in business February and less than 14 days prior to the resulting in likely capacity shortages that date will be required to meet coronavirus forecast to be atleast will materialize once factories are back to requirements set by the government. $33 billion. full production, fulfilling demand for a still The same applies to vessels with crew very strong US economy. Such a scenario of passengers, vessels with ill passengers could result in a sharp rebound in trade.

28 MARITIME GATEWAY | APRIL 2020 TECHNOLOGY

conversion work, its contracts have by ELECTRIC SOLUTIONS FOR no means been limited to this size of the company. Continental Warehousing TERMINAL OPERATIONS Corporation (Nhava Sheva) for example, Conductix-Wampfler India has electrified more than is a rather small CFS operator, moving towards all-electric operation. Switching 125 RTGs in India, reveals Kishor Dagia, Managing to electric power saves diesel, maintenance Director of the company, as the market leader continues costs and improves operator efficiencies. to innovate solutions for terminal automation Conductix-Wampfler is also aware that terminals are seeking to side line diesel generators on board their RTGs and are choosing from a variety of solutions, ranging from conductor rails to cable reels and battery based hybrid solutions. According to Dagia, “Conductix Wampfler is investing in R&D to further its solutions package as is envisaged from our unique Auto-plug in / plug-out cable reels used in Hybrid systems where the RTG operates fully on battery pack and uses only a small diesel generator to move between blocks. Where there are a lot of stacks – 30 or above – and fewer RTGs – 12-18 with many block changes the conductor rail system is usually preferred. But in smaller terminals on the east coast where there are very few stacks, the cable reel possibly makes more sense. Battery Hybrid or Plug-in type solutions are ideal for CFS operations which iesel powered rubber tyre gantry have 1-3 RTGs and 1-2 blocks.” cranes (RTGs) account for nearly With more than 125 RTGs electrified in D60 per cent of a terminal’s diesel India by solutions engineered at the Center consumption. Lured by savings in energy of Excellence in Germany and executed costs and reduced emissions, terminals by Conductix-Wampfler India, as a market around the globe are reassessing the leader Conductix-Wampfler is aware of financial case for converting existing diesel its responsibility to innovate and prepare RTGs to electric operation. Terminals in “Most terminals desire solution for future terminal automation. India are aggressively deciding to convert maximum productivity from Conductix-Wampfler has innovated with their existing fleet to run on electricity. yard equipment, switching from the ProfiDAT® solution. “We designed Kishor Dagia, Managing Director, diesel power to electric power the system so that any terminal with our Conductix-Wampfler India says, “Most Conductor rail E-RTG solution could Indian terminals desire maximum saves diesel, maintenance retrofit and upgrade with the ProfiDAT® productivity from yard equipment and costs and improves operator solution,” says Philip Wasmer, Global hence RTGs are not allocated to specific efficiencies by creating a more Market Manager – Container Handling stacks, but rather moved around the yard silent environment.” at Conductix-Wampfler. The integrated in line with operational requirements. data-transmission system combines a data- - Kishor Dagia The drivers for this change over are transmission channel with a conductor rail Managing Director, Conductix-Wampfler India the financial case and reduction of CO2 that can also be used as a ground conductor emissions.” Asked about the return on rail. “The conversion can therefore be investment, he says this is dependent on would suggest an ROI is possible within carried out without any great installation the port operation in which the RTGs are around 3-5 years,” says Dagia. effort, since the existing ground conductor involved, essentially coming down to Although large terminal operators rail is simply replaced by the combined number of stacks, RTGs and the monthly in India – Adani, DP World and APMT profile without the need for additional teu throughput. “However, on average, we have provided Conductix-Wampfler with installation space,” says Wasmer.

APRIL 2020 | MARITIME GATEWAY 29 EMISSION NORMS IMO 2020 AND THE COVID-19 CURSE

The COVID-19 outbreak ew months back towards the end cent of total sales compared with a jump to has shaken and stirred of the year 2019, the maritime 70 per cent in December. Findustry was abuzz planning to “Majorly all global bunkering ports are the already volatile comply with the IMO 2020 emission keeping the maritime industry fuelled with norms. Shipping lines were busy choosing IMO 2020 compliant low sulphur fuel oil bunker market. While among scrubbers and different fuel blends, (LSFO). Out of 34 major bunkering hub the refiners adjust their shippers had kept their fingers crossed ports, only Sydney in Australia is not yet to calculate the additional fuel surcharge servicing the request of LSFO,” opines capacities and shipping cost that they would have to shell out and Capt Vivek S Anand, Director, NYK Line lines choose their path to the bunker suppliers were busy gearing (India) Pvt. Ltd. “Usually the preferable up their production operations to meet the bunkering port is where there is minimum compliance, the market sudden surge in demand for low sulphur diversion in trading route with competitive dynamics are yet to reach fuel. The shipping industry consumes about prices. However, preferred bunkering 4 million barrels per day (bpd) of marine port is Singapore because of its strategic an equilibrium bunker fuels and the rule changes impacted location and price of $290 or Fujairah with more than 50,000 merchant ships globally, a price ranging around $280. India is well opening a significant new market for fuel equipped to supply IMO 2020 compliant producers. India’s marine fuel demand low sulphur fuel oil (LSFO) with 0.5 per is estimated at about 1.7 million tonnes cent sulphur as marine fuel at all Indian per year, largely supplied by State-owned major trading Ports.” companies. Out of this, some 0.965 mmtpa Owing to the uncertainty over the is high sulphur furnace oil, while the rest level of preparedness of the industry in is distillate fuel. At the start of 2019, low- dealing with the change, Captain SIAK sulphur fuel sales accounted for just 8 per Azad, Deputy Nautical Advisor at the

30 MARITIME GATEWAY | APRIL 2020 Mercantile Marine Department, said that likely to benefit refining in Asia, which fuel oil (VLSFO) at 10 refineries in China, the regulator’s priority in the first few is long on gasoil, and the major bunker including Zhenhai Refining and Chemicals months will be ease of doing business. suppliers and China are developing supply Co, Jinling Petrochemical Co and Hainan “Trust and common sense will be applied options for LSFO. Petrochemical Co. The company aims and we won’t go just by the letter of the India’s conversion ratio – or the amount to reach the 10 million tonnes VLSFO law,” he informed. of more complex conversion capacity, capacity per year by 2020, further such as fluid catalytic cracker (FCC), resid increasing it to 15 million tonnes by 2023. Asian refiners have the catalytic cracker (RCC), hydrocrackers It will supply to Zhoushan and other major upper hand (HCU), or coking capacity relative to CDU ports in China, while covering Singapore, Asia is set to benefit from IMO 2020 more capacity – has improved the most among Hambantota and 50 key overseas ports than any other region due to its surplus of Asian refiners. It is expected to reach a new around the globe. gasoil and relatively high complexity of high after a series of upgrading works to PetroChina aims to a 4 million tonnes its refineries, reports S&P Global Platts. prepare refineries for a nationwide rollout of VLSFO in 2020, to be produced from Asian refiners have continuously upgraded of the Bharat VI standard, which applies to its Jinzhou, Jinxi and Dalian refineries in operations, achieving greater yields of low gasoline and gasoil and mandates a limit China’s northeast, and Guangxi refinery in sulphur products, thus they are on a better of 10 ppm sulphur, equivalent to Euro 6, in the south. China Marine Bunker secured footing to adjust for IMO 2020. China and April 2020. minimum 4 million tonnes of VLSFO for India are well-placed to take advantage of However, China’s conversion ratio the fourth quarter of 2019 and the first the bunker specifications change with their is still ahead, although the improvement two quarters of 2020, while it also began high ratios of coking and hydrocracking has slowed over the last few years. China supplying all major Chinese ports from versus crude distillation capacities. Japan implemented the Nation 6 standard with bonded storage. is a major LSFO producing and consuming 10 ppm sulfur levels (equivalent to Euro country in Asia while South Korea is 6) nationwide in January 2019. Japan’s North Asia a major gasoil exporting country. Both refinery conversion ratio has improved SK Energy, the first of South Korea’s stand to benefit from high distillate cracks. due to CDU closures as part of the METI’s refiner, started supplying MGO from Singapore, as the world’s largest bunkering Refinery Ordinance. Japan is well ahead October last year, aiming to produce up to hub, will have to make major changes as it in its preparations as it has substantial 27,000 bpd of marine gasoil. Additionally, is a major importer of HSFO. Singapore’s residue desulfurization facilities, which the company is constructing a vacuum product demand composition will undergo were originally built mostly to make residue desulphurisation (VRDS) unit that a drastic change, with HSFO demand LSFO for power generation. South Korea’s can produce 40,000 bpd of LSFO, which dropping in 2020 while demand for MGO conversion ratio also improved over the will come into force in March or April and LSFO rises. years due to upgrading. 2020. SK Trading International, its affiliate, In 2020, Singapore will still be a net inked six-month contracts with some importer of HSFO, supplying to vessels A look at top global shippers in order to supply 90,000 barrels installed with scrubbers, but most of its suppliers of VLSFO, beginning from Q4. Hyundai demand will switch to 0.5% LSFO and Oilbank is producing up to 50,000 barrels MGO, creating new challenges to its China of LSFO per day. supply chains. Overall, the changes are Sinopec Corp. is producing very low-sulfur In Japan, Fuji Oil Co Ltd, Cosmo

APRIL 2020 | MARITIME GATEWAY 31 EMISSION NORMS

BUNKERING AT INDIAN PORTS COCHIN PORT • Handled 45,301 MT of low Sulphur fuel in January and February 2020. The future demand is expected to remain around 25000 MT/month. KANDLA PARDIP PORT FO 380 CST • Current stock of low Sulphur fuel is FO 180 CST 19,000 MTs MGO MUMBAI • Current demand is around 2000 MT/month NHAVA SHEVA and is expected to reach 4000 MT/month. FO 180 CST/ MGO DEENDAYAL PORT TRUST, KANDLA MURMUGAO • Current stock of low Sulphur KOLKATA MANGALORE fuel: 36,498 KL • Handled total of 52,889.11 MT of low KOCHI Sulphur fuel in January and February 2020. Demand is expected to remain at FO180CST 300,000 MT for the year KAKINADA VIZAG PARADIP HALDIA CHENNAI GANGAVARAM MURMUGAO PORT TUTICORIN FO 380 CST • Current stock of low Sulphur fuel is FO 180 CST 3550 KL FO 380 CST MGO • Handled total of 15,550 KL of low Sulphur FO 180 CST fuel last year and the demand is expected MGO to remain almost same. INDIAN OIL CORP HAS BUNKERING OPERATIONS AT LSMGO: Kandla (including Sikka/Vadinar/Mundra anchorage), Hazira, Magdalla, VISAKHAPATNAM PORT VLSFO: Kandla (including Sikka/Vadinar/Mundra anchorage), Mumbai, Mumbai, Mormugao, Karwar, New Mangalore, Cochin, Tuticorin, Chennai, • Current stock of low Sulphur fuel is New Mangalore, Cochin, Tuticorin, Chennai, Visakhapatnam, Paradip & Haldia Kakinada, Visakhapatnam, Paradip, Haldia & Port Blair. 24,800 KL and VLSFO – 43000 MT • The volume of demand expected is Bunker fuel supplies are made through pipelines, barges and tank-trucks. 166,400 MT per annum

Energy Holdings Co Ltd and Idemitsu crude processing unit, located in Malaysia, fuel and is compatible with tried-and-tested Kosan Co Ltd began shipping IMO- which will begin supplying VLSFO in May ship machinery. compliant fuels in October last year. 2020. IRPC Pcl is producing 60,000 tonnes The first batch of Hindustan Petroleum Idemitsu Kosan is planning to increase of VLSFO, making it Thailand’s first Corporation Limited (HPCL’s) VLSFO was capacity at its 190,000-barrel-a-day refinery to produce IMO-compliant fuel. produced in December at Visakhapatnam Chiba refinery's residue crude hydro- About 65 per cent of the output will be sold Refinery that can produce 5,000- desulphurizing unit, to boost output of in Thailand while the rest will be exported. 10,000 tonnes per month to begin with. LSFO or other IMO-compliant fuels. Infrastructure will be upgraded soon to India cater to the demand. The oil major operates Singapore/Southeast Asia Indian Oil Corporation released its first another refinery on the west coast in About 400,000-500,000 metric tonnes/ deliveries of 0.5 per cent LSFO bunker in Mumbai. The product meets the Residual month of low-sulphur fuel oil cargoes have November at Kandla, Cochin and Paradeep Marine Grade (RMG) 0.50 Specification been coming to the Singapore region in the ports. The compliant fuel is also being and ISO 8217:2017 standard requirements. fourth quarter of 2019, while the volume made available at Mumbai, Mangalore, HPCL’s new compliant fuel product is also was 100,000-200,000 metric tonnes/ Tuticorin, Chennai, Visakhapatnam, a straight-run residual. month earlier. Singapore, the world's Paradip and Haldia Ports. According to In February Bharat Petroleum exported largest bunkering hub, used to receive 6 Platts, IOC aimed to supply more than 1 its first low sulphur fuel cargo from Kochi million mt/month of high-sulphur fuel oil million mt/year of cleaner fuel from its Port to Singapore. P Murali Madhavan, until the first half of 2019. Towards the Haldia refinery on the eastern coast and the Executive Director (Kochi Refinery), BPCL end of 2019, Royal Dutch Shell loaded its Gujarat refinery on the western coast. IOC said they are also supplying the compliant first VLSFO cargo from its Pulau Bukom has a market share of 60 per cent in ship fuel to tankers calling at Kochi Port. refinery. Singapore Refining Company bunker in India. Further, IOC’s product (SRC), a joint venture of Chevron Corp is a straight-run residual and not a blend Middle East and Singapore Petroleum Co supplied its with any distillate, and, therefore, friendly Qatar Petroleum is supplying VLSFO at first VLSFO cargo. to shipboard engines and fuel-handling its ports since October last year. Uniper Chevron is about to double its VLSFO equipment. Regarding other properties like Energy DMCC is responsible for two crude and MGO supply in Asia in the next one to viscosity, density and pour point, the new units in Fujairah, which produce on an two years. Vitol is building a 30,000 bpd compliant fuel would be similar to the old annual basis more than 4 million tonnes

32 MARITIME GATEWAY | APRIL 2020 of VLSFO. Brooge Petroleum and Gas the bunkering hub, rose by 51 per cent suppliers have even stocked it for using in Investment Co (BPGIC) is developing month-on-month in December 2019 to 3.13 the marine fuel pool in 2020. Previously 1 a 25,000-bpd capacity low-sulphur fuel million tonnes, compared with the 1.27 per cent sulphur fuel oil was mainly used refinery in Fujairah. million tonnes of high-sulphur fuel oil sold for power generation. in the same month. At the start of 2019, But in the subsequent months Asia’s Europe low-sulphur fuel sales accounted for just market for VLSFO retreated from its Peninsula Petroleum, the biggest supplier 8 per cent of total sales compared with a record highs witnessed near the start of in the fuelling hub of Gibraltar, is doubling jump to 70 per cent in December. “Price the year, as demand for the compliant fuel its VLSFO deliveries to 60,000 tonnes. It for LSFO ranges from $230 in Rotterdam/ crumbled under seasonal factors and due supplies bunker to the ports of Gibraltar, Antwerp, Kaliningrad, Murmansk/ to the Corona epidemic. However, industry Algeciras, Barcelona, Amsterdam- Archangelsk to $590 in Ecuador. Going observers also point at a trend of more Rotterdam-Antwerp, Canary Islands, forward, we do see a downward trend in ships switching to burning marine gasoil Malta, Panama, U.S. Gulf Coast and Los prices with increase in Production of LSFO instead of VLSFO which weakened the Angeles. at major refineries and competitiveness VLSFO market. among major players battling to grab a “The market environment for marine United States bigger share of the market,” informs Capt. fuels has been very volatile over the The majority of US Gulf Coast refiners Vivek Anand. past months. While our IMO 2020 fuel are already processing heavy crudes to Adding to this surge in VLSFO demand sourcing strategy focuses on compliant make IMO-compliant marine fuels. Motive are the delayed scrubber installations, fuels for the vast majority of our fleet, Enterprises updated its Port Arthur, Texas, which mean that ships expected to run we have decided to invest in a number of refinery to produce compliant fuels. PBF on high-sulphur fuels also had to jostle scrubbers to mitigate risk and familiarise Energy restarted a coker at its Chalmette, to secure VLSFO supplies and meet the with the technology in case it turns out to Louisiana, refinery that had been idled nine IMO rules. There is currently a four-to provide significant cost benefits compared years. five-month backlog of vessels that should to compliant fuels. Thus, scrubbers form have been retrofitted by the end of last year. a secondary part of our overall IMO 2020 Changing market dynamics Installations have been delayed chiefly by fuel sourcing strategy to ensure compliance The International Energy Agency (IEA) material shortages and limited shipyard and spread the risk of fuel price uncertainty has forecast VLSFO demand to reach 1 capacity further complicated by the in 2020 – for the price spread between high million bpd in 2020 and 1.8 million bpd shortage of personnel at Chinese yards due and low sulfur fuels and for the price of by 2024, while marine gasoil demand will to the recent pandemic outbreak. future 0,5% compliant low sulfur fuels,” peak in 2020 and reduce to 1.8 million Prices of 1 per cent sulphur fuel oil also reveals Steve Felder, Managing Director - bpd by 2024. Contrary to the speculations gained ground this year, as the shipping Maersk South Asia. on initial shortage of the compliant industry uses it for blending to produce Bunker traders are of the view that fuel supply, IEA has confirmed that the 0.5 per cent sulphur fuel oil. Many bunker the IMO 2020-led marine gasoil demand preferred compliant marine fuel supplies has started to finally kick-in but the at key hubs is adequate. An expected surge virus situation is restraining demand. in China’s VLSFO production as a result The market is stabilising and people are of its new tax policies has also helped ease hoarding less and buying bunkers as and concerns about tight supplies. when needed. As the IMO 2020 compliance deadline came close, ship operators rushed to buy Refiners to trim low sulphur large quantities of compliant fuels to ensure fuel production adequate supplies, piling pressure on Going forward, we do see A major disruption to marine transportation bunker suppliers and pushing premiums for due to the corona virus outbreak has delivered fuels to record highs. The strong a downward trend in prices cooled down the rally in prices of low demand for VLSFO led to a sharp increase with increase in Production sulphur fuel, making refiners particularly in its price which sharply narrowed its of LSFO at major refineries in Asia to scale back production of the spread with the more expensive marine and competitiveness among compliant fuel. Refiners particularly those gasoil. Thus, refiners around the world major players battling to grab in Thailand and Taiwan are now grappling responded by boosting VLSFO production. a bigger share of the market. with narrowing margins amid the slump in Preliminary estimates from The Maritime demand for low sulphur fuel. and Port Authority of Singapore and - Capt Vivek S Anand Early bets by refiners to produce BIMCO indicated that sales of low-sulphur Director, NYK Line (India) Pvt Ltd LSFO at the cost of other products paid fuel oil and low-sulphur marine gasoil in off handsomely as benchmark 0.5 per cent

APRIL 2020 | MARITIME GATEWAY 33 EMISSION NORMS

marine fuel prices in Singapore surged to $314 per tonne, down 6 per cent over the a premium of more than $327/mt to 380 same period. The slow decline in the price CST high sulphur fuel oil on December 26. of HSFO can increase the payback time for But crack spreads for LSFO that trumped fitting scrubbers. Still some shipowners are both gasoil and gasoline for much of the opting for scrubbers as a strategy to hedge past two months have corrected sharply in bunker fuel risks, even though installations recent sessions, and signs are beginning to at some Chinese shipyards are getting emerge that refineries are adjusting output delayed due to the Corona Virus outbreak. in response. It is reported that refiners in While our IMO 2020 fuel The pandemic has further slowed down India, Japan and South Korea that also sourcing strategy focuses on the trade and has brought down freight tweaked refinery operations to sell an compliant fuels for the vast rates so much so giving another reason occasional LSFO cargo were likely to majority of our fleet, we have for shipping lines to opt for scrubbers. follow suit as MF0.5 per cent cracks come decided to invest in a number The losses in terms of revenue when a under pressure. ship is sitting in a dockyard for retrofitting In Thailand, where much of the switch of scrubbers to mitigate scrubber have decreased a lot this year to produce LSFO came via a move from risk and familiarise with the as compared to last year. Last year a high-sulphur crudes to low-sulphur ones, technology in case it turns shipping line would have lost $20,000/ traders say refiners may take longer to scale out to provide significant day if a ship was launched for 40 days to back production. The country currently cost benefits compared to fit a scrubber, the same loss has now come exports around 150,000-200,000 mt/month compliant fuels. down to around $2,000/day with the fall in of low-sulphur fuels, one of the highest freight rates. Further, over the months the outflows in the region. - Steve Felder installation costs for scrubbers have also MD, Maersk South Asia said to come down. Scrubbers remain a viable As far as tankers are concerned, some option scrubber-fitted ships are still commanding a Shipping companies are pushing ahead premium over non-scrubber ones, making a with multi-million dollar investments to scenario changed and the spread between positive case for installing the technology. install scrubbers, despite concerns that a the two fuels had crunched to a five-month It is reported that for modern VLCCs, the narrowing spread between high and low low of $108.84/mt, thanks in part to tighter premium is currently around $7,000/day. sulphur fuel prices could delay the return supply of high sulphur fuels and soft LSFO A scrubber-fitted and non-scrubber VLCC on those investments. The strategy has paid fundamentals. The decline in cost of HSFO is currently being offered around $44,500/ off well initially as prices of high sulphur has been slow as compared to LSFO. day and $38,000/day. The corresponding fuels declined as compared to low sulphur According to fuel price reporting numbers for a one-year time charter are fuel. As reported by S&P Global Platts agency Argus Media, the price of 0.5 per closer to $43,000/day and $36,000/day. towards the 2019 year end, Singapore cent VLSFO in Singapore is now 37 per Ships that retrofitted scrubbers before 380CST HSFO was at a discount of cent below what it cost on January 1, the compliance deadline will continue to $327.47/mt compared to Singapore marine reaching $393.25 per tonne on March 2. reap greater benefits as the price of HSFO fuel 0.5 per cent, but by March 2020 the That compares with 3.5 per cent fuel oil at continues to fall.

34 MARITIME GATEWAY | APRIL 2020 LOGISTICS

DATA YOU CAN BANK ON! LDB uses big data, analytics and IoT to bring in a holistic change in the supply chain, building efficiencies at an end-to-end level Growth and future of LDB LDB started as a pilot project across the busiest container port of the country- the Jawaharlal Nehru Port (JNPT) on 1st July here is no denying to the fact that they leave the ports. Positional information 2016. The port was highly fragmented India is one of the fastest-growing of the containers is tracked through the with container movement being recorded Teconomies in the world and is home RFID readers installed at locations such at multiple non-interconnected terminals. to some largest manufacturing facilities, as toll plazas on the expressways, port There was no centralized system to monitor delivering goods in both domestic and entrances and exits and inland container the cargo in transit. international markets. However, there was depots (ICD) and container freight stations LDB streamlined the system and a time when a poor logistics system was (CFS) where custom inspections are brought single-window container visibility crippling this growth story. Transporting carried out and cargo is reloaded. This into the supply chain. Within a year, goods around the country used to take information is uploaded on the cloud and it witnessed great success in tracking weeks altogether with incessant delays. shared with other logistics systems such as containers at JNPT and was asked to extend There was no mechanism to track the the port management systems. To track the its operations across the port terminals of goods in real-time. To combat ‘running consignment, stakeholders need to log into Adani in Mundra and Hazira. Today, LDB out of stock’ scenarios, manufacturers the website (www.Ldb.co.in) or mobile works across 25 port terminals and handles started overstocking the inventories. This application using the container numbers. over 96% of the container volume of the unnecessarily added to their expenses In addition to this, LDB analytics reports country. LDB has provided visibility to and made attracting foreign investments are designed using Data Platform for Hadoop more than 23 million EXIM containers to a difficult proposition. Realizing that this (DPH) and IoT solutions. These reports are date and has more than 55 toll plazas and rapid economic growth was outstripping published on a monthly basis and provide 139 + CFS and ICD’s under their belt. The the capabilities of the logistics system, insights into the stakeholders’ performance dwell time of export and import bound the GOI (Government of India) started across the competitive landscape. Also, containers has seen an improvement of with a series of initiatives to empower analytical reports on congestion analysis and 15% and 42.86% respectively. their infrastructure. This lead to the birth performance benchmarking are provided This growth curve in streamlining the of DMICDC Logistics Data Services to all stakeholders to identify bottlenecks Indian logistics segment made a global (DLDS) – a joint venture between GOI during transit and improve the system more impression. In 2017, India jumped up represented by National Industrial Corridor holistically. In words of DS Bharara, VP 30 notches to reach the top 100 rankings in Development and Implementation Operations ACTL ICD “LDB’s Performance the World Bank’s ‘Ease of doing business’ Trust (NICDIT) and Japanese IT major benchmarking reports with respect to index. The Logistics performance has NEC Corporation, with 50:50 equity the competition is helping us focus on improved from 54th rank to 35th under the participation on 30th December 2015. streamlining our processes to be the best in World Bank’s Logistics Performance Index the industry." (LPI). The LDB Project LDB with the use of big data, DLDS has recently received revised The LDB (Logistics Data Bank) project is analytics and IoT has brought in a holistic TAMP (Tariff Authority at Major Ports) the flagship project of DLDS which aims change in the supply chain and set new notification for extension of services. to bring visibility and transparency in the benchmarks for each of the stakeholders. Further, they are planning extensive Indian logistics system through an IoT, It has strengthened the focus of supply coverage in these 2 years to connect Big data and cloud-based visualization chain management companies in building hinterlands with all ports of India and platform. It works by affixing RFID tags in efficiencies at an “end-to-end” level as extend services to Nepal and Bangladesh to to shipping containers starting from their against a “piece” level approach taken by maximize visibility and increase customer import journey and detaching them when individual logistic players. value.

APRIL 2020 | MARITIME GATEWAY 35 INTERVIEW

THE MARITIME COOL FUEL All the major ports in India are serving the compliant fuel, supplied by state owned oil companies. Dr Abhijit Singh, Executive Director, IPA explains the fuel dynamics

Q. Which of the seaports in India are offering bunkering service and which of them are supplying low sulphur fuel? The premier state owned Oil Companies M/s IOCL, HPCL and BPCL or their authorized agencies have been allowed to offer bunkering activities at the major ports. Bunkers in Major Ports are supplied to ships mostly through a bunker barge or fuel supplying vessels. Bunkering has been permitted round the clock at the Paradip Port and Cochin Port. At Paradip, pipeline is laid from IOCL Terminal to North Oil Jetty which is approximately 10.5 kms and vessels / barges can be loaded with bunker fuel (VLSFO) directly through pipeline. Cochin Port offers bunkering through pipeline at berth and also through barges. As of January 2020, IOCL has confi rmed that among 8 ports covered by them there is already suffi cient stock. BPCL has stock in Mumbai and HPCL has stock at Vizag with barges equipped to make supply within ports. IOCL also offers bunkering at Kamarajar Port from their foreshore terminal facility at Chennai Port Trust through barges and trucks. In order to boost the bunkering trade at the ports dedicated bunkering facility is being planned at Paradip, DPT and Cochin. At VPT currently bunkering takes place through 3 modes, bunkering through pipelines, through barges at New Bunker jetty and truck bunkering is done by loading Tank Trucks at black oil terminal and later trucks pumping the bunker fuel to vessel at respective berth.

36 MARITIME GATEWAY | APRIL 2020 All the Major ports have started offering low sulphur fuel to vessels/barges as per the new IMO 2020 regulations.

Q. What is the volume of demand expected at each port for low sulphur fuel? Bunker Fuels demand at Indian ports is about 1 per cent of the global demand. Majority of the demand comes from defence ships, domestic vessels, coastal vessels and a small portion of international ships calling at Indian ports. On an average, 27,000 ships call at Indian ports and this number is expected to grow by 7 per cent. As per the statistics from Ministry of Petroleum and Natural Gas (MoPNG), 1.38 MTPA of HFO, HSD and LDO deliveries were made; 0.42 MTPA to y Murmugao Port handled total of 15,550 thereafter to reach a level of 20 TMT international bunkers and 0.96 MTPA to KL of low sulphur fuel last year and the by 2024-25. HSFO will show sharp coastal bunkers. Indian bunker segment demand is expected to remain almost decline by 2020-21 to 70 TMT but is is majorly distributed between defence, same. expected to increase (after installation trading, direct sales and exploration & y At Visakhapatnam Port Trust the volume of scrubbers pick up the pace) to 195 dredging. IOCL is the largest bunker of demand expected is 166,400 MT per TMT by 2024-25. provider with 41.6 per cent market share annum. IOCL is supplying VLSFO in with Adani, HPCL and BPCL contributing Indian markets from September 2019, to 18 per cent, 15 per cent and 10 per cent Q. What is the volume of stock of low ahead of MARPOL 2020 time line. share respectively. sulphur fuel available at each of these Its Gujarat Refinery will produce As per the available data for few Major ports? MARPOL compliant 1.0 million ports, the demand scenario for low sulphur During 2018-19, sales of marine bunker MT per annum VLSFO from LS oil is as follows: fuels in India (FO & Marine Gas Oil) residues. VLSFO will be meeting ISO y Cochin Port handled total of 45301 is 1840 million MT. The consumption 8217:2017 RMG 380 with viscosity MT of low sulphur fuel in the month of remains at the same level of 2017-18 between 220-300 CST. And sulfur January and February 2020. The future (1842 million MT). 0.5% m/m. This will be made available demand is expected to remain around Outlook projects increase in bunker at all port locations having bunkering 25000 MT/month. consumption from 955 thousand MT facilities in India through coastal y For Paradip Port, the current demand is (FO) to 1060 TMT by 2024-25. VLSFO movement from Kandla where it will around 2000 MT/month and is expected consumption will start from last quarter reach through rail route. to reach 4000 MT/month. of 2019-20 and will pick up by 2024- The stock availability for low y Deendayal Port Trust, Kandla handled 25. HSFO will not only be replaced by sulphur oil at few major ports is as total of 52889.11 MT of low sulphur VLSFO gradually but some vessels are follows: fuel in January and February 2020. expected to shift to marine gas oil in 2019- y Deendayal Port Trust, Kandla has Demand is expected to remain at 20. Consumption of MGO will increase stock of 36,498 KL available at the 300,000 MT for the year to 65 in 2020-21 but will start reducing port y Mormugao Port has 3550 KL of stock available at port Sale of bunker fuel in India during 2018-19 y (Thousand MT) Volume of stock of low sulphur fuel FO HIGH FLASH GAS OIL TOTAL available at Paradip Port is 19000 MTs PSU Co. 793 845 1638 y Visakhapatnam Port Trust has stock Pvt. Co. 162 40 202 of 24,800 KL and VLSFO – 43000 Total 955 885 1840 MT. Source: HPCL Presentation

APRIL 2020 | MARITIME GATEWAY 37 INDIA'S LOGISTICS COSTS

CONTAINER LOGISTICS COST: MYTH VS FACTS India’s logistics cost is high and there are several elements in the logistics chain which add to the logistics cost. Sunil K. Vaswani, Executive Director, Container Shipping Lines Association (INDIA) brings SUNIL K VASWANI to the fore some of them EXECUTIVE DIRECTOR, CONTAINER SHIPPING LINES ASSOCIATION (INDIA)

hile on the one hand, India ports viz-a-viz the foreign ones – The terminals, should the Indian ports go ahead aspires to be a USD 5 trillion Vessel Related Charges at Indian ports with a revision in their tariffs. Weconomy by 2024-25, on the are far higher than those at Foreign UNIT COST PER MOVE – Even other, it's cost of logistics remains high at ports. Vessel related charges work out to at the existing rates, the UNIT COST 14 per cent of the GDP, as compared to $108,437 at the New Terminals at Nhava PER MOVE, works out much higher 8/9 per cent in the case of the developed Sheva ie BMCT / NSIGT & $64,592 at the (approximately double or even almost triple economies of the world. The reasons Old Terminals at Nhava Sheva ie JNPCT the cost) for a vessel calling at Indian ports, for these are varied, some of which are / GTI / NSICT, as compared to $12,043 at as compared to her calling at Foreign ports. commonly known while the others, P Klang, $16,158 at Jebel Ali, $17,235 at Under the circumstances, it is not although equally important if not more, are Singapore & $19,308 at Colombo. These only economically challenging for the not generally talked about. charges at Indian ports will increase even shipping lines to call at Indian ports but also Here are some of the spots where the further if the tariffs are revised. diffi cult for Indian exports to be globally shoe really pinches: TOTAL CONTAINER RELATED competitive. A reduction in the Indian port COST – These costs too are much higher at charges would therefore help in bringing HIGH PORT CHARGES the New Nhava Sheva Terminals (BMCT & down the cost of logistics. India's port charges remain amongst the NSIGT), Mundra & Pipavav, as compared highest in the world. to those at Foreign ports. Again, these DUAL CHARGE TOTAL PORT CALL COST of a costs at Indian ports could increase further, Some of the ports like JNPT for instance, vessel of the same size calling at Indian including the ones at the Nhava Sheva old charge a dual charge to the lines calling there.

38 MARITIME GATEWAY | APRIL 2020 This is with reference to the MBPT MBPT DUES Sulphur from the 1st of January 2020 has dues paid by all the shipping lines at 2,468,90,817 put pressure on fuel costs for the shipping Nhava Sheva. Presently, all the container lines. With fuel contributing towards 65 per vessels call at either of the five container cent of the cost of operations, no line can terminals at JNPT. During the period 1st JNPT DUES afford to ignore this cost. January to 30th November 2019, a total of 6,443,94,603 HIGH INLAND HAULAGE 1586 container vessels called at the Five CHARGES: With rail operators padding Terminals at JNPT. on margins, which can go up to about 20 Since the inception of JN Port during TOTAL per cent, over and above the rail freight, the the year 1989, all the Shipping Lines have 8,912,85,420 increased cost impacts India's exports & been paying both the MBPT as well as the (INR) imports adversely. JNPT Dues. Earlier the MBPT dues were FRAGMENTED MARKET spread not so unaffordable due to the smaller size across the length & breadth of the country of vessels and the lesser number of calls at calls for infrastructure development, JNPT. Now with the sizes of vessels having Given above are the details of JNPT efficient and cost-effective inland increased from 2700 teus (26,000 GRT) and MBPT dues paid by the leading four transportation, first & last-mile deliveries, to the range of 9000 teus (109,712 GRT) major shipping lines, from January till modern warehousing, etc. / 14,000 teus (128,000 GRT), the MBPT December 2019. The quantum recovered CARGO MIX: The country's import dues are indeed getting to be unaffordable by MBPT from vessels calling at JNPT, & export commodities have different for the shipping lines. directly impacts the bottom line as far as transportation requirements. While India's In order to allow larger parcel size the cost of logistics is concerned. imports are mostly 40ft driven, it's exports vessels to call at Nhava Sheva, JNPT carried Due to the prevailing market scenario, need, by and large, 20ft boxes. This creates out capital dredging, thereby enabling most of the vessels are in any case under- an equipment imbalance which poses both vessels with 15 mtr arrival draft and 14000 utilised and these additional costs further operational as well as financial challenges teu capacity (over 100,000 GRT) to call impact the bottom lines of the vessels for the shipping lines. at the port. While the cost of the capital calling at JNPT. The above port costs INTERMEDIARIES: Thousands dredging was borne by JNPT, with no therefore prove detrimental towards the of so-called logistics providers have contribution from MBPT, it still recovers a Government’s initiative of reducing the mushroomed across the country. However, significant chunk of the port dues through Transaction Cost and further improving barring a few, the remaining essentially JNPT, from vessels calling therein. The India’s ranking in the Ease of Doing tend to pad on margins without offering vessels entering into JNPT, are managed Business. any real value to the end customer, thereby by the JNPT Marine Department and no IMO REQUIREMENTS of usage adding significantly to cost of logistics of services whatsoever are provided by MBPT. of fuel with no more than 0.5 per cent the country. SHORTAGE OF SKILLED MANPOWER: With limited availability COMPARISON OF MARINE & CONTAINER RELATED COSTS IN VARIOUS INTERNATIONAL PORTS (US$) of recognised courses and preference of the AVG. Moves younger generation for other professions, GRT 91,410 NRT 43,851 2500 per call shortage of trained manpower in logistics Nhava Sheva New Termi- continues. This gap can be bridged, to Port Old Terminals Basis of Charge Colombo Jebel Ali Singapore nals (BMCT/ Mundra Pipavav an extent, through on-line programs, Kelang (JNPCT/GTI/ NSIGT) NSICT) simulation models, on the job training, etc. Port Dues 4,159 5,231 3,987 1,973 13,245 13,245 4,717 15,357 DIGITALIZATION - the way to go. Other Port Dues/Towage 2,400 4,360 5,342 - 4,698 4,698 - Elimination or at least minimization of Pilotage 4,159 5,363 1,378 5,228 24,508 24,508 71,848 39,215 manual intervention would help improve Berth Hire 5,484 1,008 6,528 1,649 10,969 54,815 19,086 11,847 efficiencies and thereby help towards Other Misc Costs 196 - 261 - - - - reduction in the cost of logistics. Certain GMB Dues - - - - - 8,953 8,953 positive steps have already been taken in Light Dues 3,107 - - 2,933 11,171 11,171 - this direction but a lot still needs to be done. Total Port Call Cost 19,308 16,158 17,235 12,043 64,592 108,437 104,604 75,371 India is doing economically better than Total Container Related 171,363 163,486 188,757 111,441 162,443 210,700 241,244 241,395 many other countries of the world. However, Cost understanding where the real problems lie Average Number of Moves Performed 2.500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 and addressing those systematically, would per call help improve efficiencies and reduce the Unit cost per move 76.27 71.86 82.40 49.39 90.81 127.65 138.34 126.71 cost of logistics.

APRIL 2020 | MARITIME GATEWAY 39 MARINE FUEL

ship operators by handling the key issues namely fuel stability, fuel compatibility, low temperature operability, lubricity improvement, combustion improvement, and corrosion protection. Key drivers for global catalyst demand growth are upward trajectory of capacity additions trend in downstream, driven by demand for fuels and petrochemicals to enhance effi ciency of downstream processes conversion level, yield of target products as per change of market dynamics, and better COMPOUNDING use of all sources and stringent environment and safety regulations worldwide both for COMBUSTION fuel specifi cations and composition. Supply and demand CATALYSTS The global catalyst market is projected to fl ourish at a compound annual growth rate (CAGR) of around 5% by 2026. Growth of this industry will be driven with advancements and upgradations in refi ning, petrochemicals, chemicals and evolving environmental factors which are cementing the demand for more catalysts and additives, and investment in research & development. The global sale of all catalysts is growing by 3.6% per annum. Refi ning catalysts segment Combustion catalysts he demand for catalysts is dominates the market with its contribution and additives are gaining envisaged to rise signifi cantly, of $4.7 billion this year. triggered by International Maritime Combustion catalysts industry is demand in the shipping T Organisation (IMO) 2020 regulations highly fragmented with number of players. industry as the sector for sustainable environmental practices. Upward trend of the catalysts/additives realises their crucial role Combustion Process Additive Used industry is majorly driven by the petro Demulsifiers (breakdown while combusting various chemical refi ning sector, fuel combustion fuel-water emulsions) blends of low sulphur fuels processes in power generation and marine Pre-Combustion applications. The global catalyst market treatments Dispersants (prevents tank in compliance with IMO 2020 sludge formation and improves regulations is fl ourishing with huge impetus from purifier separation) technological advancements, optimisation Bacteria growth in Fuel microbiocides preventing BY RAKESH ORUGANTI and increased effi ciency in achieving distillate fuel during bacteria growth operating goals. Catalysts/additives are storage used in combustion process of power Organic or organo-metallic generation, followed by rail locomotives, compounds improve fuel and Combustion improvers motor vehicles, gas pipeline compressors, oxygen mixing that improves Automobiles and Aviation industries. The combustion catalysts bring economic benefi ts to the Post combustion Ash modifiers to prevent sticking

40 MARITIME GATEWAY | APRIL 2020 FUEL ADDITIVES USAGE AND FUNCTION Product Type Product Function Application Reduce sludge formation minimizes fuel Heavy fuel oil and distillate fuel oil storage Fuel stabilizer sludge conditioner instability and incompatibility in storage tanks tanks Minimizes instability during storage, reduces Low-Sulphur (0.5%) fuel conditioner tank sediment formation, provides lubricity All low Sulphur fuel oils storage tanks & reduces wear Presently, Shipping lines are focusing more Prevent deposits and corrosion of fuel injec- Ultra-Low Sulphur (0.1%) fuel treatment Prevents fuel injector deposits and corrosion on complaint fuel (Very Low Sulphur Fuel tors (ECA compliant fuels) Oil), usage of Combustion catalysts and Combustion improver and deposit modifier Improves combustion, prevents vanadium Heavy fuel oil and distillate fuel oil storage usage of scrubbers in order to comply with (organo-metallics) deposits, reduces Sulphur trioxide formation tanks Catalyzes exhaust gas deposits, prevents IMO norms. The combustion Catalysts Exhaust gas deposit modifier and remover Exhaust gas boiler economizer deposit formation are majorly used in HFO (High Sulphur Pour point depressant Low temperature flow improver Marine gas oil ultra-low Sulphur diesel Fuel Oil) & MGO (Marine Gas Oil) for Inhibits microbiological growth in storage Heavy fuel oil and distillate fuel oil storage Fuel microbiocide optimized results to comply with IMO tanks and fuel lines tanks norms and also to increase the efficiency of combustion process of bunker fuel. The chunk of the industry with 60 per cent of Another issue with scrubbers is their high ratio of combining catalysts in bunker fuel the overall fuel additives market. capital costs that range between $2 -$10 is hovering between 1-5 litres of catalyst: million per vessel. For example, if any 1000 litres of Bunker fuel. Approximate Challenges shipping line is planning to outfit scrubbers volume of bunker fuel requirement globally y High cost of fuel additives and number for its fleet of around 100 vessels at an is 250 million tonnes / $100 billion annually. of players in the marine industry. average cost of $5 million per vessel, this Hence, an estimate of 200,000 tonnes/ y Constant upgradation and advancements would amount to $0.5 billion. annum of combustion catalysts/additives is for better engine manufacturing Most shipping companies earlier required for marine applications. techniques might hinder the Catalysts considered combustion catalysts and Compliance with IMO 2020 is estimated market growth. additives as an obscure part of the to cost the container liner industry alone an y Despite fuel additives claims that improve global marine fuel market. But now the additional $15 billion per year. The savings fuel efficiency, boost engine performance maritime industry has come to terms for correct usage of combustion catalysts is and reduce harmful emissions, in flip with the advantages of additives for in between to 6-12% but results would vary side loss in mileage, water attraction and better performance of their fleet. This is based on engine design, exact fuel specs etc. absorption coupled with problems such bolstering the market as new shipping As per current IMO regulations Ship owners as phase separation, microbe production regulations require vessel owners to switch are focusing on stabilising the use of the low and corrosion are anticipated to act as to cleaner fuels. At least some new low- sulphur products and adding of catalysts restraints for the growth of global marine sulphur fuels contain ingredients that can to comply with norms. On the other side, fuel additives market. separate over time, potentially making catalysts consist of higher volume of cat them liable to clog equipment. Some of fines can cause engine wear which needs to Usage of scrubbers the new, cleaner versions may contain be addressed by the industry. Increasing the Apart from usage of Combustion catalysts asphaltenes, which can form a sludge, efficiency by usage of additives will pick and additives, usage of scrubbers is also especially when different fuels are mixed up the momentum when modern tonnage growing in 2020. Open loop scrubbers and together. That’s prompted shipping lines comes. closed loop scrubbers are two categories to turn to the additives they once passed widely used in marine industry. Open over as unnecessary, including compounds Combustion Catalysts/Fuel loop scrubbers have disadvantage due to to improve a fuel’s lubricity and others to additives market size discharge of waste water in to sea. Some keep it stable and prevent it from breaking The overall fuel additives market size ports are not encouraging this practice. down. The key players in additive market was around $7.2 billion in 2018 and is Fujairah Port banned the use of open-loop reported doubling in sales of marine-fuel projected to reach $8.7 billion by 2023, scrubbers in its port waters. Other countries additives. The trend is likely to continue as at a CAGR of 3 per cent between 2018 to namely China, Singapore, Belgium, ships use mixtures of various low-sulphur 2023. The growth of fuel additives market California and Massachusetts in the US, fuels from different sources. There have is primarily triggered by huge demand along Germany’s Rhine River as well as the been significant efforts to comply with the from end-use industries such as power Irish Port of Waterford banned the usage of regulations, including cleaning tanks and generation, manufacturing, automotive and scrubbers in their port waters. Despite some fuel systems as well as using additives to shipping industry in the APAC region. The scepticism towards open-loop scrubbers, ensure that there are no residual non- automotive industry accounts for major Japan has decided it will support their use. compliant fuels.

APRIL 2020 | MARITIME GATEWAY 41 DEDICATED FREIGHT CORRIDORS

BRINGING THE MODAL SHIFT

The freight corridors ver the past many decades since The Dedicated Freight Corridor will take off 70 per cent 1950s, the Indian Railways Corporation of India Limited (DFCCIL) Ohas been losing market share is developing the eastern and western of freight load in the to road transport because of inadequate DFCs as part of the Golden Quadrilateral form of goods trains infrastructure and poor services. In 1970, connecting New Delhi, Mumbai, Chennai railway was carrying nearly 86 per cent of and Kolkata. While the western sector will from the passenger the total freight volume, which has now be connecting all major ports, including network and the come down to 33 per cent. On the other Mumbai, Kandla, Pipavav and Mundra, logistics cost will be hand, freight traffic by road has jumped the eastern corridor will connect most of from 14 per cent to 59 per cent. Now the coal fields. The haulage charges on trimmed by 50 per cent compare this with countries like China and DFCs network will be 50 per cent lower United States, where railway freight share compared to the freight tariff in the Indian is 47 per cent and 48 per cent respectively. Railways, said Anurag Sachan, MD, As on date, 90 per cent of India's passenger DFCCIL. traffic and 65 per cent of its freight “We will be running all the trains at uses road transport and these shares are 100 kmph on a fully automated signal growing, as per DFCCIL. India is placed system,” he said. The dedicated corridor at fourth position in the world in railway will also help improve the efficiency of the freight traffic after China, US and Russia. passenger trains which will no longer have

42 MARITIME GATEWAY | APRIL 2020 private players to come and run their own up the future corridors so that by the time trains. There will be a regulatory body, like we finish these in two years, these corridors in the developed countries, and there will are also planned for execution,” he said. be a non-discriminatory access to these Three more corridors are lined up private players to operate. So, there will – East Coast corridor from Kharagpur be a very fair competition between private to Vijaywada (about 1,000 kilometres); players and the Indian Railways. South-East to West corridor from Bhusawal Eastern DFC will cover a length of to Dhankuni (near Kolkata) and North over 1,800 kilometre between Ludhiana South sub-corridor from Vijaywada to to Kolkata, while Western DFC will ply Itarsi (in Madhya Pradesh). The total length between Dadri and JNPT (1500 km). The of these three corridors is about 4,000 two corridors are expected to be completed kilometres. by December 2021 and once fully operational they are expected to take over MMLP connecting DFCs a bulk of freight traffic from the Indian Kanpur in Uttar Pradesh and Nilje in Thane Railways and thus help in making the District may be developed as the first major passenger traffic more efficient and smooth. nodes where Multi-Modal Logistic Parks The two corridors with an expected cost could be set-up along the ambitious eastern of `81,000 crore ($12 billion) are being and western DFCs respectively to give an partly funded by the World Bank (eastern impetus to rail and highways linkages for lane) and Japanese government's investment transportation of goods, create avenues for arm JICA (western lane). DFCCIL has infrastructure development, value addition spent around `34,000 crore on this project and employment. DFCCIL is likely to in the last six years. The portions which appoint a consultant by April to carry out have been completed along these corridors a feasibility study and prepare a detailed are already being operationalised for the project report on these two nodes. automated running system. The operation As per DFCCIL, the objective of control center (OCC) at Prayagraj in Uttar developing these nodes is to provide end Pradesh will be the command centre for the to end logistics solution – mapping of entire route of EDFC. Equipped with first potential customers for each location - the of its kind Integrated Train Management prospective industry, the future and current System (TMS) and Supervisory, Control market potential and traffic projections; and Data Acquisition (SCADA) System product/service delivery and infrastructure in India, it is built on ICONIS (Integrated gap assessment in a radius of 100 km Control and Information System) platform. around the proposed node. Thus, DFCCIL to negotiate time schedules on account This centre hosts a 90 metre long digital sees the logistic parks as a route to build a of commercial freight trains. As of now wall with officials monitoring it on a 24x7 network through freight terminals to boost the freight trains move at 25 km per hour basis to manage the automated goods trains the modal shift to railways from road for on an average due to the traffic load on running system. freight and bring down logistic costs. account of passenger trains. Once they shift Nearly 1,000km of freight corridor Besides, 34 points along these to DFCs their average speed will go up to is almost ready. In the first phase, 64km corridors like Palanpur, Mehsana, Rewari, anywhere between 60 to 70 km per hour of track between Rewari to Palanpur Karchana (Prayagraj), and Gothangam on an average with a capacity to go up to in western freight corridor is almost (Surat) have also been identified as 100 km per hour. “We will be running 120 completed, and 351km between Khurja to potential nodes. DFCCIL is planning to trains each way a day with total carrying Bhaupur in eastern corridor is ready for float an express of interest for those keen capacity of 13,000 tonne. So, we will not formal inauguration. to invest in such projects. According to let this capacity to be underutilised,” said DFCCIL will start survey of the Sanchan, the freight corridors once fully Sachan. The corporation is in talks with the remaining corridors of the Golden operational are pitched to take off 70 per Ministry of Railways to pass on some part Quadrilateral, and begin work by the cent of freight load in the form of goods of lower freight charges to the customers, time the western and eastern corridors trains from the passenger network along he said. are completed by December 2021. “The these sectors. This he said is the minimum “As so much capacity is being created government, after seeing the progress on and if railways at some point plans to shift and as per the concession agreement with these two corridors, have decided that it is the remaining goods freight traffic as well, the Indian Railways, we will also allow the right time that we should plan to take the DFCs are equipped for that.

APRIL 2020 | MARITIME GATEWAY 43 DEDICATED FREIGHT CORRIDORS

Currently, the bulk of automobile transportation – particularly cars and two East coast railway wheelers – is through the road network waltair division where they are transported from factories loads 72 rakes in a to showrooms across the country. The five year vision document of the railway single day ministry says the current share of East coast railway waltair automobiles transported through trains is division has achieved barely 10 per cent. Trial runs completed on highest ever loading of 72 DFCs rakes (3782 wagons) in a Major ports race to connect Indian Railways has conducted a trial run single day. Crossing the DFCs on priority of double stack cargo train on Western previous count of 68 rakes The western DFC will be connecting JNPT DFC, on the 306 km long Rewari -Madar per day recorded last year. with Dadri on the outskirts of the national Section. A trial run of BOXNS cargo With consistent efforts capital and aims to build a dedicated wagons at 110 Kmph has also been of traffic department 147 railway line. It also connects ports, completed. The DFC infrastructure has freight trains interchanged including Kandla, Pipavav and Mundra, in been made in such a way that it utilises the with 92.3 per cent punctu- Gujarat with the hinterland. Asserting that carrying capacity of these freight wagons. ality of mail and express the DFC was originally meant for its cargo, At present, Indian Railways’ freight trains trains. The waltair division JNPT asked the central government to can carry 61-71 ton weight per freight is heading towards achiev- ensure private ports do not get precedence carriage at an approximate speed of 60 ing railway board’s target in connectivity through the project. It is kmph. The newer, advanced wagons can of 68 million tonnes load- reported that at present, JNPT handles 31 carry weights up to 81 ton per wagon ing for this year. The gross per cent of the overall container traffic of at an approximate speed of 100 kmph. earning of waltair division India and its share has been declining at the These wagons have a tare weight that is its till the end of January expense of private ports in the region. own weight of 19.85 tons and a carrying 2020 is `7,222 crore, capacity of 80.15 tons. These wagons which is 10 per cent more New rail corridor along have a 14 per cent more weight carrying compared to last year. Delhi-Mumbai Expressway capacity than the wagons being currently Piyush Goyal-led Railway Ministry has used on Indian Railways. expressed interest in building a railway With its timely delivery, railways has corridor along the upcoming Delhi-Mumbai been targeting e-commerce platforms, and Expressway. A major advantage on this the freight corridor project will also open route is that no fresh land acquisition up doors for the automobile sector. – one of the biggest hurdles for major infrastructure projects – would be required. Focus on improving As of now the freight The Delhi-Mumbai Expressway project automotive traffic trains move at 25 is expected to reduce the road travel time The Indian Railways have recently been km per hour on an between the two major cities to just 12- witnessing significant decline in transport 13 hours from 24 hours at present. The of coal which has impacted its revenue average due to the highway project is likely to be completed from the freight segment. The total coal traffic load on account in three years’ time. The proposed new transported by railways stood at nearly of passenger trains. railway corridor along the Delhi-Mumbai 606 million tonnes in 2018-19, as per Once they shift to DFCs Expressway is likely to have a speed the revised estimate of 2019-20 its set to potential of 160 kmph, keeping in mind reduce to 592 million tonnes. According their average speed Indian Railways’ aim to run semi-high speed to the budget document, freight loading by will go up to anywhere trains on the Golden Quadrilateral. Prime railways in 2019-20 is about 1,223 million between 60 to 70 km Minister Narendra Modi-led Union Cabinet tonnes in March and nearly 50 per cent of had last year approved the `6,806 crore this is coal. But during 2020-21 this share per hour on an average plan to upgrade the existing Delhi-Mumbai is expected to reduce to 40 per cent. with a capacity to go up Indian Railways route to 160 kmph speed The state run transporter is targeting to 100 km per hour. potential. This includes the Vadodara- a five-fold increase in its share of Ahmedabad stretch as well. The project is transporting automobiles by 2025. expected to be complete by 2022-23.

44 MARITIME GATEWAY | APRIL 2020 UPDATE

RASUWAGADI BORDER TO REMAIN CLOSED Port and logistics operations in China are gradually resuming as the COVID-19 epidemic is being contained, but the Nepal authorities are wary and have refused to reopen the Rasuwagadi border until the virus is completely wiped off

"Trade through the Tatopani border point is on the rise, the Tatopani Customs collected revenue worth $2,25,910 in ovement of trade between Nepal primarily exports handicraft the first month of current fiscal and total Nepal and China through goods to China and imports readymade revenue grew to $2.43 million during the Mthe Rasuwagadi border was garments, footwear, chemical fertilisers, four-month period," revealed Krishna halted on January 29 due to the outbreak electrical goods, machinery parts, pipes, Bahadur Basnet, Chief Customs Officer, of Corona Virus. While port and logistics raw silk, telecommunication and TV Tatopani Customs. operations in China are gradually resuming equipment and parts from China. According to Basnet, most of the in the background of strict quarantine The Nepal-China trade was on further imported goods from China through the measures, but the Nepal authorities have rise after the reopening of the Tatopani- Tatopani border point were agriculture insisted to restrain movement of cross Zhangmu border point in May last year. products such as apples. "Industrial goods border trade until the virus effect has been The border point had been out of service have also been imported through this completely contained. since Nepal's deadly earthquake in 2015. border point but at a very limited quantity," The Rasuwagadi border, which is a Bilateral trade through the border point he said, noting that importers have not major trading point between Nepal and stood at around $4 million as of mid-July been confident enough to import through China, was initially shut for 15 days on when the 2018-19 fiscal year ended. As of this route because of the prolonged closure January 29. However, as the coronavirus mid-November since the start of the 2019- before its reopening. A major advantage epidemic showed no sign of abating, the 20 fiscal year, total trade through the route to Tatopani border is the presence of a dry government had decided to continue the has reached about $20 million. port at Larcha where stuffing and de- closure of Rasuwagadi border until further The value of trade moving through stuffing of containers and documentation notice. Hundreds of containers bound for Tatopani-Zhangmu border point was still work could be easily done without any both Nepal and China have been stalled low compared to that of the Rasuwagadhi- parking problem for the cargo vehicles. The at the border points for months. China Geelong border point, but officials and Tatopani border point had been the main falls behind India to be the second largest traders believed the volume would grow route for inland trade between Nepal and trading partner of Nepal. Nepal exported gradually. Nepal exported goods worth China before its closure in 2015. Around goods worth `863 million to China in around $3 million through Rasuwagadhi- 25 per cent of Nepal's total trade with first five months of the current fiscal, it Geelong border point and imported goods China took place through this border point imported goods worth `88.6 billion from worth about $160 million during the first as of fiscal year 2013-14, according to the there in the same period. four months of this fiscal year. Department of Customs.

APRIL 2020 | MARITIME GATEWAY 45 Q&A

interested and active players in this line of business. In 2018-19 we as an organisation BETTING went through internal restructuring to streamline our operations, create and put robust systems in place which focuses on BIG ON enhanced customer experience. Q. Established in 1999, how has the business at Freya Shipping grown over BREAK BULK the years? We were traditional freight brokers since 1950 and to align with changing business With a humble beginning in 1950s as freight requirements of our customers, ventured into brokers Freya Shipping has evolved over the years freight forwarding in 1999. Core values of into freight forwarding. “Growth in break bulk transparency, honesty and prompt customer services were retained and continue to drive cargo movement will also be an area of focus for business under brand "Freya Shipping." us,” informs Raj Chopra, Director, Freya Shipping, Exclusive FMC tie up has assisted in as he details on the business operations addressing a core regulated market. Q. To which hinterlands do you provide freight forwarding services? Which are the major commodities being moved by you? Q. How has been the business last We started our business from Kolkata - year? Any significant achievements City of Joy and as our Customers expanded you would like to share? their operations whether Vizag, Mumbai, Business has been good. We have had a Chennai, we too have followed them by growth of top line and profi ts of about 10%. providing services at these locations. As a fi rst, we were able to handle an import Hinterlands served by us are the North of a CAT Excavator weighing about 42 tons eastern states, Orissa, Jharkhand and from Houston to Kolkata, as a break bulk Bihar. We handle a varied cross section cargo on regular container vessels. We were of commodities as Jute goods, Cotton and supported by MSC in a big way for this Jute Shopping bags, CI goods, engineering import. We intend to grow this business. goods, forging materials, Garments, Other major carriers too have become Shellac, Ferro alloys, Catalysts.

46 MARITIME GATEWAY | APRIL 2020 Q. To which global markets does Pulses, Food products, Vehicles, Industrial Q. What are your growth and Freya Shipping connect? Raw Materials. expansion plans in 2020? Essentially we operate in all markets where Major commodities (Export): Yarns, We hope to maintain the growth momentum. our shippers buy or sell their goods. Major Nepali Tea, Handicrafts, Carpets. Bilateral With an exclusive tie up in the USA, exim share of goods is to USA, West Africa, trade between India and Bangladesh is from this region will be a key area of growth Europe and parts of Asia. We have a set of majorly through Petrapole- Benapole and expansion with diversified services. own and associate partner network in India customs LCS. Present barge, feeder Growth in break bulk cargo movement will and globally which enables Freya Shipping services between Kolkata - Haldia & also be an area of focus for us. to offer seamless door-to-door services. Bangladesh needs to be more regular to enable trade to shift from road. Vehicle Q. What is the impact of Corona Q. While the Customs department spares, paper packages, petrochemicals, Virus outbreak on the business? has digitalised a number of services, machinery, farming equipment, cotton, This is a big unknown. It has already as a Customs House Agent what yarns are some of the major commodities impacted movement of goods and disrupted challenges do you face? exported out of India. the supply chain. During a major carriers’ Unlike rollouts by other government earning call it was estimated that around agencies, the roll out of digitalisation by Q. How does the track and trace 30 per cent of its trade will be affected, Customs has been quite smooth and has service for tracking cargo function? given the importance of China to global aided in removing quite a few bottle necks Track & Trace is being accorded top trade. In February within a short span of faced by the Exim trade. priority with real time data access from time, carriers have blanked an additional 31 carriers website as well as third part sailings across Transpacific (21) and Q. Are you planning to offer websites. We do have systems in place to Asia-Europe (10). The Covid-19 has chartering services? monitor the progress of shipments and keep caused widespread schedule changes on We intend to explore adding Chartering customers posted. Asia-Europe and Transpacific. capability at right opportune time. There are a whole array of devices Another consequence of the shut which have been embraced and actively down or slow down has been wide spread Q. What are the commodities and promoted by major carriers, who have also shortage of containers across the globe, volumes being moved to Nepal and introduced solutions leveraging IoT for which may lead to spike in freight rates. Bangladesh? What challenges do Geo location, Geo fencing, ETA estimates, The blanking of services too could lead you face in moving cargo to these shock detection, door opening alerts on to spike in rates. In fact major carriers markets? the containers, temperature and humidity have announced rate increases to and from Nepal market has shown tremendous growth recording inside the containers. Both the Asia to Europe and North America in especially driven by higher imports, approx. asset owner and cargo owners benefit such anticipation. There is a fair amount 1,00,000 teus market volume for EXIM in from these solutions for supply chain of uncertainty on how the scenario will 2019-20. Option of Vizag Port aided Nepali management and other benefits. We work unfold in the coming days, as more number Traders in their efforts to reduce transit time closely with the carriers to provide the of countries come under the impact of this and improve the supply chain visibility. required solutions for the cargo to provide global pandemic virus. Major commodities (Import): Oil customers just in-time information on the seeds, Building construction machinery, key metrics. Q. How do you see the Union Budget 2020 impact the shipping and logistics sector? We wait for the Make in India initiative to take hold to boost exports from India. The Covid-19 impact too, has led Importers to diversify the countries from where they source their goods. We will need major support from the government to assist the Indian trade to achieve the scales which China already has. The budget allocation for funding of Road, Rail and inland waterways has seen higher quantum. Regular volume flow through inland waterways, enhanced coastal shipping will help the trade in reducing logistics cost.

APRIL 2020 | MARITIME GATEWAY 47 COUNTRY FOCUS VIETNAM

SURVIVING Vietnam’s border trade with China slowly resumes, but the THE road to recovery is expected to be slow and painful COVID-19

hina is Vietnam’s largest trading 6.8 per cent and will take steps to ease the the advantage of having abundant raw partner, representing 20 per cent of impact of the coronavirus outbreak. Fresh materials, with 90 per cent of them being Cthe country’s imports and exports fruit and vegetables will have suffered domestically sourced. by value. It imports a third of Vietnam’s the most damage because they cannot be The General Statistics Office (GSO) agricultural production. The outbreak of preserved for long. forecasts if the coronavirus epidemic ends Corona Virus has put a dent in Vietnam’s Vietnam’s January exports were down in the first quarter this year, Viet Nam’s exports, with local forwarders warning of by 14.3 per cent, year on year, with the industrial production value in the first further trade and manufacturing disruption. Ministry of Industry and Trade reportedly quarter would increase by 2.68 per cent Vietnam’s key border crossings with citing coronavirus as a key factor. While year-on-year, lower than growth rate of China were closed, disrupting cross- Vietnam is a major garment and footwear 9 per cent in the first quarter of 2019 and border trucking, and all passenger flights exporter, large quantities of raw materials 10.45 per cent in the first quarter of 2018. to mainland China had been suspended. for production are imported from China. Production value of the manufacturing However, by the month end the Tân In other industries, around 50 per cent of and processing sector, accounting for a Thanh-Pò Chài Border Gate in the northern components required originate in China. large segment in the domestic industrial province of Lang Son has been reopened, The disruption to sourcing would impact production, is estimated to increase only allowing cross-border trade between domestic manufacturing, and therefore 2.38 per cent. If there had been no epidemic, Vietnam and China to resume. Trucks exports. the processing and manufacturing sector was transporting goods from Vietnam’s side However, not all sectors have been expected to surge by 10.47 per cent. to China are being disinfected and made negatively affected by Covid-19: the In addition, other industrial products to return on the same day. For the time food industry, for instance, saw growth would also lose production value due to being, only firms that can show they have as people stocked up on food amid the an extended epidemic including textiles, contractual duties to deliver goods to China Covid-19 epidemic. Many food processing garment, leather and shoes that need are given permission to move across the enterprises are in fact requiring to increase imports of raw materials from China border. About 21 trucks carrying 315 tonnes production to meet the surge in demand such as yarn, fabric, cotton, thread, of dragon fruit passed Thanh Thuy Border both domestically and in export markets. needle, leather, and other equipment and Gate in northern Hà Giang Province, the According to Acecook JSC Company, one accessories for the textile, leather and first convoy permitted to cross into China of the leading foodstuff companies in the garment sectors. since the beginning of the year. country, the company has increased its To stabilise domestic production, GSO At the nearby Huu Nghi border, production to around three billion packs of director Nguyen Bích Lâm said the GSO hundreds of trucks were seen preparing noodles a year. Lý Kim Chi, chairwoman had proposed the Government monitor to transport goods to China after being of the city Food and Foodstuff Association, trade activities, especially key export stuck since February 5. The Vietnamese said most food processing companies have products and markets, and then solve government has announced it will stick increased their production to meet the problems of producers and traders of those to this year’s economic growth target of new orders. Vietnamese businesses have products.

48 MARITIME GATEWAY | APRIL 2020 COUNTRY FOCUS: SRI LANKA

liquid bulk, dry bulk, RoRo and container COLOMBO NORTH traffic. The maritime nation is maintaining PORT ON THE ANVIL a balanced approach in infrastructure development. On one hand it is planning to expand the seaside infrastructure and on the other hand the infrastructure connecting to the ports is also being upgraded to ensure smooth flow of traffic to the hinterland and vice-versa. Sri Lankan President Gotabaya Rajapaksa and Prime Minister Mahinda Rajapaksa officially inaugurated an extension to the country's extension of Southern Expressway that will link the main ports and airports in Colombo and Hambantota. Chinese Ambassador to Sri Lanka Cheng Xueyuan also graced the occasion. The Southern Expressway is Sri Lanka's first E Class highway and is currently the longest highway in Sri Lanka. "The extension of Southern Expressway up to Hambantota will connect lives, livelihoods and boost economic activity. It's the key infrastructure that links Hambantota Port and Mattala Rajapaksa Hambantota Airport and supports our vision in building Sri Lanka as a logistic hub in Asia," the president announced. Construction of the extension stretching olombo Port has been ranked the The proposed Colombo from Godagama in the southern Matara fastest growing container port out North Port may spread district to Mattala in the southeastern Cof the world’s 30 largest ports by Hambantota district began in 2015. It will throughput in 1H of 2018. SLPA is keenly from the Kelani River further strengthen Sri Lanka's position on observing the traffic growth at Port of in the Modara area up the Maritime Silk Road. Colombo which currently has a container Minister of Mahaweli, Agriculture, handling capacity of 12 million teu per year to the existing northern Irrigation and Rural Development, Chamal and SLPA is seeking a long-term plan for the breakwater of the Rajapaksa said the extension would suit next 30 years to boost the container handling Colombo Port and will his ministry's plans to develop export capacity at the port to around 35 million teu. agriculture as the road would enable Growing cargo traffic calls for help Sri Lanka become a transport of produce from farms to port and infrastructure expansion and the Sri Lanka major trade point on the airports. Ports Authority (SLPA) is just in time Indian Ocean Construction of the expressway was to come up with a new port plan. The undertaken by three Chinese contractors Colombo North Port will be situated in including China National Aero-Technology the northern side of the existing Port of Project Preparatory Facility. Along with International Engineering Corporation, Colombo. SLPA has signed a deal with expanding its domestic shipping and China State Construction Engineering AECOM Infrastructure and Environment logistics market, SLPA hopes the Colombo Corporation and China Harbour Engineering based in UK to conduct a feasibility study North Port will also help Sri Lanka become Company. The consulting and supervision into the development of the Colombo a major trade point on the Indian Ocean. was conducted by China Railway First North Port, as it looks to expand the cargo It is expected that the proposed Survey & Design Institute Group Co., Ltd handling capacity of the country. The study Colombo North Port may spread from Some of Chinese construction standards is expected to be completed in 15 months the Kelani River in the Modara area up were introduced into this project that and is being funded by a portion of Asian to the existing northern breakwater of the represents the advanced level of the Chinese Development Bank-funded Transport Colombo Port. It is proposed to handle construction and management.

APRIL 2020 | MARITIME GATEWAY 49 COUNTRY FOCUS: BANGLADESH

MONGLA PORT ADDS MORE MUSCLE

Mongla Port is expanding its infrastructure and boosting connectivity to better handle the domestic exim traffic and transhipment of goods from India, Nepal and Bhutan

ongla Port, the second major and railways. On completion the project by 101,000 square meters. Two more jetties seaport in Bangladesh is will significantly boost connectivity in the are being constructed at the port which will Mexpected to witness a rise in BBIN region. India has extended a line of help enhance container handling capacity to traffic in the coming years. Located in credit for the expansion of the Mongla Port 0.8 million teus by 2025. south-western part of the country, the port capacity. Out of the total estimated project The Cabinet Committee on is set to see a connectivity boost by rail in cost of Tk 6,014 crore, India will provide Government Purchase approved the next two years. As the Padma bridge Tk 4459 crore equivalent to $530 million procurement of three mobile harbour gets ready by next year road connectivity as Line of Credit for the project. cranes having capacity to handle 14-row from capital Dhaka will also get better. Rear Admiral Sheikh Mohammad Abul containers, two tier-mounted multi-purpose The new connectivity options will make Kalam Azad, Chairman, Mongla Port said cranes, and two mobile harbour cranes the port much busier and realising this completion of the project will enhance of fiver-meter working radius. German the government has taken up projects for Mongla’s container handling capacity to 0.4 company Liebherr-MCCtec Rostock GmbH enhancing its capacity. The Executive million teus and cargo handling capacity and its local agent Maxon Power Ltd will Committee of the National Economic will be doubled to 30 million tonnes. supply the cranes at a cost of $28 million. Council, chaired by Bangladesh’s Prime The new container delivery yard will add The port presently has six straddle Minister Sheikh Hasina approved a $710 capacity by 93,000 square meters and carriers, two heavy duty forklift trucks, million project for construction of two container handling yard will add capacity three empty container handlers, twenty container terminals, one container handling four forklift trucks, two reach stackers, yard, one container delivery yard, and six mobile cranes, five dock site cranes, extension of a service jetty, yard and and sixteen terminal tractors. With these sheds, among others. The capacity boost equipment in hand the port has capacity to will make the port capable of handling handle some 0.1 million Teus of containers the domestic export-import trade and and 15 million tonnes of bulk cargos. transhipment goods traffic from India, Mongla port’s capacity currently Nepal and Bhutan smoothly. remains underutilized. In fiscal year 2018- India and Bangladesh had signed a 19 the port handled 57,732 teus of export- MoU on the use of Chattogram and Mongla import containers and 1.13 million tonnes ports in 2015. The MoU envisages transit of bulk cargos, registering a significant of goods from Mongla Port to north eastern growth. The port’s ship handling also states of India through waterways, roads increased significantly in the year.

50 MARITIME GATEWAY | APRIL 2020

INTERVIEW INDIA'S LOGISTICS COSTS DEDICATED FREIGHT LOGISTICS Raj Chopra Container Logistics Cost: CORRIDORS Data You Can Director, Freya Shipping Myth VS Facts Bringing the Modal Shift Bank On! south asia’s premier mariti me business magazine R100

APRIL 2020 WWW.MARITIMEGATEWAY.COM

RNI NO: TELENG/2009/30633 POSTAL REGISTRATION NO: HD/1137/2019-2021 DATE OF PUBLICATION: 25/03/2020 DATE OF POSTING: 28/03/2020 IMO 2020 AND THE COVID-19 CURSE

MARITIME TRADE QUARANTINED China is gradually recovering from the pandemic which is spreading to other parts of the globe bringing them under quarantine, once again highlighting the vulnerability of the global supply chain