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A Diagnostic Study of Jawaharlal Nehru Port Trust

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A Diagnostic Study of Jawaharlal Nehru Port Trust INDIAN INSTITUTE OF MANAGEMENT AHMEDABAD INDIA Research and Publications A Diagnostic Study of Jawaharlal Nehru Port Trust G. Raghuram W.P. No. 2006-04-09 April 2006 The main objective of the working paper series of the IIMA is to help faculty members, Research Staff and Doctoral Students to speedily share their research findings with professional colleagues, and to test out their research findings at the pre-publication stage INDIAN INSTITUTE OF MANAGEMENT AHMEDABAD-380 015 INDIA W.P. No. 2006-04-09 Page No. 1 IIMA INDIA Research and Publications A Diagnostic Study of Jawaharlal Nehru Port Trust G. Raghuram Indian Institute of Management, Ahmedabad India W.P. No. 2006-04-09 Page No. 2 IIMA INDIA Research and Publications Table of Contents Abstract 4 Executive Summary 5 Acknowledgements 8 1. Introduction 9 2. Diagnostics 13 3. Recommendations 3.1: Immediate Strategies 19 3.2: Short Term Strategies 20 3.3: Medium Term Strategies 21 Exhibits Exhibit 1: Congestion at JNPT: Causes and Consequences 22 Exhibit 2: Import Flow of Container 25 Exhibit 3: Export Flow of Containers 26 Exhibit 4: Import Destination Data 27 Exhibit 5: Export Origin Data 28 Exhibit 6: Dedicated vs Mixed Trains 29 Exhibit 7: TEU to Road Traffic Conversion 30 Exhibit 8: Ongoing Projects 32 Exhibit 9: Immediate Proposals 33 Exhibit 10: Short Term Proposals 38 Exhibit 11: Future Proposals 40 Exhibit 12: CFS Infrastructure 41 Exhibit 13: CFS Import Handling Capacities 42 Exhibit 14: CFS Export Handling Capacities 43 Exhibit 15: Cost of CFS in and outside CIDCO Land 44 Exhibit 16: JNPT Layout 45 Exhibit 17: JNPT Y Junction to Karal Junction 46 Exhibit 18: JNPT CFS Vicinity 47 Exhibit 19: JNPT Vicinity 48 Exhibit 20: JNPT Regional Road Connectivity 49 Exhibit 21: JNPT Rail Network 50 Exhibit 22: Customs Processes 51 Appendices Appendix 1: CWC Labour Issue 54 Appendix 2: Arbitration issues between JNPCT and NSICT 56 Appendix 3: Gujarat Double Stack Container Project 57 Appendix 4: Dedicated Rail Corridor for High-Quality Multi-Modal Service 59 Visits and Meetings 63 References 65 W.P. No. 2006-04-09 Page No. 3 IIMA INDIA Research and Publications Abstract The Jawaharlal Nehru Port Trust (JNPT), an autonomous body under the Major Port Trusts Act, 1963, was commissioned on 26 th May, 1989. The port was originally planned to decongest the Mumbai port and serve as a hub port for container handling for the region. JNPT became the first Indian port to handle more than 1 million TEUs (twenty foot equivalent unit, the measure used for container traffic) in 2000-01. In view of the increasing containerised trade, a third container terminal was tendered in October 2002 and awarded in August 2004 to Gateway Terminals of India Private Limited (GTIPL). GTIPL has begun the construction and operations are expected to begin by early 2006. As stated by the Department of Shipping, —The increased volume of container traffic has put a lot of strain on the existing (landside) infrastructure, leading to the problem of frequent congestion in the port.“ The author was approached by the Ministry of Commerce for a diagnostic study of JNPT. The study was carried out during February to April 2005. As part of the study, it was decided to keep in perspective three scenarios of traffic: (i) upto 2.5 million TEUs, ie the current levels, (ii) upto 4 million TEUs, ie from mid 2006 as GTIPL becomes operational and (iii) beyond 4 million TEUs, when the fourth box terminal is made operational. This paper presents the analysis and recommendations of the study. W.P. No. 2006-04-09 Page No. 4 IIMA INDIA Research and Publications Executive Summary Immediate strategies (for current levels of traffic) Recommendations Actor • Continue the functioning of III-C. Apart from being an effective JNPT, III-C coordinating and problem anticipating body, it can serve the more important role of a stakeholder understanding the perspective of other stakeholders, so that there is less of a blame game. • Road development, as provided in the immediate and short term JNPT, CIDCO, proposals (Exhibits 9 and 10) should be executed with utmost speed. SPV, NHAI and The major bottleneck, if at all would be the fact that there are a Traffic Police multiplicity of players, including JNPT, CIDCO, SPV, NHAI and Traffic Police. • The critical road related activities, keeping the flow of the import JNPT, CIDCO, container, would be construction of additional gates, six laning of the CFS Operators, container road, traffic arrangements at Y Junction, six laning of the road NHAI and from Y Junction to Karal Junction, traffic arrangements at Karal Traffic Police Junction, (including grade separation between the traffic coming from SH 54 and the traffic going to NH 4B), development around import CFS including Buffer Yard, alternate evacuation routes from Buffer Yard to SH 54 and from the parking area to NH 4. • It is critical to facilitate the high levels of efficiency achieved by NSICT NSICT, JNPT, by providing them extra land. If doing this in a direct manner would CWC, CONCOR lead to significant legal complexities, then alternate solutions like moving the rail loading of all low volume destinations to the CONCOR DRT should be immediately implemented. Apart from releasing valuable yard space of containers waiting for trains to such destinations, it would also eliminate the problem of mixed trains. Another solution would be to have NSICT as a partner in the operations of the import CFS, so that certain containers can be directly moved into this location, almost as a remote extension to the NSICT terminal container yard. There could be certain legal hurdles, especially raised by the labour working in this CFS, which is on JNPT land and contracted out by JNPT to CWC (Appendix 1). • Given the incentive of empty container yard development in non CIDCO, Empty CIDCO land, it would be imperative to involve the Raigarh district (and Container Yard the government of Maharashtra) to ensure a controlled growth of Operators, State container yards, so that provisioning of infrastructural facilities Government becomes more efficient. CIDCO should also seriously consider reducing land prices to make it attractive for container yards to be developed in the zoned CIDCO land. Short term strategies (for upto four million TEUs, to be ready by March 2007) Recommendations Actor W.P. No. 2006-04-09 Page No. 5 IIMA INDIA Research and Publications • Road development would be a critical focus area. Some of the projects CIDCO, CFS listed under future proposals (Exhibit 11) should be taken up, keeping Operators, Empty in view the additional traffic levels. The priorities would be for Container Yard improving the road access to and between the CFSs and container yards Operators, NHAI, (f-7, f-8, f-10, f-13 and f-14). If the growth of the empty container yards Traffic Police outside CIDCO land can be controlled and zoned, then the appropriate road access to that would need to be developed. Under the current free market growth condition, f-17 and f-19 become essential. • A second road link to JN Port from a reliability perspective should be JNPT, CIDCO developed (f-6). • Evacuation infrastructure for containerised traffic and the destuffed NHAI cargo towards the north is critical. Some of the sections of NH-4 pass through the congested areas of Kalamboli, Mumbra and Thane. The six laning project (f-11) and the bypassing roads (f-2 and f-5) should be developed. • Evacuation of cargo from the private CFSs in the non CIDCO land NHAI could happen through NH-17. Consequently, apart from the project f-7 which improves connectivity to NH-17, strengthening and widening of NH-17 as an alternate route is essential (f-12). • Rail connectivity would become critical. The doubling of JNPT to CONCOR, IR, Panvel should be completed at the earliest. The section from Vasai JNPT Road to Vadodara could become a bottleneck, though improved signalling (automatic signalling) could take on the required additional traffic in this stretch. One million TEUs would result in an addition of about 10 trains a day, of which six to seven would have to get routed on the Vasai Road to Vadodara stretch. • For improving service levels, it is important to have at least one IR, CONCOR, competitor to CONCOR in place at the earliest. This would make JNPT container movement by rail more customer oriented than is right now. Even if a framework were to be put in place for competitors to enter this market, the entry barriers would be high due to the large infrastructural base that CONCOR enjoys. It may be important to think of even breaking up CONCOR into two or three entities which can effectively compete with each other. • Additional CFS infrastructure, beyond the 17, including the two new CFS Operators and three proposed CFSs (Exhibit 12) may not be essential. Expansion of some of the existing CFSs and through improved productivity of the public sector CFSs could provide significant capacity addition. Standards for CFSs and container yards should be developed. This should ideally happen through an industry association, rather than the government. Recommendations Actor • Customs are putting in place an EDI which is expected to be fully Customs, CFS operational (realistically speaking) by the end of 2005. This Operators, implementation should be completed. The proposed systemic Customs House improvements (Exhibit 22) should be implemented. The —no SMTP“ Agents, Shipping should be regularised for all ICD bound import containers. Agents • It has been quite difficult to collect, compile and analyse data for policy JNPT, Customs making. Commoditywise and origin/destinationwise data, which can be sourced from Customs, should be periodically analysed by the relevant decision makers in the port.
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