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RNI NO: APENG/2009/30633 POSTAL REGISTRATION NO: LII/RNP/HD/1137/2013-15 ‘We expect to do well with DATE OF PUBLICATION: 26/07/2014 all the positivity around us’ Capt BVJK Sharma JMD & CEO, JSW Infrastructure

andhra pradesh SUNRISE

AFTER BIFURCATION,STATE THE NEWLY CARVED STATE OF ANDHRA PRADESH SAILS ON A HOPE TO BOOST THE ECONOMY BY DEVELOPING THE COAST LINE INTO A MAJOR MARITIME HUB. INDUSTRIAL CORRIDORS FROM VIZAG TO CHENNAI WILL LINK THE PORT CITIES FUELLING GROWTH. IN ADDITION, MANUFACTURING AND INDUSTRIAL CLUSTERS BEING PLANNED WILL HELP THE STATE AUGMENT EXPORTS AND IMPROVE ITS FISCAL HEALTH. 02 maritime gateway / august 2014 OPENING REMARKS

Editor-in-Chief and Publisher Ramprasad [email protected] Tone is set for Reforms Assistant Editor Deepika Amirapu [email protected] When images of Arun Jaitley holding the black Assistant Editor Itishree Samal [email protected] suitcase were being flashed on national television, I bet the shipping industry did not expect as many Sr Designer Vijay Masa goodies. But Jaitley in his speech almost pulled Designer Nagaraju N S out the rabbit out of the hat announcing sops and Marketing & Sales generous outlays for the ports and the logistics National Satish Shetti, Manager – Sales sectors. [email protected] – 099207 05534 Came close on the heels of budget, some quick East Nikhil Doshi, GM – Sales policy make overs from Ministry of Shipping. From [email protected] – 098369 96293 revamping Port Trust Boards to allowing Indian South & International Vinod G, Sr Manager – MarCom [email protected] – 099498 69349 Shipping companies owning foreign flagged vessels to relaxation of cabotage norms at major ports for empties, Gadkari’s laundry list Client Relations Madhukar – Manager indicates the shape of things to come. [email protected] – 093937 68383 We welcome budget announcements because after years of being taxed and sidelined, Ashok T – Marketing Executive [email protected] – 094918 05508 this sector has been recognized as a significant contributor to the nation’s development. The beauty of this budget lies in the fact that there is a little something for everybody. Digital Edition Wesley Rajiv It is perhaps for the first time in the last ten years that all wings of infrastructure have been accorded equal importance. If you listened closely to the Minister’s speech, he Subscribe to MG spoke of fast tracking the east and west freight corridors, speeding up critical railway lines, allocated `5,000 crore for the establishing of warehouses and developing select UBSCRIPTION 12 ISSUES `1,200 ONE YEAR S expressways for faster movement of goods and people. Phone : +91 (40) 2330 0061 / 2330 0626 e-mail : [email protected] Equal thrust was given to the write to : Gateway Media Pvt. Ltd., # 407, Fifth Floor, Pavani Plaza, Khairatabad, Hyderabad – 500 004, INDIA. It is perhaps for the energy sector where a number www.maritimegateway.com of announcements were made to first time in the last ten improve the health of the country’s Maritime Gateway is printed by R Ramprasad published by years that all wings of infrastructure. And all this is certainly R Ramprasad on behalf of Gateway Media Pvt Ltd, #407, 5th Floor, good news for the ports and the vessel Pavani Plaza, Khairatabad, Hyderabad – 500 004, Telangana, India and Printed at M/s Kala Jyothi Process Pvt Ltd, 1-1-60/5, infrastructure have been owners as better connectivity and RTC Cross Roads, Musheerabad, Hyderabad - 500 020. and accorded equal importance. power will boost industrial productivity Published at Gateway Media Pvt Ltd #407, 5th Floor, Pavani Plaza, and hopefully bolster exports. Khairatabad, Hyderabad – 500 004, Telangana, India Regd. Office: H.No. 8-2-293/82/A/379 & 379/A, 2nd Floor, If the previous National Democratic Alliance or NDA regime’s motive under Plot No. 379, Road No. 10, Jubilee Hills, Hyderabad - 500 033. Atal Behari Vajpayee was ‘India Shining’, Modi’s is no different. During the first CIN: U74900AP2007PTC054344 few weeks of his administration, when Modi asked his cabinet colleagues and Editor: R Ramprasad bureaucrats to turn up on time for work, many dismissed and labeled his ways Please note of functioning as seminary. However, two months later, when the budget was 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. announced and many files were seen being cleared, the skeptics had to eat crow and Unsolicited material will not be returned. admit Modi was getting his way through the lethargic corridors of power in Delhi. Copyright No material published here should be reproduced in any form But that said, we have to still wait and see how these reforms on paper are translated without prior written permission from Gateway Media. in to action. Modi’s man for Shipping, Nitin Gadkari is known to be a tough task Feedback master. The budget, they say, was primarily drafted to restore India’s financial Readers are advised to send all feedback and health. But in the same breath we say infrastructure needs to be improved too. The comments to [email protected] next few years would be crucial in determining whether or not Acche Din are here. Editorial Advisory Board For now, we are not complaining! Capt Deepak Tewari S S Kulkarni Chairman, Container Shipping Secretary General, Indian Private Ports & Lines Association (CSLA) Terminals’ Association B B Pattanaik Capt Ram Ramchandran MD, Central Warehousing Former President, NISAA Corporation CONNECT Capt Sanjeev Rishi Ramprasad Anil Singh Advisor, Worlds Window Infrastructure & WITH MG Sr VP & MD, DP World Logistics Pvt Ltd Editor-in-Chief and Publisher [email protected] Subcontinent Joachim von der Heydt Jasjit Sethi Chairman, Bengal Tiger Line, Singapore Now you can read your favorite CEO, TCI Supply Chain Solution Capt Subhangshu Dutt magazine on the move. A Janardhana Rao Vice President, Institute of Chartered http://www.magzter.com/publishers/ MD, Indian Ports Association Shipbrokers, Singapore follow us on @maritimegateway Gateway-Media-Private-Limited

august 2014 / maritime gateway 03 AUGUST 2014 volume 6 issue 11

RAIL BUDGET 2014-15 Rail Budget stresses upon infrastructure building ...... 21 With a major focus on strengthening infrastructure, the Railway Budget 2014-15 has proposed FDI in railway infrastructure and PPP projects for cash strapped railways.

ANALYSIS: DREWRY 2M What will it mean?...... 28 Out went the P3 and in came the 2M alliance with another vessel sharing agreement between the Danish and the Swiss container shipping lines. Maersk and MSC have just announced a mega vessel sharing agreement that will replace their failed P3 alliance early next year. Drewry analyses what this new alliance will mean for the fraternity.

COVER STORY STEEL p. 22 Steel outlook set to improve in 2014...... 31 After bifurcation, the newly carved state of Andhra With the recovery of the automobile, construction and manufacturing industry, ANDHRA PRADESH Pradesh sails on a hope to boost the economy by optimism returns in the steel industry. The developing the coast line into a major maritime hub. industry is expected to improve in the year Industrial corridors from Vizag to Chennai will link the 2014. Sunrise port cities fuelling growth. In addition, manufacturing and industrial clusters being planned will help the CAPACITIES State state augment exports and improve its fiscal health. East Coast Ports gear up to handle iron ore imports...... 47

BUDGET 2014-15 TECHNOLOGY: ROLLS-ROYCE MARINE INDIA GROWTH STORY: PORT OF HAMBURG Budget brings cheers...... 17 Propelling Indian Shipbuilding Industry...60 Blue Chip of Europe...... 48 The Union Budget 2014-15 brings new Shipbuilding, in the early 19th and 20th Container traffic flows from baltic ports keep hopes for the Indian maritime and centuries was dominated by Europe. North the life blood flowing at Port of Hamburg with America and Japan later took over the baton shipbuilding industry. It has proposed ...... from the West in the 60s. Then, riding on...... impressive throughput growth year on year

Interviews DREWRY REPORT Supply and demand scenario Europe-Mid East-Indian ubcontinent ...... 54 Gearing up for further growth ...... 40 COLD STORAGE S S Mishra 'Huge scope ahead in South India'...... 56 'We Expect to do well Chairman with all the positivity Paradip Port OUTLOOK: DRY BULK around us' ...... 32 PRESSURE EASES, Capt BVJK Sharma But overall improvement is JMD & CEO quite slow...... 58 JSW Infrastructure Poor connectivity EQUIPMENT: KONE CRANES limiting growth ...... 44 Pinning hope on future demand...... 62 P C Parida Chairman Yesteryears: TRANSPORT New Mangalore Port Land based logistics...... 66

Getting the port back on track ...... 36 Others T Krishna Babu Eyeing geener News in Brief...... 06 Chairman pastures ...... 52 Visakhapatnam Port Trust Numbers...... 08 Derick Dias Chief Reprasentive Officer News...... 09 DNB The MG Diary ...... 68

04 maritime gateway / august 2014

NEWS IN BRIEF

Costa Concordia refloated two years after capsizing The shipwrecked Costa Concordia was successfully refloated Monday in preparation to be towed away for scrapping, 30 months after it struck a reef and capsized, killing 32 people. Authorities expressed satisfaction that the operation to float the Concordia from an underwater platform had proceeded without a hitch. Technicians later shifted the massive cruise ship some 30 meters (yards) before ending the day's operations. The entire operation to remove the Concordia from the reef and float it to Genoa, where it will be scrapped, will cost a total of 1.5 billion euros ($2 billion).

Damco Bromma’s order Stay out of maritime Subsidy hopes sink becomes first intake up 50% in Q2 disputes in south-east for local shipbuilders international Asia: China to US company to tockholm- Headquartered opes of reviving a start CFS S hina told the United States Bromma, the world Hsubsidy scheme for operation in Cto stay out of disputes over local shipbuilders have died leader in crane the South China Sea and leave Myanmar spreaders, reported a with transport minister Nitin countries in the region to resolve Gadkari ruling it out, citing the 50 per cent increase problems themselves, after fragile state of the economy. hird-party logistics in order intake for Washington said it wanted a freeze Representatives of the Tprovider Damco the second quarter in on stoking tension. China told the Shipyards Association of India has started operating 2014 compared to the US to stay out of the disputes over (SAI), a local shipbuilders’ the first international corresponding period in the South China sea. AFPChina told lobby, met Gadkari recently standard warehouse 2013. The geographical the US to stay out of the disputes to discuss issues facing the and container freight distribution shows a over the South China sea. AFP industry. This is the first time station (CFS) facility good global spread Michael Fuchs, US deputy assistant a minister has categorically in Myanmar. This with major orders secretary of state for Strategy stated that the subsidy cannot be reintroduced. The earlier brand new world- from all continents. In and Multilateral Affairs, said no subsidy scheme ended on 14 class 4,000-square more than 50 years of country was solely responsible for August 2007 after a five-year metre facility is escalating tension in the region. continuous operations, run. Since then, yards been C-TPAT compliant But he reiterated the US view Bromma has delivered lobbying for its reintroduction. that "provocative and unilateral" and strategically crane spreaders to 500 The subsidy scheme offered behaviour by China had raised located within 15 km terminals in 90 nations shipbuilders, both state- questions about its willingness to from Yangon port on 6 continents, and owned and private, a 30 per and major industrial abide by international law. China Bromma spreaders are in cent extra amount as subsidy locations. It is suitable claims 90 percent of the South service today at 97 out of from the government on for import/export China Sea, which is believed to the world’s largest 100 building ocean-going merchant activities for Fast contain oil and gas deposits and vessels that are more than container ports. Bromma Moving Consumer has rich fishery resources. Brunei, 80 metres in length, if they Goods (FMCG), is the industry market Malaysia, the Philippines, Vietnam were manufactured for the consumer electronics, leader in ship-to-shore and Taiwan also lay claim to parts domestic market. For export apparels, components, spreaders, mobile harbor of the sea, where about $5 trillion of orders, however, ships of all machinery and project crane spreaders, and ship-borne trade passes every year. types and capacities were cargo. yard crane spreaders. - Reuters eligible for the subsidy.

06 maritime gateway / august 2014 Gadkari announces Ethiopian Able Shipping AP Cabinet nod for slew of projects Shipping Line Agencies opens Petronet LNG project as Mumbai Port starts triangular office in Hazira service he Andhra Pradesh Cabinet on completes 142 years TMonday approved the proposal ble Shipping of Petronet LNG to set up an LPG thiopian Shipping AAgencies, a leading terminal at Gangavaram port. he Union Minister for Shipping, ELine (ESL), the name in NVOCC, national shipping line of Announcing the development, the Road Transport and Highways, shipping agency and T Ethiopia, has commenced State Chief Minister N Chandrababu Mr Nitin Gadkari, has announced a new liner triangular international freight Naidu said the Cabinet has approved upcoming projects that will be service with a dedicated forwarding, has expanded the Petronet LNG proposal for developed on 1,800 acres of multi-purpose self-geared its service locations by setting up 5 mmtpa project, with a Mumbai Port Trust (MbPT) land vessel of 25,000 DWT opening a new branch capacity to ramp it up to 10 mmtpa. along the eastern shore of the city. having crane capacity of office in Hazira. Hazira The plan includes building a cruise 90 tonnes. It is planned is an emerging container MMRDA & Cidco to terminal, waterways projects, to be a fortnightly service terminal which has been jointly work for MTHL, a 500-room floating hotel to be with port rotation as: gradually attracting more Nhava Sheva, Mundra, multimodal corridor anchored off the Raj Bhavan coast, services of international Djibouti, Nhava Sheva. lines and is also a key three-to-four floating restaurants, The service will accept a Ferris wheel on the lines of the location for project cargo he Mumbai Metropolitan both COC and SOC Region Development London Eye and marinas and boxes. movement. T jetties that would facilitate intra- Authority (MMRDA) and City and Industrial Development city water transport in Mumbai. Big shipbuilders in the doldrums Speaking at the 142nd Foundation Corporation (Cidco) have Day celebration of Mumbai Port, the decided to work together to Minister said a panel, led by orea’s three biggest shipbuilders are struggling expedite the Mumbai Trans Harbour Link (MTHL) and the Ms Rani Jadhav, former Chairperson Kto win orders, as China cements its status as the world’s top shipbuilder. Hyundai Heavy Industries, multimodal corridor, official of MbPT, will be set up to suggest sources said. The MTHL, measures for the project. Samsung Heavy Industries and Daewoo Shipbuilding & Marine Engineering combined for $14.6 billion in also known as Sewri-Nhava orders during the first half of the year, which translates Sheva Trans Harbour Link, is a to 26.8 percent of their goal. proposed `9,630-crore, 22- APM Terminals km freeway grade road bridge leads productivity For all of 2014, HHI aims to win $25 billion worth of connecting Mumbai with its rankings again orders, but so far it is only 35.2 percent of the way there satellite city of Navi Mumbai, with $8.8 billion. Samsung Heavy Industries stands at while the multimodal corridor 26 percent of its annual goal with $3.9 billion, while is a `12,975-crore, 126-km he JOC Group’s latest study DSME has managed only 13.1 percent of its order long Virar-Alibuag corridor Tof port productivity data, target at $1.9 billion. Industry insiders attribute the connecting NH-8, Bhiwandi covering the year 2013, retains shipbuilders’ 2014 struggles to fewer overall orders for bypass, NH-3, NH-4 and NH- APM Terminals Yokohama as the expensive offshore drilling platforms and plants, the top 4B, Mumbai-Pune Expressway world’s leading container terminal contributor to last year’s performance. and NH-17. in productivity with 163 container moves per vessel hour (MPH). Artist reimagines ‘Life of Pi’ on Shanghai’s Eleven facilities in the APM Terminals Global Terminal sullied waters Network were cited, including APM n a departure from his better- Terminals Port Elizabeth, and APM Iknown pyrotechnic work, Mr Terminals Los Angeles, which were Cai Guo-Qiang's latest project named the first and second most combines elements of the Noah’s productive terminals in the JOC’s Ark story and the film “Life of Pi” Americas grouping, with 104 and 96 by stuffing bodies of (fake) pandas, MPH, respectively. elephants and tigers onto a fishing boat for a four-day sail along SCI appoints Director eastern China’s sullied waterways. On Thursday, he floated the piece toward Shanghai’s iconic Bund – a apt Sarveen Narula, SVP, course the artist charted in part CShipping Corporation of India to recall a particularly discomforting spectacle last year when the city’s key river got Ltd has taken charge as Director jammed up with the bloated bodies of 16,000 dead pigs. (L&PS), SCI Ltd. at a recent board meeting.

august 2014 / maritime gateway 07 NUMBERS Voices Schedule Reliability, Asia-Europe Services, Q1 2014 (% of calls on time) The infinite average wisdom of Zim MSC the Chinese OOCL has helped HYundai Hapag lioyd to ensure apl that competition nyk cma cgm between the leading mol uasc shipping companies will hanjin continue to exist. From wan hai china shipping the point of view of the yang ming evergreen logistics industry and k line our trade and industry pil cosco customers, this is good maersk news in every respect. 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Source: Drewry Maritime Research - Klaus-Michael Kuehne The German billionaire who owns the world’s largest sea-freight forwarder T raffic (During April to June 2014* VIS-A-VIS April to June 2013) on China’s veto of P3. (*) Tentative (IN ' 000 Tonnes) Handled Ports A pril to June % Variation at Major Ports Traffic Against Prev. 2014* 2013 Year Traffic Trade deficit can 1 2 3 4 Kolkata be reduced to Kolkata Dock System 3045 2955 3.05 sustainable levels Haldia Dock Complex 6837 7071 -3.31 Total: Kolkata 9882 10026 -1.44 through more Paradip 17318 17001 1.86 Visakhapatnam 15336 14566 5.29 exports from Kamarajar (Ennore) 7175 6199 15.74 India to China as Chennai 12837 12833 0.03 V.O. Chidambaranar 7415 6779 9.38 well as China's investing Cochin 5508 5274 4.44 New Mangalore 9685 9668 0.18 in building manufacturing Mormugao 3503 2672 31.10 capacities in India. Mumbai 14571 13280 9.72 JNPT 16472 15593 5.64 - Ms Nirmala Sitharaman Kandla 23358 23285 0.31 Total: 143060 137176 4.29 Commerce and Industry Minister

550 2.2 Boxing Up Pie charts shows share of deliveries in terms of TEU South Korea The grant of the 500 China P.R. 2.0 and Shipping Out 2005 Japan 450 Other 2013 1.8 environmental Forecast clearance to the 400 All Boxships (RHS) 1.6 Mundra SEZ 350 1.4 will encourage 300 1.2 8,000+ TEU (RHS) investment and 250 1.0 development is expected 200 0.8 at a much faster pace 150 0.6 as it provides seamless 100 0.4 connectivity through sea, rail and 12,0000+TEU 50 8-12,000 TEU 0.2 3-8,000 TEU road. 3,000 TEU 0 0.0 - Gautam Adani

Chairman, Adani Group 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: Clarkson Research Services

08 maritime gateway / august 2014 NEWS

Joint Secretary in the Ministry of Commerce Another first for briefs FFFAI members on INSTC project Krishnapatnam Port

he MV Mina Oldendorff, carrying Tthe highest cargo of 1.89 lakh MT of coal, was berthed at the Krishnapatnam Port in the Nellore district. It is the Liberian flag vessel listed among the large-sized vessels in the world. Till now, the number of giant-size vessels handled by this southern port came to 19. It is said that as many as 47 cape size vessels called at the port in the financial year 2013-14 and in the first quarter of the current year 2014-15.

The berthing of such large ships is considered as a welcome development he Federation of Freight Forwarders’ He called on Customs brokers and as the Krishnapatnam Port has being TAssociations in India (FFFAI) last freight forwarders to take the lead in aiming at increased capabilities to week convened a press conference and popularising this route as it took just half handle fully-laden cape size vessels in a meeting of members at its Mumbai the transit time compared to shipping the India. Handling cape size vessels play office with Mr Ravi Capoor, Joint cargo to St Petersburg or Poti and then a big role in the maritime industry and Secretary, Ministry of Commerce, to moving it to the landlocked countries of it is seen as vital part of the country’s elaborate on the International North the CIS. South Transport Corridor (INSTC). maritime infrastructure. In the area of Mr Shankar Shinde, who will be leading FFFAI is doing a dry run study of the cargo handling, the port created a record the dry run study, gave a brief on it bottlenecks on the INSTC route. by handling 3.0 MMT of cargo in June and asked members to provide inputs this year as against 2.83 MMT in the Mr Kapoor FFFAI would be doing the with regard to the issues faced along previous month. dry run project on behalf of the Ministry the route and how the route could be of Commerce, wherein two containers developed. This could be integrated would be moved from Nhava Sheva on into the study and for the purpose of the following two routes: implementation, he added. Mr Sailesh Bhatia, FFFAI Vice-Chairman, while 1. Nhava Sheva-Bandar Abbas by concluding the event, thanked Mr sea, Bandar Abbas-Baku by road Capoor for updating members about the 2. Nhava Sheva-Bandar Abbas by CIS countries and assured him the full sea, Bandar Abbas-Bandar Anzali support of FFFAI for carrying out the or Amirabad by rail, and further dry run project, about which a report transhipment to Astrakhan or Olya will be submitted to the Ministry of through the Caspian Sea Commerce.

Shipping industry welcomes GOC ideas

roposals to protect the world’s York on June 24, include preserving obtaining "Authorised Economic Poceans have been welcomed by global fishing stocks, preventing Operator (AEO)" certificate from the the International Chamber of Shipping ongoing damage to ecosystems caused Customs. There are 8 certifications in (ICS), the principal trade association by land-based industry and agriculture, India till date and this would be the for merchant shipowners. ICS and preventing the acidification of the first to be issued to a Customs broker recommends that the Global Ocean sea. in the Western region. Commission’s (GOC) ideas should be Global Express Multilogistics becomes taken seriously. The GOC wishes to Various players in the international first to obtain AEO certification in see a greater level of environmental supply chain, such as importers, Western Region protection, especially with respect to exporters, logistics service providers, areas of economic activity, other than Global Express Multilogistics Pvt Ltd custodians or terminal operators, shipping, that currently may not be [erstwhile Global Freight Forwarders], Custom House Agents and warehouse adequately regulated. Issues addressed Customs broker (Customs House operators, are entitled to the benefits in its inquiry report, launched in New Agents), has achieved a landmark by of the AEO programme.

august 2014 / maritime gateway 09 NEWS

WWL opens new JN Port celebrates 25th office in Yangon, anniversary Myanmar

allenius Wilhelmsen Logistics W(WWL) has entered into a joint venture with Myanmar-based Carrier King Logistics that makes it the first independent company in the country to provide modern automobile distribution from port-to-consumer. With the rapid and ongoing democratisation of Myanmar, a new consumer market is emerging—including a growing demand for automobiles with more and more international manufacturers establishing dealerships in the country’s largest city, Yangon. "Myanmar traditionally had a very ne of the highlights of the 25th anniversary celebration of Jawaharlal limited automobile market, and still ONehru Port (JN Port) here on June 25 was an inspiring speech by Mr Nitin today the majority of cars sold in Gadkari, the new Union Minister for Shipping, Road Transport and Highways, Myanmar are secondhand vehicles who was at his eloquent and encouraging best in laying out his plans for the imported from Japan. They arrive at all-round development of the maritime sector and exhorting the stakeholders to the ports and are then ‘jockey driven’ take the necessary initiatives for growth. by individual drivers from the ports to He emphasised that the government would be proactive in formulating the right wherever they are sold—or owners or policies to give the sector impetus, be it in ports, shipping, coastal shipping, dealers come to the port themselves inland waterways, shipbuilding, roads, power infrastructure, etc. The Minister to pick up the vehicles. As new cars complimented JNPT for its performance and said that with the use of modern are starting to enter the country, a management techniques and technological upgradation, it had the potential to professional and safe transport solution become one of the top container ports in the world. is clearly needed," explains Mr Trond Tonjum, Head of WWL South-East Asia. "The proposed dedicated freight corridor from JNPT to Delhi, eight-laning of Mumbai-Pune Highway and its connectivity with the soon to be widened Mumbai-Goa Highway will help JNPT move its container traffic more efficiently and quickly," he told a huge gathering of representatives from the VO Chidambaranar maritime trade and other industries, Port and terminal officials, including Port creates record Mr N N Kumar, IRS, Chairman of Jawaharlal Nehru Port Trust (JNPT), Port users, officials from the state and Central governments, foreign dignitaries, in cargo handling former Chairpersons, representatives from the media and other invitees. O Chidambaranar Port Trust Also present on the occasion were Dr Vishwapati Trivedi, IAS, Shipping created a new record handling of Secretary, and Mr N Muruganandam, IAS, Joint Secretary (Ports) in the V lime stones in June this year. The port Ministry of Shipping. has unloaded a record-breaking 32,938 tonnes of Lime Stones in bulk in a single day from the gearless Vessel MV JAG ADITI using the port’s New Harbour ICTSI terminates contract with L&T Mobile Cranes. It has surpassed the previous record of 25,323 tonnes of Lime nternational Container Terminal Services Inc. (ICTSI), of the Philippines, has Stones in bulk unloading from the vessel Ireportedly terminated its contract with L&T Shipbuilding to operate the Kattupalli MV MASSALIA in December 2012. Container Terminal in Tamil Nadu. In a filing to the Manila Stock Exchange, it said that the deal was "not beneficial" to either party, and pointed out that it considers Seaport Logistics Private Limited was the the cancellation of the contract in tune with the group’s strategy of "moving away ship agent and stevedore for the vessel. from contracts that isolate ICTSI from the facility’s day-to-day operations, including S Anantha Chandra Bose, Chairman regulatory and commercial activities". of VO Chidambaranar Port Trust, has affirmed that the two newly inducted ICTSI said that it will be reimbursed an undisclosed sum for the licence fee it paid to 120-tonnes capacity Harbour Mobile operate the terminal. It also emphasised that it will continue to look for opportunities Cranes are capable of discharging in India as part of its broader strategy to operate ports in emerging markets. 40,000 tonnes of bulk cargo per day.

10 maritime gateway / august 2014 ClassNK acquires Canada’s Helm Operations

lassNK announced the acquisition CofVictoria, Canada-based maritime software company Helm Operations. The deal was hailed by both parties as two world-class companiesjoining forces to improve safety and operational efficiency in the marine industry, while greatly enhancing the success and capabilities of both organizations. Tokyo-based ClassNK is one of the world’s largest classification societies, providing safety and certification Yasushi Nakamura, Executive Vice President of ClassNK and Ron deBruyne, CEO and Founder of Helm services for more than 8,600 ships, Operations at the signing in ceremony representing about 20% of the global merchant fleet. Founded in 1999, UASC, CSCL most likely partners for CMA Helm Operations has grown to become a leading provider of manning, CGM: Alphaliner maintenance, dispatch, and HSQE aving been left out in the cold by that as Maersk and MSC form 2M the software to the workboat and offshore HMaersk Line and Mediterranean termination of cooperative agreements industries, and Helm software is Shipping Co (MSC) the best option CMA CGM has with Maersk on the Far currently used on some 1,000 vessels for CMA CGM could be an alliance East – Mediterranean trade, with MSC belonging to some of the most respected with United Arab Shipping Co (UASC) on Asia – North Europe, and both lines workboat companiesin the world, and China Shipping Container Lines on the transpacific, would leave it with including SVITZER, Seaspan, Blessey (CSCL), believes analyst Alphaliner. In “significant service gaps which it can Marine and Florida Marine Transporters. its weekly newsletter Alphaliner noted only fill through new slot arrangements with other carriers”. Although Alphaliner saw CMA CGM’s MOL inks shipbuilding contracts with options as limited with it either chosing DSME for ice class carriers alone along with individual slot share arrangements or join another alliance. itsui O.S.K. Lines (MOL) “However, it seems more likely for Mhas announced that its joint the French Line to seek a new alliance venture company with China Shipping arrangement. In this respect, CSCL (Group) Co, has concluded and signed and UASC appear to be the most likely shipbuilding contracts with Daewoo partners for CMA CGM, as other Shipbuilding & Marine Engineering carriers are either already members of Co., Korea, to build three ice class existing alliances or simply too small.” LNG carriers. The vessels are intended The report even went as far as to give the for the Yamal LNG project, which potential new alliance a name dubbing it is currently Russia’s most strategic 2CU. Such an alliance would essentially project in energy. split the Asia – Europe market four ways The ice class LNG carriers for the between it 2M, CKYHE and G6. project will have independent ice- It would have the smallest share on Asia breaking capabilities that enable them – North Europe with a 19 per cent share to sail in icy seas of maximum 2.1m of the market, while the potential alliance ice thickness. The vessels will be would have the second largest market capable of transporting LNG from the share on Asia – Mediterranean with Yamal LNG plant at Sabetta in Yamal 21.6 per cent share. Peninsula, Russia, to the main LNG The possibility of an alliance between markets in the world. In summer, CMA CGM and UASC and CSCL was the carriers will also be able to also flagged-up last week to Seatrade independently sail on the Northern Sea Global by Braemar Seascope. Route to transport LNG to East Asia. Source: Seatrade Global

august 2014 / maritime gateway 11 NEWS

As freight rates keep declining, cost reduction Western DFC faces is top priority for box carriers logjam

rewry’s 2Q14 Container Forecaster in Russia are crucial to this, but carriers he western dedicated freight Dhighlights that there is a widening will struggle to make a profit since unit Tcorridor (DFC), from Dadri near gap between the positive financials of revenues are also forecast to decline by a Delhi to JN Port, reportedly faces a the few carriers really focused on cutting similar amount. logjam due to several other major costs and the rest of the top 20 lines, as The blocking of the P3 alliance by the projects such as the proposed CST- they battle with the pressure of falling Panvel fast corridor, the proposed Navi freight rates. Chinese authorities is also disappointing for the industry since it was an excellent Mumbai international airport, suburban Drewry forecasts that once again, opportunity to help stabilise the main sections on the Virar-Vasai-Diva-Panvel average freight rates will be lower than trades in terms of capacity management line and the construction of the Panvel in the previous year. It estimates that on and efficient use of assets. That chance Coaching Complex. the headhaul transpacific trade alone, is now missed. A mature debate is The western DFC, among the two that carriers have given away in the region of required to help balance the benefits are being built, the other being the $1.25 billion in annual revenue via the of higher economies of scale, alliance eastern one from Ludhiana in Punjab lower annual contracts they signed with consolidation and the need to control an to Dankuni in West Bengal, will pass Beneficial Cargo Owner clients in May. oligopoly of mega alliances, Drewry’s They also signed new annual contracts report said. through Panvel. It proposes to transport on the Asia-Europe trade earlier in the containers, commodities at a maximum year at levels of around $150-$200 per Mr Neil Dekker, Drewry’s Director of speed of 100 kmph, which will 40ft container lower than in 2013. On Container Research, added: "It could considerably reduce haulage time. be that the huge task of adequately the positive side, they may have secured According to sources, the alignment of base cargoes to fill their ships at a low matching supply and demand at the global level and on a consistent the western DFC close to the proposed price. But this puts more pressure on CST-Panvel fast corridor and the carriers to try and recover revenue from basis—which ultimately helps to drive Panvel Coaching Complex would be an the spot market. Drewry believes that freight rates—is simply beyond the impediment. The existing railway station volatility in the spot market will remain industry, and we do not mean this as high this year. a condescending remark. This is an at Panvel would be expanded and more industry where accurate volumes on platforms added for the proposed CST- While supply and demand remain key many trade lanes are unknown—simply Panvel fast corridor and the Virar-Vasai- drivers of freight rates across all trades, because there is no unified and agreed Diva-Panvel lines, they pointed out. those carriers cutting their costs are also system of accounting. This is an industry better equipped to offer lower rates and, where relatively few shippers can in real terms, they are in fact passing provide accurate volume forecasts. This back these benefits to their customers. is an industry where the constant desire ADB team discusses Industry unit costs per TEU are forecast to launch bigger ships in order to reduce core issues of VCIC to decline by 2.5 per cent this year and unit costs can only ever logically be at strategies such as slow steaming, re- odds with the aim of matching supply with VPT Chief designing networks and buying bunkers and demand." he Asian Development Bank (ADB) Tteam comprising experts from Pricewater House Coopers (PWC) and an independent consultant John Arnold met chairman of the Visakhapatnam Port Trust (VPT) met T Krishna Babu recently to discuss the core issues of the Vizag- Chennai Industrial Corridor (VCIC). The Union and state governments have proposed the VCIC to boost the economic prospects of the truncated state of Andhra Pradesh with an investment of `1 lakh crore, thereby providing 50,000 jobs in the first phase of the proposed project. The proposed VCIC will be developed in four phases on the lines of Delhi-Mumbai Industrial Corridor project, which has been sanctioned as a part of the special package to Seemandhra region by the Union government.

12 maritime gateway / august 2014 Government to boost investment in the shipping Maersk, MSC sector; lays thrust on inland waterways. attempt new sharing agreement

he world's top two container Tshippers, Maersk Line and MSC Mediterranean Shipping Co, have struck a fresh vessel-sharing agreement after a previous three-way pooling deal known as P3 was undone by China's failure to approve it. Maersk and MSC say sharing vessels cuts costs, fuel usage and emissions. But critics, including those sending cargo, fear the shippers could dominate key trade routes carrying consumer goods around the world. Analysts said the shippers had a better nion Minister for Shipping On this occasion, Shipping Minister a chance of gaining Chinese approval UNitin Gadkari has said that the Nitin Gadkari also promised a slew of with the latest deal because it involves government is keen on boosting welfare measures for seafaring sailors, fewer ships and volumes of goods and is investment in the shipping sector with a including early ratification of the ILO’s structured differently. special thrust on promoting inland water Maritime Labour Convention 2006 that In statements issued MSC and A.P. transport and coastal shipping. looks after conditions of employment, Moller-Maersk, the parent company of minimum qualification requirement, Speaking at the International Day of the Maersk Line, said 185 vessels would accommodation and recreational Seafarers in Mumbai today, Mr Gadkari be shared, including 20 of Maersk's facilities, health care and social security said "Infrastructure development is the giant Triple-E ships, with an estimated protection aspects. Mr Gadkari said his backbone of the economy, and we need capacity of 2.1 million 20-foot to invest in it adequately. Besides it also government recognizes the importance equivalent units (TEU). They will run creates employment opportunities" Mr of seafarers and is committed to the trans-Atlantic, trans-Pacific and Gadkari informed that the government ensuring their welfare. Asia-Europe routes, critical paths in the is keen on developing inland water The Minister further said that his global trade of goods. transport, as a cost-effective, less- Ministry has taken up with the Finance polluting, fuel saving transportation Last year's deal - between Maersk, Ministry, the issue of Income Tax MSC and France's CMA CGM - aimed option. "For this purpose we are waiver for Indian Seafarers to ensure considering to launch 'Pradhan Mantri to share about 250 vessels and would level playing field for Indian shipping Jal Parivahan Yojana' on the lines of the have had more than 40 percent of Asia- companies. Pradhan Mantri Gram Sadak Yojana” he Europe and trans-Atlantic trade and added. 24 percent of the trans-Pacific market, according to industry estimates. It was rejected by Chinese regulators who said Officials rush to Alang to review safety they did not believe consumers' interests would be sufficiently protected against the domination of the three shippers. here was an accident on plot Rakesh, IAS, Vice-Chairman and Chief Tno. 140 at the Alang Sosia Ship Executive Officer of GMB, visited The combined capacity share under Recycling Yard last week, wherein 5 the site a day after the accident and this deal would be below 30 percent in labourers were killed and 8 injured have ordered an immediate inquiry. routes between Asia and Europe, Maersk while recycling the dead vessel An internal committee of the Board Line CEO Soren Skou told Reuters. Perin. The injured were hospitalised comprising the Port Officer (Alang), "This one is only a vessel sharing immediately and 7 of them have already safety officials and senior officials from agreement. The P3 plan included an been discharged. One is expected to be the Environment Department has been operating company which was the main discharged in two days. formed and is likely to submit its report reason why Chinese regulators looked It is likely that the accident was caused within a week. Following the accident, at it as a merger," Skou told Reuters. He by a sudden gush of gas trapped in the Capt Sudhir Chadda, the Port Officer said the Chinese Ministry of Transport vessel. However, the exact cause is of Bhavnagar who has considerable would look at the deal this time: P3 had being investigated. Mr H K Dash, IAS, experience of handling the affairs at been investigated by the Commerce Additional Chief Secretary (Ports & Alang, has been given additional charge Ministry. Calls to both ministries were Transport Department), and Mr A K at the yard with immediate effect. not answered.

august 2014 / maritime gateway 13 NEWS

Allcargo ‘Laxmi’ delivers first DSME, ABS consignment of bagged rice for FCI collaborate on first LNG fueled drillship n a first of its kind assignment, Allcargo to feed FCI depots in Agartala by trucks. ILogistics’ multi-purpose vessel The movement is regulated by Protocol on BS, the leading provider of ‘Allcargo Laxmi’ successfully delivered its Inland Water Trade and Treaty (PIWTT) Aclassification services to the first consignment of bagged rice for Food signed between India and Bangladesh global offshore industry, has entered Corporation of India (FCI). MV Allcargo government. With this shipment, Allcargo into a joint development project Laxmi carried 5,000 tonnes of rice from Shipping has significantly contributed in the (JDP) with South Korea’s Daewoo Vizag port and reached Diamond Harbour novel venture of opening up an alternative Shipbuilding & Marine Engineering in 2 days. route when compared with the conventional (DSME) to develop the industry’s FCI commissioned the project to dispatch dispatch of stock by the rail-road hitherto first LNG fueled drillship. raw rice stock from Vishkhapatnam to done from Punjab/Haryana to Tripura. Agartala in the north-east region of India The JDP will address challenges Allcargo Logistics, part of the Avvashya associated with storing and through multi-modal transport i.e., sea- Group and the integrated logistics river-road. It involved transportation of managing cryogenic LNG safely multinational, has a fleet of three fully by combining DSME’s experience stock from Vizag port to Diamond Harbour owned ships which operate in coastal in Kolkata. developing and applying LNG movement of bulk, break bulk and project technology to floating structures At Diamond Harbor, the stock will be trans- cargo across all major ports in India and with ABS’ technical standards and shipped into barges and taken through river its subcontinents. The shipping service experience working on a number of movement up to Bangladesh. Thereafter, it provides a crucial link between all Indian gas-fueled, LNG and regasification will transit Bangladesh through trucks and ports which enables the clients to save on unit projects. again would be boarded from Bangladesh the logistics cost.

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Restech Asia Pte. Ltd. | Phone: +65 6542 4131 | Email: [email protected] www.restech.no KVH Industries Adani Ports to commission Tuna Tekra acquires Videot terminal by Dec 2014 VH Industries, Inc., announced Kthat it has acquired Videotel, dani Ports & SEZ Ltd, India’s largest port developer and part of Adani a producer of high-quality training AGroup, will commission its dry bulk cargo handling terminal at Tuna Tekra films and e-Learning services for in a record time by December 2014. the commercial maritime industry. The group has announced this development Servicing over 11,000 vessels, with prospective clients during a trade Videotel is a market leader in the meeting this month. provision of maritime training services, offering video, animation, Adani Ports won the right to develop a dry e-Learning computer-based training bulk terminal with a cargo handling capacity (CBT), and interactive distance of 14.112 MMTPA at Tuna Tekra, Kandla learning courses. Port, in February 2012 under a concession agreement with Kandla Port trust. "The acquisition of Videotel is an important addition to our portfolio “Adani Group has always believed in the idea of Nation Building through of services targeting the needs of creation of world-class infrastructure. It gives me immense pleasure to announce commercial seafarers and supports that our dry bulk terminal at Tune Tekra will be commissioned by December our strategic vision of extending 2014, as it will be a game-changer for EXIM trade of the Northwest hinterland, our maritime broadband service to on account of its strategic location, infrastructural prowess and operational include delivering premium content efficiency. The response to today’s event only echoes our belief in the potential to vessels," said Martin Kits van of this dry bulk terminal to benefit the states of Gujarat, Rajasthan, Haryana, Heyningen, KVH's chief executive Punjab and Madhya Pradesh amongst others”, an Adani spokesman said. officer.

Adani Ports inks pact with CMA CGM Group to set Coasts might open up fourth terminal at Mundra up for foreign ships dani Ports & SEZ Ltd (APSEZ), Chairman of the Adani Group. India’s largest port developer, has he Union government is planning A “This new container terminal will be an entered an agreement with France-based to relax cabotage norms at major absolutely world class facility that will T CMA CGM Group to develop the fourth ports for empty containers, to let stimulate the growth of cargo benefiting container terminal at Mundra Port. foreign-flagged vessels carrying empty our customers as well as help accelerate containers move on India’s coastline The terminal will be developed and the industrial development over the vast without restriction. The shipping operated under the 50:50 joint venture hinterlands that Mundra provides access ministry has sought the Directorate with CMA CGM Group’s subsidiary to,” he added. General of Shipping’s view in this CMA Terminals and APSEZ. The regard. Cabotage rules dictate transport This 50:50 JV partnership is yet another state-of-the-art facility, with an annual of goods or passengers on a ship or major step by APSEZ to continue to capacity of 1.3 million TEUs, will be a aircraft registered in another country. rapidly expand its container terminals 650 meters terminal, with 27 hectares If the restrictions are done away with, footprint across India’s coastline and of back area and a water depth of 16.5 movement of transhipment cargo along further augments APSEZ’s existing two meters, the Port Said in a statement. the coastline would get a boost. “There container handling locations at Mundra are currently only 15 vessels involved The construction phase will be initiated and Hazira along with its already in coastal trade. Shortage of containers immediately and completion will be in announced two container terminals to limits the capacity of Indian-flagged a record 24 months. With this, Mundra be constructed at Ennore in Chennai vessels in transport of cargo. It will also will become India’s largest container and Dhamra in Odisha. It will allow boost coastal shipping by filling the port in next two years, with a total Adani Ports to fulfill its stated vision of supply gap in the container segment,” Container handling capacity reaching handling 200 million metric tonnes of said a senior government official. 5.5 million TEUs. cargo well before the year 2020. The Prime Minister’s Office has “The strategic value of such a For CMA CGM, Mundra Container asked the road transport and shipping partnership with a major global player Terminal is the Group’s first port ministries to suggest ways to increase like CMA CGM is hugely significant investment in India. CMA CGM is transhipment cargo movement in and opens up a whole set of additional present in India since 1984. With around the country and reduce instances of opportunities and synergies for both 500 staff members and 24 offices, CMA containers offloading in the port of the companies” said Gautam Adani, CGM is calling 9 ports in India. Colombo in Sri Lanka.

august 2014 / maritime gateway 15 NEWS

`100 cr logistics park near Nagpur Shapoorji Pallonji buys out Shipping idarbha's second private inland up a logistics terminal in the Mihan Vcontainer depot (ICD-cum- area. Owing to the city's central Corp of India in 50:50 logistics park) was commissioned in location, the Future Group too has chemical tankers JV July, in culmination of a `100 crore set up a major warehousing facility greenfield investment in the region, at Mihan catering to retail stores which is proposed to be doubled in a in various parts of the country. In year. Gurgaon-based Vikram Logistics Wardha, M/s World Windows is and Maritime Services inaugurated the operating a private container depot. set up spread over 72 acres at Borkhedi Sathianathan said the company plans village, 35km from Nagpur. to set up a network of logistics parks The government-owned Container which shall offer other container- Corporation of India (CONCOR), an based logistics services, apart from Indian Railway subsidiary, located in the handling cargo from ports. The one city had set up the first ICD in 1998. in Nagpur is the first in the list, with the next park planned at Palval in Briefing newspersons, Sathianathan, the National Capital Region (NCR), now managing director at Vikram onstruction and real estate major followed by one at Bangalore. Logistics, said the unit will start with CShapoorji Pallonji Group has an initial throughput of 50,000 twenty- Vikram Logistics, which sees Concor acquired 50 per cent equity stake held by feet equivalent units (TEU) annually, as its immediate rival, plans to have a state-controlled Shipping Corp of India with plans to gradually increase the major thrust on domestic cargo apart Ltd in its equal equity chemical tanker quantum. An initial investment of `100 from that generated in exim trade. joint venture SCI Forbes Limited for an crore has been put in here, with plans "Currently, business will be generated undisclosed amount. to double it in the next fiscal and also from the central region. Traditionally, SCI Forbes had commenced operations in increase eventually. the region exports rice, steel and 2009 with four new chemical tankers, each textile while the imports include This indicates the growing importance having a capacity to carry 13,000 tonnes scrap, and PTA, a raw material for of the region for the logistics majors. of cargo. The joint venture company was polyester makers," said Sathianathan. Apart from its existing set up at formed to tap the demand for moving Narendra Nagar, Concor is also setting In the domestic sector, there will petrochemicals from West Asia. be focus on automobile parts, Shapoorji Pallonji Group firms Forbes machine tools and liquid cargo. & Co Ltd and Sterling Investment Pvt Maruti Udyog Limited's depot Ltd already held 25 per cent each in SCI at Butibori is being eyed for Forbes and with transaction the firm prospective business. However, becomes a wholly owned venture. Sathianathan said not many new industries have come up in the region over the years, though the existing units have been Lifetime licence expanded, which the new logistics for ships players can eye for business. he Ministry of Shipping has decided to Treduce the paperwork for the shipping industry by scrapping the requirement of Vizag port likely to drop plans to set up annual renewal of licences for Indian ships satellite port at Bhimili and any other vessel charted by an Indian citizen or company. isakhapatnam port is likely to drop existing fishing harbour from Vizag Such licences will now be issued with Vthe proposal to construct a satellite port to Bhimili. Aecom, which was a lifetime fee instead of annual fee, but port at Bhimunipatnam, about 25 km appointed by the port to prepare a the licence will be co-terminus with the from here. The move comes in the feasibility report, stated construction certificate of Registry of the Ship. wake of a non-feasibility report given of the satellite port was not viable and The move has been widely welcomed by consulting company Aecom. It was advisable at the moment. by the industry. The decision, approved proposed to develop a satellite port in The initial estimates suggest around by the Minster for Road Transport and public-private partnership at Bhimili to `3,000 crore is required for the Highways and Shipping Nitin Gadkari, reduce cargo congestion at Vizag port. construction work, but the revenue on also provides for all the five Registrars of Apart from constructing 4-5 berths, the investment would be negligible. Ships in Mumbai, Chennai, Kolkata, Goa including break waters with a handling Besides, chances of getting new and and Cochin to issue these licenses under capacity of about 20 million tonnes a additional cargo too was minimal. the provisions of the Merchant Shipping year, it was also proposed to shift the Act,1958.

16 maritime gateway / august 2014 BUDGET 2014-15 Budget brings cheers The Union Budget 2014-15 brings new hopes for the Indian maritime and shipbuilding industry. It has proposed new port projects, comprehensive shipbuilding policy, and reviving SEZs, among others.

in the current financial year,” the n the NDA government’s Minister added. maiden Budget (Budget I 2014-15), the Union Finance The Finance Minister said that Minister, Arun Jaitley, has Kakinada, its adjoining areas and the stressed upon “port-led” development port will be developed as the key drivers of marine states, and proposed large of economic growth in Andhra Pradesh investments in the sector on new with a special focus on hardware capacity additions and to improve The budget did not disappoint manufacturing. He urged the states to existing ports and their infrastructure. and for the play an active role in export promotion Similarly, the logistics and transport first time we by providing good infrastructure and sector have also received high priority. saw several full facilitation. He proposed to establish an Export Promotion Mission to bring Along with proposing 16 new ports and industry level all stakeholders under one umbrella. allocating huge funds for growth in the announcements maritime sector, the government has for the logistics For inland waterways, a project on dedicated `5,000 crore for warehousing the river Ganga called ‘Jal Marg infrastructure development, proposed sector. Just the Vikas’ (National Waterways-I) will development of select expressways fact that the be developed to improve overall infrastructure, finance minister used the between Along with connectivity and increase efficiencies of word 'warehouse' more than Allahabad and proposing logistics and supply chain industry. 10 times indicates the focus Haldia, covering a distance of Ports sector on logistics! 1,620 km, which 16 new will enable To boost trade movement at Indian The impact of infrastructure ports in the long term, the government on the transportation commercial ports navigation of at and allocating huge proposed 16 new port projects. industry is massive and “Development of ports is also critical for least 1,500-tonne funds for growth in boosting trade. Sixteen new port projects the government's plan to vessels carrying the maritime sector, are proposed to be awarded this year accelerate game changing passengers and the government cargo. The project with a focus on port connectivity,” the projects like the Diamond has dedicated Finance Minister said. quadrilateral, Sagar Mala, will be completed over a period of “A sum of `11,635 crore will be dedicated expressway on high six years at an allocated for the development of Outer traffic density roads will help `5,000 estimated cost of crore for Harbour Project in V. O. Chidambaranar the sector tremendously. `4,200 crore. (Tuticorin) Port for phase I. SEZs will warehousing be developed in Kandla and JNP. A Vineet Agarwal As regards the infrastructure comprehensive policy will be announced Managing Director, Transport shipping and development. to promote Indian shipbuilding industry Corporation of India ports sector,

august 2014 / maritime gateway 17 BUDGET 2014-15

infrastructure like ports and highways, Being the lifeline of the the model has also been impacted by economy, rigidities in contractual arrangements, logistic lack of more nuanced and sophisticated models of contracting and lack of companies quick dispute redressal mechanism. expected a set He proposed the setting up of 3P India, of reforms and an institution to provide support to the thrust across mainstreaming of PPPs. related sectors Although details on the role of 3P of the economy India are yet to be finalised, a positive and the Finance Minister didn’t impact on the port sector is expected disappoint. The proposed from the proposed body, which could ` address some of the obstacles faced by investment of 5,000 crore port developers operating through the in warehousing, a clear focus PPP route, especially if it could support also be completed. The perspective plan on implementing GST by the developers in obtaining regulatory for the Bengaluru-Mumbai Economic the end of this fiscal will approvals and speedy resolution of Corridor (BMEC) and Vizag-Chennai provide the much needed pending issues, according to an industry corridor would be completed with the impetus to the logistic expert. provision for 20 new industrial clusters. industry. The proposed Additionally, a 24X7 Customs clearance The Minister said that the roads sector investment of `37,800 facility will also be extended to 14 again needs huge amount of investment crore into NHAI and State more sea ports in respect of specified along with debottlenecking from maze import and export goods to facilitate of clearances. He proposed investment roads and a specific focus cargo clearance. Indian Customs Single in National Highways Authority of India on development of select Window Project to facilitate trade will (NHAI) and state roads of an amount of expressways in parallel to be implemented. Customs and Central `37,880 crore, which includes `3,000 the development of industrial Excise Acts will be amended to expedite crore for the North-East. During the corridors will improve overall the process of disposal of appeals. current financial year, a target of 8,500 km of National Highway construction infrastructure, connectivity Infrastructure, logistics and will be achieved, he said. and lend efficiencies to supply warehousing sector chain. Laying focus on infrastructure, the The Master Planning of three new Finance Minister said, "A modern smart cities in the Chennai-Bengaluru nation needs multiple sources of Industrial Corridor region, viz., Ponneri transport. A country of the size of India Mahendra Agarwal in Tamil Nadu, Krishnapatnam in Andhra Founder & CEO, Gati Limited must have a transport network which Pradesh and Tumkur in Karnataka will can ensure faster travel across cities which are geographically distant. This the Minister announced that a policy will also improve the supply chain in for encouraging the growth of Indian Investments in roads all transporting goods across cities. We controlled tonnage will be formulated over India will help ‘Freight will initiate work on select expressways to ensure increased employment for the forwarding and Logistics in parallel to the development of country’s seafarers. Industry’ in faster movement the industrial corridors. For project preparation, NHAI shall set aside a sum The government has proposed a new of cargo and efficient national of `500 crore." scheme which will allow local shipping distribution services. The companies or ship owners ship owners investment in new ports will Conclusion to register their ships overseas, in tax- ease congestion on existing Besides providing high level of friendly overseas jurisdictions, without infrastructure within the ports, there opening subsidiaries there. “A policy ports and opening of new is no proposal on their connectivity for encouraging the growth of Indian- Airports in tier II and III cities to hinterland and improvement of controlled tonnage will be formulated will gives us an opportunity to roads around the port should have to ensure increase in employment of extend our net work to those been considered on a priority. Ports in the Indian seafarers,” Jaitley said in his cities. Singapore have introduced the system of budget speech. ‘turn around’, where ships come, unload The Finance Minister also pointed out or load, and go back immediately as Ajay Sehgal that while public-private partnership Director Finance & Accounts- Schenker opposed to ships here that have to wait (PPP) has delivered some iconic India Private Limited for long hours at Indian ports.

18 maritime gateway / august 2014 Gateway SpotLight, a special feature by Maritime Gateway, showcases the unique initiatives of business groups across maritime sectors in their products, services and processes that helps them achieve and sustain better productivity, efficiency, environment conservation and above all judicious business practices. Gateway SpotLight provides an opportunity for businesses to bring to light their best practices at work and thereby such a FOCUS.

Presenting under this feature.

SmartGrip intelligent grabbing for highly efficient bulk handling Leading equipment manufacturer Liebherr has launched a unique technology to optimize grab filling rates of mobile harbour cranes. This innovative solution not only lowers the stress for the crane operator but also significantly increases operational efficiency of the port.

iebherr has introduced a unique technology ‘SmartGrip’ to the mobile harbour crane market in June 2014. L The technology operates as an intelligent system that optimises grab filling rates in a self-learning manner and provides a number of valuable advantages including higher performance and zero overloads. The development of the ‘SmartGrip’ technology is based on recent turnover analyses of various ports around the world. The data showed that on an average only 70 per cent of the grab capacity is used. There are several factors responsible for the grab not being operated at full capacity including the suboptimal grabbing angle and varying material density. For crane operators, the estimation of the material density and the right grabbing angle turn out to be a real challenge. As a result, ports face with lesser turnovers than their expectations. Intelligent grabbing The ‘SmartGrip’ solution is used to optimise grab filling rates. In a comprehensive field study, Liebherr collected real data of different crane models that were equipped with a wide range of grabs to handle different materials. Additionally,

august 2014 / maritime gateway 19 SPOTLIGHT numerous crane operators ensured a broad spectrum of skill-levels during data collection. Thanks to in-depth analyses, Liebherr has deduced the ideal grab filling model by means of data mining. In operation, the self- learning system automatically adjusts its behaviour by recognizing bulk density, compression and granularity as well as current frame conditions like depth of impression or type of grab. Load cycle by load cycle, SmartGrip automatically optimises filling to maximum capability taking grab size and outreach into account. Right from the second load cycle, SmartGrip ensures that the grab filling rate is above the average of 70 per cent. Within a Case study maximum of seven cycles the full capacity of the grab is LHM 550 equipped with SmartGrip utilised. Saqr Port, United Arab Emirates Valuable benefits SmartGrip controls the filling of the grab to suit the load Situation curve of the crane. This leads to perfect crane utilisation without overloading, which results in an extended Saqr Port is located at the northern tip of the United lifetime of the crane, saving fuel and time. Arab Emirates, with access to the Arabian Gulf, and is the Middle East’s major port for bulk cargoes, aggregates, Moreover, when SmartGrip is activated, the operator pipes, cement, coal and other raw materials imported can completely rely on the system for an accurate for the local industries. With its unique geographic determination of the material density and optimal position and superior intermodal connections, Saqr Port grabbing angle in a very short time. The automatic and is also well-known for highly efficient material handling optimized grab filling means less stress for the crane and premium infrastructure. The port’s expertise has operator who can then focus more on other important attracted additional business which has led to increased issues like safety. cargo volumes, over the past 5 years. In view of the average grab filling rate of 70%, Task SmartGrip offers a potential of up to 30% more turnover. Additionally, turnover variance is significantly Saqr Port handles several materials with densities reduced, leading to more efficiency in operation. Field up to 2 t/m³ and loads on average around 5 ships per studies showed that even up to 40% turnover increase day. The most common material is limestone, which are realistic if the grab filling rate is below average. is characterized by small rocks, and when the grab is Additionally, SmartGrip partly closes the gap between closed, some of these rocks are compressed which high-skilled and less-skilled drivers, as some important results in intense shaking and stress for the crane parts of bulk handling are automatically optimised by structure, due to strong dynamic forces. Thus, in order to the system. minimize forces acting on the crane structure a smaller grab (22m³) was used which naturally reduces turnover. Another striking feature offered by SmartGrip is the possibility to manually set target loads. If a crane Solution operator needs to load a 40 tonnes capacity truck, for Saqr Port decided to install SmartGrip on their newest instance, he can advise SmartGrip to fill the grab with mobile harbour crane, type LHM 550, to cope better 40 tonnes. This feature eases the operation of the crane with limestone. This innovative system optimises grab operator. filling rates in a self-learning process which results in more turnover, zero overloads and less stress for crane and operator. For the new LHM 550, the SmartGrip parameters (e.g. closing speed, slack rope values) have been specifically adapted for the rocky limestone material. Performance Thanks to the installation of SmartGrip, Saqr Port has been able to use the bigger grab (32m³) without additional stress for the crane structure and the average limestone load has increased by more than 30%, leading to significantly more turnover. It also has additional benefits, time-consuming overloads have been completely eliminated and due to very smooth force effects, shaking has dramatically decreased, leading to more driver comfort and extended life span of the crane.

20 maritime gateway / august 2014 Rail Budget 2014-15

will target awarding of construction contracts for nearly 1,000 km this year, he said. India runs more than 7,421 freight trains carrying about 3 million tonnes of freight every day. “I now target to become the largest freight carrier in the world,” Gowda said in his speech. In the last 10 years, Indian Railways spent `41,000 crore on laying of 3,700 km of new lines. The Railway Minister also announced periodic revision in passenger fare and freight rates will be linked to revisions in fuel prices in order to insulate the Railway revenues from fuel cost escalation. In his post-budget briefing, the Minister said the Railways would continue with the Fuel Adjustment Costs (FAC) formula under which there will be periodic hike in fares and freight rates once in six months, if there is a hike in fuel cost. He has proposed to speed up Rail Budget stresses upon construction of three critical railway lines – Tori-Shivpur-Kathautia, Jharsuguda-Barpalli-Sardega and infrastructure building Bhupdeopur-Raigarh-Mand rail links – that are expected may improve coal availability by about 300 million With a major focus on strengthening infrastructure, tonne. But, it may take five years to complete the projects and, only a small fraction of the total 590 km will be the Railway Budget 2014-15 has proposed FDI in completed by 2016. railway infrastructure and PPP projects for cash However, there are several concerns remain unattended. At present, Indian Railways makes most of its profits from strapped railways. transporting freight compared to the passenger trains. Freight trains are not timetable trains and spend more than 50 per cent of their travel time hanging around for the lines to n its first ever maiden Rail Budget, Union Railway clear. Currently, seeing the slow travel time and congestion Minister Sadananda Gowda stressed upon in railway tracks, 70 per cent of freight traffic has shifted to I infrastructure building, faster trains, safety, cleanliness roads which are way too expensive and less environment- and expansion of public private partnership (PPP) in friendly. new areas. DFCs are the most crucial projects of the Indian Railways. To mobilise resources for infrastructure upgradation and Two of the six corridors planned—the Western DFC (Delhi- high-speed trains, the Railway Minister has proposed foreign Mumbai) and the Eastern DFC (Ludhiana-Kolkata)—are direct investment (FDI) in building rail infrastructure, targeted to be commissioned by March 2017. partially in operations, as the nation seeks to help improve the creaky transportation facility. The average speed of freight trains will go up from 25 kmph to 70 kmph which will reduce the transit time from the “FDI in railway projects, except in operations, to be present levels. At the same time, DFCs will allow higher axle attracted. Future projects to be financed on public-private loads per carriage and much longer trains. partnership model. Plans to attract investment from domestic and foreign players in infrastructure; focus to be on The ports in the Western region covering Maharashtra and aggressive Indigenisation, he mentioned. Gujarat will be efficiently linked to the northern hinterland, and coal would move rapidly to the power plants in the Dedicated freight corridor projects: For eastern (Ludhiana, north, and steel to the industries. The DFCs will have a Punjab, to Dankuni, West Bengal) and western (Mumbai- massive impact on the Railways’ profitability, and the entire Delhi) dedicated freight corridor projects, the Railways Indian economy.

august 2014 / maritime gateway 21 SreekalaCover G Story

ANDHRA PRADESH SUNRISE STATE After bifurcation, the newly carved state of Andhra Pradesh sails on a hope to boost the economy by developing the coast line into a major maritime n the summer of 2014, when the central government run hub. Industrial corridors from Vizag to Chennai will link the port cities I by the United Progressive Alliance made final the fuelling growth. In addition, manufacturing and industrial clusters being legislation to carve out Telangana, there was more than just planned will help the state augment exports and improve its fiscal health. a fissure in the state. Having retained Deepika Amirapu Hyderabad for themselves, there was jubilation in the ten districts of Telangana, while the severed region of the Telugu speaking population cried similar disparities in other economic Andhra’s cities on the other hand, foul over the iniquitous division. and human development indicators as considered two-tier, were far behind in attracting any multi-national They felt shortchanged as the new state well. Andhraites have never been lucky companies who could whip up the walked away not just with their capital, with retaining their capital as the state state’s exchequer. Barring the pharma but hope, pride and the sweat and toil had to forego prosperous cities twice city in Vizag and sporadic industrial of many an Andhraite who had invested after independence- erstwhile Madras to Tamil Nadu and subsequently relocate development in Guntur and Nellore, so much of himself and his capital in much of the funds were used to protect the city spanning many decades. It is from Kurnool to Hyderabad once the Nizam surrendered to the Union of small scale and other indigenous units perhaps for this reason and a few more that formed the state’s native. that the division of this state is different India. from the three others that were created After Hyderabad was named capital, Fifty percent of the states revenue came in 2000. considering the geographical edge, from Hyderabad alone and the city’s secession from the state is more than just Never before did the mother state the city became home to major defence, electronic, educational and the loss of pearls. Though united Andhra have to relinquish its right over an Pradesh ranked 4th largest State by area, existing capital to the new entity. biotechnology industries. During the dot com boom, when the chiefs in 5th largest State by population, 2nd Madhya Pradesh retained Bhopal, Patna in nominal GDP, and 4th in GDP per Googleplex, California and Redmond remained with Bihar and Lucknow capita, most of its people are unlettered decided to open their offices in India, with Uttar Pradesh. But does it matter with a literacy ranking of 24th among they helped funnel many millions who the capital went to? Yes it does. 28 States of India. Neither is Andhra More so in Andhra’s case. Consider the of dollars into IT services by many Pradesh’s human development index demographics alone. Hyderabad has entrepreneurs big and small. A little encouraging with the state finishing 7.75million residents and the next most before that came the education boom among the last ten states. populous city after the capital in the with the proliferation of engineering undivided state, Visakhapatnam, has just colleges that showed the software The export sector of the state is mainly 1.4 million people. The statistics reveal industry an alternate to Bangalore. dependent on export of primary products

22 maritime gateway / august 2014 SUNRISE STATE

keeping their cards close to their chest waiting for the industrial policy to be unveiled. Shiv Kumar Rungta of the Fappci says, “We want clarity on the financial sops that companies from all sectors can avail. Most of all, we want the state government to acquire land from the owners and sell/lease it to us at cheaper and raw materials and needs to be The most sought after districts are rates” They are a worried lot as land diversified. those that will berth the Petroleum, prices in the coastal state have trebled Chemical and Petrochemical Industrial since the state was formed anticipating It is, therefore, a daunting task to large scale development. name a new capital considering the Corridor region and the National socio-economic development aspects Industrial Manufacturing Zones (NIMZ) The upcoming state budget would waiting to be addressed while planning -– Kakinada to Vizag, Prakasam and perhaps answer a lot of questions and futuristic cities in the truncated state. Chittoor. With the state racing to be provide clarity to not just business But Chandrababu Naidu, who was energy self reliant in two years under houses but also to the scores of people popularly known as the chief executive the national ‘Power for All’ scheme, who are resting their decision of of Hyderabad lost no time reaching officials are now trying to tie up coal going back to Andhra from Telangana out for help. He has already shared reserves for the power plants waiting on Naidu. space with the industries minister of to be fired. For the people of Andhra Pradesh, the Singapore welcoming all support in An IAS officer who once worked with progress of their state rests on Naidu’s modeling Andhra’s towns after the Naidu and now serves the Telangana city state. Delegations of officials are shoulders. After ten years of a sabbatical government said, “Given the previous from power, he has made an impressive scheduled to visit the state when Naidu’s track record of the chief minister, men will roll out the map pointing to comeback. The next five years will there is no doubt the state can attract virgin locations with abundant natural decide not just his future, but also that investments.” However, he says there resources waiting to be explored by of Andhra Pradesh. Which way the state is an uncomfortable flip side to this. If impresarios and organizations alike. would go is as good as anybody’s guess. “Now is not the time to resent the the loan waivers promised by Naidu But if Naidu is successful in scripting a disproportionate distribution of assets. make it, it will leave precious little for successful story, he would have rendered It’s our chance to make the most of the any investment required by the state. the Summer of ’14 as memorable as opportunity,” said one senior member Although some foreign investments the Summer of ’69. Else, the ‘‘summer who is part of the team constituted to have trickled in to the state in the last would last forever’’ waiting for a identify a suitable capital.” one month, local industrialists are deliverer.

august 2014 / maritime gateway 23 Cover Story

FOCUSED ECONOMIC ACTIVITY

Krishna – Vijayawada to be an Education, logistics and trade hub. At Nagailanka a missile launching station can be approved immediately by which DRDO programs can be developed. Products manufacturing hub can be created and Krishna can be an agri and food processing zone.

Guntur/Ongole – Guntur – Education, Medical and health care industry. Processing industry for all commercial crops, Textile industry, Mineral based industry like cement, lime stone based etc.

Kurnool – rice is the major crop, food processing industry, can be promoted as health care and education hub

Anantapur – proximity to Bangalore facilitates development of knowledge based industry, aerospace and defence industries

Cuddapah – mineral based industries, focusing on steel and granite, livestock Chennai – Visakhapatnam Industrial Corridor

Chennai – Bengaluru Industrial Corridor

24 maritime gateway / august 2014 V isakhapatnam – IT & It enabled services, Medical and health care industry, Tourism, port based industry, Ship building and defence, navel based industry, manufacturing industry apart from existing pharmaceutical industry. Need to revise and scale up the industries like Steel plant, BHPV (BHEL), Hindustan Zinc, ship building, submarine products etc. Focus Education at large.

S rikakulam and Vizianagaram – Pharma and bulk drug industry, commercialisation of hill stations, natural products apart from agriculture.

Vizag – Kakinada Industrial corridor should be developed in the line of Ankleshwar of Gujarat as an industrial development corporation housing chemical plants, producing products such as pesticides, pharmaceuticals, chemicals, and paints.

East and West Godavari – Existing agri products, proposed PCPIR development. Kakinada as an education hub. Commercialization of hill stationed natural products and Food processing.

Prakasam – Processing industry for all commercial crops, Mineral based industry like granite, mica based etc.

Nellore – primarily an agri-based economy, food processing and agri based industries, Engineering and Chemical industries, port based industries.

Note: This image is artistic representation only

august 2014 / maritime gateway 25 Cover Story MAJOR PORT HUB IN THE MAKING

glance at the fund allocation and Ongole, the state could make the next thirty years, thousands of crore will for new port projects this most of this allocation by inviting be spent developing clusters of satellite A year by the Centre will international companies to participate towns, where people and manicured reveal the residuary state of in the project. China, Germany and property will coexist. Andhra Pradesh has been apportioned Russia have ostensibly evinced interest That said, Andhra’s ports, however, an envious 46 per cent of the moolah. in establishing a few industries in this cannot benefit unless the economic Having stated their intentions of zone. But the most ambitious projects centre of gravity moves towards the developing the 960 km coastline and of them all is the Chennai-Bangalore- coast from Hyderabad. With most bordering cities in to maritime centres, Nellore industrial corridor being FMCG and automobiles industrial the new chief minister and his battery of envisaged to upgrade infrastructure units coming up in various districts optimistic administrators hope to bring along this region to promote industrial of Telangana, the state has to play the at least half the projects to pass utilising and manufacturing activity. The corridor card of being a coastal state and muscle these funds. development will involve employing its way to attracting export oriented `12,000 crore for improvement of three Let’s consider the plausibility of such industries. If the state aspires to be national highways NH 4, NH 7 and NH an aspiration first. Many reckon the a maritime hub, the centre and state 46 with construction of roads to connect residuary state has greater benefits and have to speak in one voice. Shanghai’s industrial hubs. Over the course of the resources than Telangana. The fertile green belt covers almost 60 percent of the state’s land. Andhra’s seafood is also one of the biggest foreign exchange earners. These two could together SWOT Analysis of Andhra’s Ports bolster agriculture and allied exports from the region. On the industrial front, the undivided state had spent close to `54,000 crore on developing the stretch STRENGTHS WEAKNESSES between Visakhapatnam and Kakinada to render the area fit for the Petroleum, • Three of the four ports have deep drafts • Vizag Port has a space constraint and Chemicals and Petrochemical up to 18m, allowing handling of capesize cannot support much expansion. Also, Investment Region (PCPIR) region. The vessels. shippers prefer JNPT/Chennai for certain • Krishnapatnam and Vizag are well commodities because of cheaper tariff, special development authority (SDA), vessel frequency. created specially to ensure the progress connected by railway and road connectivity enabling faster movement of • For Krishnapatnam, although it has large of this project is understood to be cargo from/to the hinterland. land bank, it lacks soft infrastructure- CFS working overtime to iron out differences • K’patnam has the most modern container and ICDs around it. between the locals and administration. handling facility in the east coast. • Gangavaram’s fame extends to handling PCPIR being the flagship scheme • Vizag has a large immediate hinterland only bulk commodities. The port does not of the department of chemicals and and is handles 70 MT of cargo annually have connectivity to North India. petrochemicals to support projects with traffic increasing steadily. Vizag’s rail • Kakinada is the orphan among the ports, that ensure raw material availability of line helps East meet North India. with no clear expansion plan, operating naphtha could gain more momentum • With 2 berths of 19.5 m draft, the state’s with make-shift berths and mobile given the cordial relations between first private port has handled the biggest harbor cranes. vessel to call carrying bulk cargo. Chief Minister Naidu and Prime • Absence of a state maritime board Minister Modi. The last regime at the • Kakinada, the other state controlled despite having four ports in the state minor port boasts of an enviable list reflects poorly on the state’s vision for centre had also allocated three national of many agriculture and fertilizer the sector. manufacturing zones (NIMZ) to the consumers. undivided state while others in the • Absence of other support shipbuilding/ • Kakinada also has a distance advantage ship finance industry except the ailing country had just one manufacturing zone from the cargo centre with the Dredging Corporation of India. marked in their territory. With 25,000 neighbouring districts producing rice or acres of land apportioned for furthering hosting fertiliser plants. manufacturing growth in Chittoor

26 maritime gateway / august 2014 MAJOR PORT HUB IN THE MAKING

boom, for instance, is on account of the well. Availability of land cannot justify years as it had spent 50 per cent of its strong support extended by the central the existence of a new port,” says capital on laying roads and developing and state governments in making it fit Mr Raghuramaiah, former chairman of connectivity. To add to its low returns, to be an international maritime centre. the Paradip Port who is now a port and the poor turnout of iron ore volumes The development of ports has to be infrastructure consultant. further led the port in to the red zone. in conjunction with development of The state should take care in choosing industries. Ideally, the state maritime board should the least vulnerable location for a new identify a location before they give The state has to identify and match port as the entire belt from Nellore to any new port a green signal. To create industrial and port requirements and Srikakulam is highly prone to cyclones, a sea trading corridor and a wealth boosting smoke stacked plants cannot he says. The new port should also of opportunity for the port and users, be an exercise in isolation. “The have good connectivity else a major firstly, sea ports should be able to host industrialists have to identify imports, portion of the capital will be spent on mother ships. This requires a 20m draft exports, hinterland cargo and make developing roads and railway lines. and currently all the four ports are just an assessment of the location of the Referring to Dhamra’s case, shy of this benchmark. Secondly, most industries. A similar exercise has to be Mr Raghuramaiah says the port could bulk cargo is getting containerized all undertaken for new ports coming up as not achieve a good turnover for many over the world. Andhra should now step up its efforts and beat the rest of the ports in containerizing most bulk cargo A analysis of the strengths, weaknesses, opportunities and threats of the four at its ports. Lastly, the state should draft operational ports in Andhra Pradesh- Visakhapatnam, Kakinada, Gangavaram a concrete plan to the sector mapping and Krishnapatnam will help comprehend the potential of the ports to support existing and new industrial activity to the volume of projected industrial activity in the coming years. help prospective users. While these measures will address OPPORTUNITIES THREATS the primary requirements, the state, • 11 projects undertaken by Vizag Port • The proposed new port could cannibalise in the long run will have to create an under PPP and self financing mode to be cargo from the existing ports. atmosphere to house other verticals or units of the maritime sector. To create operational by 2015. • Vizag could face intense competition from • Signs of bigger vessels visiting K’patnam Dhamra and Paradip that have lined up an international maritime centre akin signal prospects of increasing container massive expansion plans. to Singapore’s or Hong Kong’s, ship traffic. • Low container traffic at all the ports could management and ship finance are critical • Vizag Port has the ability to attract still tilt the balance in favour of JNPT and to the all integrated development of the transshipment from the upper east coast Chennai. sector. ports, growing pharma exports could help the port in increasing volumes and • Sporadic and unplanned industrial If Vizag is being positioned as Andhra’s regain top spot among major ports. development could dent prospects for financial capital, it should be also be the sector as ports have to re-invest in • Gangavaram can do an Ennore on Vizag. It infrastructure to improve connectivity. the nerve centre for maritime finance. can benefit from congestion at Vizag. Globally, financial centres are also • Greater allocation of funds to social regional maritime centres with London, • State/Centre’s thrust on agriculture could schemes could limit budget support to help Kakinada handle large volumes of maritime activities despite promises New York, Tokyo, Shanghai and Hong grain, fertiliser. made to develop the east coast in to a Kong being the seats for buying and • Opening of Buckingham Canal could maritime hub. selling ship services. Over the years, further boost Kakinada Port's prospects. • Overlapping hinterlands could have the the IMC should also aim to an eastern • Coastal shipping from the coast to ports scavenging each other’s cargo to confluence of maritime legal services, Cochin and development of other Inland sustain/justify volumes. insurance, vessel leasing and chartering Waterways could help the region garner a businesses. If consignors and ship bigger share of cargo moved. • Growing power of West Coast ports with Adani, Essar, JNPT improving their owners are the bone and marrow of this • Flurry of industrial activity is promising efficiency and cargo handling capabilities relationship, the related services are the for all ports. Upcoming power plants to in bulk and container cargo. aid ports handling bulk cargo. binding agents that allow the trade to flourish.

august 2014 / maritime gateway 27 ANALYSIS Drewry What will it mean?

28 maritime gateway / august 2014 the P3 alliance a much bigger share of Out went the P3 and in came the 2M alliance with another 42.5 per cent. Only six weekly services are planned by 2M instead of nine, but vessel sharing agreement between the Danish and the Swiss the VSA will still be the trade lane’s container shipping lines. Maersk and MSC have just announced largest. From Asia to the Mediterranean, where a mega vessel sharing agreement that will replace their failed four weekly services will be provided instead of the five planned by P3, 2M P3 alliance early next year. Drewry analyses what this new will have a much greater market share of alliance will mean for the fraternity. 42.1 per cent, compared to P3’s 53.8 per cent (see Figure 2).

t will replace all current VSAs Figure 1 Figure 2 and slot purchase agreements Carrier Shares of EffectiveV essel Capacity from Carrier Shares of EffectiveV essel Capacity from I that MSC has with Maersk Asia to North Europe, June 14 Asia to Mediterranean, June 14 Line on these trades. This new VSA service co-operation will be known 9% 13% as 2M and will provide approximately 21% 19% 9% 185 vessels operating 21 strings. It will 23% 11% be smaller, and compare well in size 23% with the G6 and CKYH alliances – but 10% 24% what about CMA CGM?" 26% 12% Maersk and MSC have taken on board China’s objections to the P3 alliance by Maersk MSC CMA CGM CKYHE G6 Other Maersk MSC CMA CGM CKYHE G6 Other Notes: Effective vessel capacity = total vessel capacity less estimated Notes: Effective vessel capacity = total vessel capacity less estimated coming up with a new vessel sharing space allocated to wayport and out of scope cargo; P3 = Maersk, MSC space allocated to wayport and out of scope cargo; P3 = Maersk, MSC arrangement called 2M that they and CMA CGM; CSAV assumed to be independent of Hapag-Lloyd and CMA CGM; CSAV assumed to be independent of Hapag-Lloyd hope will be agreed by all regulatory Source: Drewry Maritime Research Source: Drewry Maritime Research authorities before the beginning of next year. Out has gone CMA CGM, in Key takeaways from the alliance order to bring the agreement’s market share down to more acceptable levels, • The VSA will improve the network efficiency and allow for lower slot costs and in has come a much simpler joint through improved utilisation of vessel capacity and economies of scale. co-ordination committee to monitor the • The VSA will provide more sailings and direct port pairs. carriers’ network on a daily basis. • The VSA includes 185 vessels with an estimated capacity of 2.1 million The objective remains the same – TEU on 21 strings in the Asia – Europe, US namely to reduce costs by sweating assets more efficiently between Asia/ • Maersk Line will contribute with approximately 110 vessels with a nominal Europe, Asia/US and Europe/US, but as capacity of app. 1.2 million TEU (55 per cent of the total capacity). port rotations and vessel sizes have not • MSC will contribute with approximately 75 vessels with a nominal capacity yet been clarified, it is not possible to of app. 0.9 million TEU (45 per cent of the total capacity). say how their market shares will change, or their undeniable savings compare • Vessels deployed in the VSA will continue to be operated by the two with that envisaged by P3. individual lines. Drewry’s analysis shows that on the • The VSA does not include joint marine operations. Each party will thus Asia-North Europe trade route, Maersk execute their own operations including stowage, voyage planning and port and MSC currently have a 32% share of operations. all effective westbound vessel capacity, which is more than the 30% market • The VSA does not include any commercial tasks or responsibilities. share threshold normally allowed under • A joint coordination committee will monitor day to day management of the the European Union’s consortium network. regulation, so will require close scrutiny (see Figure 1). Maersk currently • The duration of the VSA is 10 years. provides 21.3 per cent on its own, and • The VSA is expected to start early 2015. The starting date is conditioned by MSC/CMA CGM provide another 21.2 filing of information to and in some cases approvals by relevant maritime per cent through joint services shared authorities fairly evenly, which would have given

august 2014 / maritime gateway 29 ANALYSIS Drewry

larger operators to secure more market share. “MSC is pleased to have reached this agreement with Maersk Line. It represents another positive step in our continual drive to enhance our operational network in terms of scope, scale, efficiency and reliability. Our customers will be able to enjoy these benefits alongside the world class customer service that has been the cornerstone of our business since our formation in 1970.” says Diego Aponte, MSC Vice President. Mr Aponte continues “The 2M Vessel Sharing Agreement will enable us to achieve significant reductions in fuel consumption, driving down the carbon footprint of our On the Asia/USWC route, 2M is service quality could be very shipping operations. With planning four weekly services; whereas different to that envisaged They may be needed, sustainability a key area P3 was expecting to run six (see Table by P3. Will a shipper loading as CMA CGM has of focus for MSC, we’re 1). At present, Maersk, MSC and CMA a container on an MSC ship delighted that this vessel CGM share four weekly schedules. really get the same schedule sharing agreement will mean Between Asia and the USEC, two reliability as when loading on 28 ships of major cuts in emissions while services will be provided, the same as at a Maersk ship, for example, simultaneously enhancing present, but two less than planned by P3. as Drewry has consistently our service to customers.” recorded a lower level of 9,000 On the US-North Europe route, 2M will reliability for MSC? This aside, a bigger concern operate three weekly services – the same teu boxes on order will be the future of CMA number planned by P3, which reflects Maersk will want to continue CGM, as it has been sharing the fact that CMA CGM’s capacity share its Daily Maersk service guarantees vessels with MSC between Asia and on the route is relatively small. 2M will between Asia and Northern Europe, Northern Europe, and with Maersk probably be the second-largest alliance which could create further friction in the trade lane, after G6, in Drewry’s between the two new partners. between Asia and the Mediterranean, estimation. since 2011, so will not be able to fill its It is not yet known whether 2M will ULCVs on its own reasonably. The game As 2M will not include joint marine negotiate joint operational contracts. If of musical chairs of the mega-alliances operations, with each party looking this does happen, it will be a concern means that CMA CGM will now have after its own duties, including stowage, to terminal and intermodal service to seriously consider a closer East- voyage planning and port operations, operators, but an opportunity for the West vessel-sharing arrangement with someone else, therefore, the most obvious Table 1: Existing Alliance Services and the New 2M VSA candidates being UASC and CSCL. Both have recently ordered 18,000 teu mega- Asia to Asia to Asia to Asia to N Europe to Med to ships, and have worked with CMA CGM N Europe Med USWC USEC USEC USEC in the past – but there are other options. Maersk 5 0 1 1 1 0 They may be needed, as CMA CGM has MSC 0 2 1 1 2 2 28 ships of 9,000 teu on order, some of CMA CGM 0 0 0 1 2 0 which are more suitable for North-South Maersk/CMA CGM 0 4 0 1 0 0 trades. MSC/CMA-CGM 4 0 2 0 0 0 Our View G6 5 1 14 8 5 0 CKYHE* 6 3 10 6 1 2 2M will become the largest alliance on New 2M VSA 6 4 4 2 3 2 the Asia-Europe route, if approved. Like other alliances, it will help reduce costs, Notes: Maersk, MSC and CMA CGM share most Asia/WCNA services. G6 scope does not include Med/USEC route; * Although Evergreen has only joined and should be allowed. the CKYH alliance between Asia and Europe, they now share vessels on other routes; Only wholly owned and operated services are included. Shared services between different alliance/consortia members excluded Source: Drewry Maritime Research (www. Source: Drewry Maritime Research drewry.co.uk/ciw)

30 maritime gateway / august 2014 STEEL

The growth in steel consumption With the recovery of the largely depends on a revival in procurement from sectors such automobile, construction as automobile, real estate and and manufacturing industry, construction. Going forward, the Steel outlook set stabilization in the Euro-zone, optimism returns in the steel recovery in the US and Chinese economy will determine the fate industry. The industry is to improve in 2014 of M&A deals. M&A activity is expected to go up in the Indian expected to improve in the steel industry. Also, in the long run, as urban population increases, so will the need for steel year 2014. to build skyscrapers and public-transport infrastructure increase. With its population and rapid urbanisation, India is set to drive the next growth engine in steel. Global steel industry recovering from slowdown he steel industry, which has been struggling to keep 2014 is expected to be a “transition year” for the steel afloat, is expected to see a good year in 2014. industry with all major steel-consuming countries expected to log positive growth. Global steel supply and demand will T Since 2012-13, the steel scene has worsened, when grow in tandem with economic recovery around the world. demand growth was 3.3 per cent, at 73.3 million tonnes (mt). India's steel consumption grew by just 0.6 per cent While the steel industry started 2014 on a weak footing with in the 2013-14 fiscal, the slowest in at least four years, to 73.93 a 0.4 per cent decline in production in January, the industry MT. Exports grew by 4.1 per cent at 5.59 MT, while imports soon regained its ground as production picked up in China were down by 31.3 per cent during the period 5.445 MT. and India. Gains in the European Union, thanks to a recovery According to Steel Authority of India Ltd (SAIL) Chairman in steel demand in the region, coupled with a strong rise in Chandra Shekhar Verma, as major steel-consuming sectors the Middle East also contributed to the up-trend. After two from automobiles and capital goods to infrastructure are facing years of contraction, steel demand in Europe is likely to rough times, reflecting a slowdown in the economy. improve on the back of a flourishing automobile sector and a recovering construction sector. In US, the demand will grow Growth projections of the industry on the back of an improving global economy and the strong In the past two years, the continuing Euro-zone difficulties, momentum in the automotive markets. slow growth in developed economies and a cooling of With the global economy gradually on the mend, the WSA emerging economies took a toll on the industry. expects continued recovery in steel demand in 2014 and However, Steel Ministry estimates that India's consumption projects global steel usage to increase 3.1 per cent in 2014. may go up to 176 MT by 2025-26 if the economy grows by For 2015, world steel demand is projected to grow further by 6.5 per cent during the period between now and 2025-26. 3.3 per cent and reach 1,576 Mt. According to the World Steel Association (WSA), steel As per WSA, global steel production has increased 2.2 per demand is expected to grow by 3.3 per cent to 76.2 Mt in 2014, cent to 668 Mt in the first five months of 2014. China has following 1.8 per cent growth in 2013, due to an improved churned out 50 per cent of the total, growing 2.7 per cent outlook for the construction and manufacturing sectors, even over the same time frame. Production in the European Union though this will be constrained by high inflation and structural rose 4.6 per cent to 70 Mt. United States held the third problems. spot with production climbing 1.5 per cent to 49 Mt. Japan nudged up 1.5 per cent to 45 Mt, slipping from its second Apparent Steel Use (ASU) position as a recent increase in sales tax by the government Short Range Outlook for Apparent Steel Use, finished steel products (2013-2015) hurt demand in the country. India moved up 1.9 per cent to

ASU, megatonnes Growth Rates, % reach 34 Mt. Regions 2013 2014(f) 2015(f) 2013 2014(f) 2015(f) ArcelorMittal, the world's largest steelmaker, emerging European Union (28) 139 143 148 -0.2 3.1 3.0 economies will also continue to be a major driver of demand Other Europe 37 38 40 8.5 3.9 4.2 CIS 59 59 62 2.2 1.1 3.7 due to the huge amount of steel required for urbanization and NAFTA 129 134 139 -2.4 3.8 3.4 industrialization. The demand for steel is thus expected to Central and South America 49 51 52 4.3 3.4 2.7 Africa 29 30 33 9.8 4.8 8.4 remain strong in the years to come. Middle East 48 51 55 -1.1 5.8 9.5 Asia and Oceania 92 1 020 1048 4.9 2.8 2.8 For ArcellorMittal, the year-on-year improvement was World 1481 1527 1576 3.6 3.1 3.3 Developed Economies 387 397 407 -0.3 2.5 2.4 the result of recovering steel markets, the expansion of Emerging and Developing Economies 1094 1130 1170 5.1 3.2 3.5 its mining operations and benefits of cost controls. “The China 700 721 741 6.1 3.0 2.7 BRIC 843 869 894 5.4 3.0 3.0 prospects for growth of our core markets in Europe and MENA 63 67 73 0.9 6.1 9.4 World excl. China 781 805 836 1.5 3.1 3.7 the US are encouraging and overall we remain cautiously optimistic about the business outlook for the rest of 2014," f - forecast ArcelorMittal said in a statement.

august 2014 / maritime gateway 31 Interview BVJK SHARMA

How do you look at the group’s Qp erformance last year and what are your plans for the coming year? Last year, our target was to reach a Aturnover of `500 crore. But we fell short of the target. On the positive side we achieved our business target set for PAT, which was `200 crore. Last three years, we have been recording a CAGR was set during the previous government. handles import of coke, metallurgical of 44 per cent at revenue level, EBITDA Now with a change in regime, we should coal, thermal coal for third parties. level and PAT level. This year, we aim to probably look at 150-200MT by 2018. On the export side, we have bauxite, grow at 30 per cent. molasses, and raw sugar. Recently, we Does this plan require additional handled fertilizer and sulphur imports. We are looking at every possibility to Qcapacity building with new ports? achieve our growth targets. And, this We are now looking forward handling includes increasing volumes, efficiency, We want to exploit the existing sites car exports and starting containers, new products and pricing. Athat are available with us. We are LNG terminal and POL terminal at the expanding capacities at Goa from 7.5MT port. We are in the process of getting What are the significant to 12MT; Jaigarh from 15MT to 50MT; statutory clearances for this. We are Qde velopments one can expect and Dharamtar from 8MT to 40MT. also tying up with partners for building next year? These are the expansions in the existing infrastructure. Our biggest challenge Despite all the challenges, steel, locations. We are also looking at one at Jaigarh is connectivity, especially Aenergy and infrastructure verticals new site on east coast as our iron ore rail. Now, we are looking forward in our group have grown. We expect to requirements are increasing day by day. to the PPP model announced by the do well considering all the positivity We are also exploring another at north of railways to address this issue. We want around us as against last year. We are Bombay. We are open to opportunities in to participate in railway PPP projects even looking at our cement business Karnataka as well. that connect our ports to railways. Goa turning around this year. We also is already connected and Jaigarh will Currently, what is the cargo mix get connected to Konkan Railways and have challenges. While group cargo is Qat each port? available to my vertical, I must match subsequently from Konkan to Central it with commercial cargo. So I plan to Our ports mainly cater to group Railways. Dharamtar is connected to our expand capacity in all three operating Acargo, which accounts for 80 per cent plant. We need to extend it to port. ports – Goa, Jaigarh and Dharamtar. of the total cargo. But in my final model, How do you look at current This will include brown field expansion, the cargo mix will change to 50:50. Qbusin ess scenario in the country? brown field acquisition, brown field What is the main cargo handled What gives you confidence that bidding and green field building. These Qat ports? next year will be better and you will are required as I need to create at least reach your business targets well in 100 MT capacity by 2020. We are even We are handling mainly coal, advance? looking at advancing and expediting our Alimestone and coke in our port in targets. We are considering the possibility Goa. We also handle and exports of steel The positive factor is that Indian of reaching 150 MT by 2018 with all and steel products. At Jaigarh, we are Abusiness is demand driven. When the positivity around. The earlier target importing thermal coal. The port also demand gets created we create supply.

JSW Infrastructure is all set to take advantages of the opportunities that a change in regime We expect to do is expected to usher in. In an interview with Maritime Gateway, Capt BVJK Sharma, JMD & CEO of the company, talks about its future plans. well with all the Sharing his optimism, Sharma says the positivity is already visible and that the group is confident positivity around us of achieving its business targets well in advance.

32 maritime gateway / august 2014 Currently, supply is lagging behind in is there should not be any negatives all sectors – be it services, consumer for lending to infrastructure sector. durables, or raw materials. I am very Across all sectors, In the PPP model, if you reduce the confident that since supply side is surprises, then the upfront loading on always dragging one can easily compete there should be a interest rates will not be there. If you on price front with good marketing. So common process and increase the tenure of 25 years to five business model is given in India. Only year moratorium, then you are through. enablers are required. Policy side, we standards for PPP. The Earlier moratorium of two years was too expect transparency, dispute redressal short. But with five years outlook, one mechanism to be in place so there is a principle behind PPP can definitely take the required steps business to do for everyone. and risks that are required. No risk, no should be protected reward. But it should be reasonably You are also part of FICCI’s shared between the government and the infrastructure committee. What Q and risk should be private players. And modern technology is the agenda that set by it? shared. This cannot be should be encouraged wherever PPPs We are looking at what is required to are considered. The government should Abe done on the present PPP model in one sided. find a mechanism to weed out non- India. We are also considering the issues serious players. They should be debarred involved in the land acquisition process so that serious players can compete and and how to resolve it. The committee bidding. The bidding process should get qualified. also studied the environment issues, not lead to big surprises like technical In some projects like roads, probably the ports, coastal shipping, international or geological in the project itself. Also, government can look at separating the shipping, roads and railways. We the traffic study should be realistic. The creation of infrastructure and operations. have deliberated upon these and have bidding process should be shortened. The model of creating a road and given our recommendations to the Both qualifications and pricing can be operating it for 30 years may not work government. Similarly, many other done simultaneously. Across all sectors, any longer. We need to look at an EPC bodies like Assocham and CII are there should be a common process and model so that the EPC player can exit meeting respective secretaries and standards for PPP. The principle behind after developing the infrastructure. In the giving feedback to them. PPP should be protected and risk should be shared. This cannot be one sided. The operations part, we can look at a reverse What is your take on risk should be equally shared based on BOT model like Mumbai-Goa highway. implementation of policy by the Q technology changes, political scenario Earlier, you had expressed government? and many other factors that may come Qin terest in setting up facilities in They are all low hanging fruits. in later. A mid-term review process West Bengal and Odisha. Are they AWe do not need to do much. Right should be provided for this. Long term still on your radar? things are already happening, enabling funding is also required for this sector For us the entire east coast is the decision making process. The through proper PPP enablers ,where the open. However, compared to west government should look at PPP in its government is also part of it with a real A coast, east coast has more challenges true form. Unless there is profit for the long term tenure of 25 years. in terms of geography. I’m looking at developer, there will not be any PPP What about the infrastructure West Bengal and Odisha border. But success in India. All the money that Qf und that was created a while the Odisha government has still not needs to come can come through the back? come out with a transparent process for PPP route. First thing the government bidding. I am interested in Odisha as needs to do is improve the quality of It is working in a manner which can Abe expedited. All that is required

august 2014 / maritime gateway 33 Interview BVJK SHARMA

My strategy is simple. call in mining our own resources in an AI plan to invest `800 effective manner. But by the time it will crore in rail project, `500 come into effect, one year would have crore in container project passed. So, demand will be very high and `100 crore in CFS. for coal this year. There onwards, once This way I will be equally Indian coal mines are opened and we good as JNPT and will be mine in a scientific manner probably the well and connected to the import will not be as high as now. hinterland required. The Maharashtra government is What are the current volumes further connecting Konkan Qhan dled at your port? Railways to Central This year, Goa will handle about 8 Railways by taking equity AMT and Jaigarh will handle 7MT. We in the project. Larger the are also using other ports like KPCL for distance I go, I will be our coal import needs. better equipped to compete it is going to be a place with plenty of as far as rail freight is concerned. Next What are your wishlist for the opportunities. They are blessed with lot enabler is draft for big shipping lines Qn ew government? to come and call at the port. Thereafter, of good things. I am also open to Andhra The new government should not setting up enabling infrastructure, where and Tamil Nadu. West Bengal has differentiate between major ports and challenges and everybody knows it. lot of people can move in with families A non-major ports. Whatever enablers are to a new location. We are moving in Which are the key customers for that direction and talking to a number of there for major ports should be extended QJaigarh port in Maharshtra and people. We have started a good school to minor ports as well. They should Karnataka? and a vocational training centre. specify certain minimum threshold for non-major ports like those invested at In terms of coal, last year was very From the Custom’s point of view, we least `1,000 crore and handled 20 MT fruitful for us because we diverted all A are bringing in scanning equipment cargo and treat them on par with major our third party coal handling customers which is approved by the Customs. ports. They should also seriously look in that region who cater to foundries. This will bring down the cost for our Around 440 industry units are there at remodeling the PPP model. Land customers. There are concerns related to acquisition should be an enabler rather in Kolhapur region. Besides, there cost at JNPT. I’m told that the cost for are sugar factories. In terms of coal, than what it has become today. Railway importing a container is almost `30,000 should fall in line. They have their we have diverted UAE-based Walden at JNPT. When I look at my own cost, Commodities (check), Dalda Oil, Emami own PPP model and their own way of I believe it should not be more than working. They need to align their model Seeds and several others. ` 4,000. Why should a customer incur with others. My wish is that roads, such high cost; who is benefiting from What are the incentives for railway, ports and shipping come under it and how we can reduce it are the Qcus tomers to move from Nhava one ministry and is part of the central factors we are looking into. Even if I Sheva to Jaigarh? budget to get proper attention and have logistics disadvantage, I can beat coordination. Ports without connectivity We have good draft. We can handle that by bringing modern equipments cannot be defined as ports. So, Alarger ships. Our discharge rates and bringing players who will charge are very good. We discharge around in a transparent manner. Beyond the connectivity issues should be addressed. 40-45,000 tonnes per day. Also, in terms port also, there is a lot of cost that Simultaneously, whenever they are of logistics cost we are far cheaper by gets added to shippers and consignees addressing a port there is a lot of room around 50 per cent on land logistics. making it difficult for them because to improve inland waterways. Sagar We handled the largest raw bulk sugar there is a monopoly regime at JNPT. mala project should be brought back exports at our port, surpassing Mundra Even in export containers, I was told because it will help ensure development and Kandla. We have touched around that the cost is almost `11000. If the of an entire region. That will further 245000 tonnes of raw sugar exports hinterland reach is increased and proper promote the growth of the port. This in two months. Our main customers connectivity of rail, road and inland in turn will help develop the economy. include Shripad Sugars, Baramati Agro, waterways are established, we can beat Sagar Mala was well conceived. Sagar Suraj Influx and we have diverted all of them. Our group cargo is increasing Mala project should be reintroduced them. Around 2 lakh tones of molasses to 40 MT including some volumes of by including inland waterways in it. have been exported out of Jaigarh last containers and I’m sure I will be able to The government should Incentivize the fiscal, which is about 90 per cent off offer services at the right price. modal shift like in Europe, where there the Maharashtra coast. We have also is a Marco Polo scheme. This will help What is your outlook on coal? handled 4.5 lakh tones of bauxite. ensure seamless shift of cargo from road What is the strategy for Q Demand will be always there. to rail to coastal. This way logistics cost Qattracting cargo to your port? AThis government may take a will come down.

34 maritime gateway / august 2014

Interview T KRISHNA BABU, chairman, vpt

or 80 years, the Port of Visakhapatnam has helped F run coal plants, aided in the production of India’s steel and given the world a taste of the finest coastal catch. With many firsts to its credit the port is now embarking on projects aplenty to be completed and commissioned by 2015. Whilst these projects would keep the infrastructure wants at bay, the Port Chairman, Krishna Babu says his other priorities are to modernize cargo handling and suppress pollution levels at the port arising because of dusty cargo. Edited excerpts of his first interview with Maritime Gateway after taking over as Chairman. What in you view is the impact Qo f state re-organisation on port sector – investments, economic activity? What support do you expect from Andhra Pradesh and how is the hinterland activity shaping up with The Government of India made Acertain commitments under the Andhra Pradesh Reorganisation Act 2014 to providing necessary support for development of both the regions. The Government of Andhra Pradesh is also indicating at the formulation of a new Industrial Policy to attract new investments. Further, the policy initiatives and directions contained in the Union Budget 2014-15 are aimed at improving the economic growth by giving a fillip to industrialisation. Some of the are the development of Getting the Chennai-Visakhapatnam industrial corridors consisting of 20 industrial clusters being set up by Asian Development Bank, development of PCPIR, extension of ten years the port T Krishna Babu tax holiday for setting up of power Chairman, VPT generation units for one more year, expansion of the production capacity of the RINL, expansion of refining capacity of HPCL from 8.3 million tonnes back on track to 15 million tonnes per annum and establishment of LNG terminals. Visakhapatnam Port with good track record was slipping on The budget provisions also talk of achieving targets. Chairman T Krishna Babu vows to bring it rejuvenating SEZs with a slew of tax incentives for the state. We understand back on track by completing the ongoing projects fast there by that MSMEs will also be given much impetus to thrive. improving capacity and intrastructure.

36 maritime gateway / august 2014 Imported coal moves to SAIL steel The current level of rail cargo to the plants in Chattisgarh, Odisha and tune of about 30-35 million tonnes is Madhya Pradesh. Rail connectivity being moved by the existing internal rail goes further up north passing through network of about 200 kms track through coastal Odisha, West Bengal and up two exchange yards. The port also has to Assam facilitating movement of plans to develop another exchange yard Alumina, fertilizers, petroleum products at Mindi to meet the future demand. and others to various stations. At In April 2011, due to congestion on the Vizianagaram, the main line branches rail route from Vizianagaram to Raipur, off and further branches at Rayagada the Indian Railways have adopted a route meeting the industrial needs of Western rationalization policy that mandated Odisha and Chattisgarh and also acts all traffic originating from the port to as the gateway port for destinations the destinations in Central India and beyond Central India and even leading beyond, be routed on the longer route to National Capital Region. Most importantly, the Government of via Vijayawada-Ballarshah. This has AP is also considering setting up a State adversely impacted traffic destined to Maritime Board to develop an industrial Central India and beyond by adding an hub similar to Singapore by developing The port has taken up additional freight equivalent to 340 Kms. ports along its coast which has huge and consequent shifting of container and potential for development. several developmental fertilizer traffic destined to the National Capital Region to western India. This It is certain that there will be programmes in the major policy may even have larger impact on substantial growth in maritime this region jeopardizing the “look East” activity corresponding to the growth thrust areas such as policy of the Government and the related in the hinterland. But, the quantum proposal of developing Visakhapatnam of additional cargo to the Port of deepening the draft with Port as a container hub port. Visakhapatnam can only be assessed after 1-2 years when some of these a view to handle bigger You have had mechanization and initiatives transform into actions. Qexpansion programmes lined up vessels construction of that were slow in taking off. What How is the rail connectivity and is the current status and schedule Qr oute rationalization in this region? new berths to enhance of completion including dredging Does it serve port needs well? the capacity, and activity? The port is connected to trunk The port has taken up several Arailways through the Chennai- mechanisation to improve Adevelopmental programmes in the Howrah main line of East Coast major thrust areas such as (i) deepening Railway. This line branches off at pr many as 8 projects the draft with a view to handle bigger Kothavlasa leading to Bailadilla mines with an estimated vessels (ii) construction of new berths to in Chattisgarh, which mainly caters enhance the capacity (iii) mechanization to iron ore movement from mines to investment of `3000 to improve pr many as 8 projects with the port. There is also connectivity an estimated investment of `3000 from IB valley in Chattisgarh for crores through PPP mode. crores through PPP mode. Port has also movement of thermal coal to port. taken up dredging in the outer harbour

august 2014 / maritime gateway 37 Interview T KRISHNA BABU, chairman, vpt

and inner harbour to handle deeper Status of projects awarded under drafted vessels, construction of new PPP by Port of Visakhapatnam berths, strengthening of the existing berths, improvement to rail and road infrastructure with internal resources. • Installation of mechanical coal handling facilities and up-gradation of The Port will have a capacity of nearly General Cargo Berth at outer harbour to cater to 2 lakh DWT carriers 125 million tonnes by 2016-17. on design, build, finance, own and transfer (DBFOT) basis an estimated cost of `444.10 crore is operational from April 2013. The Vizag Port previously Qth ought of two berths for • Development of EQ-1 berth in inner harbour on DBFOT basis awarded handling petroleum products. Does to Adani Vizag Coal Terminal Pvt Ltd, at an estimated cost of `323.18 that plan hold good still? crore for handling steam coal is likely to be commissioned in July 2014. The port has two berths in the • Development of WQ-6 berth in inner harbour on DBFOT basis awarded Aouter harbour viz., OSTT and LPG to West Quay Multi Port Pvt Ltd, at an estimated cost of `114.50 crore Terminal capable of handling deeper for handling CP Coke, LAM Coke, Granite and Steel cargo is likely to draft vessels and two berths in the be completed by July 2014. inner harbour viz., OR-1 and OR-2 for • Development of EQ-10 berth in inner harbour on DBFOT basis awarded handling petroleum products. With the to AVR Infra Pvt Ltd, at an estimated cost of `55.38 crore for handling completion of dredging work in the liquid cargo is likely to be completed by July 2014. inner harbour, the OR-1&2 berths will have the capability of handling deeper • Development of EQ1-A berth in inner harbour on DBFOT basis awarded draft vessels as well. The existing to SEW Vizag Coal Terminal Pvt Ltd, at an estimated cost of `318.23 berthing facilities would meet the crore for handling thermal coal and steam coal is likely to be completed requirement of the oil companies duly in October 2014. upgrading the pipeline facilities in the • Installation of mechanized fertilizer handling facilities at EQ-7 berth event of expansion of the refinery. in inner harbour on DBFOT basis awarded to Vizag Agri Port at an W e have been hearing about estimated cost of `217.58 crore for handling fertilizers. There has been QPCPI R for quite some time now. some delay in the take-off of the project as the concessionaire has Will it gain momentum in near been delaying payment of the licence fee. The project is likely to be future and support the port growth? completed by July 2016. There are indications that the • Up-gradation of the existing facility and creation of new facility for Aproposal to develop PCPIR is being handling iron ore on DBFOT basis awarded to Vadinar Oil Terminals actively considered by the Government at an estimated cost of `845.41 crore is likely to be completed by of AP. The PCPIR is being planned to be December 2015. developed as per international standards • Extension of existing container on par with the petro chemical regions terminal in outer harbour on in the US, China, Japan, Singapore etc. DBFOT basis awarded to I am hopeful that besides enhancing Visakha Container Terminal at refinery activity in this region, the an estimated cost of `633.11 prospects for the units involved in crore is likely to be completed production of chemicals such as by December 2015. Ethylene, poly Ethylene and other polymers will be promising. • II Status of projects undertaken by the Port through internal Could you update us on the accruals: Qprogress made on the satellite port planned near Bhimili? • Deepening of outer harbour to facilitate navigation of vessels A study is entrusted to a consultant of draft up to 18.1 meters Afor development of a Satellite in the outer harbour at an harbour integrated with Fishing estimated cost of `139.88 crore Harbour at Bheemunipatnam. As the completed in March 2014. study indicated that the proposal is not attractive, Port has proposed to carry out • Works relating to development of West Quay North berth in inner a study for development of independent harbour at an estimated cost of `221.14 crore have commenced and the Fishing harbour at Bheemunipatnam. berths are likely to be ready by December 2015. What additional cargo will your • Dredging in inner harbour to facilitate navigation of PANAMAX class Qp ort aim to garner with Paradip vessels at an estimated cost of `350 crore is in progress and is likely to upping its ante to compete with be completed by December 2014.

38 maritime gateway / august 2014 Do you expect an increase or Qdrop in volume with the new state being formed? To address the likely power shortage Ain the new state of Telangana to the tune of about 2,000 MW, the Centre has proposed setting up a 4000 MW mega power project by NTPC. Government of India has also proposed conducting feasibility studies for setting up a steel plant by SAIL in Telangana and another steel plant in Kadapa. A major chunk of the coal required for these projects Adani owned Dhamra Port? Does The Port has been organising trade may be routed through the Port of meets to interact with the business Vizag also plan to hold a road show Visakhapatnam. As the new state has no fraternity in its potential hinterland to invite more customers? coast line, the ports in Andhra Pradesh and developing port infrastructure will cater to the requirement. Competition between ports, to meet their expectations. This is a Aterminals, service providers is continuous activity. We have organised What are your immediate focus desirable for better service quality at about 4-5 trade meets last year and Qar eas as Chairman for the Vizag economic cost to the industry. Port of during the current year we have a target Sea Port? Visakhapatnam has also been facing of organising nearly 8 trade meets to competition from the neighbouring ports market our services. The port is unable to achieve targets to the North and to the South. The Port Afrom past two to three years because entered the elite club of Ports across the What incentives are you willing of the on-going projects and inadequate world having the capability of handling Qto give your customers in facilities for handling larger vessels. Capesize vessels with effect from April addition to discounts based on The major task ahead is therefore putting 2013. The port has the deepest container volume? back the port on track by restoring its terminal among major ports in India with Besides providing incentives to the lost glory. a capacity to handle five lakh million Acustomers in terms of discounts tonnes annually. The terminal handles Deepening projects are very critical based on volumes for promoting trade, for providing necessary draft both at highest transhipment cargo among major the port is extending incentives for ports. A project to extend the existing the outer harbour and inner harbour. coastal cargo. The port has also been The outer harbour dredging has been container terminal with an estimated extending 50 per cent discount on port investment `633.11 crores is awarded on completed ahead of schedule and I am dues and pilotage for mainline container proud that the port is now capable of PPP mode recently. With this, the port vessels. will have a capacity to handle 1 million handling capsize vessels and compete TEUs per annum. Government of India The tariff fixed by TAMP are ceiling with any of the neighbouring ports. is actively considering to notify Port of levels; likewise, rebates and discounts The inner harbour dredging, however, Visakhapatnam as a transit port to the are floor levels. There is provision to is complex in terms of execution. We EXIM cargo of Nepal. Further, with charge lower rates and / or allow higher are making a judicious balance of the locational advantage the terminal rebates and discounts by the Port. providing window for dredging with is poised to transform into a major Provision also exists to rationalize a view to minimize the corresponding container Hub. the prescribed conditions governing effect on navigation. I am hopeful the application of rates prescribed that the dredging in inner harbour The port will soon be able to handle which may give relief to the user in rate will be complete by December 2014. fully laden Panamax vessels at the per unit. Inadequate capacity and outmoded Inner harbour berths. The Port has been systems of cargo handling were upgrading its infrastructure to compete What is the handling posing problems to the port. With the with other ports by taking up capacity of the steam Q developmental projects taken up, the developments in the major coal terminal built by The port has also port will be able to overcome these thrust areas viz., deepening, Adanis? been extending constraints. I am therefore keen on mechanisation, construction of The Adani Vizag Coal completion of all these projects new berths and improvement ATerminal developed at within time. in other logistics. The port 50% East Quay berth 1 in the will have a capacity to handle discount on port inner harbour is capable of Besides targeting improvements in 125 million tonnes per annum dues and pilotage handling Panamax vessels capacity and infrastructure, priority on by the end of 12th plan and is for mainline of draft up to 14 meters with the agenda is to bring the pollution at anticipated to handle about container vessels. a terminal capacity of 6.41 bare minimum levels as per AP Pollution 80-90 million tonnes. million tonnes per annum. Control Board norms.

august 2014 / maritime gateway 39 Interview S S MISHRA, chairman, paradip port

Paradip Port has registered a immensely. We also help some customers Q20 per cent growth in cargo and with priority berthing and I personally 34 per cent growth in revenues last went to about 60 customers and tried to financial year.W hat was the growth understand their issues. aided by? In addition, we continuously tried to There was an untapped market. We meet the ground staff of the shippers Atook a few measures to improve our and stevedores of the port and we had performance. Since money invested an open house meeting and made some in projects will not give us immediate difficult decisions. Lastly, we tried to result, we streamlined our functioning address issues of our employees by and we improved our system of working giving them healthcare benefit post every month and did not want to take retirement and made efforts to improve a big step at one go. So this helped us the overall working atmosphere. deal with higher volume of cargo with In terms of cargo what the existing infrastructure. One of our contributed to growth? biggest achievements is that we are now Q dealing with 95,000 tones of cargo. The Our basket has not been widened. second achievement I would consider is AIt is domestic coal sent through we increased evacuation by 30 per cent. the coastal route to the power plants, The east coast railway and the railway imported coal going to nearby power and board helped us achieve this. Thirdly, steel plants, crude and petroleum that we also talked to the customers, listened IOC is pumping to refineries of Haldia, to their problems made them aware fertilizer raw material of IFFCO, iron ore that this is a responsive port. Some of a little of other cargo. We convinced the their problems we were able to solve. customers going to other places to have For example the berthing policy that faith in us and we proved it by handling was framed last year that is now totally higher volumes. We are now trying liberalized. Initially the vessel calling in to diversify our cargo. We signed an with import cargo had to clear all custom S S Mishra MoU with GAIL and LNG will now be charges before berthing. Now it is after Chairman, Paradip Port transported through our port. 30 days. This has helped the customers We are also going through a process GEARING UP FOR FURTHER GROWTH Paradip Port, which has registered an impressive growth in cargo volumes, is now looking at expanding to handle multiple cargoes including containers with mechanisation of berths on agenda. The port is striving to get cape size vessels. In this interview S S Mishra, Chairman of Paradip Port, details the strategy

40 maritime gateway / august 2014 to award a container berth and are in discussions with various sake holders for a CFS, FTZ or an SEZ and we are evaluating the possibility. We will also shortly come to the market to handle menthanol, ethanol, edible oil which is a new commodity for us. We have just drafted a policy for handling bunkering fuel. The policy will allow government companies such Hindustan Petroleum Company Limited, Bharat Petroleum Company Limited and Indian Oil Company to engage an agency, bring a barge and will be given area to store fuel and the vessels which are coming from Dhaka, Haldia, Kolkata, Vizag, Dhamra, Gangavaram, Chittagong, We see that apart from the multi-purpose improve once our rail connectivity Krishnapatnam can refuel at our ports. container berth that we will award, we with Haridaspur Paradip railway line Currently ships go to Singapore or see the need for a container berth. Some is commissioned in 2017. The second Colombo for their fuel needs. We are companies have expressed interest for concern is environmental or forest exploring the bunkering market and we other cargo such as liquid petroleum clearance. For the southern dock where are yet to decide if we will fuel vessels cargo or fertilizer raw material cargo. So the IOC and the multipurpose berth are meant for domestic trade (coastal those prospects give us a confidence that supposed to come up, the clearance took shipping) or for Exim trade. We are the western dock complex will be fully a long time, but after follow up with already in talks with IOC for this project. utilised. Also, the off shore breakwater the authorities it came through. For the The state government on its part has we are constructing for GAIL, there also Western Dock also we are going ahead reduced tax on fuel from 12% to 4%. we will have another berth. with the clearance process. The third issue pertains to handing over of land Once we reach a stage where this Earlier, investors walked out for scheduled projects. We are trying to projects starts, we will approach the of many projects despite the Q obtain clearance through court cases filed government for more concessions. memoranda of understandings being against the iron ore plot users. We are About six new captive berths of signed due to a delay in awarding or also simultaneously collaborating with more than 10 mtpa, costing Rs implementation. What do you think Q the Orissa government, especially the 6,500, is planned at the Western is the reason and what measures mining department for faster clearances. Dock Complex. What commodities will you take as a major port to will the new berths handle? promote more confidence among With these measures, we have assured users and investors? the investors that we are making an We recently conducted a study effort to resolve their issues. We Investors have three issues. Here Athrough Rites and we have an recently had a market analysis done to is how our port plans to resolve understanding on the power and steel A give investors a realistic status of the them. Quicker evacuation of cargo plants that are coming up. They are all project and RITES, the consultancy is one of main issues. On the eastern in need for imported coal. Similarly, has done a thorough job of analysing front, we are one of the best in this I met the companies who ship coal the connectivity and cargo. Further, on area and our connectivity will further from Talcher through the coastal evacuation, when the eastern corridor shipping route. The Indian railways in DFC comes up, moving cargo out of the collaboration with MCL has undertaken port will be easier. automatic signaling from Talcher to Paradip so that the throughput will We are not in a position From my understanding, the eastern increase significantly for the port and corridor is promising higher rates of alongside the line capacity. The demand to meet the demand right return and the Ministry of Railways will at this stage is 36 million tones for these now. There is a huge take it up. But what bothers me is the upcoming power plants. We are not logistics plan of the Indian Railways. in a position to meet the demand right potential and so as the There are close to 18 of thermal power now. There is a huge potential and so as plants being set up in Central India. the manufacturing activity takes place, manufacturing activity The average distance of these power there is a shift to containerization. We plants from the Paradip Port is 500 km. haven’t taken any step in this direction takes place, there is a But these plants are being forced by the other than creating a facility for stacking Railways to procure coal from the ports 1,000 containers and allowing a 50 per shift to containerization. of the west coast where the distance is cent discount in vessel related charges. three times compared to the distance

august 2014 / maritime gateway 41 Interview S S MISHRA, chairman, paradip port

Farakka is facing some difficulty, the Secretary, Shipping is taking personal interest in promoting the waterways of the country. What is your take on the imports Qo f iron ore from the port? A number of mines are closed Anow because of the Apex court’s on banning mining in some areas and exports of ore in some others. However, we do see a number of steel plants being established. The government must be taking action to resolve the issues. So I do think there would be exports of ore in the short term. to PPT. I believe the market should be What is the port doing to What challenges does the allowed find its own rhythm. Paradip Qpr omote coastal shipping? Qp ort confront while upgrading Port, on its part, can run long haul trains- We are already actively promoting infrastructure and increasing cargo at least three trains- to carry six million volume? tones of cargo that can be evacuated. Acoastal shipping and last year we dispatched close to 19 mt of coal We must be cape size compliant and Looking at the timing of through the coastal shipping route. Many Acreate more berths to ensure these Qinfrastructure expansion planned power plants in Southern India and a ships call our port. And do this early. at your port, can one reckon that few in Eastern India were supplied coal The connectivity through railway lines it has been timed with the logistics through these ships. Further, we recently must also be completed at the earliest. infrastructure developments just spoke to a steel major to ship their The next is mechanisation. We have promised by the Centre? products through this route. seven mechanised berths and in future Yes. Our timelines are well managed The government extended the all berths will be mechanized. But of Aand leveraged to the Centre’s proposal Qw ater limits of the Paradip the seven non mechanised ones, we to have the dedicate freight corridor Port Trust to Kanika Sands area plan to mechanise five of them. There in place. The Ministry of Shipping is for setting up of the transloading are issues in the way, but we hope to go guiding us our expansion projects. facilities. Has the facility been set ahead with the process. The next is the up? manpower challenge. We have about Neighbouring ports Dhamra and 1987 employees in toto at all levels. QV isakhapatnam are gearing up It has been notified and working Here is where we need to do something to handle great volumes of cargo Aprocedures are being decided by to have more quality manpower. Our by containerizing cargo and adding us. It is a very good thing to create age profile is highly skewed and most new berths. How do you view this an additional facility and it will be people are over 45 years. We need a development? promoted. The facility will be of great young, dynamic work force. We also If you consider the cargo handled use especially during the monsoon. have to resolve land issues with the state government for the port to grow. Aby Paradip Port in 2003, it was You were known to be an avid The state government should assure us around 11 million. But Dhamra and supporter of the inland waterways Q of our land and we can take steps for Paradip last year handled 83 million model during your stint at the IWAI. developmental activities in a confident tones together last year. Competition is What work has been initiated on the manner. always welcome and containerization National Waterways 5? is at a very primitive stage in eastern The port had plans to set up an It is the ministry of shipping, Inland India. There is a significant room for inland container depot. How far Waterways Authority of Indian and Q all ports to be a part of this. The up A has that plan progressed? country that uses the JNPT will realize the Government of Orissa that drove the that there is so much of congestion at project and the Port became a willing Yes, we are thinking of setting up that port and evacuation problems are partner to develop the IW 5. There is a A a container freight station near adding to the logistics cost. We are sure lot of improvement that is going to take the port and additionally a special that once the infrastructure is in place at place. IWAI, PPT, Dhamra Port and the economic zone (SEZ). We are taking to our port, there will be a one third shift of state government Orissa have identified govt, cos and transaction advisor. We cargo from the western coast. That said, a stretch that has more water and greater have made up our mind on the cfs, but one has to be competitive, responsive, depth. The IWAI is trying to ship we need to decide whether it’s an SEZ reach out to customers and make fertilisers through waterways and though or FTZ. But we are sure of going ahead improvements in house. cargo movement from Sand Heads to of this plan.

42 maritime gateway / august 2014 Inspiring Networks SURAJ INFORMATICS Interview P C Parida, Chairman, nmpt POOR CONNECTIVITY LIMITING GROWTH

Formally inaugurated in January 1975, New Mangalore Port is now well equipped to handle bulk, liquid chemicals, hazardous cargoes, crude and POL products, heavy lifts, machinery and containers. The port handles 45 per cent of India’s coffee exports. What make the port different are its competitive charges and low manpower related cost. In an interview with Maritime Gateway, NMPT Chairman P C Parida, talks at length about cargo, volumes and future plans.

What is the cargo profile and our port. Due to surge in container traffic (HMRDC), a special purpose vehicle Qcurr ent throughput handled by in the 1st quarter, weekly call of feeder (SPV) between NMPT, Railways and NMPT? vessel increased to 3 to 4 vessels per the Karnataka state government. Even week. It will take around 25-28 days to though the track was designed for We handled 39.37 MT of cargo in our cargo from here to reach Europe. handling freight to NMPT, now daily A2013-14, of which 65 per cent is about 6-7 passenger trains run on these What are the most pressing liquid bulk and the rest is dry bulk. tracks. As a result there is limitation to issues faced by ports? Containerised cargo has witnessed a Q move our rail borne traffic. We do not have cargo problem at the spurt in the recent years. Number of If we could double the track it will result moment. What we face is rail and containers handled at the port has gone A in an improvement in containerization. road connectivity issues. up from 8,000 in 2003-04 to 50,000 Again, this is easier said than done as in 2013-14. In fact we saw 30 per cent To increase cargo volumes, especially Western Ghats is a treacherous terrain growth in containers in the last three those containers throughput would to manage and it is time consuming months alone. Our main containerized increase if connectivity improves. to double the rail track. But, we are cargo is coffee and we handle 45 per We face infrastructure problems in liaisoning with HMRDC and they are cent of the country’s total coffee exports. offering connectivity. Roads and railway in the planning stage and we understand We encourage containerisation by connectivity have to improve. they have found an innovative way to offering reduced marine and container overcome the limitation of developing A single track railway line connects handling charges to customers. the additional siding in different stations. Hassan to Mangalore. This single Feeder Vessels make minimum two calls rail track was constructed by Hassan- The road from Bangalore to Mangalore a week to Colombo and Mundra from Mangalore Rail Development Company also passes through the Western Ghats,

44 maritime gateway / august 2014 P C Parida Chairman New Mangalore Port

especially a 20 kilometre stretch of the What are the unique advantages Shirdi Ghat area it is difficult to expand Qo f New Mangalore Port? the roads. Number of containers Our advantage is that we are a Which are the hinterland catered major port. Users are comfortable in to by NMPT, and what is the A Q handled at the port has dealing with government ports. It is like future potential? using public transport as procedures are We cater to Calicut, Hospet, Bellary, gone up from 8,000 in transparent and rates are fixed. AHarihar, Haveri, Mysore, Nanjangud and Kushalnagar. We can even stretch it 2003-04 to 50,000 in Secondly, at our port, there is very little up to Bangalore if we could improve rail cargo that is manually handled. Of the connectivity. This is a possibility we are 2013-14. In fact we saw total cargo, 25.61MT is pipeline cargo looking at. and 7 lakh are containers. Besides, As Chennai Port is facing congestion 30 per cent growth 3MT coal for Udupi power plant is also issues, cargo from Bangalore can come mechanised. That leaves just about 8.5 here due to proximity and sea freight in containers in the MT of cargo to be handled manually at advantage for Europe and Middle East the port. bound cargoes. last three months Already, our port charges are very Currently, we are looking at attracting alone. Our main competitive. For instance, NMPT coastal cargo. Kudremukh Iron Ore charges `18 per tonne for handling Company Ltd (KIOCL) is bringing iron containerised cargo is coal. Our total manpower is 1400 and ore from Orissa and making pellets pensioners are about 1400-1500. This which are then send to Gujarat. So cargo coffee and we handle makes us a lean port and we do not have is moving from Paradip to Mangalore any debt liability. to ports in Gujarat. This is an attractive segment and can be expanded further. 45 per cent of the Are you looking at private We are regularly liaisoning with KIOCL Qpartnership for expansion? to increase the volume of this cargo. country’s total coffee Our current capacity is 77 MT and With the iron ore ban getting lifted in 3-4 years we can expand to 100 we are also looking at ore export from exports. A MT through PPP. Bellary as well.

august 2014 / maritime gateway 45 Interview P C Parida, Chairman, nmpt

But, to set up new berths or privatizing What kind of cargo volumes are representatives from other government the existing berths, connectivity and Qy ou looking at for the coming departments. So, they are aware of our draft have to improve. In the absence year? needs and sensitive to our demands. of these, we cannot achieve our full Representatives of Indian Railways, potential through private partnership or Next year, our target set by the Govt. Customs, Navy and Coast Guard are on expansion. Ais 42 million tones. I am hopeful of our board. So we get support from all achieving it. allied departments facilitating operation Container cargo is clean and once rail & development. and road connectivity improve then we However, we may not be able to see will know about our true potential. If we increase in liquid bulk unless oil What is your take on improve connectivity, we can think of companies go for expansion. So the Qc orporatisation of ports? going for private partnerships and set up additional volumes have to come from Port trusts model is not designed to a container terminal. Good connectivity dry bulk and containers, which are 25% make profits as the government felt will help us bag a better offer from of our total throughput. A ports could play a major role in building private partners We used to handle 2MT LPG for the nation. We do not have any share What are the steps taken to entire south. But with an LPG terminal capital and we do not need to offer any Qaddr ess infrastructure issues at at Ennore becoming operational, our dividends. the port? share has come down to 1.35 MT. It is hazardous cargo and road connectivity is In the early 2000s, there was a move Currently, our draft is 14 metre and an issue. After commissioning of HPCL to introduce corporatization in major Awe have invited tenders to appoint pipeline from Mangalore to Bangalore, ports. A team from the European Union consultant to conduct feasibility study LPG throughput shall go up. visited and studied our ports and our for increasing the draft to handle cape official also visited European ports. size vessels. September this What kind of policy Subsequently, a report was submitted. year, we plan to finalise the Qsupp ort you expect Personally, I feel, corporatization will consultant and by February Our target set from the government? lead to delegation of additional powers 2015, we will submit by the Govt. is Policy is already for faster decision making. Major ports the report to the central Asupportive. We also can also make use of the professional government. have fruitful and efficient expertise of independent directors from However, dredging is a tough 42 tones, cooperation with various different fields. It will also help speed up task as it involves very hard I am hopeful of other departments. One mobilization of funds. But, ultimately, it rock dredging in a operating advantage of being a major is a decision that the government needs to port. achieving it. port is that our board has take considering other various factors.

46 maritime gateway / august 2014 CAPACITIES East Coast ports gear up to handle While companies are engaging in tying up with suppliers overseas ports on the east coast of India are readying for iron ore imports handling the commodity in huge quantities. Iron and coal has been the mainstay for almost all ports on the east coast with Visakhapatnam, Krishnapatnam and Paradip handling An acute shortage of iron ore supply in the country a bulk of the shipments for customers. State owned Ennore has forced steel manufacturers to import large and Gangavaram come close to handling the much needed commodity. quantities of the mineral this financial year. India’s Krishnapatnam said it expects to handle at least three to four million tons of this commodity this year while Visakhapatnam ore wants are expected to scale a peak of 15 million expects its revenue to be bolstered by the same. In fact’s tones (mt) this, according to the Federation of Indian Vizag’s earnings in the first quarter went up by 5.29% handling bulk commodities, the majority of which came from Mineral Industries. handling iron ore (3.02 mt). The port handed the highest amount of iron ore among major ports beating Kandla for the ort based steel plants are likely to import high grade financial year 2013-14 (25 million tons of ore). Ennore and ore as the price difference between the low and high Paradip came a close second during the year. grade ore has almost been bridged given the supply P Supply and seaborne trade outlook glut in the market. Notwithstanding the import tax of 2.55%, most private steel manufacturers such as JSW Steel Seaborne supply and Chinese demand generally set the iron and Tata Steel have already earmarked funds for importing ore price; as seaborne supply will be insufficient to satisfy coal. In a statement issued last week, Jindal said its first Chinese requirements the market will need to tap Chinese shipment of ore had arrived and the company would buy six iron ore to balance the market. As seaborne supply increases million tones of ore from international markets this year. Tata and less Chinese domestic ore is required, the lower cost Steel is also understood to have shipped 17,000 tonnes of ore Chinese iron ore can be utilised, which will have the effect of from Paradip Port in the first quarter. pushing prices down the marginal cost curve. This, plus the presence of high stocks in China seems to be happening now. M Seshagiri Rao, Joint MD, JSW Steel and Group CFO said, “We have decided to import half a million tonne of high- Falling iron ore exports from India in recent years – the grade ore every month to maintain the capacity utilisation at result of resource nationalism, characterised by exports bans optimum level.” and 30-per cent export tariffs – have limited the amount of iron ore available to the seaborne market, but this is now The upswing in imports is because India’s domestic iron have less of an effect as output in Australia is ramping higher ore production is slated to fall to less than 10% to about 120 and output in Brazil is expected to start to recover this year, million tons in FY15. While the Supreme Court’s partial lifting having slipped in recent years. of mining ban in Karnataka and Goa have helped resume operations a little, the current levels of mining are nowhere India accounted for 21 percent of China’s iron ore imports in close to the volumes generate before the ban. Another deterrent 2007, a figure that dropped to one percent last year. In 2013, is the apex court’s order that asks new licence holders in Orissa India’s exports amounted to 14 million tonnes compared with to re-apply for permission to mine in the state. China’s import requirement of some 800 million tonnes. Imports through eastern ports mostly witnessed a record rise The overall outlook is for iron ore supply to grow at a faster last year after the commodity was found to be wanting by pace next year and for the market to move into a supply industries. But unlike last year, imports surplus for the first time since 2010. will come at a friendlier price as there is IRON ORE IMPORTS The east coast ports handle large now a threat of over supply with China In million tonnes volumes of cargo viz., coal, iron ore, paring its coal demand. An analysis fertilizers, food grains, gypsum and by research firm fast market says the Year Quantity granite to name a few. With draft sizes absence of seasonal weather-related 2009-10 0.88 of extending to greater than 18m, most disruptions to shipping in the first quarter 2010-11 1.85 ports can berth Panamax and capesize and as a result an already high level of vessels. Gangavaram has to date handled stocks in China, of both steel and iron 2011-12 0.87 over 100 capesize vessels. In June this ore, have been further inflated. That said, 2012-13 3.05 year, Krishnapatnam handled a record there level of stocks is not smoothly of 3.0 MMT of cargo handled in June distributed along the supply chain, so 2013-14 0.50 surpassing 2.83 MMT in previous there are likely to be bouts of restocking 2014-15* 0.30 month. that should help underpin prices. *For Q1 of FY15 Source: Ore Team Research

august 2014 / maritime gateway 47 growth story PORT OF HAMBURG

Container traffic flows from baltic ports keep the life blood flowing at Port of Hamburg with BLUE CHIP impressive throughput growth year on year OF EUROPE

ort of Hamburg reports impressive results for first P quarter seaborne cargo throughput In 2013 the Port of Hamburg achieved total throughput of 139 million tonnes. This represents a growth of 6.2 per cent. This was contributed by both general cargo handling (97 million tonnes) and bulk cargo handling (42 million tonnes), ensuring the above- average growth for Germany’s largest universal port. “The Port of Hamburg‘s throughput trend is a fine signal for Hamburg and the entire Metropolitan Region. Growth of per cent is a most impressive result, underlining the tremendous effectiveness of port and logistics companies in Germany‘s largest universal port,” said Axel Mattern, Port of Hamburg Marketing’s Executive Board Member at the presentation of the Port of Hamburg’s cargo handling figures for 2013. The container handling was the principal source of this growth. With throughput of 9.3 million teu (20-ft standard containers), there was a slight increase in container traffic by 4 per cent. This was primarily attributable to growth in transshipment services into the North Sea and Baltic region that were higher, plus the onset of a recovery in container traffic with Asia, especially with China – Hamburg’s largest partner on the market.

48 maritime gateway / august 2014 rose from 97.7 per cent to the current 98.0 per cent. Throughput of non-containerised general cargo in 2013 totalled 1.9 million tonnes and was 7.6 per cent The Port of Hamburg‘s throughput trend is a fine lower than that handled in previous year. signal for Hamburg and the entire Metropolitan The decline is primarily attributable to lower import volumes (19.3 per cent). Region. Growth of per cent is a most Imports of citrus fruits are increasingly containerised, causing a downturn in impressive result, underlining the tremendous the volume of conventional cargoes handled. At 1.3 million tonnes, exports effectiveness of port and logistics companies in of conventional general cargoes via Hamburg remained all but stable (-1.4 Germany‘s largest universal port per cent). Apart from project cargoes from the machinery and plant sector, – Axel Mattern the port handled export cargo such as Marketing Executive, Port of Hamburg vehicles, iron and steel, paper and timber which are handled conventionally. Bulk cargo throughput in 2013 rose by 7.2 per cent to 42.3 million tonnes, Port of Hamburg gains substantial also contributing significantly to the market share in container traffic Port of Hamburg’s favourable result on the year. In all three handling segments, Against the trend in its competing namely grab, suction and liquid bulk ports, the Port of Hamburg succeeded in cargoes, an increase in seaborne cargo capturing a substantial market share in handling was achieved. Suction cargo container traffic. In the four largest ports throughput advanced especially strongly, of mainland Northern Europe, in 2013 with handling of 8 million tonnes seaborne cargo throughput totalling representing a 29.9 per cent increase. 849.1 million tonnes represented only Another advance was achieved in liquid slight 1 per cent growth. Container bulk cargo, up by 3 per cent at 14.5 throughput of these ports has million tonnes. This was mainly due to increased marginally. However the an above-average 65.7 per cent leap to Port of Hamburg’s share of container 7 million tonnes in imports of mineral throughput in the same four ports now oil products. Handling of grab cargoes, amounts to a little over a fourth of the e.g. coal, ore, fertilizers and building total share. Hamburg has consolidated materials, also improved significantly by its position as Europe’s second strongest 3 per cent, reaching a total for the year container port. In the worldwide ranking of 19.7 million tonnes. of container ports, Hamburg currently stands in 15th position. Baltic region sustains growth Balanced growth Hamburg‘s container services with the Baltic region are the main growth The satisfactory result in the general factor in the European trades. In 2013 cargo sector was achieved mainly thanks a total of 2.3 million teu were handled to almost balanced growth on the import via Hamburg on feeder and shortsea and export sides of container throughput. services between Hamburg and ports In 2013 handling on the import side on the Baltic. “Consisting of Russia, totalled 4.8 million teu and on the Finland, Poland, Sweden, the Baltic export side, 4.5 million teu. Handling of states and Denmark, the Baltic region loaded containers totalled 8 million teu, is of immense significance for us in representing a gain of 4.8 per cent. In container traffic. We are surprised that 2013 strong exports provided a boost. A despite clearance problems at the Kiel total of 1.2 million teu empty containers Canal, with 2.3 million teu we were able were handled last year. In 2013 the to achieve such a good result for 2013,” containerized proportion of general said Mattern. Against the background of cargo throughput in the Port of Hamburg growing traffic flows, HHM’s Executive

august 2014 / maritime gateway 49 growth story PORT OF HAMBURG 5 REASONS throughput. Container throughput with TO SUBSCRIBE the People’s Republic of China and Hong Kong represented around 29 per TO INDIA’S NUMBER 1 cent of the Port of Hamburg’s container throughput, reaching volume handled in MARITIME MAGAZINE 2013 of 2.7 million teu (+ 2.9 per cent). Container traffic between Hamburg and It is India’s most-widely read Singapore also rose in 2013 by 3.9 per cent to 547,000 teu. Also gratifying was maritime publication the throughput trend between Hamburg and ports in Europe. Here 3 million teu It covers all issues of importance (+ 9.5 per cent) were transported via related to Ports, Shipping and Logistics Hamburg. Throughput in the America trade was slightly lower at 1.1 million It offers insightful analysis teu (- 3.3 per cent). Container traffic with Africa at 268,000 teu achieved a It reflects industry opinion gain of 12.4 per cent. Throughput on container services with ports in the It’s a complete package for Australia/Pacific trade totalled 42,000 readers on maritime sector teu (-2.5 per cent). Expansion of infrastructure Yes, Maritime Gateway, is one-of-its kind maritime business magazine in the country that has become a vital source of information for all ports, shipping and logistics players in the maritime industry. This Magazine addresses key issues and “We need to stress to the public in provides insights through analytical articles, comments and features. News, Port Scan, Interviews, Region Update, general that the infrastructure for traffic into and out of the seaports lies in the Technology, Policy, Equipment, Education are some of the regular incisive sections. interest of the entire national economy. Join the Growing Community! Board feels that the modernization and We are therefore relying on a positive expansion of this waterway is of utmost decision this year by the Federal importance for the development of Hamburg‘s container Administrative Court in Leipzig on the Hamburg and the entire North German deepening of the navigation channel on region. To further expand the links services with the Baltic the Lower and Outer Elbe. SUBSCRIBE TODAY! to this region, among other measures region are the main growth Countrywide, around 260,000 HHM has headed the EU-backed Amber Fill the form & mail jobs, of which 110,000 are outside the Coast Logistics (ACL) project since factor in the European Hamburg Metropolitan Region, are TARIFF February 2012. “We are delighted that linked directly or indirectly with the high-ranking political representatives trades. In 2013, a total of Port of Hamburg. In addition, almost 20 (please tick your choice of subscription) – also including Uwe Beckmeyer, the payment enclosed send invoice billion euros of added value countrywide ONE YEAR Federal Government’s new Maritime 2.3 million teu were underlines that the Port of Hamburg’s Coordinator – are participating today SUBSCRIPTION Name ...... significance reaches far inland. On the in the ACL closing conference being handled via Hamburg Address ...... held in parallel at Unilever House in construction of the Y-shaped rail link 12 ISSUES `1,200/- ...... Hamburg’s HafenCity,” reported Egloff. on feeder and short sea as well as the extension of the A20 and A21 autobahns, we all need to pull Nineteen partners from Denmark, services between Hamburg City ...... PIN / ZIP ...... State ...... Poland, Latvia, Lithuania, Belarus and together. Championing improvement of Save `120/- Country ...... Tel ...... Fax ...... 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All enquires to be addressed to Gateway Media Pvt Ltd. directly. All disputes subject to the exclusive jurisdiction of e-mail: [email protected] Ashok: +91 94918 05508 competent courts in Hyderabad only. 50 maritime gateway / august 2014 5 REASONS TO SUBSCRIBE TO INDIA’S NUMBER 1 MARITIME MAGAZINE

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India’s premier maritime business magazine words ...... only. maritime add Rs. 50/- for outstation cheque. gateway All payments in Indian Rupees (INR) to be made in favour of ‘Gateway Media Pvt Ltd' through A/C payee Cheque / DD payable at Hyd. Our NEFT/RTGS Details are: Oriental Bank of Commerce, Khairatabad, Hyderabad, India. A/c. No. 08711131001683; Current Account; IFSC Code: ORBC0100871; MICR Code: 500022009 All Payments in US Dollars (US$) to be made as Wire Transfers in favour of 'Gateway Media Pvt Ltd' Bank and wire transfer details will be provided on request. Gateway Media Pvt Ltd #407, Fifth Floor, Pavani Plaza, for subscription related queries, please call: Maritime Gateway publishes 12 issues a year. Maritime Gateway may also publish occassional and special issues. Maritime Gateway cover price is `100/-. Savings are off the cover price. Please allow 6-8 weeks for commencement of your subscription. Gift offer is only Khairatabad, Hyderabad 500 004 tel: +91 40 2330 0061 / 2330 0626 valid upon payment. All enquires to be addressed to Gateway Media Pvt Ltd. directly. All disputes subject to the exclusive jurisdiction of e-mail: [email protected] Ashok: +91 94918 05508 competent courts in Hyderabad only. INTERVIEW Derick Dias

Today, we have relationships with large Indian companies ranging from state-owned companies to large private players& our global customers who have Eyeing Greener operations in India. We are a relationship oriented bank with a more focus to maintain the relationship with key clients rather than chasing volumes. Which are your key functioning Pastures Qand growth verticals in India? How big is your presence in As I mentioned, apart from DNB Bank, the largest maritime Qthe global maritime industry, Atraditional shipping, we have moved bank, is now building more specifically in India? into new segments such as ports, DNB Bank ASA is one of the largest offshore sector, etc, and we want to fruitful relationships in India Aglobal maritime financing banks. grow in these areas in the country.We Maritime industry is one of the pillars have also expanded our presence in the with a strategy to focus on ports of Norwegian economy. DNB being the energy sector which is also a big growth largest bank in Norway, the major focus area for us. and terminals of the bank remained in the maritime In the energy segment, our major industry. We have been involved in this focus is on oil and gas sector. We have industry for many years now. Currently, developed relationships with large oil we are globally positioned across sectors and gas companies. Though the segment and sub-segments. Physically, we have has many challenges, we will continue positioned ourselves across geographies banking in this sector and could look where maritime industry is present at power & renewables going forward. such as Singapore, New York, London, However, due to environment concerns, Greece and Shanghai. we don’t do coal and nuclear. When it comes to financing in India, What is your main business back in 2007 when the bank decided function ? to enter Indian market, we set up our Q representative office in Mumbai during Our office in India is a August 2008 primarily to cater to the Arepresentative office unlike a maritime industry here. In order to branchoffice compared to some of our strengthen our operation and business, global peers. Our job involves mainly we entered India and broadened our liasoning. We represent the Bank in product base as well as to looked at India, call on customers to understand new clients in India. Earlier, we were their needs and gain market insights. As more focused on the traditional shipping India is a big country, it is not easy to segments such as dry bulk carriers and follow and understand the market just tankers. Now, focus has extended to by following news. We function as ‘eyes ports, terminals and offshore. and ears’ of the Bank in India.

52 maritime gateway / august 2014 The trade flows are increasing between India and Norway to support which is also an important function of the office. Similarly, we support India’s crude imports of oil& gas and we have to work closely with the Indian banks. Maritime sector still remains the main focus. What is your exposure in the QIn dian maritime industry? The volume of business is quite Agood and it has grown pretty well over the last few years. As mentioned, we are relationship focused and do not What is your challenge when it comes to chase volumes. Due to our expertise in Qperspective on the There may not global banks. When it comes this segment, we are able to offer other Indian tonnage? Where to Indian banks, the long tenor products such as corporate finance, do you see more business be immediate of foreign currency financing commodity hedging etc to our maritime opportunities? needed for this segment acts customers from our global offices. increase in as a constraint in my view. A distinction could be Usually, the shipping industry As shipping is a dollar based Amade between Indian flag Indian flag industry, rupee loans which Qis cyclical with ups and downs. tonnage and India owned What are the major challenges tonnage but is the strength of Indian tonnage. There may not be banks are not the best option in ship financing, and how DNB is immediate increase in Indian managing the challenges? Indian owned for financing vessels Also, flag tonnage but Indian the expertise level required I agree with the point. Shipping is owned tonnage could increase tonnage could in this industry which is of Aa global industry, and it has its own as we see trend of Indian increase global nature & subject to share of ups and downs. We have drawn owners flagging vessels in global trends could also be a our resources quite well. We work very foreign jurisdictions. constraint. closely with our teams in Singapore I guess this segment will grow In your earlier remarks you (our regional office), Oslo (bank’s head depending upon the economic cycle. had mentioned that ports and office) and offices in other international Currently, India’s share of India’s EXIM Q markets. terminals are your focus areas for trade is low and in single digit. Though financing. Are you involved in any of there was a slowdown in FY 2013-14 in India too had several challenges. such projects in India? Our strategy being relationship-oriented terms of imports, but with the economy rather focusing on numbers has helped picking up, the trade volumes will We have done a few projects in this us. Even in good-old days during 2007- further grow, some evidence of which Asegment. We are involved along with 08, when Indian ship owners went to is starting to be witnessed. There should other banks both Indian as well as global build capacity and tonnage, we stuck be growth especially on crude imports. banks. As of now, we are involved only to our plans. That is why our exposure The percentage share of Indian flag in container terminals in India. Being a today though not large is good. ‘Focus’ vessels in that trade is also low. The land relationship driven bank the promoter is is one thing that has helped us. based infrastructure like the ports could key when deciding to financing a project probably get more boost based on past in this segment too. track record The offshore sector is also doing fairly good due to its linkage to In container terminals, capacities India’s energy security.. Qare increasing and the realisation we support India’s of revenues is not that healthy. What Indian ship owners complain is your observation as a banker? crude imports of oil Qabout their low access to funds, which has been a major concern for The location of the terminal is very and gas, and we them. Why? Aimportant. If you take JNPT in Mumbai or Mundra Port or some of the Financing is a service industry, and have to work closely terminals on the east coast, the volumes the financiers will pick the right A are still steady. Though there are projects. From a bank’s perspective with the Indian several issues including tariff and some (from any global bank perspective), banks. Maritime capital flows depend upon the return on rationalization is in the process, the investment. success of the terminal would depend sector still remains a lot on the location etc., With growth Global banks are focused on large in trade volumes and focus on coastal the main focus. fleet owners which are not too many trade, the container business at the in India presently That is the major terminals should grow going forward.

august 2014 / maritime gateway 53 drewry report Supply and Demand Scenario Europe-Mid East-Indian Subcontinent The first half of the year is usually the best for ocean carriers, with the peak around June/July coinciding with the beginning of Ramadan, although this mainly relates to the Middle East. The average utilisation of all vessels sailing from Europe to MidEISC went up to 79 percent in March from 61 per cent in February. However, it fell low in April, not assisting the ocean carriers’ efforts to improve freight rates.

Figure 1: Eastbound Europe to MidEISC Container Traffic (’000eu) t 300

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150

100

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0 Apr -13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Europe to Middle East Europe to Indian Subcontinent Source: Drewry Maritime Research, derived from CTS (www.containerstatistics.com) ontainerised cargo teu in April to 8,156 teu in from Europe to Figure 1.1: Seasonality of Exports from Europe to MidEISC (’000 teu) May. Offsetting this, vessel C the Middle East 300 capacity from Europe to the (including Red Sea) 280 Middle East was decreased and Indian Subcontinent fell in March/April though the from 291,000 teu in March to 260 restructuring of CSCL/ 285,000 teu in April, but the 240 UASC’s Asia/Europe total of 1,051,000 teu shipped services, and Evergreen between January and April 220 joining the CKYH alliance. was still a healthy 6.5 per cent Otherwise, only ports more than during the same 200 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec pairs and slot swaps were period in 2013. The total of 2012 2013 2014 modified. 684,000 teu shipped to the Source: Drewry Maritime Research Middle East was 7.3 per cent Figure 2: Eastbound Europe to MidEISC Capacity (’000 teu) The average size of vessel higher, whereas the ISC’s 420 6% deployed in direct/dedicated total of 367,000 teu was 5 per 410 4% Europe/Mid EISC services cent greater (see Figure 1). 400 2% remained at around 6,000 April’s decline in isolation 390 0% teu between March and 380 -2% is surprising, therefore, but May, but the pinch point 370 -4% in Nhava Sheva is said to the interpretation of a single 360 -6% month alone is dangerous 350 -8% have improved since March, due to the varying number of 340 -10% with the port’s maximum Apr-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 sailing that can fall into each (*000 teu) M/M % change draught increasing from period. Source: Drewry Maritime Research 13m to 14.5m, which means that 6,500 teu ships Ocean carriers responded Table 1: Europe to MidEISC – Estimated Monthly Supply/Demand Position Supply ('000 teu)* Demand ('000 teu) Ship Utilisation could soon become 8,000 to this change in cargo by reducing the number of Eastbound Westbound Eastbound Westbound Eastbound Westbound teu. MSC/CSAV’s IPAK/ cancelled sailings from Feb-14 404 256 246 191 61% 75% IMEX-1 schedule is already four in March to only one Mar-14 369 256 291 216 79% 84% heading this way through the deployment of four vessels in both April and May. Apr-14 374 264 285 194 76% 73% over 8,000 teu. Meanwhile, Vessels continued to be Notes: *Based on effective capacity after deductions are made for deadweight and high-cube limitations and then again for out-of-scope cargoes, ie. those relayed to areas outside the range. Where CMA CGM continued to upgraded, with the average relevant,operational capacities have also been adjusted for slots allocated to way port cargoes size increasing from 8,080 Source: Drewry Maritime Research upgrade its EPIC service

54 maritime gateway / august 2014 Figure 3: Eastbound Europe to MidEISC Utilisation v Rates 85% $ 1,800 80% $ 1,600 fleet in May through the 75% Figure 4) but, as shown in deployment of more 6,500 Figure 4.1, much of this was 70% $ 1,400 teu vessels. Since April, four probably seasonal. Year- 65% big ships have replaced 5,700 $ 1,200 to-date growth between teu ships. 60% January and April still The consequence of all these 55% $ 1,000 reached a healthy 8.3 per cent Apr-13 Nov-13 Jan-14 Mar-14 May-14 schedule changes up to the compared to the same period Utilisation (%) Drewry CFRI Rotterdam-Jebel Ali ($/feu) of 2013, with ISC’s 12.8 beginning of May is that Source: Drewry Maritime Research; Drewry Container Freight Rate Insight (www.drewry.co.uk/cfri) eastbound vessel capacity per cent growth being only decreased by 9 per cent Figure 4: Westbound Europe to MidEISC Container Traffic (’000eu) t partly offset by the Middle between February and March, 250 East’s decline of 1.6 per cent. India’s currency devaluation but then increased by 1.5 per 200 cent in April, to 373,000 teu, continues to make its exports where it remained in May 150 more competitive, whilst the (see Figure 2). Middle East’s containerised 100 exports of petrochemicals has This meant that the average 50 yet to take off. utilisation of all vessels The eastbound schedule sailing from Europe to 0 Apr -13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 MidEISC climbed from 61 Middle East to North Europe Indian Subcontinent to Europe changes mentioned earlier per cent in February to 79% Source: Drewry Maritime Research, derived from CTS (www.containerstatistics.com) meant that the effective in March, but then fell back Figure 4.1: Exports from MidEISC to Europe (’000 teu) capacity of all westbound to 76 per cent in April, which 220 vessels sailing from did not assist ocean carriers’ MidEISC back to Europe efforts to improve freight 200 stayed the same between rates (see Figure 3). It should February and March, but be underlined that these are 180 then increased by 3 per cent very broad numbers covering in April, before falling back both Northern Europe and 160 very slightly in May (see the Mediterranean as well Figure 5). as the Middle East and 140 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Indian Subcontinent. Vessel The consequence is that 2012 2013 2014 March’s average vessel utilisation within each sub- Source: Drewry Maritime Research region can vary enormously. utilisation of 84 per cent fell Figure 5: Westbound Europe to MidEISC Capacity (’000 teu) to only 73 per cent in April, Looking ahead, UASC, 270 which also did not help ocean CSCL, and CMA CGM 7% 260 6% carriers to continue improve still plan to upgrade their freight rates (see Figure 6). 250 5% weekly GEM/MEGEM 4% Here again, it should be 240 service between Turkey and 3% noted that these are very 230 MidEISC in the third week of 2% broad numbers covering June. Its current fleet of six 220 1% separate services from both vessels averaging 4,240 teu 210 0% the ISC and Middle East to is to be upgraded to vessels 200 -1% Apr-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 both Northern Europe and ranging between 5,600 teu the Mediterranean, and vessel and 7,000 teu, including one (*000 teu) M/M % change Source: Drewry Maritime Research utilisation within each sub- from CMA CGM for the first region can vary enormously. time. The CMA CGM Bellini Figure 6: Westbound Europe to MidEISC Utilisation v Rates (5,770 teu) was due to take 85% $2,700 Our View up position in Khor Fakkan $2,600 A greater number of sailings on 18 June, and should start 80% need to be cancelled in 3Q loading eastbound cargo in $2,500 14 to better align supply and Mersin on 9 July. $2,400 75% demand. Vessels deployed Westbound $2,300 in direct services will get progressively bigger due to Cargo from the Indian 70% $2,200 Subcontinent and Middle Apr-13 Nov-13 Jan-14 Mar-14 May-14 India’s port improvements. East (including Red Sea) fell Utilisation (%) Drewry CFRI Jebel Ali-Rotterdam ($/feu) Source: Drewry Maritime Research; Drewry Container Freight Rate Insight (www.drewry.co.uk/cfri) Source: Drewry Maritime from 216,000 teu in March Research (www.drewry.co.uk/ciw) to 194,000 teu in April (see

august 2014 / maritime gateway 55 Cold Storage Huge scope ahead in South India

Cold storage units in India, which were earlier used for long-term storage of potatoes and onions now giving space for multiple products including fruits, vegetables, seeds, dairy and other FMCG products. With the addition of these value-added products, the cold storage industry in India has to become a `18,000 crore industry with 5,500 units across the country. A majority of the units are concentrated to a few states including Uttar Pradesh, West Bengal and Punjab. According to industry experts, the industry in north India has reached saturation point with a wide demand-supply gap, while south India posses a great growth potential with less units. Despite the opportunities, the industry faces several bottlenecks such as low subsidy and power cuts. In an interview with Maritime Gateway’s Itishree Samal, Gubba Nagender Rao, Managing Director of Gubba Cold Storage Limited and former president of undivided Andhra Pradesh chapter of Chamber of Cold Storage Industry (CCSI) talks about the challenges and growth opportunities of the industry.

How big is the cold storage the cold storage industry. In recent storages. While in India, it is limited Qin dustry in India, and what are years, many cold storages have come to only a few product variants. The the opportunities ahead? up in North India while production cold storage market still has a lot of India currently produces around 85 has remained stagnant. It has brought room for growth compared to its global Amillion tonne of vegetables and 45 saturation in the northern markets such counterparts. million tonne of fruits per annum. More as in Uttar Pradesh, Madhya Pradesh Despite the growth opportunities, than 30 per cent of the produce gets and Bihar. Qthe industry is facing with wasted due to insufficient cold storage As South India houses only around several challenges such as facilities. At present, there are around 500-600 could storage units, the region disrupted power supply, low 5,500 cold storage units, with handling has a great market potential. Also, the subsidy, low agricultural produce, capacity ranging from 5,000 tonne to product variants are wide in south India less demand, etc. According to you, 20,000 tonne, in India. Most of the cold compared to north where tamarind, what are the major challenges faced storages are located in North India; chilly, turmeric, jaggery, pulses, seeds, by the industry? Uttar Pradesh and West Bengal together vegetables, pharmaceuticals, are key Few years back, cold storage cater to 65 per cent of the market. The products that are kept in cold storages. cold storages in North mainly preserve Aindustry was a booming industry, potatoes. With potato storage been In developed countries like US, but current scenario paints a different restricted by the government under most of the agricultural produce, dairy picture. As against 30 to 50 new units essential commodity, it has affected and poultry products are kept in clod every year few years back, now many

56 maritime gateway / august 2014 in state of undivided Andhra Pradesh. Currently, we are the No.1 cold storage player tonnage wise with 93,000 tonne capacity and have 11 cold storages (all located in Hyderabad). We also leading players in some segments such as seeds where occupy more than 80 per cent of seed cold storage market. We cater to more than 250 seed companies including Syngenta, Dupont, Godrej and Monsanto. We also cater to vegetables, fruits and other grocery products, mainly the frozen packed products segment. As all your units are Qconcentrated in and around Hyderabad. Are you looking at expanding to new regions? How are you going to fund your proposed projects? cold storages are struggling Yes. We are looking at expanding to stay afloat and few have Aour operations across India, starting already shut shop. with Maharastra, Gujarat and Bangalore, as well as in international markets. We The industry is facing have received interest from four-five several challenges; finance countries including Thailand. We are and power are the major two currently doing the feasibility study. challenges. Power, the crucial Internationally, we will stick to only raw material of the industry, special seed cold storages. is becoming very burdensome day-by-day with multiple We need around `5 crore to set up power cuts. If you take the a cold storage unit, excluding the land example of the newly formed prices. For specialised cold storages, the state Telangana, industries set up cost is high. We are yet finalize here are facing severe power the source of funding. crisis with multiple power Apart from cold storages, do you cuts and power holiday Qhave plans to look at the cold compared to its neighboring state of production and demand for cold storages chain sector? Andhra Pradesh. Power cuts are adding will be low. We fear the next financial Cold chain itself is a huge market. up to the overall maintenance cost. Other year will be a crucial year for the At this moment, we have no such bottlenecks include high power tariff, industry as monsoon is bad this year. A plans. Once we expand our cold storage high infrastructure cost, no adequate Potato cold storages used to operations throughout the country and government subsidies, etc. Also, there contribute 88 per cent storage capacity proposed international destinations, we are restrictions on the industry to ramp till 2000. However most of may consider entering the space. It may up fire proof equipment which the new cold storages in the take few more years. is another burden. Potato cold storages last decade have added other products in their baskets. Cold storage industry is a Government has declared used to contribute competitive industry where cold storage as a priority More addition of new Q products will bring cheer to you have to constantly keep sector and as an industrial yourself updated with advanced sector. It also should come 88 per cent the industry. technologies. What techniques and forward to reduce the interest storage capacity till At Gubba Cold Storage, technologies you adopt to remain rate, provide uninterrupted Qthe largest cold storage the No.1 player? power supply and give player in India, how has exemptions from power cuts 2000. been the growth? We constantly keep pace with to the industry. However most of the Athe government regulations and Gubba Cold Storage advanced technologies of global What is the outlook for new cold storages started operation in 1987 standards. We have adopted some of the next year? A Q in the last decade with a 500 tonne cold storage latest technologies such as multi-racking The cold storage industry have added other in Hyderabad, which was system, handling of jumbo bags of one- Ais highly monsoon- products in their then the first commercial two tonne capacity, etc, across our cold dependent. If there is less rain, baskets. cold storage of the country storages. We have even upgraded latest there will be low agricultural and the first cold storage technology for fire fighting.

august 2014 / maritime gateway 57 OUTLOOK DRY BULK BIMCO’s latest report on Demand the doldrums, failing to follow dry bulk indicates bulk suit with big brother so far. South American grain exports finally got under way. The lower export figures The optimism built commodity shippers will from April, being only on a par with up in H2-2013 has all but 2012 illustrates, delayed take-off in evaporated. BIMCO still benefit from the slow but shipments. Brazil has been the major expects stronger earnings as steady growth in demand exporter during Q2, while Argentina we enter into H2-2014, but delivered more steadily throughout Q2 the world fleet is capable of for commodities in India and Q3. Ship broking company SSY catering to a much higher expects a combined 35.8 million tons level of demand than it does and China will dry help (mt) of soya exports in Q2, with 30.8 mt today. This is what makes in Q3. The strength of the current upturn the road forward full of air bulk shippers. This would depends on Asia’s appetite, as all growth pockets, with owners and stems from that region. operators trying to hit the be aided by a spurt in optimum speed in a quest to The Atlantic basin has been awash utilise their ships better. demand for iron ore and with ships during most of 2014, putting downward pressure on freight rates H1-2013 was a low and coal from the two Asian for Panamax and Supramax ships in flat freight rate environment, particular. Freight rates for a trans- so in that sense so much countries. The only sorry Atlantic round-voyage, which were more has happened in 2014. hitting a three-year high by mid- Normally, volatility is good patch for bulk shippers December 2013 (USD 20,500 per day), for operators, but when subsequently experienced four straight the past two months have being the slow take off months of losses to hit USD 2,500 per been flat, there is only some day for Panamaxes. Since mid-April, comfort in knowing that the of grain movements from Panamaxes have tripled earnings on the back of demand, finally meeting South America which the expectations. Supramax ships are still in owner hope will gather steam soon. PRESSURE EASES, BUT OVERALL IMPROVEMENT IS QUITE SLOW

58 maritime gateway / august 2014 T ripcharter Rates for Supramax and Panamax - 2010-2014 sets a new fleet size record every day. Currently growing at 8.7 per cent on 45,000 a year-on-year basis, standing at 191 40,000 million DWT at the end of May, the 35,000 200 million DWT fleet size threshold is likely to be reached before year-end. 25,000 Outlook 20,000 A trend has been developing over some 15,000 USD per day years now and going forward, more of 10,000 the same is expected. This trend is a 5,000 continued Asia-biased dry bulk market, where China is completely dominant, 0 dwarfing the slow but steady Indian import growth, while the rest of world Jan. 2010 May 2010 Sep. 2010 Jan. 2011 May 2011 Sep. 2011 Jan. 2012 May 2012 Sep. 2012 Jan. 2013 May 2013 Sep. 2014 Jan. 2014 May 2014 only grows imports slowly. Moreover, Panamax Transatiantic R/V Supramax, 52,000 dwt, Transatiantic R/V the trend in commodities became Panamax Transpacific R/V Supramax, 52,000 dwt, Transpacific R/V Source: BIMCO, CRSL increasingly focused on coal and iron ore trades that are taking an even larger share of the pie going forward. This year-to-date BDI average is up by 51 The Handysize fleet started to trend favours the larger bulkers. per cent (end-May). Below the surface, grow again in April, following nine As the big mines in Australia and Capesize earnings are up by 158 per cent successive months of contraction. The Brazil have scaled up iron ore output to USD 14,504 per day, Panamaxes up total Handysize fleet remains shy of the significantly in 2014 and will do so in by 22 per cent (to USD 9,208 per day), record 89.17 million DWT fleet size in the coming two years, the price of the Supramaxes up by 28 per cent (to USD 1985, currently at 87.8 million DWT. commodity has been under pressure. 10,906 per day) and Handysizes up by BIMCO forecasts the Handysize fleet to Such a development should benefit 26 per cent (to USD 9,181 per day). grow slowly and thus remain South of international trading at the expense the record size in 2014 and potentially in Supply of China’s higher-cost, domestically- 2015 too. produced iron ore of poorer quality. Is The dry bulk fleet has grown by another In opposition to this is the Panamax that what is happening? Yes and no. 121 ships in the past two months (0.9 segment, which with little hesitation, China has increased its iron ore imports per cent in DWT). The expansion has significantly (up by 21 per cent in the been easy in the Capesize segment, with first four months of 2014 from a year on) only 10 new deliveries, as compared to D ry Bulk Supply Growth as good merchants buy at the right price, roughly 30 new ships flowing into each 100 20% but domestic production keeps up (so of the other three sub-segments. For 80 16% far) despite the obvious cost pressure. the full year, our estimates have been 60 12% They are doing so at a very steady level T W slightly upwardly adjusted, now to reach D 40 8% seen during the past 5 years. Conclusion: 52 million DWT of new built deliveries, 20 4% Don’t expect China to become 100% Million meaning that the fleet will grow by 5.3 0 0% p.a. rate Growth reliant on imports while enjoying the per cent (up from 49 million DWT). -20 -4% lower market price. The current iron ore -40 -8% price is around USD 90 per ton, down Order-book activity has been 2011A 2012A 2013A 2014F 2015E 2016E 2017E from 130-140 per ton in H2-2013. slowing down since January. The order To be delivered p.a. Demolition Conversions Growth rate (RH axis) book now holds 1,989 ships (163.4 Source: BIMCO, CRSL We cannot expect freight rates to A is actual. F is forecast. E is estimate which will change if new orders are placed. The million DWT) for future delivery and is supply growth for 2014-2017 contains existing orders only and is estimated under the react significantly to increased demand still heavy on the Panamax side. assumptions that the scheduled deliveries fall short by 10% due to various reasons and before China starts taking more iron 30% of the remaining vessels on order are delayed/postponed. ore from Brazil, most likely during the One hundred and nine ships had left second half of the year. the fleet by the end of May 2014, equal to 6.6 million DWT. During the first five China Iron Ore Import by Origin To sum up, our forecast for June/ months of 2013 no less than 12.2 million 2011-2014 July: BIMCO believes that the level DWT left the fleet. BIMCO remains firm 50 of Capesize TC average rates will stay 45 on the forecast of 14 million DWT to 40 around USD 12,000-22,000 per day. 35 be sold for demolition for the full year, 30 Panamax TC average rates will feel the significantly down from last years’ 22.2 25 supply pressure and stay around USD 20 million DWT. Demolished tonnage is Million tons 15 4,000-9,000 per day. For the Supramax 10 only marginally younger on average this 5 segment, BIMCO forecasts freight year. With expectations of improved 0 rates in the USD 7,000-12,000 per day

Jul. 2011 markets just around the corner, BIMCO Jan. 2011Apr. 2011 Oct. 2011 Jan. 2012 Apr. 2012 Jul. 2012 Oct. 2012 Jan. 2013Apr. 2013 Jul. 2013 Oct. 2013 Jan. 2014 Apr. 2014 interval, whereas Handysize freight rates forecasts lower levels of demolition for Australia Brazil South Africa India are expected around USD 6,000-8,500 the coming years as well. Source: BIMCO, China Customs per day.

august 2014 / maritime gateway 59 Technology Rolls- oyce Marine India Propelling Indian Shipbuilding Industry

Shipbuilding, in the early 19th and 20th centuries was dominated by Europe. North America and Japan later took over the baton from the West in the 60s. Then, riding on The government should provide superior design and prompt deliveries, came Korea, Singapore and fiscal incentives to promote strong R&D, revive the subsidy scheme, ease tax Taiwan. In the recent past, when low cost became the mantra, China related regulations and give shipbuilding an industry status. Land should be stormed in. Ostensibly, India should have been in too. But many easily made available for setting up a new port or a shipyard in each of the major culprits blocked its entry. maritime states. As an industry, we should promote better integration among igh costs of steel, mounting Government of India is taking all the planning, designing, scheduling and borrowing costs and a slew necessary steps to provide the much production departments. Strategic level H of taxes is driving India’s needed impetus to the sector. intervention is necessary to develop price differential to about strong basic design capabilities in 50% more compared to other countries, Some of the initiatives taken by collaboration with multinationals that making India’s shipbuilding proposition the government include a 100 per cent have proven expertise in providing extremely unappealing to the FDI for port development projects and innovative technologies. international market. These are known to a 10- year tax holiday by Government be the major culprits. of India augurs well for the sector. The Government has also proposed Yet, India has the natural makings of plans to develop ancillary units for the a shipbuilding powerhouse. Currently, shipbuilding sector, with a potential to India accounts for less than 1 per cent create millions of jobs. of the global shipbuilding industry, but with advantages like lower costs However more needs to be done, of labour, high availability of skilled if the Indian Shipping industry truly workforce and a robust demand in the wants to scale to new heights. An domestic market, it aims to capture 5 per overall approach is required, both cent of the global market share by 2020. from Government (Central and State) and also the yards, to address not only Realising an ambition shipbuilding but also simultaneous In order to lift the Indian shipping synchronized implementation of overall industry to global standards, the Maritime Policy of India.

60 maritime gateway / august 2014 Providing an impetus A robust ship-building industry is a vital component of a strong economy. Given that the nation’s private shipyards intend to invest US$4.3 billion and the public-sector investment plans have a volume of US$1.18 billion, the Indian shipping industry offers immense potential for growth.

subsidy or interest rate support may be linked to sourcing of at least 50 per cent of materials and components in terms of cost from domestic suppliers, so that there is growth of the ancillary industries Providing an impetus as well. Currently, about 80 per cent of A robust ship-building industry is a vital materials and components used by local component of a strong economy. Given yards are imported. It is such a domain that the nation’s private shipyards intend that globally reputed manufacturers such to invest US$4.3 billion and the public- as Rolls-Royce, with its comprehensive portfolio of products and ship repair sector investment plans have a volume domestic demand, realigning its research of US$1.18 billion, the Indian shipping services coupled with a 80 year old commitment to the nation would be and development initiatives to support industry offers immense potential for related upstream & downstream cluster growth. able to significantly contribute to the development of the marine equipment as well as related industry objectives. Since the growth in orders to Indian manufacturing cluster in the country. Conclusion shipyards is lagging behind the growth in global orders and needs immediate Lessons from the East While challenges abound, so do impetus to improve the weak order-book China has made extraordinary progress opportunities. Given the positive outlook position, it needs to be considered and in its shipbuilding industry. With 1,700 for cargo traffic, and the resulting evaluated whether a renewed subsidy shipyards of which 200 can build high- increase in number of vessels visiting scheme providing initially about 15% quality ships of international standards, ports, demand for ship repair services subsidy on the price of the ship to Indian China has emerged as the world’s will also go up. This will provide shipyards may be introduced or a funding leading shipbuilding nation opportunities to build new dry docks loan interest subsidy at 7-8% to ship and set up ancillary repair facilities. overtaking Japan and European owners ordering on Indian shipyards A coordinated approach both from nations. The Chinese government help reinvigorate Indian shipbuilding. Government and the yards is required to continues to give subsidies to the Amongst other measures such as ensure shipbuilding, ship-repair as well industry which greatly contributes to awarding certain price preference to as implementation of overall Maritime China’s 35 per cent share of the global Indian shipyards in Indian new-build Policy of India. shipbuilding market. The country tenders, limiting coastal transportation to has greatly benefitted from national Indian flagged & built vessels, some of investments in world class shipbuilding which may be deemed as a bit retrograde, infrastructure and specialised institutions. providing an economic stimulus to Indian Even the private equities in China are shipbuilding as outlined above, will funding shipyards in a big way thus enhance its competitiveness as well as the propelling further growth of the industry. skill sets and project management levels with enhanced business. To promote However, its biggest challenge Navjit Gill indigenisation in shipbuilding, the fiscal moving forward would be in stimulating MD, Rolls-Royce Marine India Pvt Ltd

august 2014 / maritime gateway 61 EQUIPMENT KONE CRANES

Could you list the Kone’s products Qfor the Indian market with the services offered to the customers? Konecranes customers can be Afound across all market sectors like automobile, wind energy, steel, shipyards, general manufacturing, foundries, oil refineries and many more. Konecranes’ business is fundamentally categorised into two divisions – Equipment & Service. Business Area Equipment offers Electric chain hoist, profile track cranes, standard EOT cranes, Process cranes; WMI Tailor made cranes, Container handling cranes to Shipyard cranes, Forklift & Reach stackers. Business Area Service offers service and maintenance solutions for all types of cranes, like, annual maintenance contacts, on call repair, cranes rail inspection, rope inspection, crane modernization services to crane reliability survey. When was India introduced to Qthe Konecranes and how has the company adapted to the market’s requirements? Since our inception in February 2007, Athe company has achieved a significant growth. Today, we employ more than 550 professional as compared to a single employee in 2007. Our sales and service network is spread all over the country and more than 100 service engineers ensure they provide the best service in the least possible time to customers. We have a new factory at Jejuri, which is one of the biggest crane factories in India. Konecranes has been successful in delivering lifting solutions to many industry segments right from general manufacturing, steel and automotive. Pinning hope on future demand Riding on the success of the Reach Stackers and Box Hunters, Swedish crane manufacturer Kone Cranes plans to launch products tailor made for the emerging markets. Alongside, the firm also aims to strengthen its infrastructure, sales and support to its customers in India. In an email response to MG’s Deepika Amirapu, Kone Cranes Country Manager, Saeesh Nevrekar says ports should always invest in capital equipment considering the future outlook of business and not just the current situation.

62 maritime gateway / august 2014 manufacturing facilities, which can manufacture more than 1000 cranes. Spread across huge area of 1.85 acres which has 2 manufacturing facilities, administrative building, stores, advanced simulation training centre. Our factory is having the most advanced & automated equipments which lift with precision & limits chances of human error. In terms of production, quality and performance norms have become the single stringent parameter that determines efficiency & durability. We have a dedicated facility for manufacturing components where tests done at each and every step of production. One of the unique things carried out in this facility is, FAT- Factory Acceptance Testing, in which Cranes are tested before they are dispatched to Customers. Of the RTGs, Lift Trucks and the QStraddle carriers, which of the products is most preferred at Ports in India? How much does India contribute to Konecranes in terms of revenues. How has the response to the Box Hunter been in India and overseas? There is a good demand for STS Aand RTG cranes in India and mostly all the equipment manufacturers come from Europe and China. Konecranes supplies a complete range of material handling equipments for ports like STS, RTG, RMG, ADG Bulk Unloader, Reach Stackers, Forklift Trucks, Straddle Carriers, and Automated Stacking Cranes etc. The Konecranes range of RTG cranes uses less energy than usual with its new Hybrid Power Pack technology. Hybrid Power Pack turns a fully-diesel RTG into Apart from industrial EOT cranes, Currently, we are focusing a diesel/ electric hybrid RTG. Whenever our port cranes and Reach Stackers are in on developing our manufacturing possible, the crane is operated with used for operations in India. Our products infrastructure & sales and service network electrical power drawn from the energy are very well recognised by the industry in India to bring global knowledge & store. Like a hybrid car, it takes the energy and in a short span of 7 years we have expertise to local customers. generated during braking and converts it received orders to supply more than 1000 into electricity to recharge the batteries. Could you care to give us details of cranes. Our services offered are not limited Depending on usage, this solution can your manufacturing/assemblage to cranes manufactured by our company Q significantly reduce diesel fuel costs. Put plant in Pune? What equipment is alone, but also extend them to other another way, the RTG can operate much manufactured in India and is any makers of cranes as well. We work as a longer on a tank of fuel. equipment/spares exported to other complete lifting solutions provider with markets from here? Reach Stackers work as a backbone our customers instead of just supplying for container handling in ICD & CFS. lifting equipments, and this differentiates Konecrane’s plants at Jejuri, Pune There is a great potential for these us from the others. Aare state-of-the-art world class equipments in India, till date, Konecranes

august 2014 / maritime gateway 63 EQUIPMENT KONE CRANES

has supplied more than 44 Reach Stackers of 7 years we have received orders to in India. Konecranes has introduced supply more than 1000 cranes. We have world’s first hybrid reach stacker – the 8 branch offices all over the country to our crane comes with SMV 4531 TB5 HLT for container cater to demand of our customers. Branch handling, with a lifting capacity of 45 offices consist of service as well as sales container identification tons. It features a hybrid diesel/electric personnel. driveline, electrified hydraulic lifting technology which can help We have developed a dedicated team system, and a super capacitor based energy of more than 100 service professionals operator to identify the storage. This innovative lift truck will for service and modernization of all types cut fuel consumption and emissions with of cranes including Port cranes. For Lift specific container location at least 30% while offering improved Trucks and Reach Stackers, we provide performance, acceleration and response to services for maintenance, refurbishment among the hundreds of driver’s command. and modernization of all brands. Apart containers lying in the Recently, we launched the from this, we also conduct maintenance BOXHUNTER and reinvented the RTG training programs and driver training ports, so the operator crane. BOXHUNTER is built around programs for customers. the needs of container terminal operators can pick up the exact What technology is deployed while who want the best but do not need all manufacturing equipment for the the features or peak performance of Q container with least time. shipbuilding and ports (terminals) Konecranes’ top-of-the-range 16-wheel sector to boost productivity and lower RTG. The BOXHUNTER maintains a operational cost? Konecranes has more than 100 patents on steady level of performance, around 15+ crane technology. container movements an hour, while In the eighty year history of still offering the high reliability and low AKonecrane, many new technologies Our cranes are highly advanced in downtime that lie at the heart of the have been developed and at our terms of automation solutions, the fuel Konecranes philosophy and brand. headquarters. We developed our first efficiency of cranes and its fast speed of shipyard crane in early 1950. The world’s operation. When the ship comes at port How do your two business units- first all electric Rubber Tyred Gantry for unloading it completely depends on equipment and service fare in India? Q cranes was developed by Konecranes in speed and efficiency of crane for how long How many service centres’ do you 1995. We have many patented innovations to make the ship waiting for unloading / have in India and are they all company on our account, to name a few are electric loading. Faster the crane, lesser time is owned-company operated centres or are load sway damping, electric RTG wheel required to unload/load ships and it will they franchised? turning, active load control system for increase the productivity of ports. Also our Our products are very well recognised yard cranes, electro mechanical load crane comes with container identification Aby the industry and in a short span control system for STS and many more. technology which can help operator to identify the specific container location among the hundreds of containers lying in the ports, so the operator can pick up the exact container with least time. These are just few examples of how our modern cranes can enhance the overall efficiency of port operations. Konecranes also has Automatic Stacking Cranes which operates without operator and fully controlled remotely. This eliminates human movements inside container operational area. How many employees work with QKonecranes India and are they trained at your institute? Does Pune also house a training facility? Konecranes India comprises of A550 employees. We have recently inaugurated a training centre in our factory in Jejuri. The new training centre is equipped with purpose made crane controller simulators, Single Girder CXT crane with latest Inverter technology,

64 maritime gateway / august 2014 range of workstation lifting equipments including new award winning CLX chain hoist, air balancer, XM profile crane system and whole range of Brake kits to provide both theoretical & practical training to the participants. Worldwide Konecranes focuses and invests a lot on training of our employees. We provide product specific trainings to our employees worldwide. For instance, our service engineers are trained at Konecranes Sweden factory for Lift Trucks business exclusively. What new products will be Qintroduced to the Indian market up to 2015 and how many will be dedicated to the ports sector? We are continuously investing in Adeveloping new features and making the cranes more advanced. The Indian market is very price sensitive and many a time our cranes appear a little expensive to the customers at the first glance. We also observe that many big ports procure ports sector, is expected to further boost in India. Our aim is to strengthen our the capital goods through tendering the growth. Many private ports also came infrastructure, sales and service support process where most of the time the into operation to cater the increasing to customers. At present we have good common and traditional specifications are container traffic at the ports. customer references in India and we are included and the final decision is taken focusing on providing complete service to It clearly shows the growth in based on the price only. However, many customers than just providing equipment. container traffic and the subsequent huge ports buy equipments considering the We can now also provide the maintenance demand for Port cranes and material existing container traffic at the ports. They service for the port cranes and can also handling equipments like Lift Trucks and express the choice of buying equipment execute the maintenance contracts for Reach Stackers. The market size for port longer durations. We want to become of multipurpose use, those are able to cranes is estimated to be close to $ 300 the complete lifting solutions provider perform multiple activities but at average million in India. Further the market is company in port equipment business. efficiency. Our cranes are designed and expected to grow steadily by 15 to 20 per build considering the increasing container How many mid market products cent. traffic at ports in India in the long run. Qwith high quality but lower price We have geared up for the continuous points are being developed to strengthen With infrastructure projects such growing demand for port equipments your position in emerging markets? as the dedicated freight corridor Q in India. Our aim is to strengthen our and the diamond quadrilateral on the Our strategy is to be one stop solution infrastructure, sales and service support cards, what prospects do you see for the for the lifting requirement and to to customers. At present we A business in India? work as a partner with our customers. have good customer references Not only equipments but we also focus Our prospects for the The market size in India and we are focusing on providing complete crane maintenance Indian Ports sector are for port cranes is on providing complete lifting A service and to help customers reduce the quite optimistic. Indian Ports solution to customers than just estimated to be downtime and improve the efficiency are the gateways to India’s providing equipment. close to of operations. Konecranes is focusing international trade by sea What are your growth on emerging markets. We have plan of and are handling over 90% plans for the ports launching some products especially for of foreign trade. The Indian $300 Q segment in Indian sub emerging markets. ports sector is poised for million in India. continent for years up to significant growth driven by We recently launched new SLX Further the market 2020 and how does India new manufacturing and power electric chain hoist with capacity from is expected to grow feature among the countries projects and higher cargo 60 kg to 2500 kg. This is a new compact as Konecranes customer? traffic at ports. Increase in steadily by chain hoist with latest features and is containerized trade coupled We have geared up for useful for automotive, warehousing, with the Government’s active 15 to 20% Athe continuous growing machine tool and light lifting initiatives to develop the Indian demand for port equipments applications.

august 2014 / maritime gateway 65 YESTER YEARS TRANSPORT

mpires were built on the back of immaculate logistics E planning. The importance of logistics was never underestimated at any point of Land based logistics time in history. Battles were lost because soldiers could not efficiently move to forward positions or were unable to Logistics played a decisive role in the outcome in all wars. Mongols protect their supply lines. The story is all successfully set up a flawless line of logistics during their regime. And too familiar coming to the present day where companies import large shipments in India Mughals developed highways to facilitate trade. This article and are not able to clear on time owing to skewed logistics planning or for want looks at role of transport logistics in ancient times. of timely information. Vijay Kurup In the Second World War, logistics played a decisive role in the outcome. The army logistics of the allied forces were far superior to those of the conquest for world dominance. It Logistics of The Roman Army at War Germans. They were successful in meant establishing a daily line of (264 BC – AD 235)’ says that the Roman crippling the supply locations of German communication over hundreds of army rightly considered logistics as an forces and in turn the allied forces kilometres of snow-bound and often integral part of warfare which gave them ensured that their services and supplies hostile territory. This entailed a regular a decisive edge over their opponents. were provided at the right time and at line of messenger posts, with spare They had “convoyed provisions” or the right place. horses between their own armies. The supply line to feed its army. They At the time of Genghis Khan’s death system was so perfect that the ‘Mongol had developed a sophisticated system in 1227, he had the largest contiguous pony express’, with regular change of through various sources to feed its empire that stretched from the Pacific horses, could cover 600 km in a day soldiers which enabled them to acquire to the Caspian sea – an empire that a speed not equaled again, until the dramatic success in their conquests. A was four times the size of Alexander’s. coming of the railways in that region series of depots between operational and But that was only half. By 1300, his several centuries later! But the flexibility tactical base was not only a question grandson Kublai Khan had conquered of the chain remained unmatched, says of “leap-frogging” supplies forward, China, Korea, Tibet, Pakistan, Iran and John Man in his meticulously researched but also to protect them from hostile Turkey – 20 million square km, almost book on ‘Genghis Khan’. attack. The importance heeded by one-fifth of the world’s area was under the Roman commanders to logistics the one empire. How did they achieve it? Another empire built with painstaking attention to details in their planning can be gauged by the fact The Mongols understood the logistics movement, dates back to 264 that its commanders would commence importance of establishing a flawless BC – the Roman Empire. Jonathan only after completion of all logistical line of logistics chain in their P Roth in his compelling book ‘The operations.

66 maritime gateway / august 2014 The Romans understood that to enough to realise these lacunae During the Mughal preserve grain for the longest possible to get a strangle hold in India. Mughals times the common mode of period, the temperature and the moisture transport was not with horses content of the grain had to be kept as The Mughal kings, built three or elephants, but with oxen. low as possible. To keep the granaries however, did realise the Goods carried in carts were cool, the floors were raised with built-in importance of having a good arterial pulled by oxen. The oxen were ventilators. These cool warehouses were transport system over land. highways considered much faster and used to store food grains. The emperor Jahangir was more efficient. According to the aware of the advice contained fanning out English ambassador Thomas Alexander the Great in his time in the Ottoman Nasihatnama Roe, during the Mughal period, would become a logistics legend. His (a major work of 11th century of Agra an ox could carry load 3 times success was not a series of fortuitous Persian literature) that urged as much as a camel; cover events, but was ascribed to meticulous monarchs especially to "look more distance in a day and logistics planning. In a paper titled with favour on the merchants in the the merchandise was not required to ‘Logistic lessons from Alexander the land; always care for them; let know no be unloaded and loaded again thereby Great,’ the writer Timothy Van Mieghem one harass them; let no one order them minimising damage. says that supply chain management about for. Through their trading the land occupied a strategic role in his warfare. becomes prosperous and by their wares Sea traffic was seasonal and He synchronised the movement of his cheapness abounds in the world." was dictated by the winds. All ship troops with the harvest cycles. This movements came to a halt during the ensured that his army was not burdened The Mughals built three major South West monsoons, i.e. from June with carrying heavy supplies of food. highways fanning out from the capital to September. After the abatement of He marched along the river, to reduce of Agra, according to the book Land the monsoon fury, the change in wind the burden on his soldiers, leveraging Transport in Mughal India by Subash direction enabled the ships to arrive at the inland water transport to carry large Parihal. The thrree arterial highways Indian Ports and then by January, taking supplies of food. were from: advantage of the northerly winds the ships could depart from India. Alexander personally led the 1. Agra to the Port town of Surat. Surat logistics organisation of his army and was the most important town of the International trade was almost a included it in strategic planning. He Mughal Empire. It was from this monopolistic venture of the royal ladies ensured that logistics did not operate in port that all the goods produced in who had plenty of idle money and a functional silo. His decision-making the empire were exported by sea exclusive connections abroad. Shah process involved cross-functional to different Asian and European Jahan himself set up a monopolistic information sharing. destinations. trade in Saltpetre, and cornered the entire textile industry in Ahmedabad for The Mughal era 2. Agra to Patna and Dacca. This exporting textile to the Middle East. highway ran parallel to the riverine Trade and logistics in the Mughal times route and the traveler could travel Financial trade was fairly well was fairly developed but skewed in either by river or road. developed. Bills of Exchange and certain ways. Whereas development Hundis were commonly used. Some of highways was on their priority 3. Agra to Kabul. This highway was sort of insurance covering war risk was list, maritime activity was carelessly one of the most ancient routes in in vogue. The money transactions in neglected. Abraham Eraly, in the the subcontinent. The highway Mughal India were handled by shroffs, eminently readable book, ‘The Mughal stretch between Agra and Lahore money changers and merchants who also World’, describes in detail the trade and was, according to a British traveler served as bankers. transportation during the Mughal period. Thomas Coryat, was the “most incomparable show of that kind that Logistics in Mughal. India was fairly It could perhaps be said that the his eyes had ever surveyed." Another well developed, but it was confined only ascendency of the British in India could chronicler Thomas Roe said that to the land. The scant interest shown in part, be attributed to the Mughal it was one of the great works and by the Mughal emperors towards the emperors staunch refusal to see the wonders of the world. maritime sector can be understood by importance of maritime or maritime the fact that bulk of their revenues came trade. Visiting Jesuits in Akbar’s court The royal decree had ordered the from the land. It was estimated that the warned the Emperor that ‘under the Zamindars to plant "lofty trees with broad gross revenue from the import duty was colour of merchandise the English leaves and wide spreading branches less than `3 million a year. Further the would invade your country and take affording shade to the traveler." The Mughals did not consider the seas around some of your forts and put your majesty decree further bid them to build bridges India as part of their domain. What if to great trouble.’ Later Jahangir was over every river; spacious Serais and the Mughals were a dominant power in similarly warned. The Mughals, and Choultries (a resting place for visitors the maritime sector? What if they had an it could be said that the Europeans where rooms and food are provided on invincible armada to take on the might themselves, did not foresee nor realise charity) to be built at regular intervals. of the British naval power? Would India that the domination of the Indian seas The later Mughal emperors continued the have been a maritime force to reckon would lead to the domination of India maintenance of the highways with the with, today? Interesting thoughts, but itself. The British however were astute same vigour. that can only be conjectures now.

august 2014 / maritime gateway 67 The MG Diary

It’s time for trade shows, exhibitions and conferences in the maritime Dates for your diary sector. Here are a few events lined up for the coming months.

August 20, 2014 Venue: The Lalit Mumbai, Mumbai Some of the world’s most admired speakers examine: India Shipping Summit • How will future global and regional cargo flows change? October 13-15, 2014 • What are the emerging transhipment opportunities? Venue: The Palladium Hotel, Mumbai • How the supply/demand balance will change? • What Port / Terminals are doing to add value? 10 years is a very short time in history, however since the first • How much further the containerisation process can go? edition of the India Shipping Summit held in Mumbai in September 2005, there have been many changes to the local and global More information: maritime economy. The tenth edition of the India Shipping Summit [email protected] will examine these changes, sharing the highs and lows of the industry, and will also contemplate the future, discussing solutions to current problems and the way forward into the next decade of shipping in India. More information: www. indiashippingsummit.com

A shoresian O ff Support Journal Conference October 8-9, 2014 Venue: Singapore This conference is a focus for all of those involved Cruise Shipping Maritime Gateway in offshore support in Asia - from oil companies to A sia Pacific August 20, 2014 Awards suppliers. Shipowners will hear where oil companies November 20-21, 2014 Venue: The Lalit Mumbai, Mumbai will be driving the market and solution providers Venue: Hong Kong Convention & The Gateway Awards are the most coveted will be able to present to 280 plus industry experts Exhibition Centre, Hong Kong awards in the maritime industry honouring and demonstrate their innovation and cutting edge The annual cruise event will focus individuals, organisa- technologies. tions and companies on the entire Pan-Asia cruise from across India's More information: market,ingexplore the revenue maritime industry. www.rivieramm.com outlook throughout the region. Gateway Media is More information: proud to announce the www.cruiseshippingevents. 2014 edition of The Gateway Awards. com

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