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RNI NO: TELENG/2009/30633 POSTAL REGISTRATION NO: LII/RNP/HD/1137/2013-15 FUTURE SMELLS GOOD DATE OF PUBLICATION: 26/11/2015 DATE OF POSTING: 28/11/2015 – Leena Nair, Chairman, Coffee Board

ADANI PORT ANOTHERANOTHER ACEACE ININ THETHE PACKPACK

Hazira is one of the few ports where all the big three shipping lines – Maersk, MSC and CMA CGM have made a bee line. With rich hinterland and cargo movement growing by the day Hazira is on its way to occupy number two position among Adani ports 02 MARITIME GATEWAY / DECEMBER 2015 from the editor

Waiting for reforms push The maritime industry continues to face slowing global trade. Though private serious challenges with weak global ports were able to increase their net demand. Though some bright spots income, it happened at a slower rate than appear here and there, majority of the last year. With slowing ocean volumes, sectors are struggling amid a wave of many ports appear unlikely to meet their Amidst all this new pressures combining with familiar targets for fiscal 2015-16. It is a different ones. story that terminal capacities continue to mayhem, Indian grow despite slowing cargo growth. The oil price collapse over the past maritime industry year is hitting the offshore vessel sector Amidst this gloomy business scenario, seriously needs a hard as demand falls for its services. some policy changes have begun to Dry bulk shipping continues to struggle take shape. Though it is too early to shake up along the bottom. Weak global trade assess the impact they may have on the pulls down container volumes. Some of industry, these proposed changes have the leading shipping lines released their certainly caused a stir. While decision results and they are not good. On top of like cabotage relaxation to ro-ro vessels, this, global economic growth remains ODC carriers and LNG vessels and sluggish and uncertain. Freight rates cargo support to Indian ships have are under constant pressure and major brought cheer to some, the idea of re- containerised freight indices continue to bidding the existing terminals is causing see sequential declines. furore. The government appears to be launching a series of policy reforms after Exports, which have declined for 11 the recent Bihar elections, signalling its months in a row, are a major policy intent to get moving again on economic worry, although the government has so changes. It appears that the government far done little beyond offering benefits is not going to wait till the Budget to a few industry segments. Exports to kick in reforms in various sectors. contracted 17.53 per cent to $21.35 Reforms must be meaningful to step billion in October, against $25.89 billion up investment in infrastructure, boost in October 2014. The decline in non-oil productivity and make the economy imports is more worrisome. What this more efficient. means is weaker economic activity and falling investments, putting a question Amidst all this mayhem, Indian mark on economic recovery. A proposal maritime industry seriously needs a to provide interest subsidy to exporters shake up – new business opportunities has been pending and the commerce and right policy measures – to lead it ministry has virtually no action plan to out of choppy waters. bolster trade in medium term. Container throughput at major ports recorded modest growth during the first seven fiscal months, compared with the R Ramprasad Editor and Publisher same period last year, dragged down by [email protected] Automate, connect and control with Cavotec’s inspired engineering.

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Maritime Gateway is printed by R Ramprasad Published at Gateway Media published by R Ramprasad on behalf of Pvt Ltd #407, 5th Floor, Pavani Plaza follow us on @maritimegateway Gateway Media Pvt Ltd, #407, Khairatabad, Hyderabad – 500 004 5th Floor, Pavani Plaza, Telangana, India Khairatabad, Hyderabad – 500 004, Telangana, India Regd. Office: H.No. 8-2-293/82/A/379 & 379/A, 2nd Floor, Plot No. 379, Road No. 10, Printed at M/s Kala Jyothi Process Pvt Ltd, Jubilee Hills, Hyderabad – 500 033. 1-1-60/5, RTC Cross Roads, Musheerabad, Hyderabad – 500 020. CIN: U74900AP2007PTC054344 Editor: R Ramprasad Editorial Advisory Board Views expressed in the articles are those of the writer(s) and may not be shared by the S abyasachi Hajara Anil Yendluri A Janardhana Rao editor or members of the editorial board. Former Chairman, SCI, Director & CEO, MD, Indian Ports Association Unsolicited material will not be returned. Chairman Editorial Advisory Board Company Ltd Jasjit Sethi Joachim von der Heydt Adarsh Hegde CEO, TCI Supply Chain Solution Copyright Chairman, Bengal Tiger Line, Singapore Executive Director, Allcargo Logistics Capt Dinesh Gautama No material published here should be re- Julian Michael Bevis President Senior Director, Group Relations, South Asia P Jairaj Kumar Navkar Corporation Limited produced in any form without prior written Chairman & MD, Ocean Sparkle Limited A.P.Moller-Maersk Capt Sanjeev Rishi permission from Gateway Media. S hardul Thacker Advisor Capt Deepak Tewari Partner Worlds Window Infrastructure & Logistics Pvt Ltd Feedback Chairman, Container Shipping Lines Association (CSLA) Mulla & Mulla & Craigie Blunt & Caroe Navin Passey Readers are advised to send all feedback and Anil Singh Dhruv Kotak Managing Director Sr VP & MD, DP World Subcontinent Director, JM Baxi Group Wallem Shipmanagement (India) Pvt Ltd comments to [email protected] contents volume 8 | issue 03 | DECEMBER 2015

CARGO RESERVATION: INDIAN SHIPPING 23 24 adani MG POLL: Is this workable? cover story: Improve connectivity There are mixed responses on Another Ace and Infra the proposed rule on cargo Hazira is one of the Time and again the industry reservation to Indian flagged few ports where all in the Pack has voiced their concern about vessels. While Indian shipping the big three shipping poor hinterland connectivity and firms are hailing the move, lines – Maersk, MSC infrastructure at dry ports. international shipping firms are and CMA CGM – crying foul. have made a bee line. With rich hinterland and cargo movement growing by the day, 28 40 Hazira is on its way to policy: tariff CARGO: TEXTILEs occupy number two T ariff remains bone of Respite in coastal shipping position among Adani ports. contention High road transport costs have The idea to deregulate tariff made the textile sector in Tamil regime by re-bidding existing Nadu uncompetitive not only terminals is creating a lot of in the domestic but also in the furore in the shipping industry. global market. The departure to INTERVIEWs coastal shipping as an economical mode of transport has helped the 32 industry stay afloat. 44 REGULATIONS: CABOTAGE Leena Nair, Chairman, Coffee Board Partially Relaxed Future smells good The government makes Rising value added exports and domestic amendments to cabotage law consumption signals good growth. for special vehicles to encourage coastal shipping 46 Ramesh Mahapatra, president, Utkal 34 Chamber of Commerce & Industry exim ‘Odisha is seeing a 20% growth in exports’ Stable government and new proactive industrial Are shipping costs policy make this state join the growth race. exorbitant? Exporters protest about exorbitant extra charges being 58 taken by shipping lines. 43 Koh Chong Hin, GM-P Asia acific (Marine). e xport: coffee ZF Asia Pacific Pte Ltd Stagnant for long Skilled and Speedy Support 36 In spite of being the sixth largest ZF provides a complete line of heavy-duty ennore port: RO RO coffee producer in the world, transmissions for all kinds of commercial vessels. Betting to become a Ro-Ro India contributes only 4 per hub cent to global exports. India's contribution to the global market 64 Ennore Port seemed to be striking can be improved with suitable Praveen Somani, Dor irect , Inland GROUP the iron while it is hot. Along government policies. “Demand for logistics parks is set to increase” with the cabotage relaxation on Inland Group’s Director Praveen Somani talks in costal Ro-Ro movement, the port length about the growing opportunities he sees in the has also introduced schemes that Indian logistics sector, especially in the maritime sector will incentivise car makers in and around the city to move even their local shipment via sea, hoping to profile make a good business 38 48 Nafeesa Moloobhoy, managing partner of A.S. Moloobhoy & Sons Nafeesa sails her way to success Nafeesa Moloobhoy successfully anchored herself as an entrepreneur to reckon with. 50 Others 10 News in Brief review 2015: Looking back 12 Point Blank A quick review of major events 14 News that happened. 66 Infographics A GREAT MATE FOR SMALL PORTS THE NEW TEREX® QUAYMATE ™ M50 MOBILE HARBOUR CRANE MEET YOUR MATE

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TPS-Ad-QM-A4-EN-India.indd 1 16.11.15 11:22 brief NEWS

Gateway rail CropBox: Farm in a shipping container abolishes House.” It’s an invention handling of North Carolina-based charges Williamson Greenhouses, To help investment which released the Crop- and export business Box one year ago, billing in Punjab, Gateway it as “a farm in a shipping Rail at its ICD at container.” The “Green & Sahnewal will not Herbs” and “Microgreens levy any terminal & Fodder” boxes start at handling charges about $50,000 and can be on export contain- customised. A strawberry ers at their facility. cropbox is coming soon. This will continue he Ritz-Carlton Naples trailer are rows upon rows The Ritz-Carlton is the first is redefining the term of lettuces, herbs and other until there is overall T hotel chain to incorporate improvement in “locally sourced produce.” greens. this technology, and the When Executive Chef export volumes in Not only is the tempera- Naples beach resort is its Punjab. In a first ma- George Fistrovich needs ture kept near 70 degrees first test market. To date, greens for a fresh salad at jor export initiative, Fahrenheit, the pH, humid- there are just 13 CropBox Gateway Rail moved Terrazza or another of the ity, nutrient release and units in the United States, resort’s restaurants, there is block train of Naran- other growing factors are said principal owner Tripp jan Rice Exports Pvt no delivery truck required. all controlled at the touch Williamson. He simply walks out of the Ltd carrying rice in of a button – or remotely According CropBox data, 90 racks to Mundra hotel’s back entrance and from a smartphone. About over to a 320-square-foot each 320-square-foot unit Port for connecting 300 cabbages, lettuces yields the equivalent of one to designated vessels. portable unit for his harvest. and micro greens are It doesn’t look like much acre of field lettuce or 2,200 This is the biggest now germinating in what square feet of greenhouse quantity for export from the outside, but inside Fistrovich calls his “Grow this climate-controlled space. in one go.

Visakhapatnam Government Port to use solar Flipkart invests in logistics, warehouses Flipkart will invest around $2.5 to improve power billion in the next few years on trade with The Visakhapatnam Port beefing up its logistics network Latin America Trust (VPT) plans to com- as part of efforts to strengthen its position in the booming e-com- mission a 10-MW solar To boost exports merce industry. $500 million will power plant by March 2016 to Latin America, be invested over the next 4-5 years in two phases. In the first Indian government in warehousing to set up a network of 80-100 fulfilment phase, 2-MW solar power has asked exporters centres across all states, more than half of them will be in plant will be set up by to create a supply tier II and III towns. January 15, 2016 and the chain through back- remaining 8 MW capacity A fulfilment centre has been opened in Gundlapochampally, end operations and would be commissioned by Hyderabad spread over 2.2 lakh sq ft and holds storage logistics. Exporters March 20, 2016. VPT is the capacity of 5.89 lakh cubic ft. have been asked to first among the major ports create warehouses to go ahead with the solar Fortigo to raise $2m funding to plug the transpor- power project. The project tation gap. To this contract has been awarded A soon to be launched logistics service Fortigo is in talks with effect, The Export to Jakson Engineers Lim- Nandan Nilekani, Infosys' co-founder, to raise $2 million in seed Promotion Coun- ited of Noida that would funding. Fortigo will be providing the trucking services and will cil for Handicrafts maintain it for seven years. target small and medium-sized businesses and truck owners with (EPCH) is setting up The total project cost is relatively smaller-sized fleets. It will help truck owners manage a warehousing facil- `60 crore, including annual and track their inventory more efficiently and help save logistics ity at Montevideo, maintenance cost of `2.5 cost also. Through the startup, the truck drivers can plan their Uruguay. crore. journeys and can reduce the delays in transportation.

10 maritime gateway / december 2015 The longest ship to call at Chennai Auction coal blocks: ASSOCHAM Port To boost indigenous production of coking coal, ASSOCHAM has urged the government to put coking coal blocks on auction and al- locate the same through competitive bidding. Coking coal blocks should not be allotted on nomination basis as it would delay the development of coking coal in India and create a non-level play- ing field in the steel industry, suggested ASSOCHAM. Allocation of coking coal blocks to steelmakers has much merit because the industry is capable of efficiently utilising 100 per cent prime cok- ing coal reserves.

MV Maersk Serangoon V.1510 is the longest vessel to call on Chennai Port. The ship will help Maersk Iron ore business in India looking up improve operational efficiency through reduction of cost due to economies of scale. To mark the oc- After two casion, an on-boarding ceremony was organised at years since the Chennai Port in association with DP World. mining was halted, Vedan- ta has restarted UK keen to invest in Indian exporting iron ore from transport infra Goa to China. The British government and UK-based investors are China is one keen to invest in India's transport infrastructure, re- of the biggest vealed Railway Minister Suresh Prabhu. Prabhu was buyers of Goa in London recently on the invitation of two senior ore. Moreover, UK government ministers to explore ways in which earlier this the UK can engage with India. year Indian government had reduced export duty on low-grade iron ore from 30 to 10 per cent, and as a result many Indian min- ers have restarted operations. Mahindra ships first Peruvian grapes COFCO planning alliances to import grain Mahindra ShubLabh Services (MSSL), the agribusi- ness division of Mahindra & Mahindra, is expand- China National Cereals, China Shipping (Group) Co ing its offshore sourcing of grapes with its first Oils and Foodstuffs Corp to launch five new shipping shipments from Peru. Mahindra shipped a container (COFCO), the country's larg- services before the end of load with Red Globe from Piura in Peru’s north to est food trader, is planning this year between China and Europe, signalling the start of its inaugural pro- to import 3.5 million metric South America. They will pri- gramme from the Andean nation. MSSL is aiming tonnes of grains every year marily import soybean, corn, to ship a total of 50 container loads of Peruvian through tie-ups with domestic beef and other agricultural grapes this season to a range of markets including shipping companies. COFCO products. Europe, China and India. will expand its alliance with

India to export 200,000 tonnes of white sugar Aurizon eyes Indian logistics market Indian mills have contracted to export 200,000 Queensland-based freight tonnes of white sugar, taking advantage of a surge service provider Aurizon is in global prices. More deals could be sealed if the eyeing investment in rail and government approves incentives. The latest export logistics networks in India. The deals have coincided with a rally in world raw sugar company is doing preliminary prices, which hit an eight-month peak of 14.80 cents investigations for investing into a pound. The proceeds from exports can be used to India. “Our agenda is simple clear huge debts the mills owe to sugarcane farmers. – to explore growth markets The government has announced new rules mak- where Aurizon can leverage ing it compulsory for sugar producers to increase our capability in rail-based exports to at least 4 million tonnes of sugar, both integrated supply chains,” said chief executive Lance Hockridge. raw and whites, in the 2015/16 crushing season to The company is particularly upbeat about India’s surging demand cut stockpiles. for coal as it lifted steel production.

december 2015 / maritime gateway 11 POINT BLANK

Cloud services allow remote monitoring of entire I don’t see any reason why fleets. When data collected this trend would not continue. by automation systems is The average vessel size per utilised in the most optimal country will continue to way, we can save both grow and so we expect there costs and environment. The will be fewer companies in Internet of Things opens individual markets, and this is new possibilities for the an increasing challenge for the marine industry. smallest players. – Jan Hoffmann – Mikko Lepistö Head of trade facilitation at UNCTAD Vice President of software and automation operations, ABB

We see very weak development in the trade between Asia and Europe, and because lot of capacity is coming in, we've seen pressure on rates. What affects us more is the rates than the volume. Currency and competitiveness is surely playing a role. As more Indian ships – Nils S Andersen CEO, Maersk start participating in the regular carriage of Indian imports, other ancillary industries such as bunkering, ship repair and Governments can hinder or even shipbuilding will grow. help but no country can shape – Anil Devli the system alone. The shipping CEO, Indian National Shipowners' Association business as the backbone of (INSA) world trade is driven by the power of market and it is essential that we guard it against any kind of protectionism by ensuring effective and transparent international regulations. The gap between regulators and shipping industry needs to be improved.”

– Robert Goodwill Minister of Shipping, UK

12 maritime gateway / december 2015

NEWS

Ships. The container opera- slot charter agreement on “Seventy per cent of the tions to be sold consist of the CHX2 has been done. transshipment at Colombo SHIPPING TransFeeder North Line, The revamped network will is Indian traffic and our TransBothnia Container include a Northern China terminal has 32 per cent Maersk Line and Line and TransFeeder direct call, head haul new of Colombo’s market after APMT profits South Line, with annual direct port calls including being in operation for just container volume of ap- Singapore, Hong Kong, over a year,” said Tissa plunge in third proximately 105,000 teu. Yantian and Port Klang, Wickramasinghe, general quarter and backhaul new direct manager, commercial X-Press Feeders will port calls including Busan, and marketing, at port continue to conduct the Singapore and Port Klang. operator Colombo Interna- business under the brand tional Container Terminals The movement of two new TransAtlantic Container. (CICT). The company is 85 services would be: per cent owned by CMHI, IRClass acquires CHX: Busan – Qingdao – with the rest held by the Xingang – Busan – Shang- Sri Lanka Ports Authority. Maersk Line has an- GML hai – Nansha New Port The port is seen as one part nounced a 59 per cent Indian Register of Ship- – Singapore – Tanjung of the Chinese initiative year-on-year drop in its pre- ping (IRClass) has acquired Pelepas – Chennai – Krish- to construct a “string of tax profit during the third Bengaluru-based Geological napatnam / Kattupalli pearls,” a line of facilities quarter of 2015 amid con- and Metallurgical Labora- (biweekly) – Visakhapat- extending their reach across tinued overcapacity and low tories (GML), a specialist nam – Tanjung Pelepas – the Indian Ocean. freight rates. The company multi-discipline testing labo- Singapore recorded a $303 million ratory focused on chemical, CHX2: Busan – Shanghai profit before tax in the three mechanical, metallurgical, CSCL to charter months to September 30, – Hong Kong – Yantian civil, environmental testing, – Singapore – Port Klang six 21,000-teu 2015, compared to a pre-tax calibration, failure analysis profit of $740 million in the – Chennai – Port Klang – boxships built at and geological investiga- Singapore – Shanghai same period last year. tions, as well as assisting SWS The Maersk Group also suf- industries in establishing fered poor results in its port laboratories and training Chinese Port operation section. APM personnel. Subsequently, in Colombo Terminals recorded a 60 per IRClass also made another strengthens cent plunge in profit before successful acquisition of tax to $205 million in the Safess Quality Manage- String of Pearls third quarter of 2015, from ment, which deals with the $510 million in the same inspection of cryogenic period last year. vessels. China Shipping Container APMT’s revenue went Maersk Line Lines (CSCL), through its down by 5.7 per cent from wholly-owned CSCL HK, $1.1billion in the third introduces two has confirmed a bare- quarter of 2014 to $1.05 bil- new services boat charter deal for six lion in the three months to 21,000-teu containerships September 30, 2015, while to be built at Shanghai the amount of containers Waigaoqiao Shipbuilding handled fell by 8.2 per cent (SWS). CSCL had earlier to 8.9 million teu in the The first section of a Chi- announced that it planned third quarter of 2015 from nese port project in Colom- to bareboat charter up to 11 9.7 million teu in the same bo, Sri Lanka is boosting units of 21,000-teu con- period last year. the speed of India's mari- tainerships, of which five time freight shipping. The will be options exercisable $500-million investment by after six months of charter X-Press Feeders China Merchants Holdings for the first six ships. The buys TransAtlantic Maersk Line will introduce International (CMHI) in owner of the containerships two new services from Jan- Sri Lanka's first deepwater is China Shipping Nautic- AB uary 2016 for its Far East/ port is already paying off green Holdings Company, X-Press Feeders announced Southeast India network, by handling significant vol- an indirect wholly-owned the purchase of TransAt- the Chennai Express (CHX) umes of Indian container subsidiary of CSG. The lantic AB, a subsidiary and the Chennai Express 2 traffic – and shortening charter hire for each of the of Swedish supply vessel (CHX2). A vessel sharing local feeder routes in the vessel is $41,000 per day for operator Viking Supply agreement on the CHX and process. a period of 12 years.

14 maritime gateway / december 2015 businesses actively through Nicaragua Canal Thailand proposes the networks of "K" Line Elektrans adds gets green light $20bn Silk-Road- and Sharaf Group. third tanker to its Chinese concession holder Canal fleet of the Nicaragua Canal project, Hong Kong Nica- A new canal situated in Hanjin and Hyundai ragua Development group Southern Thailand called to merge? (HKND), has received the Kra Canal could be approval from the state-run included as part of China’s Nicaraguan Grand Inter- Maritime Silk Road plan. oceanic Canal Commission A feasibility study of the on the environmental and new canal has already been social impact studies for the conducted and shows that waterway project, clearing the 26-metre-deep and less- the way for construction to than-100-kilometre-long In its biggest acquisition to begin. waterway would cost around date, Elektrans Shipping $20 billion. The project entails con- Pvt Ltd has acquired Distya a Suezmax crude struction of an interoceanic Upon completion, the canal Akula, oil tanker, co-owned with waterway that will be 276 is to offer a route that will Arya Industries. The joint kilometres long, up to 520 allow ships to avoid sailing South Korea's biggest ship- company has so far in- metres wide, 30 metres through the Malacca Strait, ping company Hanjin Ship- vested $40 million towards deep, link Nicaragua's a region that is expected to ping has confirmed that the acquisition of vessels to its Pacific and Atlantic coasts, become heavily congested in South Korean government fleet. It has a deadweight and serve as a rival to the the next ten years. The canal had asked it to consider a tonnage of 149,834 tonnes Panama Canal. Further is also anticipated to save merger with liner Hyundai and is the third tanker to projects will include roads, up to 48 hours for shipping Merchant Marine (HMM), join the fleet in the past one two deep-water ports and a companies transiting routes free-trade zone. However, any merger is year. Distya Akula is built by between Asia and Europe. thought to be unlikely at the Mitsui Ichihara Engineer- China is rumoured to be present time, with Hanjin ing and Shipbuilding. It has financing the project. Shipping stating a joint the capacity of carrying a China Cosco operation would be “hard full load of about 149,000 to materialise.” metric tonnes of oil. Holdings in the red K Line and Sharaf joins for a new Special berthing venture Inland Shipping facility for Indian Port at Jalore transit shipments The IWAI has proposed to Vessels carrying Indian guide and support Rajast- transit shipments will enjoy han government for build- special berthing facility at ing an Inland Shipping Port Bangladesh's Chittagong at Jalore. A canal is pro- and Mongla seaports. "As China Cosco Holdings posed to be built between far as Mongla Port is con- booked a 3.8-billion yuan Mori Creek and Jalore that cerned, we will be able to ($598 million) net loss for Japan-based Kawasaki will have a minimum draft provide preferential berth- the January-September of 3 metres. It will help in ing facility to vessels laden period as China’s slowing Kisen Kaisha (“K” Line) and Sharaf Group have creating inland navigation with goods for transit to In- economy sank demand for facilities in western Rajas- dian states," said chairman domestic shipping of coal established a new firm, K Line Shipping & Logistics than and business devel- of Mongla Port Authority and other goods. The state- opment opportunities for Riazuddin Ahmed. The owned maritime shipper (KLSL). Based in Dubai, UAE, KLSL will carry out limestone, gypsum, lignite Chittagong Port Authority had managed 1.89 billion and cement factories can will be able to offer 'window yuan in net profit for the businesses in the fields of marine transportation, lo- be explored by the state gov- berthing' facility instead of first half, propped up by ernment. A pre-feasibility fixed berthing to vessels of a government subsidy for gistics, land transportation, air cargo transportation, report for the project will Indian transit goods. But the demolition of received be prepared by WAPCOS. setting up of warehouses ships. But poor performance warehousing and supply chain solutions. Existing cherras and rivers may be needed if the un- by core operations during like Luni may be explored loaded Indian goods are not the third quarter pushed the According to "K" Line, the for establishing connectivity transported immediately company into the red. new firm will develop new from Jalore to Mori Creek. and need storage.

december 2015 / maritime gateway 15 NEWS

dian Navy and Coast Guard Peripheral Expressway and Coastal shipping for hijacking two ships and Railways freight eight-laning of the high- can save `40,000 holding the crew to ransom. productivity way section from Mukarba crore, says govt The move to make a guilty declines chowk (Delhi) to Panipat. plea came after embassy of- ficials visited the jail where The 136-km-long Kundli- the men are being held. The Manesar-Palwal (KMP) trial has been underway for Expressway, also known as three years. Around 80 wit- Western Peripheral Express- nesses have deposed in the way project would provide court proceedings so far. high-speed link to the north- ern Haryana with its south- ern districts like Gurgaon, Faridabad and Palwal. The project spanning five LOGISTICS For the first time since districts of Sonepat, Jhaj- 2010, freight productivity of jar, Gurgaon, Mewat and The government estimates Allcargo wants the Indian Railways – both Palwal would be completed that as much as `40,000 to set up logistics in distance and volume at a cost of `4,000 crore crore could be saved in 10 terms – declined in the and would help in decon- years by promoting cargo parks first half of FY16. Freight gestion of National Capital transportation through transportation is a key Territory. coastal shipping. Higher bread-earner for the Indian coastal shipment of coal Railways, accounting for al- FCI to increase by 100 MTPA and of other most 70 per cent of its total commodities (cement, steel, income. Overall, however, storage space fertiliser, food grains, POL) the Railway earnings reflect The Food Corporation of by 50 MTPA alone could a growth on account of the India (FCI) has proposed to result in savings to the tune hike in freight tariff during call bids from 21 shortlisted of `11,500 crore by 2025. this period. The commodi- private players to develop Building of new coastal ca- ties that saw a positive net silos, at an estimated cost pacities for 120 MTPA steel tonne kilometre (NTKM) of `80 crore, in order to and cement in southern Gu- include coal (0.68 per cent), generate a storage capacity jarat, central and northen pig iron and finished steel of one lakh tonnes. FCI will Andhra Pradesh, northern (7.31 per cent), fertilisers provide guarantee of rentals Karnataka and Odisha (32.29 per cent) and mineral for 30 years for silo opera- would result in savings oil including petroleum tion for the private sector to of another `8,500 crore. products (2.38 per cent). recover capital investment Dedicated road corridors Allcargo Logistics wants and maintenance charges. for last mile connectivity to build logistics parks at In addition, as per infra- and improving Customs ef- smart cities announced by PM lays structure project norms, the government. "We are ficiency can reduce time for foundation stone there is a provision for 20 exporting containers by five looking at rail corridors. per cent VGF from the days in the next 10 years, Wherever the dedicated rail- for highway government. way freight corridor passes saving `12,500 crore. through, there will be smart projects cities. If the industrial zones Medical equipment 120 Somalis plead are set up, we will look at hub near logistics parks. We will go guilty of piracy and examine whether it Visakhapatnam makes for strategic fit and Andhra Pradesh Govern- The Somali government whether it gives us the re- ment has expressed plans to has told an Indian court turn we want on our capital set up a medical equipment that close to 120 of its employment," said Prakash hub near Visakhapatnam. nationals undergoing trial Tulsiani, COO, Allcargo Prime Minister Narendra The proximity of ports in Mumbai intend to plead Logistics. Such infrastruc- Modi laid the foundation to the region will make it guilty to charges of piracy. ture projects will need the stone for three 341-km- easier to transport equip- The pirates want to submit government's support in long highway projects ment. He also invited a guilty plea in the hope terms of tax incentives, as costing `13,802 crore at foreign delegations along of expediting the trial. The these are capital-intensive Rajiv Gandhi Education with government of India men were arrested between projects and there is a City, Sonepat. The projects representatives to visit January and March in 2011 gestation period before the include Western Periph- Andhra Pradesh and zero in by a joint force from the In- returns start to come in. eral Expressway, Eastern on suitable locations.

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Seaways Group provides NVOCC services through its subsidiary Maxicon Container Line, leading NVOCC in Indian sub-continent and South East Asia . With an asset base of more than 17000 containers and serving more than 70 locations, the NVOCC focuses on high volume, high growth trade lanes in Middle East, South East Asia, Far East and the Indian Subcontinent.

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utilised for storage of paddy fulfillment for individuals T rial run for North-South and agricultural produces. and businesses and to corridor will open NABARD will provide 95 integrate the largely India-Myanmar- access to India per cent of the cost under unorganised logistics Thailand highway Warehousing Infrastructure process in India. If the North-South corridor, Fund as loan and the state Vamaship claims to The trial run for the India- which links North Europe government will bear the be the world’s first Myanmar-Thailand (IMT) trilateral highway connect- with South-West Asia, rest 5 per cent of the cost. integrated logistics ing the country with South- operates at full capacity, this The project will be com- platform facilitating east Asia is likely to begin will allow some European, pleted in three years. shipping through air, from December next year. Central Asian, Caucasus ocean and surface. It According to Vijay Chib- countries, as well as several has also pioneered a Cargo stuck at ICD ber, Union Road Transport regions of Russia to get drastic decrease in the and Highways Secretary, access to the Persian Gulf Birgunj is being turnaround time for "We are developing the and India. ocean freight pricing, dispatched protocol in advance and the reducing it from 48 hours "The North-South corridor agreement is expected to will allow intensifying the to just 7 seconds. be signed by last week of railway transportation be- March or the first week of tween Europe, South Asia April 2016. We hope that and Middle East. It will Trial run of cargo the trial run for IMT will significantly increase the between Kolkata commence in early Decem- income from local and tran- ber." The highway from sit railway transportation," and Agartala Moreh in Manipur to Mae said Javid Gurbanov, head Cargo imported from third Sot in Thailand via Myan- of Azerbaijan Railways. countries that had been mar will have three verticals The railway’s capacity is stuck at the ICD Birgunj – passenger cars, buses and estimated at 1.4 million since long due to the ongo- trucks. passengers and 5-7 million ing protest in the Tarai and metric tonnes of cargo per rising insecurity in Birgunj year. area have started being dispatched to their respec- India mulls tive destinations. It will take feasibility of Odisha govt to another one week to clear bridge to Sri construct 2,600 the goods stuck at ICD if A trial run of cargo loading of goods and cus- transport between Kolkata Lanka godowns toms clearance are done at and Agartala through India will carry out a feasi- a rapid pace. Security forces Dhaka, reducing the are escorting the cargo to bility study on a bridge link- distance by nearly two- ensure safe logistics. As on ing Rameswaram in Tamil thirds, has been flagged off November 1, the additional Nadu and Thalaimannar as part of the Bangladesh- cost being borne by Nepali in Sri Lanka. It will be con- Bhutan-India-Nepal (BBIN) importers due to the protest structed over the Palk Strait sub-regional initiative that connects the Bay of has exceeded `5 billion. for uninterrupted cargo Around 270 cargo contain- Bengal in the northeast with movement. The distance ers, 40,000 tonnes of bulk Palk Bay and the Gulf of between Kolkata and cargo and 92,000 tonnes of Mannar in the southwest. Agartala will be reduced break-bulk cargo have been However, at its narrowest Odisha cabinet has ap- from 1,550 km to 640 km stuck at the ICD. point, it is studded with a proved a proposal to con- and will be further reduced 30km chain of low islands struct more than 2,600 go- by another 150 km after and reef shoals collectively downs at a cost of `736.50 Integrated construction of a bridge called Adam's Bridge. One crore in 27 districts of the in Bangladesh. The BBIN of the Indian islands, state to create storage capac- logistics platform Motor Vehicles Agreement Rameswaram, is linked to ity for fertilizers and other Vamaship removes the need for the mainland by the 2-km agricultural inputs. The launched transshipment of cargo pamban road bridge. A godowns included 1,239 of at international borders proposal for providing road 100 MT capacity and 1,362 Vamaship, a technology- between the countries and and rail link bridging the of 300 MT capacity. 1,239 driven integrated logistics vehicles of each country divide across Palk Strait had godowns would be utilised platform, has been launched would run uninterrupted been submitted to the Asian for storage of fertilisers and in India with an aim to through these countries Development Bank, for a other agricultural inputs, provide the most cost- through designated pre-feasibility study and 1362 godowns would be effective, on-time shipment corridors. subsequent financing.

18 maritime gateway / december 2015 no construction is allowed Aurangabad, Nagpur and and is also constructing in this section. The area is Nashik, , additional berths with ports part of the port area noti- and Delhi. Some of the dedicated facilities for fied by MoEF in 2005 and preferred sectors include handling of containers. The LNG terminal is marked for port activities. FTWZ, light engineering, maiden container vessel MV project scrapped electronics, apparel, multi SSL Chennai called at the Detention charges services (IT/ITES and port, opening the gateway Indian consortium has healthcare) and renewable for container movement in scrapped plans for a would be waived, energy components. Kolhapur and peripheral $770-million liquefied says HTPL sector. Neighbouring regions natural gas (LNG) terminal like Ratnagiri, Chiplun, Himalayan Terminals Pvt Pipavav in the southern Indian port Mahad, Kolhapur, Satara, Ltd (HTPL) has decided to town of Mangalore, balking volume plunges Sangli, Solapur, Belgaum, waive the detention charges at the low capacity use of have major industrial base for the period September 20 a similar existing terminal for foundry, textile, sea-food, to October 29 for delay in in close proximity. The agro commodities etc. The clearance of goods from the consortium, comprising oil entire trade is presently ICD – a sigh of relief for marketer Bharat Petro- operating from JNPT, the importers whose cargoes leum Corporation Limited Mumbai. Jaigarh Port have been stuck at the ICD (BPCL), exploration and reduces distance by 200 kms Birgunj due to the Tarai production major ONGC for exporters and expects to protests. and Japan’s Mitsui, had Gujarat Pipavav Port attract container traffic of at recorded a 24 per cent year- lined up the investment to The decision was made least 2,000 teus per month. build an initial 3-million- over-year decline in its con- by HTPL in view of the tainer volumes during the tonne-a-year LNG terminal difficulties faced in Customs at Mangalore, which would second fiscal quarter. It was Visakhapatnam clearance by the cargoes later have been expanded the second straight quarter stuck at ICD Birgunj due to Port to install to a 5-million-tonne-a-year of declining throughput at the Tarai protests. With the VTMS terminal. the minor facility on India’s detention charges waived, west coast. The private Visakhapatnam Port is importers are expected to operator, also known as currently undergoing a JNP T on a revamp get relief to some extent as APMT Pipavav, handled modernisation and expan- extension plan the movement was turning 147,000 teu in the three sion plan which includes costlier with goods stuck at months through the end installation of VTMS from Kolkata Port for long and of September, down from Transas that will be inte- they were compelled to pay 194,000 teu in the same grated with the Port Opera- high demurrage charges quarter in 2014. tion System, X-band Radar, levied by the port authority. six CCTV cameras and an Importers who have already The APMT unit attributed AIS Base station. The main paid fees for 40-day period the negative performance VTS operator workstation will get refund soon. to “global trade slowdown, will be equipped with three realignment of shipping monitors to display marine JNPT floats tender services and intermodal traffic and a video from Eight villages spread- disruptions on the northern CCTV cameras. The second ing across more than 111 for setting up rail corridor due to heavy operator display unit will be hectares of land will have to rains earlier this year.” installed at the ERP unit. clear to make way for exten- industrial units sion of the Jawaharlal Ne- JNPT has floated a tender hru Port Trust (JNPT). The for invitation of EoI to JSW Jaigarh Port Elektrans receives land which comes under set up industrial units in handles its first Samudra Manthan the inter-tidal zone has been the upcoming smart and Award 2015 approved by the ministry of green port-based SEZ. The container vessel shipping for rehabilitation SEZ is spread across 277 Elektrans Shipping Pvt Ltd of residents whose land had hectare of land having a has bagged the prestigious been acquired 25 years ago processing area of 200.25 Samudra Manthan Award for development of JNPT. hectare. The proposed site in the non-vessel owning The land is adjacent to the is located in Uran Taluka common carrier category. port township, railway quar- of Maharashtra abutting The award recognises the ters, Customs quarters and SH-54 & NH4B. The site is JSW Jaigarh Port is company’s stellar achieve- Funde village. An inter-tidal strategically and logistically expanding by creating ment as the foremost Indian zone area is a Coastal Regu- well placed in proximity additional stackyard company in the marketing lation Zone-I area as per to major growth centres/ equipped with modern of containers (both exports CRZ notification 2011 and nodes like Mumbai, Pune, material handling systems and imports) in 2014-15.

december 2015 / maritime gateway 19 NEWS

carrying export cargoes. the joint development and Aug’15, 52 vessels in Sep’15 Kakinada The facility is exclusively operation of Jafrabad LNG and 58 vessels in Oct’ 15 Container Terminal for the handling of factory- Port project to be located in with a 16 per cent increase launched stuffed export containers Gujarat. Jafrabad LNG Port in volume year on year and arriving via road, bound for will be a 5-MTPA LNG an improved month-on- outgoing vessel calls at the receiving terminal, with one month throughput for the terminal, and is located at jettymoored Floating, Stor- last seven months. the entrance of the Dedicat- age and Regasification Unit ed Access Road leading into (FSRU). The two partners the terminal. The tractor- have the firm intention to trailer drivers will be able expand the terminal to 10 to get non- to park their trucks at the MTPA through the deploy- facility for a nominal sum, ment of a second FSRU. government Kakinada Container and upon completion of all EXMAR will contribute its railways status Terminal, a joint venture documentation and other vast experience in floating company of Kakinada standard verifications, will LNG solutions into the inte- Dhamra Port Company Ltd Infrastructure Holdings Pvt be allowed to proceed to the grated project management (DPCL) in Odisha will soon Ltd and Bothra Shipping terminal gates. team and will participate as get the status of 'non-gov- Services Pvt Ltd, has been equity partner in the LNG ernment railways,' for which formed to serve the trade on receiving terminal. it has signed a commercial the eastern part of India. It Paradip Port to agreement with the min- will have an initial annual soon handle 300 istry of railways at its east container handling capac- China becomes coast railway headquarters. ity of 200,000 teu and is mn tonnes of coal the largest DPCL, with help from the equipped with a 300-metre exporter to India Odisha government, under quay, mobile harbour cranes the agreement constructed and reach stackers. The port China's share in India's total 62.5 km of railway tracks, will particularly serve east imports has risen to 15.1 which was the longest ever India’s agricultural, seafood per cent so far in the current non-government railway and commodity hinterland, financial year (April-August system constructed by any which exports products like 2015). Between 2010-11 and private organisation. It will rice, sugar, maize, shrimps 2014-15, the country's share help DPCL to connect to the in India's import basket and paper products. Paradip Port is expected major portion of Bhadrak. grew rapidly from 11.8 per to handle nearly 300 mil- cent to 13.5 per cent. This lion tonnes of coal annu- NMPT promotes makes China the largest ex- Indian port ally soon when Mahanadi porter to India.The overall coastal shipping coalfield in Talcher Odisha companies to trade between the two coun- In order to encourage completes its expansion tries has steadily risen from invest in Colombo coastal shipping, New project, Shipping Minister $57.65 billion in 2011-12 to Mangalore Port has allowed Nitin Gadkari said. Indian project $72.3 billion in 2014-15. priority berthing facility Port Rail Corporation is The Indian government for coastal vessels. A berth implementing a `4,000-crore is keen to promote has been earmarked for this project to link Talcher with Vallarpadam participation of port purpose so that ships carry- Paradip Port under the port ICTT Exim traffic companies, private or state- ing coastal cargo need not connectivity project. Gad- owned, in the Colombo Port wait at the port for berthing. kari said the coal meant for improves Expansion Project (CPEP). The documentation process thermal plants in numerous John Keells Holdings, one for coastal cargo has also states both in the east and of the largest private sector been streamlined. The port west coast will be handled companies in Sri Lanka, has also introduced RoRo and coastal shipping will has sought help through service between Mangalore get a boost. Moving coal Indian high commission and Hazira to boost coastal by ship will reduce the cost there to identify a suitable shipping. of power by at least `1 per strategic investor from India unit. The export-import traffic to partner them in bidding APM Terminals for the East Terminal at India's first FSRU from Cochin, through the Mumbai opens ICTT has seen a steep rise Colombo Port, the largest terminal planned in the past 2-3 months. Val- and busiest in South Asia. new facility in Gujarat larpadam ICTT has shown CPEP involves building APM Terminals Mumbai steady positive growth for three container terminals has opened a new park- EXMAR has entered into the last seven consecutive (south, east and west) ing facility to provide easy a binding agreement with months and is on a high sequentially, with 2.4 million access for tractor trailers Swan Energy Limited for after handling 51 vessels in teu capacity.

20 maritime gateway / december 2015 sen, Managing Director prices, but raise domestic of Norge. Norway had prices and help bring down India to buy 10k exim exported 275 tonnes of government purchases at tonnes of soymeal salmon fish worth $4 mil- the support price. Accord- from China Iran to rescue lion to India in 2014. But it ing to Kavita Gupta, Textile of Indian rice eyes doubling its export of Commissioner, higher India, which was export- farmers salmon fish to India over demand from Bangladesh, ing soymeal to China next few years. India also Pakistan and Vietnam can until three years back, has needs to improve in terms offset poor demand from started importing it from of handling of import docu- China. In the 2014/15 sea- its northern neighbour as ment to get goods cleared in son Bangladesh surpassed global prices have dropped an expedite manner. China to become India's following a huge soybean top buyer of the fibre as the crop in Brazil and the US. Indo-Poland trade world's biggest consumer Feed makers are said to to reach $4 billion began cutting import quotas have contracted imports Rice farmers and mills in to stimulate demand for of about 10,000 tonnes of India are banking on Iran by 2020 domestic cotton. soymeal. Feed makers, who to end a two-year slump in Poland expects its trade have contracted to import prices. Iran’s decision to end volume with India to grow Govt extends from China, will be getting curbs on imports is set to to $4 billion by 2020 from duty incentives to soymeal at about $480 a boost demand for basmati $2 billion currently and is boost exports tonne (`31,394 a tonne) at rice and send its prices soar- encouraging Poland-based their doorstep while the ing. Exports to Iran may companies to expand Indian product will cost increase for the first time in collaboration with lndian them about `35,000 a tonne two years. companies in a host plus freight. After a surge of sectors like IT, coal, in soymeal production Basmati rice prices plunged food processing, power, by 46 per cent in the past more than 50 per cent in , defence, five years, China has been the past two years after Iran science and technology. aggressively exporting the cut purchases and Indian Poland is already India’s animal feed with 1.6 million farmers boosted planting. largest trading partner in tonnes estimated for the The easing of international Central Europe and Poland current year. trade sanctions on Iran sees The government has ex- imports more than it exports the country having access tended duty incentives to a to India and this trade to more supplies at a time large number of products, NALCO steps out when Thailand is looking deficit is increasing over the including textiles and elec- to dispose of its near-record years. India exports cotton, tronics, to increase competi- of India textiles, chemical products, tiveness of Indian exports state stockpiles. In its first overseas foray, vehicles and vessels, while and boost shipments. Under the state-run aluminium imports electro-mechanical the Merchandise Exports producer Nalco has lined appliances, mineral and from India Scheme (MEIS), Norway plans up a plan to invest $2.8 bil- chemical products, among the Commerce Ministry has lion to build a smelter and a doubling of other items. extended the duty benefits captive power unit in either to 110 new tariff lines or seafood exports Iran or Oman, depending Indian cotton products and increased rates on where it will get the fuel to India or country coverage or both exports to rise cheaper. The 5-lakh-tonne/ for existing 2,228 items. year smelter will be fed on Duty benefits at 2 per surplus alumina from its ex- cent, 3 per cent and 5 per isting and proposed Indian cent are provided depend- refineries and will cater to ing upon the product and the markets for value-added country. Global support has products, primarily from the been extended to products automobile industries, in Norway is hopeful of including textile items, South Asia, Southeast Asia, doubling its exports to India India, the world's biggest pharmaceuticals, project Europe and the US. The over the next few years. "To cotton producer, is likely goods, auto components, proposed smelter abroad facilitate this we have asked to export 6.8 million bales telecom, computer, electri- could make it competi- that the import duty of 30 in the 2015/16 season, up cal, electronics and railway tive against even Chinese per cent on seafood should 18 per cent from a year ago transport equipments. aluminium producers be completely removed by as demand from Asia is Earlier, benefits to these known for their lower costs, the Indian government," expected to improve. Higher items were provided to a enabled by captive power said Terje E Martinus- exports will cap global few countries. units.

december 2015 / maritime gateway 21 NEWS

Centre urges for BHEL bags nai for certification. New consul quick approvals of orders for The lab will help ad- general of Belgium dress issues of managing textile parks thermal power safety, quality and logistics in Mumbai projects throughout the supply Peter Steven Leo The central government chain. Most of the seafood HUYGHEBAERT is the will soon come out with exports to EU are rejected new Consul a modified Technol- for presence of antibiotic General of ogy Upgradation Fund residues or microbiological Belgium in Scheme (TUFS) to help contamination. Mumbai. the textile industry catalyse He holds investments in sectors that Shashi Kiran a Master generate employment and in Political exports. TUFS was intro- Shetty invests in Science and Commercial duced in 1999 to attract NanoHoldings LLC Engineering. His career in investments in the textiles Foreign Service started in and jute sector by offering a Bharat Heavy Electricals Shashi Kiran Shetty, Found- March 1998 and his recent 5 per cent interest reim- Limited (BHEL) secured er & Chairman of Avvashya deputations were as the bursement. orders, cumulatively valued group, has invested in Series Ambassador of Belgium at `4,614 crore, for setting D round of funding of the to the Republic of Côte Textile Minister Santosh US-based NanoHoldings Gangwar has urged state up two supercritical thermal d’Ivoire, Liberia, Sierra power projects involving LLC. This investment is Leone and Ghana. governments to expedite aimed at providing resourc- clearances required to set one unit each of 800 MW in Andhra Pradesh. The es to various NanoHoldings up textile parks which are subsidiaries to accelerate expected to attract an in- projects are 1 x 800 MW Dr Cochin Port offers Narla Tata Rao Thermal commercialisation. vestment of `30,000 crore. direct service to A total of 72 textile parks Power Station (Dr NTTPS) Stage-V of APGENCO and have been sanctioned under JS W to add port Far East 1 x 800 MW Sri Damoda- the scheme for integrated ram Sanjeevaiah Thermal and cement textile parks till now. Power Station (SDSTPS) capacity Stage-II, popularly known as Krishnapatnam Super- AP govt gives nod critical Thermal Power Project, of Andhra Pradesh for bauxite mining Power Development Com- The Andhra Pradesh pany Ltd. government has given an approval for bauxite mining in 1,212 hectares of forest Hi-tech testing lab The Port of Cochin will land in Visakhapatnam dis- at Kancharapalem now have a direct sailing to trict with certain conditions. the Far East as the Galex According to a Government The opening of a hi-tech service commenced the Order, the Principal Chief testing lab for seafood and Cochin call in their East Conservator of Forests has spices at Kancharapalem JSW Group plans to invest bound trip from November been accorded permission by German testing and cer- `4,000 crores to boost its 20. The service will be a to divert forest land in Chin- tification giant TUV SUD port and cement capacity big help to the exporters tapalli and Jerrila of Narsi- will boost exports from in the next two years. JSW from Pollachi, Dindigul patnam Forest Division in Andhra Pradesh, Odisha, Infrastructure Ltd plans to and surburbs who export Visakhapatnam for mining Chhattisgarh, and parts of almost double its ability to coir fibre and related lease for bauxite in favour West Bengal. For exporting handle cargo at its ports to products to destinations of Andhra Pradesh Mineral seafood to the United States 62 million tonnes, with a near intermediate ports Development Corpora- and the European Union, target to further increase like Ningbo and Chiwan. tion. The legal status of the stringent quality check and it to 200 million tonnes by The direct sailing ensures forest land being diverted certification by an accred- 2025, Seshagiri Rao, Group savings of four days of shall remain unchanged as ited agency of international Chief Financial Officer, transit time and savings in well as the compensatory repute is a prerequisite. For said. Cement capacity is overall cost of transport afforestation over non-forest this reason, the exporters estimated to increase to 17 and gives the much needed land in extent to the forest from the city used to send million tonnes in the next logistic competitiveness to land being diverted shall be their consignments to Kol- 24 months from 6 million the emerging EXIM sector raised. kata, Hyderabad or Chen- tonnes. of Pollachi.

22 maritime gateway / december 2015 mg poll DRY PORTS

How do you see the hinterland Improve connected to Ports? 4% connectivity and Infra 54% 42% Time and again the industry has voiced their concern about poor hinterland connectivity and infrastructure at dry ports Poor Average Good by Rakesh Oruganti Should stuffing and de-stuffing happen at the hinterland or at the ports?

connectivity is good which clearly implies the fact, that this is one of the pertinent issues need to be revamped for better maritime 46% 54% infrastructure. One of the other major concerns of the industry is whether stuffing and de- stuffing should happen at ports or at the factories. Fifty otivated by the four per cent of respondents felt that Hinterland Either way encouragement that MG it should happen in the hinterland Poll received in its debut rather than ports where as forty six No one selected option for stuffing and M de-stuffing at ports edition last month we are happy to per cent responded that it can take present you the next poll focused on place either at ports or at hinterland. the most persistent concerns of the No one opted for the third option. industry – hinterland connectivity, ICD’s and CFS’s play a pivotal stuffing & de-stuffing at hinterland/ role in decongesting the ports. When What is the major problem faced by CFSs/ICDs? ports and major issues at dry ports. we tried to find out what are the Hinterland connectivity occupies major issues that plague this sector, the top priority while deciding forty two per cent expressed that it location of a port and even for is Poor Infrastructure. Thirty five shipping lines while deciding to call per cent of the respondents reported 19% at a particular port. In spite of its that they have experienced delays significance, this aspect has failed in evacuation is a major concern to garner the required attention for them which is imposing huge 42% from governments. Major ports and charges to the users. Nineteen per private ports become inefficient cent responded less customs staff due to their inability to service their at dry ports is one of the major 35% hinterland because of the poor reasons for time sensitive cargo 4% connectivity. Ultimately users pay depending upon gateway ports for the price for the poor supply chain their EXIM cargo and meagre four issues. per cent responded that already dry In our survey, a combined ninety ports have more storage space than Poor Infrastructure Delays in evacuation six per cent responded saying that demand. If the main purpose of Less customs staff More storage space hinterland connectivity is either handling cargo through ICD’s and than demand poor or average. Only a meagre four CFS’s is not served, it severely affects per cent opined that the hinterland the whole value chain.

december 2015 / maritime gateway 23 c over story adani HAZIRA PORT

adani hazira port Another Ace in the Pack Hazira is one of the few ports where all the big three shipping lines – Maersk, MSC and CMA CGM – have made a bee line. With rich hinterland and cargo movement growing by the day, Hazira is on its way to occupy number two position among Adani ports by Deepika Amirapu

24 maritime gateway / december 2015 ot too far from Gujarat’s in 1998. Subsequently, as it aggressively glittering city of Surat where added Indian and overseas ports to its Nmercantile trade is known portfolio, the port at Dahej was set up to flourish with undiminished zeal, primarily to handle liquid and chemical lies Hazira, nestled in a quiet corner cargo before Hazira came up in 2012. surrounded by some of the biggest At the time the port was ready to names of Indian industry. Before the welcome vessels; five berths were dry, asphalt road leads to the port’s qualified to handle Panamax and gates, your gaze will fall upon Kribhco, Capesize vessels. In the first phase of the fertilizer manufacturer’s expansive development, the port developed two passage around which the express way container berths, three for handling turns to open in to a wider space. A bulk and break bulk cargo and the few hundred metres down the lane, liquid terminal. Being equipped to huge boards announce the presence of handle all forms of cargo, the port ’ and Larsen and receives large quantities of coal, rock Toubro’s manufacturing plant making phosphate, steel, gypsum, pet coke, petrochemicals and heavy engineering fertilisers and other liquid cargo at equipment for India and rest of the its terminals. “Our port is positioned world. Even as you wonder how many as an alternate to the Mumbai and tonnes of cargo they must be bringing Jawaharlal Nehru Ports where we can in and sending out every year, you are handle all forms of bulk, break bulk, already at the port’s turnstile waiting to container, liquid and project cargo,” be ushered into; allow yourself a first Capt Anil Kishore Singh, glimpse of the west-facing port and its the Chief Executive facilities. Officer of the port I expect to be frisked and asked for told Maritime Gateway. a list of documents validating my With over `3,000 crore purpose of visit, but without much ado, invested since inception in I’m let in to the port’s administrative constructing its facilities, the port is office. I’m told it’s not just visitors; embarking on an ambitious expansion even fully laden trucks are allowed plan readying another multipurpose entry as smoothly without much fuss berth and an additional liquid cargo if they have all their documentation terminal anticipating a huge jump sealed and stamped. This is perhaps in handling this form of cargo in one of the many reasons that the the coming year. By the end of the ’s ports dotting the Indian financial year 2016, HPPL would have peninsula are so sought after. The handled almost 17 million tonnes (mt) Hazira Port Private Limited was set of cargo powered by large amounts up much after the group’s first port of coal, rock phosphate and container Mundra came up in the Kutch district cargo. “Coal will occupy the top spot in the cargo pie chart,” Capt Singh says. Almost all of this coal is diverted to the parent firm Adani’s power companies that guzzle the black gold commodity to fire up the plants and provide electricity to India. While practically Hazira is as much an import port like most of India’s, some amount of exports of sugar and DOP fertilizer also take place. The expansion of the berths is being undertaken taking into consideration GUJARAT the increase in the consumption of petroleum and associated products in the country. Most of this will be ready by the first half of 2016. Once the second phase of the liquid terminal is Hazira Port completed, about 86 tankages with a holding capacity of 2,25,000 kilo litres shall be ready. Currently, about 83 tankages hold 96,000 KL of different varieties of chemicals.

december 2015 / maritime gateway 25 c over story adani HAZIRA PORT

Central Madhya Pradesh. Much of the soya bean processing firms in MP Increased containerisation in the Southern Gujarat belt source their requirements from the Hazira Port. Maharashtra’s green belt will certainly bolster greater movement of containers into areas are known to remain so and thrive because of the fertilizer imports and outside the port. Within 300 km of distance from the emanating from this port majorly. Also, the proximity to the sugar belt port, there is a lot of cargo waiting to be containerised. sweetens the deal for this Adani’s port than for the drier and desert like region But apart from this cargo, what keeps Hazira’s container where Mundra stands. terminals busy is the bunch of advantages that it offers to “Increased containerisation in the Southern Gujarat belt will certainly its customers, including longer dwell time, better pricing bolster greater movement of containers into and outside the port,” avers in terms of terminal handling charges and container another industry official who has tracked this port closely. Captain freight stations, allow containers to be repaired and Ramnath also tends to agree to this argument that within 300 km of empties to stay on the yard. distance from the port, there is a lot of cargo waiting to be containerised. “Almost 500- 600,000 teu of cargo can be boxed and bundled out,” he The strategic location of the port Hazira has been quick to score says. But apart from this cargo, what would perhaps explain this aggressive and catch up with its bigger peers keeps Hazira’s container terminals maginification. Hazira is enveloped by in the state despite being a late busy is the bunch of advantages that the other industrialised cities of Vapi, comer. “Needless to speak of liquid this port offers to its customers. “We Ankleshwar, Silvassa and cargo, the entire rock phosphate offer a longer dwell time, better pricing which are known for manufacturing and gypsum market has moved to in terms of terminal handling charges and processing large volumes of liquid Hazira from Kandla and Dahej,” and container freight stations, allow chemicals by hundreds of small and says Capt. Ramnath Vaidyanathan, containers for repair and empties to big manufacturers. The sleepy town of also an Adani official who looked stay on our yard compared to the Ankleshwar is known to meet more after Hazira previously and is now in neighboring ports that are choked than 60 per cent of India’s chemical charge of the firm’s Ennore terminal. and breathless for lack of space in requirements. Equally, Silvassa is All of this imported cargo moves to and around their terminals,” Capt. popular in making the plastic and Madhya Pradesh where a number of Singh says. He’s obviously referring ingredients required to make edible processing plants are located. The to the state-run JNPT located about plastic bottles for the country. The hinterland of the port for other bulk 120 nautical miles from Hazira that presence of this industry perhaps and agricultural products extends to faces congestion problems and a lot emboldens Hazira to expand its liquid Nothern Maharashtra, encompasses of cargo moves over to Hazira to be terminal. all of South Gujarat, Western and transported to different parts of the world quickly and for a better price. But even as one tends to think that JNPT’s loss is Hazira’s gain, the head of an international shipping line whose vessel calls at Hazira is quick to point out that shippers preferring this port directly too can save up to `5,000 to `6,000 by skipping JNPT or Pipavav. “Hazira is growing also on its own merit as it currently offers us shipping lines a good window to berth our vessels. With more than 3,800 ground slots, it has grown from handling about 8,000 teu two years ago to more than 30,000 teu presently,” the shipping official says. Once the customers are used to time bound cargo, they’ll go nowhere he adds. Hazira is one of the few ports where all the big three shipping lines – Maersk,

26 maritime gateway / december 2015 SWOT Analysis of the Port

Strengths Weaknesses Opportunities Threats

Handle Capesize vessels Absence of railway siding Scope for greater movement Upcoming port at Dahanu and divert cargo from JNPT, causing drop in cargo handling of project cargo given Kandla presence of windmill New terminal at JNPT to Poor sea conditions during operators jeopardize cargo transfers Low cargo handling losses part of the year posing navigational issues limiting Current industries expanding Prospects of container Efficient berthing operations, entry-exit windows operations increasing cargo terminal at Kandla Port streamlined functioning parcel size Presence of two bridges under Adequate infrastructure, yard construction hampering road Tapping large industry base at space and no congestion. movement of cargo Baroda-Dahej

Excellent road connectivity Completion of the Narmada reaching up to the port gate bridge to improve road cargo movement

MSC and CMA CGM – have made a said. But one area where the port can for the country, Hazira should project bee line to the port being assured of the bolster its performance significantly itself as the numero uno fertilizer volume of cargo connecting to Europe, is by increasing the number of cranes destination for India’s imports. The Asia, Americas and the Middle East. to handle cargo. Currently, the port is trade, however, has no complaints The Hazira terminal at the moment known to deploy two RMQCs doing about the port’s connectivity by road. hosts five weekly sailings and one about 85 moves per hour. This, the With the Bombay-Delhi highway (NH- fortnightly loop among the carriers. industry experts say can go up 100 or 8) reaching right up to its gate, the The service profile includes Maersk breach the figure if another crane is cargo gets a free way to almost every Line’s weekly ME3 linking India, the deployed. Once all the container berths destination it is intended to be sent. In Middle East and Europe. Another are ready, the port can handle up to 80 order to enable better truck movement, shipping line official who works for million tonnes of cargo in the next few the port is also constructing a parking one of the Big Three said, “There’s years. This will spur the purchase of facility for about 500 trucks close to its no delay whatsoever on the berthing more cranes, customers aver. complex so trucks can complete all the side except during the monsoon However, the only missing link documentation prior to entering the season. The port also maintains a shipping lines and users point is the port premises. very good communication channel absence of a rail siding. This, the port Industry experts foresee a lot of with us updating us on the schedule management says, shall be ready in potential for the port. This is because and window frequently.” Both these the next two years. Currently cargo the Adani Hazira Container Terminal officials MG spoke to pointed that the is brought on rail via the Kribhco rail more than doubled the number of port has been very accommodative in siding and is trucked from there to the container boxes handled to 132,994 entertaining requests from their lines port. “The port has to have in place teu from 61,505 teu during April- to address an ad hoc situation. Once the rail connectivity for it to attract September 2014. The chief executive when the management was informed more cargo. Then, it could possibly says Hazira could soon occupy the that the ground slots for the laden start weaning more boxes from Pipavav number two position among Adani’s boxes were clashing with the empties, as much of the cargo from this port ports if this performance continues. the management immediately cleared comes from the inland container “We always want to stay half a step the empties within 24 hours creating depots in the northern region. So, with ahead of the problem,” Capt. Singh space for the loaded containers. In a rail siding, Hazira’s reach can extend said. Coupled with this approach another instance, one of these lines up to the Northern hinterland,” the and a continued stellar performance, requested for a mid-sea clearance of shipping line official said. Experts also Hazira will be the next coveted cargo where a number of boxes had suggest that the port should push itself crest jewel in Adani’s crown after to unloaded from the vessel. This and market its ability to handle larger Mundra has almost walked away with request too had been accepted by the volumes of fertilizer cargo. Just as every award conceivable in the last port without a squirm, the liner head Kandla handles all of the timber trade few years.

december 2015 / maritime gateway 27 policy tariff

Tariff remains bone of contention The idea to deregulate tariff regime by re-bidding existing terminals is creating a lot of furore in the shipping industry by Ritu Gupta

subtle tug of war is going on investor sentiment, an option can be Payments in case of Political Event these days between the Union given to the existing concessionaire to (Political Force Majeure) in case Ashipping ministry (MoS) and migrate to deregulated environment. of Authority’s (Government / Port container and bulk terminal operators Furthermore, the existing Trust’s) default. Since termination of at government-run ports, as the concessionaire may also be given a Concession Agreement in this case government is mulling over the idea Right of First Refusal in the bidding would not fall in any of these two of replacing the Tariff Authority process,” says the Deloitte report categories, such Termination Payment for Major Ports (TAMP) with a made public by the MoS. The report would not be applicable. However, deregulated tariff regime via re-bidding further recommends that in case if any compensation to the existing of existing terminals. Though the the existing concessionaire doesn’t Concessionaire which is in excess authorities are yet to take a decision on emerge as the highest bidder or it of the compensation specified in the the matter, the idea itself has received doesn’t exercise its right of first refusal Concession Agreement for Authority’s heavy criticisms from the terminal to match quote from highest bidder, default can be questionable. In view operators. the project would have to be awarded of this, closure payment for existing The plan for a deregulated tariff to the highest bidder, i.e. to another Concessionaire can be replacement regime has been mooted in a report entity. In such a case the existing value of project assets, as estimated by the Deloitte Touche Tohmatsu concessionaire should be suitably by an independent agency, subject to a India Private Limited, which has compensated towards its investment cap of Termination Payment defined in proposed four options for possible in the project. A suitable indicator for the respective Concession Agreement migration to a deregulated tariff such compensation can be replacement for Authority’s Default. environment. However, the one value of the assets in the project, Other suggestions of Deloitte strongly recommended by it is where calculated by an independent agency. include abolition of TAMP and the government can use open bidding However, it is also to be noted that appointment of another competent for the market to determine revenue respective concession agreements also authority. It says that if, for certain share. “To address the aspect of have provisions relating to Termination reasons, some existing concessionaires

28 maritime gateway / december 2015 RINL is also exploring coastal shipping for movement of its finished goods ot its regional offices which are located in different parts of the country. For the appointment of an Intermodal Transportation Agency for Costal Movement, a composite global tender was called by the steel firm a month ago.

would not like to migrate to a deregulated environment, in such a case, through policy directive, the M any industry specialists worldwide have for long urged “government would need to appoint a competent authority, as per the to end the current bidding model for award of port provisions of respective concession agreements, to determine tariff.” The projects in India where revenue share is the variable. It study was commissioned by Indian Ports Association (IPA) on direction is felt that if revenue share was a fixed component and from the MoS to review the role and relevance of TAMP in the context of tariffs are made the variable for bidding, operations at the port sector in India and provide a way forward. Jawahar Lal Nehru Port major ports would have been able to cut costs and become Container Terminal, Nhava Sheva International Container Terminal more efficient. Pvt or NSICT (DP World Mumbai), APM Terminals or Gateway Terminals India (a JV between APM Terminals for contemplation of flexible tariff- bidding, operations at major ports and CONCOR), Singapore’s PSA fixing approach. Other industry would have been able to cut costs and International and JNPT’s Bharat players also agree with him. “Recent become more efficient. Currently, Mumbai Container Terminals Pvt will suggestions that businesses be re- TAMP fixes the upper limit of tariffs be some of the terminals impacted tendered is unfortunate and likely to for port services in consultation with if the study's recommendations are be seen as detrimental. The terminal potential bidders and then bidding is implemented. The Indian Private operators want to find a mutually carried out with revenue share as the Ports and Terminals Association acceptable solution which is beneficial criterion. To grab projects, bidders (IPPTA ), which represents private both for the economy agree to shell out unreasonably high ports and container and bulk terminal and the industry,” said amounts as revenue share – even 40-50 operators, has raised strong objections Julian Michael Bevis, per cent – and lose their ability to bring to the Deloitte recommendations. Senior Director, Group down tariffs and compete with private According to IPPTA, it is a matter Relations, South Asia, sector ports. of great concern for the industry, AP Moller Maersk. As a solution to this, Deloitte for trade and for India as a place to Many industry specialists says tariff should be deregulated, invest and do business in. R Kishore, worldwide have for long urged to end which will enhance competition, IPPTA’s president, in a letter sent to the current bidding model for award improve performance and business the MoS, has opposed the Deloitte of port projects in India where revenue orientation in the sector and would suggestion saying that the existing share is the variable. It is felt that if also encourage investors, and thus concession agreements do not provide revenue share was a fixed component the government may move towards for rebidding, however, there is room and tariffs are made the variable for market-based tariff determination. But

december 2015 / maritime gateway 29 policy tariff

the nuances of this broad suggestion the ministry came out with 2015 made a representation to the Ministry is where the contradictions come for guidelines for terminals operated and are hopeful it will be given due the industry. For instance, according by major ports. This results in four consideration and the matter will be to IPPTA, Deloitte recommends that different guidelines for terminals in resolved soon," says Bhattacharjee. if the present concessionaires covered the major port sector. For instance, According to IPPTA, it agrees with under the 2005 and 2008 guidelines JNPT’s five terminals are governed by the concept of revenue share being wish to migrate to the 2013 guidelines different guidelines. GTI/NSICT are used as a bid parameter. However, then their projects need to be rebid under 2005 guidelines, NSICT under it disagrees with the concept of and have laid out mechanism for 2008 guidelines, BMCTPL (4thCT) reference tariff being calculated and rebidding. "No consultation under 2013 guidelines and JNPCT pre-specified in the draft concession was held with IPPTA on under 2015 guidelines. Each of the agreement for determination of the this issue," says Capt. guidelines result in a different price quantum of the amount of revenue Ashok Bhattacharjee, for materially the same level of service share payable during the operations Secretary General of and completely vitiates the principle stage. The reason being as the market IPPTA. According to of a level playing field. The 2008 conditions and related factors which him, the fallout of this is either rebid guidelines and the 2013 guidelines result in determination of tariff to be or perish. "IPPTA does not agree were a result of the material and grave charged over the concession period with this approach as it results in a lacunae in the 2005 guidelines and the are determined by various factors rewriting of the PPP contracts entered 2008 guidelines respectively. Operators including competition, economic into between its members and the under the 2005 guidelines are climate, demand, level of service, respective port trusts. The bids were struggling and many of those whose draft, connectivity and evacuation. In won through an open and transparent terminals are just getting operational the spirit of true partnership, the risks system of bidding and the contracts under the 2008 guidelines are finding should be shared by both parties to the allow for migration which should how impractical the approach was agreement. have automatically taken place. This under those guidelines when fixing IPPTA further adds that it would ensure a level playing field, the upfront tariff," says Bhattacharjee. is necessary that the complete honouring of the signed contracts IPPTA is of the view that the move report should have been placed and in accordance with the provisions to rebid will result in an extremely on the website rather than just the of the Major Port Trust Act, 1963. negative message to the investor recommendations and way forward, Presently there is a lack of a level community and negate the various so that it could be verified whether the playing field which impacts interport initiatives to promote investment feedback of the stakeholders have been and intraport competition. Recently taken by the government. "We have accurately represented. Even as the industry is anxious about the final decision of the government, the MoS is yet to decide on the matter. CB Singh, adviser to the MoS, said, “We are holding inter ministerial consultations but nothing has been decided so far. Deloitte has just made a study with some suggestions, the government has not taken a decision on that.” Singh did not give a timeline for the final decision. J Krishnan, Chairman, Logistics Committee, Madras Chamber of Commerce and Industry, and a Deregulating tariff regime Objections raised by IPPTA trustee of the Chennai Port Trust, said that while tariffs may be market-driven, • The government can use open • The existing concession agreements performance standards must be first bidding for the market to determine do not provide for rebidding• set, audited independently and service revenue share. • Fix revenue share and make tariffs failures be matched by monetary relief • Existing concessionaire can migrate variable for bidding. to the users. Krishnan said the Indian to deregulated environment and port sector is yet to mature for total • Currently, TAMP fixes the upper limit have the option of Right of First of tariffs for port services and then deregulation of tariffs, which can be Refusal in the bidding process bidding is carried out with revenue market driven. Indeed, the coming • If he doesn’t meet the above options, share as the criterion. times will reveal what will be the the project is awarded to the highest outcome of this tug of war. Industry • Lack of level playing field: JNPT’s five bidder. experts hope that the final decision terminals are governed by different should be for the better, and not for guidelines making a bad situation more worse.

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flag vessels to carry local cargo from one Indian port to another. Such or similar laws are there in various other countries of the world, with the Partially intent to promote/protect interests of domestic shipping industry. Countries like the US, China, and Indonesia have absolute cabotage only their Relaxed own flagged ships are allowed for coastal cargo movement. he Indian government has "The government has decided to The government recently relaxed the cabotage law relax cabotage only for special vessels Tfor five years to allow certain such as Roll-On Roll-Off (Ro-Ro), makes amendments special foreign vessels like Ro-Ro Hybrid Ro-Ro, Ro-Ro cum Passenger, to facilitate transportation of cargo Pure Car Carriers, Pure Car and to cabotage law for between different ports along the Truck Carriers, LNG vessels and special vehicles to country's coastline. The development Over-Dimensional cargo or project comes in the wake of long standing cargo carriers for a period of five encourage coastal demand of the shipping industry years," said a spokesperson of the for relaxation of the cabotage law. Union shipping ministry. With this shipping Before this amendment, the cabotage relaxation, vessel operators will be provisions in the Indian Merchant allowed to bring foreign flagged vessels by Ritu Gupta Shipping Act did not allow foreign of this category to ply on the coastal

32 maritime gateway / december 2015 routes, he said. "Such special vessels are in short supply in the country but since they cater to specific class Wrong U turn? of cargo, their availability will make it possible to shift cargo movement The Union shipping relaxation in cabotage ports (non-transshipment for these commodities from road ministry is weighing policy is for ICTT to attract terminals) as well. One and rail to coastal shipping," he an option to convert cargo destined for Indian of the options being added. Availability of Ro-Ro vessels India’s first international ports which are presently considered is to have the is essential for the success of efforts container transshipment being transshipped at ICTT run as a gateway to develop coastal shipping and terminal (ICTT) at Colombo and other foreign facility and not as a Vallarpadam in Cochin ports. The relaxation in transshipment terminal. decongesting roads and railways. "As port into a gateway cabotage was subject to We are also examining an example, large automobile clusters facility. The terminal was review after three years. whether the relaxation exist at Manesar and around Chennai. made into an international According to the ministry of cabotage restriction Large numbers of cars are transported transshipment hub in sources, the relaxation in should be extended to the from north to south and vice-versa. It 2012, after the cabinet cabotage has not had any ICTT alone for a further is possible to shift major part of this had agreed to ease impact on ICTT. In 2014-15, period or grant it to other transportation to coastal shipping," cabotage policy by the ICTT Vallarpadam transshipment ports also said an industry expert. Not only allowing foreign registered handled 365,000 teu of such as the one planned would availability of Ro-Ro vessels vessels to ship export- which the transshipment at Vizhinjam in Kerala,” import (EXIM) containers decongest roads/railways, it would EXIM containers was only the ministry spokesman out or in through the 17,000 teu,” a spokesman said adding that no final also enable a green mode of transport ICTT and help it emerge for the ministry said. “This decision has been taken on reducing fuel intensity and also reduce as an international much of transshipment the matter. carbon emissions. "Any amendment transshipment hub. The EXIM containers are is a step in the right direction, even if primary objective of handled by other gateway it has small impact. The government needs to still do a lot more where amendment of cabotage provision is concerned," said Sharmila H Amin, Managing Director, cargo. The Indian Private Ports and trip. If foreign flagged ships are Bertling Logistics India Terminals Association (IPPTA) has allowed for coastal cargo movement, Pvt Ltd. asked the shipping ministry to allow overseas cargo ships can carry costal So far, the cabotage foreign lines to carry transshipment cargo and the issue of empty return policy in India allows cargo from one Indian port to another. can get addressed. Furthermore, over first preference to Indian Currently foreign lines are allowed the years the share of Indian ships flagships over cargo and foreign to load export cargo or unload in the carriage of India’s overseas ships. Cargo and foreign ships are import cargo at any Indian port, but trade is declining. From about 40 allowed only when no suitable Indian they cannot pick up an imported per cent in the late 1980s, it has flag vessel is available for the same. consignment for delivery to any other declined to about 11 per cent recently. Indian importers and exporters use Indian port or aggregate export cargo Furthermore, Indian ships are ageing, Colombo, Salalah, Singapore and from different ports to one Indian with the average age of the Indian Dubai hubs for shipments adding port. In the process, Indian ports are fleet increasing from 15 years in 1999 to their costs. Industry experts say losing the opportunity to become hub to about 17 years in 2012. Growth in relaxation in the cabotage policy is ports, pointed out the association. capacity of Indian flagged ships has expected to bring more trade to major IPPTA says it is seeking permission been lagging behind compared to the ports in India. At present about 60 per to allow foreign vessels to carry growth in cargo at Indian ports. The cent of India's exports and imports only customs sealed transshipment Indian shipping industry also faces containers are transshipped through containers bound for export from one hindrance in the form of multiple ports like Singapore and Colombo. Indian port to other. This will help taxes. Apart from the tonnage tax, This transshipment through ports foreign lines to aggregate export cargo which is to be paid on the basis of outside the country involves not only and in turn reduce the logistics cost for cargo carrying capacity of a ship, huge expenditure but also extra 7-10 Indian exporters. there are other taxes, which Indian days of transit time. Transshipment is According to some industry ship owners are required to pay. In fact, the shipment of goods or containers to players, there is limited capacity in this is also being cited as one of the an intermediate destination, and then the Indian shipping industry and thus reasons why international ship owners from there to yet another destination. relaxation on cabotage law is essential. are reluctant to register their ships in Of late, the anti-cabotage lobby Foreign flagged ships will not only India despite 100 per cent foreign direct has become stronger with large private bring the required capacity, but also investment (FDI) permitted through ports and foreign terminal operators competitiveness in prices and ease of the automatic route. The taxation joining hands with shippers and the planning in case of transshipment. hurdle is also cited as one of the government-owned ports. Shippers Coastal cargo movement has inherent reasons why foreign shipping and port operators feel the law is an issue of one directional traffic leading companies can offer more competitive impediment for the smooth flow of to ship coming back empty in return freight charges.

december 2015 / maritime gateway 33 exim

Are shipping costs exorbitant? Exporters protest about exorbitant extra charges being taken by shipping lines by Ritu Gupta

hipping companies and other annually towards such shipping taken by Sri Lanka and Bangladesh such agencies are collecting surcharges, terminal charges and ensure transparency and cap the Sexorbitant amounts as extra numerous other non-negotiable cost to what has been negotiated by charges, on top of the amounts charges which are primarily the shipper. Indian government can mentioned in the Bills of Lading, recovered by shipping lines and also easily plug this leakage by issue thereby causing a loss to exporters their nominated forwarders. Bill of of a simple notification," and also to the exchequer. These Lading is a document issued by a says Khalid Khan, allegations have been made by carrier, or its agent, to the shipper FIEO’s Western Region the Federation of Indian Export as a contract of carriage of goods. Chairman. According Organisations (FIEO). Indian FIEO says these issues have been to him, shipping exporters, already struggling due addressed by neighbouring countries companies levy and collect to a economical slump and tough like Sri Lanka and Bangladesh charges under multiple heads (one competition, say that omission to by issuing a simple notification exporter has counted 56 different restrict shipping costs stipulated on restricting the amounts that can be types of charges) and the Indian Bill of Lading implies that the exim collected besides those mentioned exim community is at their mercy as industry looses more than $2 billion on the Bill of Lading. "The decisions their cargo is withheld till all charges

34 maritime gateway / december 2015 claimed are paid. The charges for is facing huge imbalance in inbound of the balance sheets of the instance include terminal handling and outbound traffic. "We strongly shipping lines and those making the charge, washing charge, B/L issue object to the misleading remark on allegations will give a better picture charge, additional B/L charge, TAMP scale of charges, since TAMP of who is following clean business survey charge, container damage and by statute governs the tariff of major practices. All these allegations repair charge, container imbalance port trusts which has got nothing are baseless," said Captain Vivek charge, equipment maintenance to do with shipping lines’ tariff. Anand, President of charge, consolidation charge, service Moreover, trade dynamics of India Mumbai and Nhava- charge, custom clearance charge, with developed countries cannot Sheva Ship-Agents and port congestion surcharge. A be a topic of comparison, unless Association, and also press release by FIEO states that the level playing field is common the Director at NYK shipping lines on an average recover today. Further, with the presence of lines. a minimum of `5,000 per container so many container operators, the Apart from FIEO, the Synthetic handled at a container freight station Indian shipping scenario is highly & Rayon Textiles Export Promotion (CFS) or taken to the importers competitive and Indian shippers Council (SRTEPC) has also made factory for destuffing as damage are at advantage to negotiate their similar allegations. "Exporters are and repair charges, irrespective of price of shipping freight without any fleeced by the shipping companies. the condition of the container. This hassles," said Murthy. If we are able to save this so called results in additional income of more His explanations extortion charges imposed by the than `500 crore annually for the notwithstanding, it is true that shipping companies and their shipping lines. transaction cost at Indian ports for partners from our costing, we will Furthermore, shipping lines the industry is the most expensive in become competitive to a great extent brazenly do not adhere to an order the world. There is no mechanism in our pricing," says V Anil Kumar, of the Tariff Authority for Major to monitor the working of the executive director of SRTEPC. Ports (TAMP) which stipulated that service providers to ensure cost Adjoining ports like those in "no container detention charges effectiveness, transparency of tariffs, Sri Lanka, Bangladesh and Dubai are payable for a period of 5 days services and accountability. are cheaper by more than 40 per following the day the container "These allegations are being cent. Ironically, 70 per cent of reaches the nominated CFS of made by people who have no the container volumes handled the shipping lines". As per FIEO, understanding of the shipping at Colombo Port in Sri Lanka shipping lines recover container business. Before making allegations comprise Indian cargo, which on the shipping lines, they first detention charges from the day otherwise should be handled at of vessel arrival at a port. These need to assess their own business Indian ports. According to a study containers remain lying at the port practices which are reflective of by ASSOCHAM, shipping costs container yard and are not moved their allegations. Shipping lines are incurred by Indian exporters is to the CFS for clearance. "Despite international companies who abide twice as high as compared to those such happenings no action is by laws. The charges being taken of China and thrice of Singapore, initiated by any of the concerned are justified as per the standard ministries. In this scenario, it is practices. The FIEO officials should putting the country at a disadvantage difficult for the industry to meet sit across the table and then we in global trade. The study observed with the expectations of the Prime can argue point by point, rather that the high cost of logistics Minister of Ease of Doing Business than making allegations in a public could hit India's competitiveness. and Make in India," said Khan. He forum and misguiding the entire "Shipping a container from India avers that this has been a very long system. Their modus operandi costs close to $1,200 while from standing matter and the government is to put the shipping lines under China, it is in the range of $600 should now intervene. pressure and pocket all the money. and Singapore about $400," says Reacting to these allegations, They are trying to hoodwink the the ASSOCHAM study. Till some C S Murty, director general of entire trade. For instance their years back Sri Lanka faced a similar the Federation of Ship Agents charge about shipping lines taking situation, but from January 2014 the Association of India (Fedsai), a minimum of `5,000 per container country made it illegal for shipping said that the FIEO remarks are an as repair charges is baseless, as lines to collect terminal handling and attempt to malign the image of it is not repair but maintenance other charges. It is observed that this the shipping lines. Ships also face charges that is taken world over. provision led to reduction in freight various constraints, such as pre- Why should shipping lines pay for cost. Further, the industry proposes berthing detention, hefty storage and the maintenance of the containers, that the ministries should hold a berth hire charges, and go back as especially when all of them are meeting with the stakeholders to underutilised since the whole trade making huge losses? A comparison discuss this matter threadbare.

december 2015 / maritime gateway 35 ennore port RO RO Betting to become a Ro-Ro hub Ennore Port seemed to be striking the iron while it is hot. Along with the cabotage relaxation on costal Ro-Ro movement, the port has also introduced schemes that will incentivise car makers in and around the city to move even their local shipment via sea, hoping to make a good business by Mohammed Shareef MP

companies can make use of coastal movement for their domestic shipment. First we converted the earlier system of ad-valorem into unit basis and also in the rates we have introduced 50 per cent rebate and this would incentivise coastal movement of cars,” said M A Bhaskarachar, Chairman and Managing Director of Kamarajar Port Ltd. Kamarajar, the only union government – owned port that is run as a company (the other 11 are run as trusts), is offering a discount from 2012 in vessel-related charges (comprising port dues, berth hire charges and pilotage) to ships including car carriers calling at the port for picking cars for exports. “The board has taken this decision and we are planning to continue this scheme till March 31, 2016. We are hoping to get a huge share of business amaraj Port Ltd, the only union the city to move even their local by implementing these schemes and government-owned port, that shipment via sea. At present, cars Original Equipment Manufacturers Kis run as a company at Ennore sold locally are moved by road from (OEMs) would switch road transport near Chennai is all set to make use factories to the dealers. into coastal movement,” Bhaskarachar of the positive business environment, Only automobiles exported by said. which evolved with the government’s global automakers from their plants Under the new pricing scheme, recent decision on relaxation of in India are shipped on car carriers the port is charging `500 per unit for cabotage on Ro-Ro movement. With through ports such as Mundra, cars up to 1,600 cc, `1000 for cars the cabotage relaxation, the port Pipavav, Mumbai, Chennai and above 1600 cc and `2,000 for heavy has introduced schemes that will Kamarajar. “We have implemented vehicles. The cargo-related charges incentivise car makers in and around two schemes so that automobile for export cars are calculated on an

36 maritime gateway / december 2015 ad valorem basis depending on the value of the cars. Original equipment manufacturers (OEMs) had argued We have implemented two schemes so that automobile that levying cargo-related charges on ad valorem basis for coastal shipments companies can make use of coastal movement for their will not help in switching from road to sea and it was in that scenario, domestic shipment. First we converted the earlier system Kamaraj Port converted cargo-related charges for coastal movement of the of ad-valorem into unit basis and also in the rates we have cars into unit basis. Ad valorem rates for cargo-related introduced 50 per cent rebate and this would incentivize charges will not work out for coastal movement of cars and it is a welcome coastal movement of cars, said M A Bhaskarachar, move that the port changed it into unit basis, said Captain Vignesh executive chairman and managing director of Kamarajar Port Ltd. at NYK Auto Logistics (India) Pvt. Ltd, a unit of Japan’s NYK Group, one of the world’s top automotive ocean transporters and logistics firms. “Cargo-related charges have to be be any day better a solution. It would there is potential for transporting levied as fixed charges on a per unit decongest the road traffic, it would around 105,000 cars annually using basis in order to make it viable for reduce the carbon footprints and with specialized ships on the Gurgaon- the modal shift from road to sea. This GST in place, it would be cost effective Mundra-Cochin, Pune-Mumbai- will make it easier for the OEMs to also, provided every scheme is in Chennai and Pune-Mumbai-Cochin calculate the cost difference between favour of the shipper, he added. routes, according to the shipping road and coastal shipment. Good that According to logistics firms, at ministry. the port has done it, however we are present by road it would take seven Increased availability of these yet to venture into coastal movement. to eight days to transport the cars vessels is needed to meet the growing We are yet to ascertain several other from Chennai to up country cities coastal movement of goods. In March, aspects and once everything seemed to like Noida etc. and to Kolkata it the shipping ministry flagged off a scheme that gives incentives to cargo be viable for us we will try the coastal would take five to six days but with an uncongested port environment and owners, consignors and consignees shipping out” the NYK Auto Logistics hassle-free clearance, supported with when they transport certain identified executive said. friendly cargo charges coastal shipping bulk commodities, containerized cargo According to OEMs and would be the future economic and or automobiles on Indian vessels on auto logistics firms, along with environmental friendly logistic option local routes. incentivisation of the cargo charges, for moving vehicles to the countries The scheme also covers several other things are also needed dealers. transportation of vehicles wherein to be bettered. Port infrastructure, The factories of four passenger car cargo owners shall be eligible for customs related issues etc. needed to makers – Ford, Nissan, BMW and incentives of `300 per two-wheeler be improved in order to have a speedy Hyundai – are located in Chennai. vehicle, `600 per three-wheeler vehicle and hassle-free coastal movement. Toyota exports cars that are made in and `3,000 for other vehicles. At present, considering several its Bengaluru plant through Chennai These commodities have been glitches at the ports, coastal movement and Kamarajar (Ennore) ports. Truck identified on the basis of their low is not cost effective compared to road makers Daimler and Ashok Leyland levels of transportation through transport and it is time consuming, are also located in Chennai. coastal and inland waterways. says Captain Vignesh. “In the present In August, the government lifted Auto makers say that the incentive scenario, for example, via road, we curbs on foreign-registered, specialized scheme will take off only if the can ship the cars to Mumbai in four car-carrying ships to operate in Indian government removed the stipulation days and as it is single mode transport, waters for five years in a bid to help to use Indian registered ships for there are no hassles in reaching the shift movement of such cargo from coastal shipment. “The government cargo in this time whereas if we move roads and railways. has allowed foreign registered car the cargo via sea it would take at least The so-called cabotage law makes carriers to ply on local routes because seven days because coastal movement it mandatory to use Indian ships to such specialized Indian registered would be multimode of transport; first transport cargo between different ports ships are not available with Indian we have to move the cargo by road along the country’s coast. Foreign fleet owners. Hence, the condition to the port and there will be waiting ships are allowed to operate only to use Indian registered ships for time at the port and in the destination when Indian ships are not available, coastal movement of cars needs port also the same process has to be after obtaining a licence from India’s amendment to make the scheme followed,” said Vignesh. maritime regulator. a success,” said NYK Auto However considering all issues are While Indian fleet owners do Logistics executive quoted in favour, coastal movement would not run such specialized ships, above.

december 2015 / maritime gateway 37 CARGO RESERVATION INDIAN SHIPPING Is this workable? There are mixed responses on the proposed rule on cargo reservation to Indian flagged vessels. While Indian shipping firms are hailing the move, international shipping firms are crying foul by Mohammed Shareef MP

he union government’s proposed to foreign shipping firms from 2013- shelled out an estimated $57 billion rule that would require state- 2014, the move is expected to bring a last fiscal to foreign shipping lines. Towned importers of oil, coal, considerable amount of business back A major part of this freight outgo is steel and fertilizers to route at least to Indian shipping firms. According on account of oil imports. Out of the 50 per cent of their cargoes through to Indian shipping industry statistics, 172 million tonnes of crude imported local shippers is hailed by Indian in the early 1990s, Indian shipping last year, Indian tankers carried only shipping firms and also bunker and lines carried one-third of the country’s 16 per cent – a steep fall from 66 per shipbuilding markets. However, the cargo. Two decades later, their share cent in 1994 when the oil cargo was proposed rule is being taken with a has slumped to barely one-tenth, reserved for Indian bottoms. pinch of salt by a section of experts reflecting the poor growth of a “It is a pity that a country, which from the Indian shipping industry sector that is pivotal for the country’s has a cherished tradition of shipping and being criticised by international economic progress. and seafaring and is endowed with shipping companies, on the accounts While the volume of cargo grew more than 7,500 km of coastline, of denial of a free and fair market six-fold over the past 20 years, the dotted with 13 major ports and opened for everybody in the shipping domestic shipping fleet expanded at over 180 non-major ports, depends industry. a snail’s pace, just by one-and-a-half on foreign lines to carry bulk of its The proposed regulation, which times. As a result, 90 per cent of strategic oil cargo,” one of the Indian would see importers sign five-year India’s sea-borne cargo is handled by industry experts lamented. contracts with local shipping firms, overseas carriers, causing a huge drain While this has been the case, one is said to be part of a larger plan to on foreign exchange in the form of thing that remained unchanged is boost India's shipping sector. With freight payment. the shipowners’ demand for cargo India having paid around $57 billion Indian exporters and importers support. India followed a policy of

38 maritime gateway / december 2015 import on free-on-board and export on losses. Forty years ago when a similar cost-insurance-freight basis, to ensure policy only affected the industry that Indian ships carry the country’s Indian exporters and badly, according to Captain Dinesh cargo. However in the late 1980s, Gautama, President, export cargo was exempted from this importers shelled out Navakar Corporation. policy. “If you go back forty For import cargo, Indian lines around $57 billion last fiscal five years ago there was continue to enjoy the first right of to foreign ships. A major policy of this kind, i.e. refusal. Transchart, the centralised reservation of cargo, but agency in the Shipping Ministry, part of this is for oil imports. that only caused problem for the implements this for government- exporters itself. For the exporters owned cargo. However, over a period, Out of the 172 million he want a wider variety of choice, the volume of Transchart cargo frequency, he wants a wide choice of dwindled as many public sector tonnes of crude imported dropping the cargo to the places that undertakings opted out of the scheme. last year, Indian tankers he wants and this he can get when Till 2002, oil cargo was reserved everything is open and put him on a for Shipping Corporation of India carried only 16 per cent. level playing field. From a time where on a cost-plus freight basis. This he got a choice of 50 to 60 vessels was discontinued following the and when he is confined to only one dismantling of the administrative price that way the Indian shipping tonnage party he would become incompetent mechanism for petroleum products. will go up. Once cargo is available for in the industry,” says Captain Dinesh Oil companies are now free to make Indian flagged vessels, more and more Gautama. their own arrangements. shipping companies are going to flag The way to differentiate the impact With centralised charter system in India. of the proposed rule is describe by discarded and with the new policy of “It is in the proposal stage and Captain Gautama. Government of cargo reservation, country’s shipping with first right of refusal and with India is producing steel and private lines are hoping for a new beginning. cargo reservation, this is going to be companies are also producing steel. "There is no incentive in the the best policy intervention which One of the factors that go into the present shipping environment to buy would benefit Indian flagged prices of the coil is ocean freight rate. vessels. With the newly proposed vessels,” said Capt. While the private company is left with policy of reserving the cargo and a Anoop Sharma, CEO & varied choices of vessels and freight grant of a 5-year commitment will be Director, Essar Ports and rates available, Indian public sector good for the industry and provide a Logistics firm is left with a limited choice in its comfort level to the lenders," A source from the Indian hand and this would be huge taxing said Oil Corporation(IOC), commenting on the Indian firm in providing steel A K Gupta, Chairman on the possible new rules, said, "as of in competitive rates to the foreign SCI. now, the (Indian) fleet is not enough market. This would be the same case Apart from the to meet our requirements, but the in the import scenario where with this growth of Indian shipping shipping ministry has said companies proposal procuring of raw material companies, other ancillary industries will raise funds on the back of 5-year for Indian companies will have to be such as bunkering, ship repair and contracts to buy more vessels." in a confined market scenario while even shipbuilding is also expected Meanwhile, as domestic industry private companies would enjoy a free to grow with the new policy, when is expected to grow, international market environment. it is implemented. With the news of companies, which are said to have 1979 when they went for a long proposed reservation policy, shares of been seeing significant growth in term contract they suffered a lot the Indian firms are said to have risen business from India over the past freight rate set to a low rate, even by as much as 12 per cent. several years due to international firms' the operating company suffered "As more Indian ships start lower rates and quicker turnaround loss. “This intervention should not participating in the regular carriage times, are expected to lose out. have done in the first place because of Indian imports, other ancillary "Any increase in the reservation of we are going more open and going industries such as bunkering, ship cargo for national fleets is a cause of for a wider variety of open market repair and even shipbuilding concern because it reduces the volume every sector and this policy would will grow," said Anil of cargo available for free traders, only dampen shipping industry of the Devli, Chief Executive such as many Greek or Hong Kong country,” said Captain Gautama. of the Indian National shipowners," said an official from However, if the government, oil Shipowners' Association Indian branch of an international and other PSUs, and the shipping lines (INSA). shipping company jointly work out a strategy to expand Indian shipping majors like Essar Also for a section of other Indian the domestic fleet with the proposed is also hopeful of the proposed rule. shipping industry experts, the new policy change in place, this will create According to them, it’s going to move to bring in cargo reservation a win-win situation for all stakeholders benefit in a way that the cargo will be for Indian flagged vessels is a move in the long run, according Indian reserved for Indian flagged vessels and which the industry going to incur shipping industry experts.

december 2015 / maritime gateway 39 CARGO TEXTILEs R espite in coastal shipping High road transport costs have made the textile sector in Tamil Nadu uncompetitive not only in the domestic but also in the global market. The departure to coastal shipping as an economical mode of transport has helped the industry stay afloat by Mohammed Shareef MP

n a state of dire straits with hardly to acute power shortage and steep 2.75 million spindles, consumes only any government support even when increase in transport costs. The global around 15 lakh bales of cotton a Ithe industry is contributing more recession of 2008-2009 and the high year out of its annual production of than 14 per cent of country’s export volatility in cotton prices in 2010- over 100 lakh bales. To fill the gap in earnings, the predominantly cotton- 11 added to the woes. The various supply and demand, Tamil Nadu mills based textile industry in Tamil Nadu incentives offered by states like Gujarat, procure over 100 lakh bales of cotton is trying their own way, in bailing Maharashtra, Madhya Pradesh etc. from other states, especially from out from the crisis by reducing their in their textile policies, have made Gujarat and Maharashtra. logistics costs, diverting raw material the textile sector in Tamil Nadu With the steep increase in lorry sourcing by coastal shipping. uncompetitive in the global market. It freight, transportation of cotton by To begin with the industry has has incurred a loss of at least `15,000 road has become unviable. The current tried out sourcing a little per cent of crore in the last six months. In the last lorry freight fare for transporting their required cotton through coastal 10 years, more than 100 mills have cotton from Gujarat to Tamil Nadu movement from up country by entering closed down operations. is `865 per bale (of 170 kg). Indian an agreement with Indian shipping Dr. K Selvaraju, Secretary vessels charge `672 per bale for firms and Tuticorin Port. However this General, Southern India Mills’ transporting cotton from Gujarat to hasn’t moved to considerable changes Association (SIMA), said that Tamil Tamil Nadu, which is higher than the as countries’ vessels are not having Nadu produces only 5-6 lakh bales fare of `433 per bale for transporting a level playing field in operating at of cotton per year against its annual cotton from West Africa to Tamil Indian ports with several tariff issues, requirement of 120 lakh bales. At Nadu. Currently, mills are spending including bunker charges, compared to the same time, Gujarat, which has `85,000 to transport 100 bales of 170 their international counter parts. Tamil Nadu, a main hub for textile business on the global map, accounts for one-third of the textile business in the country. Textile mills in the state account for 44 per cent of the total spinning capacity of the country and 60 per cent of its yarn exports. Altogether, mills in the state earn total foreign exchange worth over `75,000 crore. The livelihood of cotton farmers all over the country, survival of the powerloom, handloom and garment segments and that of the Tirupur knitting and garmenting sectors, which account for 70 per cent of the total cotton knitted garments produced in the country, depend upon the competitiveness of textile mills in the state and Tirupur accounts for `22,000 crore of textiles export. The textile industry in Tamil Nadu started facing crisis since 2008 due

40 maritime gateway / december 2015 kg by lorry from Gujarat to Tamil Nadu, which works out to around `5.30 per kg, whereas China is able to T amil Nadu Gujarat transport 150 bales of cotton per 40 ft. container from Gujarat to Shanghai 5 to 6 100 at $100 to $350, using empty cargo Annual Cotton lakh lakh vessels returning in the same route. production Bales Bales Dr. Selvaraju said that, for the last four years, SIMA has been urging the 120 lakh 15 lakh government directly and also through Annual requirement Bales Bales the Confederation of Indian Textile Industry (CITI) and the Cotton Textiles Export Promotion Council (Texprocil) to relax the Cabotage Rule and permit Cost of moving bales from Gujarat to Tamil Nadu foreign flag vessels to transport cotton and textile goods in EXIM container from the Gujarat port to either Tuticorin or Cochin port, so that the freight charge could be reduced by 50 per cent. The appeal to exempt cabotage on foreign vessels was vehemently opposed by the Indian shipping firms. A single 40 feet container can carry However, they were ready to work out Cost of moving 100 bales of 170Kg 170 bales at a cost of `1.20 in moving the raw material for textiles each is ` to ` lakh lakh to ` lakh industry with a considerable rate. 86,500 1 1.30 SIMA and INSA agreed for an understanding to make domestic foreign shipping company, together pertaining to restriction on the number coastal shipping cost effective, as with strict norms for coastal shipping, of moves in ports (Tuticorin) and relaxation of the Cabotage Rule would were the root causes for the higher other port-related issues, which could affect the Indian shipping industry. cost of transportation for shippers. be an impediment to the success of Accordingly, both SIMA and As decided, a joint memorandum the joint efforts, would also need an INSA members had a series of was sent to the Minister for Shipping intervention of the Shipping Ministry. meetings at Mumbai and Coimbatore and the Minister of State for Textiles SIMA supports the INSA demand to and fully realised the problems faced. seeking certain concessions and remove such restrictions so that greater It was learnt that certain local issues relaxation in the forthcoming Budget efficiencies are achieved at the port, faced by the Indian shippers, such as for Indian shippers. The ministers which can translate into better logistics duty on bunkers consumed and other were also urged to provide duty-free services for the SIMA members. taxes which are not applicable on a bunkers for Indian flag vessels for SIMA and INSA have jointly carrying cotton and textile products on appealed to the Centre to take a Indian coasts. favourable decision to make cost- With deliberation made with effective transportation of cotton and INSA, the textiles industry ventured textile goods possible among Gujarat, into coastal movement in sourcing the Maharahstra, Tamil Nadu, Andhra cotton. Though initially it was very Pradesh and Telangana, the hubs little quantity, last year the industry for cotton and cotton textile goods sourced around 10 lakh bales of manufacturing, to sustain their global cotton of the total requirement of competitiveness. their cotton, which is around 12,000 At least bunker charges should be teu in terms of container units. This made equal to what foreign vessels financial year, the industry is planning are enjoying. A level playing field in to make it to 30 lakhs of bales sourced terms of tariffs should be provided by coastal movement, which would for coastal shipping. Government be around 36,000 teu of cotton to be should exempt bunker charges and sourced. Over the period, the industry also seafarer taxes and concerned wanted to move almost 80 per cent state governments should exempt of their cotton sourcing via coastal sales taxes also because in all of these shipping, provided, the government there is no parity when it compares to bringing a level playing ground for the foreign flagged vessels. When China movement in terms of bunker charges, is carrying our cotton for 50 paisa per seafarer taxes etc., said Selvaraju. kg, we are carrying it for 5 to 6 rupees According to SIMA the issues per kilogram.

december 2015 / maritime gateway 41 CONCEPT FREIGHT VILLAGE

huge movement of cargo necessitating strengthening of intermodal transport links and augmenting transport capacity. Secondly, the opening of the Railways to FDI, will bring in FDI into Freight Villages. The concept of Freight Villages could be incorporated into the concept of freight corridor development (East & West). The development of freight villages as a part of corridor development would mark a paradigm shift in India’s approach to transport planning as it will cut down Solution to logistic both costs of transportation and transit time. A large tract of land would be required to set woes? it up, hitherto a difficult These Freight Villages once setup near seaports, railway stumbling block. The proposed changes in the hubs and highways will ensure faster movement of Land Acquisition Act would now make it easier containerised and breakbulk cargo to the hinterland to acquire land for public purpose. by Vijay Kurup In his Budget Speech, the Union Finance Minister Arun Jaitley had announced he roads in the facilities which are co- proximity would ensure that the PPP mode of suburban areas of any located and coordinated faster evacuation of the infrastructure development metropolitan city are for synergies; cargo to the hinterland has to be revitalised. T An opportunity here for crammed with loaded and 2) An intermodal terminal destinations. The shared empty trucks and trailers located near container access could also extend to Freight Villages in India either waiting to transload, storage, handling areas other facilities, equipment to be developed on a PPP or waiting for permit for and warehouses linked and common user services. model. Its management and entry into the city or are to rail to reduce cargo The centralised governance structure should stranded due to congestion handling costs and time management and ownership be similar to a landlord at the ports. All this gives and reduce the use of structure would have the model of Port. Besides, the rise to disorganised parking roads for containers; responsibility for planning public sector should also be and avoidable congestion 3) A facility with an access the long-term investment responsible for establishing on the roadways. What if to shared facilities, and growth as well as the corporate governance and there is a land earmarked equipment and services; short-term maintenance of administrative arrangements not just for parking but for a 4) A centralised the village infrastructure. for the village, including host of transport and logistic management and In India however no those related to quality facilities? It would not only ownership structure such facilities exist as yet. control, safety, and greatly reduce congestion for long-term planning, A Freight Village would risk and environmental on the roads, but also investment, governance, have ‘all the convenience of management. improve cargo movement environmental shopping under one roof.’ The Public sector dry and clearance of shipments. management and other Would this be an opportune port owners (CONCOR ASSOCHAM has proposed issues. time to launch the concept and CWC) enjoy a huge to the Centre for the creation The Freight Village, of Freight Village in advantage of having land of a Freight Village which by its definition would be India? ASSOCHAM available for use. The State would cater to such facilities. located near a seaport, firmly believes so for agency could also provide A Freight Village can a rail hub and highway. several reasons. The land on a long-term lease have the following features: This would ensure faster Indian economy is back on on a nominal basis. Will 1) A localised cluster of movement of containerised higher growth trajectory this concept and model be transport and logistics and breakbulk cargo. This which would generate successful?

42 maritime gateway / december 2015 export coffee

hough the domestic consumption of coffee is on the rise in India Twith a rise of coffee culture and mushrooming coffee chains such as Barista, Café Coffee Day and Starbucks, country’s production and export of coffee sees a miniscule growth. The demand of domestic consumption is increasing at a 7 per cent annual growth rate, whereas the export is seeing less than 4 per cent growth year-on-year. According to Coffee Board estimates, the coffee production is estimated to grow to 3.5 lakh tonnes this year, compared with 3.27 lakh tonnes in last financial year. Whereas, country’s domestic consumption is pegged at around 1 lakh metric tonnes a year. Reports say consumption of coffee in non-traditional areas such as Maharashtra and Delhi is growing by 43 per cent, while the traditional markets such as Tamil Nadu, Kerala S tagnant for long and Karnataka are witnessing a growth of 2.5 per cent a year. In spite of being the sixth largest coffee producer Despite the rising domestic consumption, coffee exports in in the world, India contributes only 4 per cent India remain close to the production to global exports. India's contribution to the volume. “It’s because India is seeing a good growth in the re-exports global market can be improved with suitable segment, which involves importing of green coffee, roasting and processing government policies in the country and re-export the value- added or instant coffee to different by Itishree Samal destinations,” according to Dr. DR Babu Reddy, Deputy Director (Market Research), Coffee Board. The share of half times to 423,270 ha in 214-15 are shortage of labour, saline and old value-added coffee in the overall coffee from 92,523 ha in 1950-51; similarly coffee trees, method of cultivation etc. exports has increased from 4 per cent productivity has improved by four Export outlook in 2001 to 36 per cent last year; India times to 959 kg/ha from from 22 kg/ Currently, India exports to more imported 72,000-MT of green coffee ha during the same period. Globally, than 100 countries with major for value-added variety last year. India ranks third in robusta coffee next destinations including EU, Turkey, At present, India ranks sixth to Vietnam and Brazil, and fourth Russia, US, Canada, Japan etc. among coffee producing nations in Arabica variety next to Brazil, Exports have remained stagnant, globally and contributes only 4 per Honduras and Guatemala. but there is an increase in value of cent in the global coffee export. Though there has been growth in shipments, which has risen to `5,142 What’s hindering the production? production in last five years, which crore in 2014-15, compared to `4,920 Over the years, Indian coffee grew at 4 per cent, it has not impacted crore in last fiscal. production has increased 17 folds much in the overall production In order to make Indian coffee to reach 327,000 tonnes in 2014-15, volume. Prior to that, the industry competitive in global markets, from 18,893 tonnes 65 years ago. suffered with stagnant production the government has provisions of With 70 per cent share in production, between the years 2000-2007. incentives to ship to US, New Zealand, Karnataka leads in production as The production has been more or Canada, Japan, South Korea, Finland, well as area of cultivation, whereas less stagnant due to several factors. Norway and Australia, which involves 21 per cent of production comes First and foremost is the uncertain high shipping charges. For instance, from Kerala, 6-7 per cent from Tamil climatic condition in India. While though US is the largest coffee Nadu and remaining share is from other coffee growing nations have a consuming country in the world, the Araku Valley region in Andhra predictable weather, India suffers from India exports less than 1 per cent of its Pradesh, Koraput in Odisha and from fluctuation in weather condition such exports to US. Also, the government north-eastern states. The area under as extreme heat and extreme rain. is taking up measures to attract global cultivation has also increased four and Other issues that affect the industry buyers and boost exports.

december 2015 / maritime gateway 43 q & A L eena Nair, Chairman Coffee Board

F uture smells good Rising value added exports and domestic consumption signals good growth to the otherwise competitive industry by Itishree Samal Despite India being the seventh largest coffee producing nations in the world, it contributes only 4 per cent in the global coffee. Country’s coffee export is seeing a good growth year-on-year, especially the exports of value-added, instant coffee. The share of value-added coffee exports in the overall exports increased from mere 4 per cent in 1991 to 36 per cent last year, while the export of green coffee remained more or less same.

How is the current Indian coffee is exporting close to 3 lakh MT every 75 per cent. India exports green coffee industry placed? What’s your outlook year. The export of value added variety to EU, while Russia and CIS countries for the industry? of instant coffee is also on the rise. On mainly import value-added instant We are positive about the industry, the domestic front as well, demand and coffee. At present, the top importing we expect to touch an all-time high consumption have increased with the countries include Italy (25 per cent), record in production to 3.55 lakh rise in coffee culture. At present, India Germany, Russia, Belgium and metric tonnes for FY15-16. Coffee consumes about 1 lakh MT of coffee Turkey. Though traditional importers crisis was felt all over the world during every year. have remained same over the years, the years 2000- 2004, but from 2006 Which are the major exporting Turkey has emerged as a key importer onwards, global prices started to markets for Indian coffee? of Indian coffee in the recent years, pick up with the improved scenario We exported to 105 countries in mainly in the instant coffee segment. globally. During the last five years, the 2013-14 and to 108 countries last year. Demand from European markets country has been seeing good growth European Union is our major exporting reduced because of the economic in production as well as exports. On destination comprising 52-55 per cent slowdown. Has it affected India’s export-front, India used to export an of the total exports, and EU and CIS exports? average of 2 lakh MT (metric tonnes), (Commonwealth of Independent Coffee does not fall under “essential while during the last five years India States) countries put together comprises commodity”, so the demand is

44 maritime gateway / december 2015 not changing despite the changing economic scenario in short-term period. However, currency fluctuations BRAZIL impact the pricing. Many countries 35.0% COLOMBIA currencies have been depreciated, COTE DIVOIRE which has impacted the international pricing of coffee. 9.5% “Re-exports” is a growing 2.9% Global coffee segment. How has been the growth of production - 2014 the value-added and speciality-coffee? Coffee exports in India consist of VIETNAM both exports of Indian coffee as well eTHIOPIA re-exports (green coffee is imported, 20.0% used for instant coffee preparation, then sold back to global markets). 4.2% Contribution of re-exports (instant or value-added coffee exports) in overall exports is growing year-on-year; it grew INDONESIA from 4 per cent in 1991-91 to 36 per MEXICO cent (Around 1 lakh MT in volume) last year. Though import duty is 100 4.8% per cent to import coffee to India, 3.4% INDIA 4.0% however duty-free import is allowed under the government clause to import green coffee, value-add and then re- Korea, Finland and Norway. Board 4 per cent. Seeing the current trend, it export instant coffee. This is leading to also conducts targeted international is difficult to increase its share further. a growth in re-export segment, which campaigns in key markets and brand India has several limitations including has further growth potential in future. building efforts for promoting Indian less production area. The specialty coffees constituted for coffee. Our production is mainly confined about 1 per cent of total exports which What are the other initiatives to traditional coffee growing states – have increased to 5 per cent during to improve coffee production and Karnataka, Kerala and Tamil Nadu 1991-92 to 2014-15. This shift in share increase exports volume? which produces more than 98 per of exports from dominant green coffee By understanding the constraints in cent of its total production, while beans to strong speciality / value- production, the Board is encouraging rest is coming from newly developed added coffees is primarily due to the through several developmental regions such as Araku Valley in recognition of India as producer of schemes, mainly for re-plantation, Andhra Pradesh, Koraput in Odisha high quality coffees in the international water augmentation, quality and few north eastern states. Also, market. upgradation etc. Generally, the unlike major coffee producing nations, Which are the major markets for plants have become old and senile in India has different climatic conditions, this re-exports category? traditional coffee growing areas. To production methods (Indian coffee Importers with “re-exports” improve yields, the board is helping is grown under shades), etc. While purpose mainly look for low-cost coffee in re-plantation. The Board also has India has typical dry and wet climatic geographies to import green coffee. schemes for mechanisation in order to conditions, other coffee producing Majority of the imports are coming tackle the issues of labour shortage. nations have continuous rainfall from Vietnam and Indonesia. On the exports-front, the Board is throughout the year. Still Coffee Board While US is the largest coffee incentivising exporters at the rate of `2 of India is making efforts for expansion consuming country in the world; it per kg for export of high value green of coffee growing areas not only in meets most of its demand from Brazil coffee to far off destinations. It is also non-traditional areas but also in the and Columbia. What initiatives the providing `3 per kg for export of value- traditional areas. Board is taking to make Indian coffee added coffee in retail consumer pack What other challenges faced by the viable for such far away destinations? with “India Brand” logo to improve Indian coffee industry? US is closer to the major coffee Indian brand. Productivity also gets hampered producing nations such as Brazil and Is there any scope to increase due to continuous dry spell or heavy Columbia, so it sources mainly from Indian exports? rain as Indian coffee is grown under Latin American countries. Though Globally around 80 countries shade. Apart from uncertain climatic India exports 55 per cent of its total produce coffee, while most of the conditions, the industry faces with exports to EU countries, its exports to countries contribute less than 1 per shortage of labour, volatility in US is less than 1 per cent. The far away cent in global share. Largest producer international market prices, etc. But shipping distance is a major concern Brazil contributes 35 per cent, while due to rising coffee consumption for many exporters. The Board is the second largest player Vietnam in the country, the coffee growers incentivising exporters to export to far- contributes 20 per cent. Though India are protected from fluctuating off destinations such as US, Canada, is the sixth largest coffee producer and international prices due to rising Australia, Japan, New Zealand, South exporter in the world, its share is only domestic demand.

december 2015 / maritime gateway 45 q&A R aMESH MahapATRA, president Utkal Chamber of Commerce & Industry ‘Odisha is seeing a 20% growth in exports’ Stable government and new proactive industrial policy make this state join the growth race by Itishree Samal

Odisha is rising on the development map, with a 9 per cent growth in gross state domestic product, which is higher than the country GDP growth of 7 per cent. The state government has also unveiled Industrial Policy Resolution (IPR) 2015, that aims at ushering new investments in the manufacturing sector and make Odisha an investment destination for both domestic and international players. According to Directorate of Export Promotion and Marketing (DEPM) data, exports of goods from Odisha zoomed 44.22 per cent in 2013-14 to `17,661 crore, compared to `12,246 crore in the previous financial year, mainly on accounts of increased mineral exports which surged 97.62 per cent to `6,227 crore in FY13-14 compared to previous year’s `3,151 crore.

How do you define the current and several policy hurdles. In is seeing a 15-20 per cent growth industrial scenario in Odisha? September this year, it has announced year-on-year in exports at a time when The overall industrial and a new industrial policy, which aims to the overall country’s export is seeing manufacturing environment of the attract investments across sectors such a slump. The state recorded `18,000 state has improved in the recent as food processing, exports, MSME, crore in exports in last financial year. years. The state has recorded 9 per software, manufacturing etc. More than 30 per cent of the exports cent growth in gross state domestic How has been the growth in consist of metallurgic products, product, which is higher than the exports and imports? Which are the while other exporting goods include country’s average. Though we still lag major EXIM commodities? software, engineering products, sea behind few states in terms of industrial Imports are not substantial in foods etc. Sea food exports have production, we are hopeful we will Odisha, apart from coal. We may see doubled in 2013-14 to `1,800 crore soon join the race with the current imports of oil once the Paradip refinery from `900 crore in previous year. aggressive growth. We can say the project of Indian Oil Corporation Manufacturing-wise, where does current industrial scenario of Odisha is (IOC) is commissioned by next year. Odisha stand on the national map? very positive. The IOCL refinery is expected to In India, you will find more In addition to that, the state has produce 5.97 million tonnes of diesel, industrial development in western and a stable government which has been 3.4 million tonnes of petrol, 1.45 northern parts of the country. While ruling since last 15 years, which is million tonnes of kerosene/ATF western India has rich manufacturing an added advantage to the industry. (Aviation Turbine Fuel), 5,36,000 base, northern India is mainly big in Ensuring to improve the economic tonnes of LPG, 1,24,000 tonnes of the MSME sector. Though Odisha sentiments of the state, the government Naphtha and 3,35,000 tonnes of has been neglected so far, it is now has been taking several proactive Sulphur. slowly catching up in manufacturing measures in curtailing the bottlenecks In contrast to imports, the state and industrial development. According

46 maritime gateway / december 2015 to a recent World Bank study, Odisha ranks seventh among Indian states in terms of attracting investments to the Odisha exports on the rise state in manufacturing. Gujarat and In 2013-14, Odisha `2,306 crore of software, respectively in exports. Andhra Pradesh ranks first and second exported `6,308 crore `0.64 crore of handloom Kalinganagar is respectively in the list. However, the of metallurgical goods, items and 0.26 crore being developed as a state government is ambitious to put `866 crore of engineering, of handicraft products. National Investment Odisha among the top three in the next chemical and allied Textile and pharmaceutical Manufacturing Zone two to three years. products, `1,943 crore also contributed `10 Which are the major industries? of marine products, crore and `0.92 crore, The state has huge potential for large scale industries in ferrochrome, face several bottlenecks. The current Ferro alloys, steel, aluminum, power Is UCCI taking up any initiatives rail, road and air connectivity is not up plants etc. With the changing mindset to combat this issue? to the mark compared to other states; and entrepreneurship, the state is UCCI, along with other industry same is the case of alternative mode of slowly catching up. Once the state will bodies such as CII, constantly transportation such as waterways. have the large industries, it will create in discussions with the industry At present, road is the most way for many small and medium and takes up the issues to higher preferred mode of transportation ancillary units. authorities. We are now scouting to keeping in mind the logistics cost. Jharsuguda and Kalinganagar are improve the means of transportation. Though there is good rail connectivity growing as the major industrial hubs Once more transportation options are between southern and eastern parts in the state. How these two zones are available, the industry will be more (that connects Chennai to Kolkata), shaping up? price competitive. not all towns and cities of the state Nobody was heard of Among the existing ports in the are connected by rail. So, it becomes Kalinganagar a decade back, but now state, which one is more preferred by it has thrived as a major industrial hub expensive when cargo is transported the business community? on the east coast. Under the National by both rail and road. The rail The state has three ports – Paradip, Manufacturing Policy, Kalinganagar connectivity needs to be improved. Dhamra and Gopalpur Port. The is being developed as a National Also, work is in progress to Gopalpur Port operation has been Investment Manufacturing Zone develop national waterways at key stalled due to the cyclone last year. (NIMZ). The region is emerging as a places. Currently, dredging work is Of the remaining two, connectivity major industrial hub with more than going on river Brahmani to connect is not adequate to Dhamra Port. It eight steel majors such as Tata Steel, Kalinganagar with Dhamra Port. is connected with single lane road. NINL, Jindal, VISA and MESCO Plans are there to connect Paradip and On the other hand, Paradip Port is having set up their manufacturing Dhamra Port with major industrial well connected by both rail and road, facilities. The zone has immense zones through waterways. The so it is widely used by the business export potential in the coming years. Kalinganagar-Dhamra Port stretch community here. The port has good Among the projects at would involve movement of vessels infrastructure for bulk cargo. Most of Kalinganagar, Tata Steel is gearing along with cargo. A temporary the containerised cargo of the state up to commission the first phase of terminal is being constructed at Erada goes to Vizag and Haldia Port. its proposed six million tonne per in Jajpur district with vessel berthing, Which neighbouring ports the annum (mtpa) capacity steel plant on loading and unloading facilities. exporters are using? November 18, 2018, the company’s Few industries are facing issues Both Haldia and Vizag Port are second steel mill after 10 mtpa in getting the raw material on time situated in close proximity; distance capacity plant at Jamshedpur, this due to lack of efficient transportation from Bhubaneswar to Vizag is 441 km, month. The first phase will have 3 infrastructure in the state. What are while distance from Bhubaneswar to mtpa capacity. Similarly, Neelachal the other difficulties faced by the Kolkata is 447 km. Most of the sea Ispat Nigam Limited (NINL), a joint industry? food exports happen through Vizag venture steel company promoted High logistics cost still remains Port as the vessel calling is more at by trading firm MMTC and the a concern. Though the diesel price Vizag. Industries closer to West Bengal government of Odisha, is also one of has reduced in recent times, the prefer Haldia Port. the largest producer and exporter of transporters have not reduced their Is the government planning to pig iron with 1.1 mtpa capacity in the prices. They have formed a cartel and set up any new ports or expand its first phase, while the second phase will are not ready to reduce the logistics maritime infrastructure? have 5 million tonne capacity. costs. The state government had earlier The Jharsuguda industrial This apart, the current road proposed for 12 ports across the coastal belt mainly has power plants and infrastructure remains another regions. Of which, the government aluminum companies. concern for the industry. The state is considering setting up ports at Which is the most preferred mode government is planning to connect Bahabalpur in Balasore district, of transportation for cargo? Kalinganagar with both the ports Chudamani in Bhadrak district, We are not well placed in terms with six-lane roads. At present, it is Astarang in Puri district and at Palur in of infrastructure and connectivity and connected with two-lane road. Ganjam district.

december 2015 / maritime gateway 47 profile women in shipping

But that should not mean, Nafeesa is an all-business woman. The humble and thoroughly professional Nafeesa successfully juggles a demanding Nafeesa sails her professional life with personal space. A homemaker at heart, she is happy that both these spheres overlap in her way to success life as she mentors her two daughters, Hard-pressed into running the family-owned Ghazalah Moloobhoy and Tehzeeb Moloobhoy, recently married, in the business, Nafeesa Moloobhoy, Managing trade. Partner of A.S. Moloobhoy & Sons, sailed True to her adventurous self, she has many plans chalked out for her through all odds and successfully anchored company in the next five years. "I herself as an entrepreneur to reckon with in want our company to go public in the next five years and be the first marine the marine industry. Lack of a formal degree service companies to be listed in the or diploma did not deter her to foray into a stock exchange." There is a proposal to expand internationally by opening male bastion. a branch in Dubai, apart from starting by Reshmi Chakravarthy a marine-related IT vertical by setting up BPO facilities to repair electronic shipboard equipment. Plans are afoot to launch a state- of-the-art training centre for the offshore industry, offering Bosiet and Huet courses, apart from lifeboat management, certified by Opito, in collaboration with MTC who are pioneers in the field. The company also has a sizeable market share in the sale and supply of pyrotechnics. Ask who inspires her the most and pat comes the reply, Chanda Kochhar, the MD and CEO of ICICI Bank, whom she knows personally and admires every facet of her personality. "Kochhar is not outstanding only in the professional “ t was a man's world but is no "My husband inherited the front, she also is an affectionate longer. More women will dive into company from his father. My mother and an homemaker. Above all, the oceans of opportunity and children, are the fourth generation to she looks petite. She is my muse," says I Nafeesa. prove their mettle," asserts Nafeesa handle the 1905-established ancestral Moloobhoy, who calls the shots at the business house," she says, with a A torchbearer to the world-class century-old company. proud grin on her face. ship supplier company, Nafeesa's Travelling down the memory Under her able administration, main focus is customer satisfaction lane, Moloobhoy recollects why she Moloobhoys successfully secured the and in the same breath, she also had to venture into the business. all-India dealership of Furuno Inc., a makes every employee feel they are "My husband, Adil Moloobhoy, Japanese electronics company whose working for their own family. The had to retire early due to ill health main products are marine electronics, staff have their own guest house and I had no choice but to take over including radar systems, fish finders and enjoy going to picnics together. the company to ensure that it was and navigational instruments. “It put After a hectic schedule, Nafeesa too business as usual at Moloobhoys." us firmly in the navigation business unwinds by seeing good movies, going Yes, you can feel the resolve behind and allied services,” she informs. Last for massages at spas, indulging in the words. It was in 1960s that year, A.S. Moloobhoys, after spending facials at salons. our company shifted focus from more than a century in Mazagaon, Nafeesa aims to corporatise the ship breaking and ship chandling relocated to an eco-friendly office, trade and get due recognition for to specialise in safety products for Marathon Future-X in Lower Parel, it, just like the film industry. We, at the marine industry, she recalls. Mumbai. Maritime Gateway, wish success in Recently, the company has ventured Her sheer determination and all her endeavours and will sure be into providing Type Specific ECDIS dedication reflects in placing the there to support her in the incredible training for aspiring mariners. right value system at Moloobhoys. journey.

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looking

bA quicka reviewck of major events that happened by Omer Ahmed Siddiqui

The past eleven months have not brought many cheers to the global maritime sector that witnessed a continued slump in world trade. However, the Indian industry guided by Prime Minister Narendra Modi’s formula of port-led development has witnessed capacity expansion at various ports, new ICDs and CFSs cropping up and development of logistics infrastructure.

Multi-product SEZ at JNPT: The Financial limits of major ports an ICD by Concor. It will serve the Union shipping ministry has approved enhanced: The government has Baddi- Barotiwala-Nalagarh hub. `468 crore for the development of enhanced the financial limits and also Container terminal at Kakinada: basic infrastructure for a multi-product streamlined the powers exercisable PSA International Pte Ltd is setting SEZ at JNPT, expected to be fully by major port trusts. The areas up a container loading facility at functional by 2018. covered include the powers to execute Kakinada Port. PSA is said to have Revised policy for stevedoring contracts and deposit works, take signed a MoU with Kakinada Seaports and shore-handling: The Shipping temporary loans or overdrafts, incur Ltd in this regard. Ministry will sell permits to stevedores capital expenditure, sanction works, DP World Nhava Sheva and shore-handling agents to compound or compromise claims, inaugurates NSIGT: The 330- undertake cargo handling operations writing off losses. metre terminal adds 800,000 teu in from the non-mechanised berths of Tuna Tekra bulk terminal at capacity to the region and is able to government-owned ports through Kandla commissioned: APSEZ has accommodate some of the largest auctions on a revenueshare basis for a commissioned a bulk terminal at vessels calling at the Jawaharlal Nehru period of three years. Tuna Tekra, Kandla Port, with an Port. Private ports to change cargo annual handling capacity of over 20 New projects at Paradip Port profile: The government is allowing million tonnes. The project is expected Trust: Union Minister for Road private ports to set up container to benefit the states of Gujarat, Transport, Highways and Shipping, terminals to change their cargo profile Rajasthan, Haryana, Punjab and Nitin Gadkari inaugurated projects either permanently or as a stop-gap Madhya Pradesh. worth `269 crore at Paradip Port. measure to deal with circumstances Bharat Mumbai container These include an oil jetty of 10 million that have rendered their facilities idle. terminal at JNPT: Prime Minister tonnes capacity, draught enhancement New port at Sagar Island: Kolkata Narendra Modi laid the foundation in the central dock and MCB to 14.5 Port Trust has formed a joint venture stone for the container terminal which metres. with the West Bengal government to will more than double the capacity of Coastal shipping bill: The set up a new port at Sagar Island in JNPT in next two years. Bangladesh cabinet and the Indian South 24 Parganas district. The port Dry port at Baddi: Baddi in cabinet chaired by Prime Minister will cost `11,900 crore and a SPV has Himachal Pradesh got the state’s first Narendra Modi approved proposal for been formed for this purpose. dry port with the inauguration of coastal shipping.

50 maritime gateway / december 2015 Ministry of shipping acquires required for import and export of of land has been allocated for the ISO Certificate: The Ministry of goods to three documents each. project. Road Transport and Highways has Merchant Shipping Bill 2015: Senior IRS officer acquired ISO 9001:2008 certificate for The Union Cabinet approves Deepak Shetty monitoring, planning, development introduction of the Merchant Shipping appointed and maintenance of highway (Amendment) Bill 2015, in line Director General of infrastructure. with a global convention, to protect Shipping. Cabotage partially relaxed: The environment and human health from government has relaxed cabotage law ballast water and sediments used in for five years to allow certain special ships. foreign vessels like Ro-Ro, Ro-Ro Bhiwandi to be made logistics hub: cum Passenger, ODC, project cargo Bhiwandi town in Thane district Ki-tack Lim vessels, to facilitate transportation of is being made into a logistics and elected as IMO cargo between different ports along the godown hub. 2,200 hectares land has Secretary-General country's coastline. been earmarked for the project. Singapore expands Pasir Panjang PSUs to plan logistics: Developing inland waterways: Terminal Phases 3 and 4: The port The government has approved MoU signed by IWAI with the expansion will help to cope with decentralisation of existing chartering government of Odisha, Paradip Port mega-ships and alliance complexities arrangements. PSUs can make their and Dhamra Port Company Ltd to by increasing the overall capacity of own arrangements of bulk cargo develop commercially viable stretches Singapore's Port to 50 million teu by movement without having to route the of National Waterway-5 end of 2017. requirements through the Ministry of Jal Marg Vikas project started: Malaysian Flag approves IRClass: Shipping. Work started on the ‘Jal Marg Vikas' The Maritime Administration of Amendment to the Merchant (National Waterway-1) project, which Malaysia has authorised IRClass Shipping Act: The Merchant Shipping envisages developing a fairway of to act as a ‘Recognised Security (second) Amendment Bill, 2013 has 1,620 km between Allahabad and Organisation’ towards verification been passed in Rajya Sabha to amend Haldia stretch with a $3.5 million and approval of ship security the Merchant Shipping Act to enable funding. plans and issuance/ endorsement India to accede to a global convention Online permissions for ODC of International Ship Security that exempts Indian vessels on cargo: The Road Transport and Certificates for ships operating under international voyages from inspection Highways Ministry has decided Malaysian Flag Administration. and aimed at improving the working to grant online permissions for Suez Canal expansion: Suez Canal condition of seafarers. movement of over dimensional and expanded by deepening and widening Excise duty on bunker relaxed over weight cargo. the existing canal and developing a for Indian ships: In order to promote Incentivising modal shift of new parallel canal which is about 22 movement of cargo through coastal cargo: The Union Ministry of miles long, at a cost of $8 billion. waters, the government has exempted Shipping has initiated a scheme to Cargo train from China to Customs and excise duty on the use of incentivise shippers who move their Europe: A cargo train service between bunker fuels by Indian ships. cargo through coastal routes and China's famous commodity hub Yiwu Coastal cargo service on west inland waterways. and Madrid, Spain completed its coast: Transport Corporation of Container yard near Nanjangud: maiden trip on the 13,000-km long India Ltd launched its cargo container Concor is establishing an inland route. shipping service from , container yard at Kadakola near Bangladesh offers two SEZs Gujarat to Kochi, Kerala. Nanjangud which will give a boost to to India: Bangladesh has offered Documents required for EXIM exports from Mysore and help local to establish two SEZ for Indian reduced to 3: The Government has industries in moving freight to ports, companies in Mongla and Bheramara. reduced the mandatory documents saving on cost and time. Fifteen acres Panama Canal expansion: The expansion doubles the capacity of the waterway, allowing the Canal to handle the larger freighters crucial to efficient global trade. The waterway will be able to handle 97 per cent of the world’s vessels in the container segment Tianjin blast: Two massive explosions at a warehouse that stored flammable chemicals in the port of Tianjin, northern China, have killed more than a hundred people, left hundreds more injured while causing massive damage to the cargo stored there and to areas surrounding it.

december 2015 / maritime gateway 51 q2 results

Profit plunges in Q2

Gujarat Pipavav port – Q2, FY 2016 profits decline Allcargo posts `1,468 crore in revenue Net profit declined 40.6 per cent to `53.10 crore for the second quarter ended 30 September, as compared to `89.52 crore for the corresponding period in the previous year. Low sales and higher expenses are cited as the reasons for the decline in profits. Net sales during the quarter declined to `140.42 crore from `157.15 crore in the year-ago period. Total expenses increased to `95.42 crore for the quarter as against `90.58 crore in the corresponding period.

Total revenue from operations for Allcargo was Adani Ports Q2 profit up 16 per cent `1,468.1 crore for the quarter ended September APSEZ reported 16 per cent 30, 2015, almost similar to `1,462.5 crore for increase in its net profit to `667 the corresponding previous period. Multimodal crore for the September quarter, Transport Operations clocked total volumes of as compared to `573.52 crore 1,17,574 teu for the quarter, as against 1,08,874 for the same period during the teu for the corresponding previous period, an previous fiscal year. Total expenses increase of 8 per cent. The total revenue from during the quarter rose to `912.84 the operations for the quarter was `1,232 crore crore from `840.11 crore a year- as against `1,250 crore for the corresponding ago period. Consolidated cargo previous period. handled during the quarter was 36 CFS/ICD operations clocked total volumes million tonne, an increase of 4 per of 77,027 teu for the quarter, as against 75,398 cent, over corresponding period teu for the corresponding previous period, last year. an increase of 2 per cent. Total revenue from these operations for the quarter was `112 crore, as against `101 crore for the corresponding Essar Ports Q2 FY16 net profit up 9 per cent previous period, an increase of 11per cent. Essar Ports has reported 9 per cent jump in Q2 FY’16 net profit to Project & Engineering Solutions earned a `104.5 crore on a Y-O-Y basis. The revenue of `138 crore as against `128 crore for port’s revenue also increased by 8 per the corresponding previous period, an increase cent Y-o-Y to `470.3 crore. The port of 8 per cent. recorded cargo movement of 20.64 MMT during the quarter, as against Profit plunges at Gateway Distriparks 17.70 MMT during the corresponding period in the previous year. Revenue Gateway Distriparks recorded a sharp decline for the quarter pegged at `470.3 crore, in net profit in the second fiscal quarter through an increase of 8 per cent against `435.3 the end of September, hit by slowing container crore in Q2FY’15. volumes. The company made a consolidated net income of `29.65 crore (about $4.6 million) Essar shipping records net loss of `76 crore during July to September, down 38 per cent from Essar Shipping posted a net loss of `76 crore for the quarter, as `47.81 crore ($7.4 million) a year earlier. Total compared to a loss of `43.9 crore posted for the corresponding period income from operations for the second quarter last year. Total Income during the quarter stood at `414.6 crore. fell 11 per cent year-over-year to `261 crore. Second-quarter operating profit was down 24 SCI reports eight-fold jump in profits for Q2, FY 16 percent to `43.7 crore from `57.7 crore for the Shipping Corporation of India (SCI) reported an eight-fold increase in same period last year. Quarterly income from its net profit to `161.21 crore in the Q2 of FY16, guided by reduction container freight station division was down 8 in prices as well as changes in depreciation policies. Revenue came per cent from a year earlier to `82 crore. Rail in majorly from the tanker business, there has been a huge decline in logistics segment booked a revenue increase of the dry bulk earnings, even in the liner earnings. Q3 will be on same 4 per cent to `179 crore in the second quarter lines as Q2 if the crude prices and demand remain the same, said AK from `172 crore during July-September 2014. Gupta, CMD, SCI. Profit margins are expected to remain at 28-29 per Gateway’s net income in the first fiscal half cent level in the Q3. (April to September) plunged 43 per cent from As compared to Q2 of last year, about `144 crore is the benefit in a year earlier to `49.5 crore, on revenue that fell bunker and about `50 crore gained due to the depreciation policies. 8.3 per cent year-over-year to `525 crore.

52 maritime gateway / december 2015 REPORT ungoacs Sustainable logistics Logistics form the life line of global trade. To ensure it stays sustainable, the UN has come up with certain goals shared by the World Ocean Council, The International Railway Association and The International Road Transport Union

he United Nations has to promote the continued economic three pillars: innovation, incentives and recently adopted Sustainable sustainability of shipping by infrastructure. The strategy encourages Development Goals (SDGs) T encouraging the cost benefit analysis governments to provide real business intended to guide global efforts of any new environmental or safety incentives to expedite the development to alleviate poverty and promote measures proposed by the industry’s and penetration of innovative sustainable development from 2015 to regulators. technologies and best practices, as well 2030. Contributing to these goals in as adequate infrastructure to eliminate their own way are The World Ocean Safety and environmental bottlenecks, missing links and the Council (WOC), The International standards The IMO International Safety resulting congestion. Road Transport Union (IRU) and The Management (ISM) Code, developed International Railway Association The International Railway with complete inputs from ICS (UIC) representing respective modes Association (UIC) and implemented worldwide from UIC counts 240 members across of logistics and transport. 2002, contains mandatory standards five continents, including railway WOC has been consistently for both the internal and external companies, infrastructure managers, participating in monitoring and audits of shipping companies’ safety rail-related transport operators reporting on these SDG process for the management systems. Companies and research institutes. The UIC ocean business community. The WOC and ships have to demonstrate full Environment, Energy & Sustainability and its efforts on ocean sustainable compliance with the Code to receive (EES) Platform manages five expert development are featured in “Scaling a license to operate from their flag. networks (Energy & CO , Emissions, Up Sustainability Collaboration: 2 Moreover, the Code is implemented Sustainable Mobility, Noise and Contributions of Business Associations by the majority of shipping companies Sustainable Land Use) and a and Sector Initiatives To Sustainable by reference to “ICS Guidelines portfolio of projects focusing on the Development.” Abstracts from the on the Application of the ISM development of best practices. report pertaining to the shipping and Code”. ICS promotes the shipping In logistics sector have been compiled Advocacy and awareness: industry’s continuous improvement 2009 UIC organised the Train to below: of its environmental performance – a Copenhagen in the context of the About 90 per cent of world trade concept central to the ISM Code. United Nations Climate Change is carried by sea. The commercial negotiations in Copenhagen at viability of shipping is thus central The International Road Transport COP15. This Climate Express was to the broader goal of sustainable Union (IRU) IRU is an international non- an unprecedented special train that development and underpins the governmental organization aims to delivered a symbolic message from industry’s ability to deliver investments promote the sustainable transport of Kyoto, as well as transporting key in environmental and social persons and goods via road networks. delegates from Brussels to Copenhagen improvements. International Chamber The 3i strategy which IRU adopts by low carbon sustainable rail of Shipping (ICS) is, therefore, keen promotes sustainable transport through transport.

december 2015 / maritime gateway 53 Ship Breaking environment

N o silver lining Government's plans to amend ship breaking code may not help the environs by Ritu Gupta

here is yet some more bad news have died in the past 20 years in do is to undertake the amendment in store for the Indian ship accidents in Gujarat's Alang, the of the Ship Breaking Code 2013 Tbreaking yards. Even though world’s largest beach stretch for ship- which was finalised by the Inter the ministry is proposing changes to breaking. Some 3,500 mostly migrant Ministerial Committee on Ship amend India's ship breaking code of and unskilled workers operate there. Breaking pursuant to the Supreme 2013, environmentalists allege that Amidst protest from many Court's order of September 2007," the proposed changes are mere paper European countries, the ministry had avers Krishna. According to him, the tiger, and will not do much to protect thought of making amendments to ship breaking matter was transferred the environs. If the allegations of the curb such harmful practices. "The from Ministry of Steel to Ministry environmentalists are true, then it proposed changes however may of Shipping in August 2014 despite would indeed be tragic as many old not have the desired affects," says protest from environmental groups. tankers, cruise liners and cargo vessels Gopal Krishna of ToxicsWatch It is quite strange that Ship Breaking are broken by hundreds of unskilled Alliance. "Since the constitution of Scrap Committee has modified its workers using simple tools such as Ship Breaking Scrap Committee on composition to include representatives blowtorches on pristine beaches in July 22, 2014, it had two meetings of the ship breaking industry but India. Chemicals leak into the ocean on November, 2014 and March 10, representatives from environmental when the tide comes in. Apart from 2015. This committee was modified and occupational health groups and environmental damages, this practice on February 17, 2015. Its minutes trade unions have not been included also leads to loss of human life as were not uploaded on the website. It as yet despite Supreme Court's order. per the Mumbai-based Tata Institute is quite bizarre that one of the first Environmentalists allege that of Social Sciences, some 470 workers few things the committee plans to the Indian government seems rather

54 maritime gateway / december 2015 Environmentalists' concerns

• Amendment to India's ship breaking code of 2013 is a paper tiger aver environmentalists

• Vessels broken down by about 3500 unskilled workers • Rules on disposing of hazardous waste Ship breakers' voice • harmful chemicals leak into the oceans such as asbestos are generally lax. • Shipowners can make up to • Indian ship breakers see the amendment as a ploy to fill • About workers have died in 470 per tonne of steel empty European yards the past 20 years at Alang $500 • Fewer than 4 per cent of all • Ship breaking transferred from Ministry from an Indian yard, as compared retired ocean-going ships passed of Steel to Ministry of Shipping in through European facilities in to in China and just August 2014 despite protest from $300 2014. environmental groups. $150 in Europe • Concerns about poor safety and • Ship Breaking Scrap Committee has • European shipping groups such as environmental standards in India modified its composition to include are misplaced. representatives of the ship breaking Denmark’s Maersk and Germany’s industry but representatives from Hapag-Lloyd have adopted policies environmental and occupational health to recycle only at facilities that meet groups and trade unions have not been international environmental standards. included

unmoved by the potential hazards of China and just $150 in Europe. "It's stricter privacy laws, not in attempts the business, allege environmental a good compromise. The price Asia to escape safety rules of Europe. organisations. For instance, the Modi yards pay is significantly higher than According to Krishna, the government has not done much other yards," a Greek shipowner who global shipping companies have about the tax on ships imported to has recycled vessels in Bangladesh, turned places like Alang into the be broken up. This last budget also was quoted as saying by international most polluted beach in the world seems to have brought with it very media. "The cash you get is usually with the complicity of Gujarat and little of material concern to the ship- around one-fourth of the price of a central governments. The only hope, recycling sector, noted Dubai-based new ship. Most owners use the money according to activists like Krishna, cash buyer Global Marketing Systems for a down payment," he added. The is shipowners' corporate social (GMS). In fact prices of recycled Indian shipyard owners see the new responsibility. European shipping steel rebounded from $340/ldt to rules as a ploy to fill empty yards groups such as Denmark’s Maersk more than $360/ldt post budget. "A in Europe. Fewer than 4 per cent of and Germany’s Hapag-Lloyd have cursory review appears to show no all retired ocean-going ships passed adopted policies to recycle only at significant increases on taxes to the through European facilities in 2014. facilities that meet international ship recycling sector, but conversely, Haiderali G Meghani, Director of environmental standards. At the no new duties on any freshly imported International Steel Corporation, a Galloo ship recycling yard in Chinese billets seem to have been large ship recycling firm based in Belgium – the largest in Europe – the imposed so far," said GMS. Alang, said concerns about poor volume of ships recycled has more Indeed the state of affairs where safety and environmental standards than quadrupled over the past 10 ship breaking is concerned is a in India are misplaced. "We have years to about 35,000 tonnes of sad one. For shipowners it is very already been trying to improve our steel per year. It employs only economical to break their ships at processes and will continue to take about 30 staff, with most of the a South Asian facility, as rules on steps to improve safety and protect the heavy work done by machines. disposing of hazardous waste such as environment," says Nitin Kanakiya, Indeed, if this wave of corporate asbestos, for example, are generally the secretary of India’s Ship Recycling social responsibility extends to lax. Depending on raw-material Industries Association. According shipowners worldwide, then only prices, shipowners can make up to to him, many owners register their there is hope for safeguarding the $500 per tonne of steel from an Indian ships in such havens as the Bahamas, pristine beaches where ships are yard, as compared to US $300 in Liberia, and St.Vincent for their dismantled.

december 2015 / maritime gateway 55 LOGISTICS human resources F ast paced demand The success of entrepreneurs in the logistics segment, followed by a growth in adoption of technology and improved infrastructure has highlighted the need for skilled, trained and committed workforce in the country. Addressing these requirements is critical for the competitiveness of the transportation, logistics, warehousing and packaging sector in the long run

by Deepika Amirapu

ccording to the National Skill in the Europe and Americas. This ‘integrated logistics management’. Development Council, the sector in India is dominated by the Traditionally, the Indian logistics Aannual logistics cost in India unorganised segment of brokers, small industry comprises of core-service is valued at `6,750 billion (US$ 135 truck owners and transport companies, providers where contracts are billion) and it is growing at 8-10 per freight forwarders operating within a issued for trucking, shipping, inland cent annually. Logistics cost by value small radius and warehouse owners. container depot and container freights accounts for around 13 per cent of the The organised segment, reportedly, station operations. But this is now GDP of India – this is much higher accounts for less than 10 per cent of gradually shifting towards 3PL and than that in the US (9 per cent), Europe the Indian logistics market. 4PL systems driven by customers (10 per cent) and Japan (11per cent) As is typical in other industry demanding organised services, higher but lower than that in countries such as segments, much of the employee technology, more control and a China (18 per cent) and Thailand (16 workforce is usually in the lower rungs one-stop solution for all movement- per cent). In particular, the percentage- of the management where delivery oriented needs. wise share of transport cost (an boys, supervisors and floor managers The introduction of 3PL and 4PL important constituent of total logistic are hired in droves compared to the services has increased the usage of cost incurred by a nation) by value of managerial level. The type of logistics all modes of transport – road, rail GDP has been steadily increasing. services provided in India are yet and sea, forcing operators to improve The high cost of logistics in the evolving; the focus in India has been their efficiency levels for discerning country is attributed to poor quality of on enabling ‘physical distribution’ as customers. This use of multimodal infrastructure and inadequate service compared to developed nations where transport has led to a demand for offerings when compared to countries the focus has progressively shifted to varied skill requirements which have

56 maritime gateway / december 2015 coerced logistics managers to redefine workforce requirement in the industry since the scope of employment has T he demand for human resource in the Transportation, broadened from simply managing inventory to complex third-party Logistics, and Warehousing sector is thus expected to supply chain management, intensifying increase from about 7.3 million to about 25 million in the skill gap situation. This is emphasised by the fact that apart from another five years domain training and expertise, supply chain managers are required to be analytical, capable of multi-tasking, delegation, and able to handle stressful FUNCTIONS DISTRIBUTION also expected to become conversant situations. Specialised managerial, Operations 30-35% with more popular value addition interpersonal and analytical skills are a services such as labelling, handling must for the Indian Logistics industry Sales and Marketing 20-25% requirements specific to heavy or today, particularly in its nascent stages Customer Service 15-20% fragile material, special consolidation when it struggles to overcome critical HR, Admin and Finance 10-15% or bundling requirements. infrastructure and organisational Multi-operations skills: challenges. Senior Management 1-5% Multi-skilling will be required According to the NSDC in the Transportation, Logistics, report, the transportation, logistics, Table 1: Functional Distribution of Human Resources in the Ship Transport Warehousing and Packaging Sector Segment warehousing and packaging sector going ahead. In case of providers in India currently employs around dealing with multiple areas such as 7.3 million persons. Of these, the FUNCTIONS DISTRIBUTION freight forwarding, warehousing, road maximum proportion is employed Operations and Maintenance 60-70% transport, people with skills across in the road transport segment and areas will be required. For example, Support Functions 10-20% personnel employed in the road and in case of 3PL or 4PL providers, rail transport segments constitute over Health and Safety 3-5% people with skills across IT systems 90 per cent of the total employment in Corporate Management 3-5% (specific to logistics) integrated with this sector in India. Although 95 per supply chain practices and basic cargo cent of India’s cargo is exported by Table 2: Functional Distribution of Human Resources in the Railway Transport handling practices will be required. sea, this sector, however, only accounts Segment Also, with increasing track and trace for 10 per cent of people employed in service requirements by customers India’s transport system given the high from service providers, people who skills requirement and long periods of FUNCTIONS DISTRIBUTION can fulfil system requirements and stay outside the country. Workers (drivers, loaders, handlers) 70-80% simultaneously coordinate with The skills requirements, therefore customers will be further needed. in the sea and surface transport in Supervisory Staff 10-13% Apart from these, the service providers India are aligned to the demands Middle Management 3-5% need to be skilled in aspects related of the customers and growth in to state-specific rules, procedures, Senior Management 1-2% technology and infrastructure. compliances to required paper-work Emerging Skill Requirements in Table 3: Level-wise Distribution of Human Resources in the Road Transport and excise. Segment the Sector The demand for human resource Technological skills: The organisations consist of analysts who in the Transportation, Logistics, and rapid advancements in technology design and engineer the optimised Warehousing sector is thus expected deployed in the transportation, supply chain. The customer agents to increase from about 7.3 million logistics, warehousing and packaging implement these solutions; speak to about 25 million in another five sector have necessitated training in to shippers, receivers, and book years, leading to an incremental handling technology across levels and loads. A customer service agent who human resource requirement for about upgradation of skills with advancing understands all the workings of the 17.7 million persons.It is important technology is required. Drivers will be supply chain and the transported to address skill deficiencies in the expected to know skills about using commodity will be able to optimise logistics segment as this function is GPRS effectively. Emerging fields of delivery and lead times, saving on crucial to the smooth functioning of information technology applied in costs. Sound analytical skills need the manufacturing, agriculture and logistics will also bring about the need to be developed so that they can service sectors that depend heavily on for specialised skills. For example, create efficient systems, and provide this people intensive business. Besides, internet based or mobile based track customers with information which increasing globalisation and a strong and trace services becoming more might add value to their business. presence of multi-national firms doing popular in India, people specialised in Warehouse handlers have to acquire business online require the supply these systems will be in high demand. skills in using equipments such as chain systems to work seamlessly Better overall understanding printing devices, scanning devices and sourcing and delivering products with of industry by Agents: Logistics basic computing devices. They are stipulated periods of time.

december 2015 / maritime gateway 57 q&A K oh Chong Hin, GM- Asia Pacific (Marine) ZF Asia Pacific Pte Ltd

Skilled and Speedy Support A global leader in driveline and chassis technology as well as active and passive safety technology, ZF has presence at about 230 locations in some 40 countries. It is one of the top three automotive component suppliers worldwide. In the marine segment ZF offers propulsion systems for pleasure boats, commercial and fast crafts. For all kinds of commercial vessels ZF provides a complete line of heavy-duty transmissions.

Size of commercial Our commitment to ships is increasing and the service readiness is reflected focus is on low sulphur in our extensive network fuels, emission reduction of highly skilled engineers and slow steaming. How and service centers across do you help shipping lines the globe - three Product in the process? Competence Centres, As the focus on six Regional and two environmental protection Subregional Competence and energy savings in the Centres and about 170 global maritime industry Local Competence increases, we see significant Centres in 55 countries. potential for parallel We have skilled teams of hybrid systems that enable “flying doctors” in our ship owners to selectively Regional and Subregional choose electrical fuel which Competence Centres to translates to energy and ensure speedy support cost savings. Some of our availability onsite. Our latest products including engineers go through our latest ZF W10000 & ZF comprehensive product 3300 PTI are both hybrid- trainings at ZF Marine ready products. factories in Italy, the Every shipping line Netherlands and Germany. desires for minimum We strive for rapid down-time and life cycle response, technical cost. How can this be support, spare parts and achieved? maintenance in the shortest In the shipping and possible time to ensure maritime industry, the ease smooth vessel operations of use and maintenance of and highest availability for maritime equipment is an our customers. important factor not just While LNG seems to because of the high costs be a suitable alternative to associated with downtime bunker. What are the pros but also because of the and cons of retrofitting shortage of skilled vessel vessels to use LNG fuel? operators. LNG offers reduced In addition to offering emissions and higher safety the best performing marine as compared to the heavier propulsion units and sub- bunker oil. Beyond the cost systems, we are committed of converting ships, a major to providing class-leading impediment to the near- after-market service to term development of LNG ensure the highest levels as a significant maritime of safety, reliability and fuel is the need to build efficiency for our customers. additional LNG production

58 maritime gateway / december 2015 infrastructure to support Around three marine vessel conversions. years back, ZF Marine What is the role/ consolidated its T he few underlying trends for the marine involvement of ZF Marine commercial, fast boat in the ship building and pleasure boat industry are increasing comfort and safety process? operations into two We listen to our segments: Commercial and for vessel crew, environment protection and customers to understand Recreational. How has the their needs. Our strategy consolidation worked out energy savings, and multi-purpose assets is to work closely with for the company? all parties involved in the We reorganized our with low cost of ownership. vessel design, building and business into two segments: operation to understand Commercial & Fast Craft their requirements and (CFC) and Pleasure Craft offer suitable products that (PC). This has allowed We are also working will meet or exceed these us to align and focus our to enhance our services to requirements. This requires approach to customers, superyacht owners through our global coordination as both in terms of sales and extensive network of highly vessel designers, owners, aftersales. We now also skilled engineers and service builders and operating have better alignment of centers, which consists of locations can be in different our product development three Product Competence continents. efforts to respond to market Centres, six Regional and Where do you see the demands and future trends. two Subregional Competence demand for your products Which are the key Centres and about 170 Local growing more – in the technology trends that will Competence Centres in 55 recreational or commercial guide the future of marine countries. segment? Tell us about business? As the marine engine your customers in the The few underlying A ZF HRP 8000 VRM unit typically installed in tugs. technology advances, how commercial shipping trends for the marine do you ensure your product sector? industry are increasing service offerings. portfolio remains relevant? We predominantly serve comfort and safety for The company seems to Our strategy is to leverage clients in the commercial vessel crew, environment focus on strengthening its our core competencies shipping sector, although protection and energy presence in the superyacht in component design our systems are suitable savings, and multi-purpose market. How do you plan and technology to offer a for a wide range of assets with low cost of to go about this? competitive range of highly applications, from pleasure ownership. Technologies We have a range of efficient propulsion products. cruising craft through to and designs that enable products, in particular Our core products include defense and naval vessels. these will see increasing transmissions and controls transmissions, thrusters, ZF offers products demand. These include that are well suited for the propulsion controls and fixed across sectors ranging from hybrid propulsion, low superyacht market. We are pitch propellers. We believe aviation to automotive noise and vibration systems, in constant dialogue with in personalised customer and marine. Is there any compact and power-dense our customers to explain relationships. chance of technology equipment with flexible to them the advantages What are your short-term transfer/sharing among arrangements, and high of our products and and long-term plans for the these divisions? efficiency components. solutions, as well as any Indian market? The 100-year old ZF ZF is well placed to product improvements. There is presence of Group, the parent company play a key role in shaping For example, we recently prominent equipment of ZF Marine, embodies the future of the marine introduced SUPERSHIFT manufacturers, shipbuilders technical excellence and business. We have a 2, our next generation and designers in India and it invests heavily in R&D. range of hybrid-ready in shift technology that is this opportunity that drove The technology developed transmissions, industry- allows our transmissions to us to be a part of the INMEX. is shared across all business leading lightweight and react to shift input signals Recent announcements by the units and is accessible compact transmissions, almost instantaneously Indian government indicate through our corporate R&D retractable and azimuth with less drop in engine an increased prominence for laboratories. ZF Marine thrusters, and high RPM, offering passengers inland waterways, which in turn has benefited in particular efficiency fixed pitched a smooth shift for total is expected to boost presence from developments in propellers. We will comfort. SUPERSHIFT by industry players, enhancing component technology continue to broaden the 2, combined with our competition. We are closely (clutches, bolts, and seals), applications of our in-house proven AUTOTROLL following the developments gear development, materials technologies and designs, functionality, sets a new in the Indian market, and are technology and software and to continuously standard in safe and slow optimistic about our growth electronics. improve our product and speed maneuvering. path in the country.

december 2015 / maritime gateway 59 India’s premier maritime business magazine maritime A gateway event

ADANI TAKES EAST COAST CONTINUES TO BE OVER L&T PORT HOT FOR MARITIME BUSINESS ALLCARGO The presence of 13 operational ports along a 2,630 km-long eastern coastline (from West Bengal TO SET UP to Tamil Nadu) continues to offer significant development opportunity for investment in maritime sector. More ports in both public and private domain are planned in almost all the CFS AT KOPT states on the east coast. Capacity expansion on all counts of bulk, Ro-Ro and container is progressing at breakneck speed. Some PARADIP PORT of the major ports have shown dramatic turnaround in their performance. Ministry of Shipping has put KRISHNAPATNAM ANDHRA in a time bound plan in place to improve the capacities and efficiencies at major ports. PRADESH HANDLES Sizeable investments are planned in states of Andhra Pradesh and Tamil Nadu, which could PORT REPORTS trigger of manufacturing activity on the coast leading to increase in cargo traffic. Coastal JUMP IN GETS HIGHEST COAL TRAFFIC movement is picking up momentum. VOLUME INDUSTRIAL Maritime business on the East Coast plays a pivotal role in India’s steady and stable economic BOOST growth. Upcoming industrial corridors, dedicated freight corridors, planned ports / terminals and new dry ports will also append to the growth of East Coast business. Contribution from all the above said factors will definitely spur further development in the Eastern Coast of India. `13314 CR CONCOR INFRA- PROGRAMME PLANS 8 STRUCTURE 4th East Coast Maritime Business Summit, January 28-29, 2016 CONTAINER UPGRADE Day 1 – 28 January 2016 Day 2 – 29 January 2016 03.00pm Registrations Open 10.00am – 11.00am Inaugural Session: FREIGHT FOR 04.30pm – 06.30pm CEO Roundtable: East Coast Hinterland Waiting to be Served STATIONS PONNERI Ease of Doing Business at Ports 11.00am – 11.30am Coffee Break (by invitation only) 11.30am – 01.30pm Business Session 1: Shippers Panel 06.30pm onwards Networking & Cocktail Dinner 01.30pm – 02.30pm Lunch 02.30pm – 04.00pm Business Session 2: Service Providers Panel 04.00pm Closing Remarks

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Host Port Corporate Sponsor Port Partners Session Sponsor Associate Sponsor Programme Booklet Sponsor

Visakhapatnam Infrastructure Port Trust Inland Waterways KOLKATA PORT TRUST Authority of India JANUARY 28-29, 2016 HOTEL NOVOTEL VISAKHAPATNAM VARUN BEACH

Supporting Partners

FEDERATION OF INDIAN EXPORT ORGANISATIONS Set up by Ministry of Commerce, Government of India

AP CHAMBER The Association of CCHAA Shipping interest in Calcutta India’s premier maritime business magazine maritime A gateway event

ADANI TAKES EAST COAST CONTINUES TO BE OVER L&T PORT HOT FOR MARITIME BUSINESS ALLCARGO The presence of 13 operational ports along a 2,630 km-long eastern coastline (from West Bengal TO SET UP to Tamil Nadu) continues to offer significant development opportunity for investment in maritime sector. More ports in both public and private domain are planned in almost all the CFS AT KOPT states on the east coast. Capacity expansion on all counts of bulk, Ro-Ro and container is progressing at breakneck speed. Some PARADIP PORT of the major ports have shown dramatic turnaround in their performance. Ministry of Shipping has put KRISHNAPATNAM ANDHRA in a time bound plan in place to improve the capacities and efficiencies at major ports. PRADESH HANDLES Sizeable investments are planned in states of Andhra Pradesh and Tamil Nadu, which could PORT REPORTS trigger of manufacturing activity on the coast leading to increase in cargo traffic. Coastal JUMP IN GETS HIGHEST COAL TRAFFIC movement is picking up momentum. VOLUME INDUSTRIAL Maritime business on the East Coast plays a pivotal role in India’s steady and stable economic BOOST growth. Upcoming industrial corridors, dedicated freight corridors, planned ports / terminals and new dry ports will also append to the growth of East Coast business. Contribution from all the above said factors will definitely spur further development in the Eastern Coast of India. `13314 CR CONCOR INFRA- PROGRAMME PLANS 8 STRUCTURE 4th East Coast Maritime Business Summit, January 28-29, 2016 CONTAINER UPGRADE Day 1 – 28 January 2016 Day 2 – 29 January 2016 03.00pm Registrations Open 10.00am – 11.00am Inaugural Session: FREIGHT FOR 04.30pm – 06.30pm CEO Roundtable: East Coast Hinterland Waiting to be Served STATIONS PONNERI Ease of Doing Business at Ports 11.00am – 11.30am Coffee Break (by invitation only) 11.30am – 01.30pm Business Session 1: Shippers Panel 06.30pm onwards Networking & Cocktail Dinner 01.30pm – 02.30pm Lunch 02.30pm – 04.00pm Business Session 2: Service Providers Panel 04.00pm Closing Remarks

presents www.ecmbs.in

Host Port Corporate Sponsor Port Partners Session Sponsor Associate Sponsor Programme Booklet Sponsor

Visakhapatnam Infrastructure Port Trust Inland Waterways KOLKATA PORT TRUST Authority of India JANUARY 28-29, 2016 HOTEL NOVOTEL VISAKHAPATNAM VARUN BEACH

Supporting Partners

FEDERATION OF INDIAN EXPORT ORGANISATIONS Set up by Ministry of Commerce, Government of India

AP CHAMBER The Association of CCHAA Shipping interest in Calcutta TECHNOLOGY rfid

Automation at hazira terminal Improved turnaround time and operational efficiency along with reduced operational cost are some of the key benefits of technology automation that have enabled Hazira terminal to attract more cargo by Omer Ahmed Siddiqui rolonged waiting hours at Hazira Container Terminal at Adani the ports, lengthy and time Port is among the league of these Pconsuming procedures at the technologically advanced ports that entry and exit gates increase the are a class apart. loading /unloading time for trucks In 2013, the port had started causing delays in the movement of deploying RFID system as part of the cargo and extra costs incurred by terminal-operations solution provided shippers. This phenomenon is not by Suraj Informatics Pvt Ltd. As uncommon at many ports in India. a result, the terminal has achieved So, it’s obvious that a port that offers greater cargo-management efficiency. quick turnaround for trucks carrying The turnaround time for trucks export/import cargo and streamlined arriving to load or unload cargo has procedures which are automated reduced significantly. A steady stream and error free will obviously stand of truck traffic now passes through the apart from the competition. The terminal to move cargo to and from

62 maritime gateway / december 2015 Europe, Africa, the Americas and the Middle East. Advantages of RFID technology: The road to automation In 2012-13, Adani Port engaged • The processes of tracking vehicles at the gate and while they are loaded or unloaded Suraj Informatics Pvt Ltd to develop is automated a passive ultrahigh-frequency (UHF) • Makes operations more efficient by preventing errors like cargo being loaded or RFID solution for the container unloaded at the wrong location operations at the port. RFID tag • Waiting time for shipping customers is reduced readers were deployed at the entry • Enables easy tracking of trucks at the shipyard and at the wharf thereby removing and exit gates while RFID tags were manual checking of truck ID numbers for creating a record of its processes at the supplied to trucks moving cargo in terminal and out of the port. The data is shared with the software at the back-end the terminal's boom barrier opens, that determines which trucks have allowing the truck to pass out of the arrived for which particular container. terminal toward the port gate. Tag readers are installed on loading At the port gate exit a tag equipment to identify vehicles and dispatcher retrieves the truck's tag. A ensure that there are no errors, such as reader installed at the gate interrogates unloading cargo at the wrong location, the tag a final time as it is turned over or loading the incorrect goods onto a to the staff, and the TOS software vehicle. prompts the port gate boom barrier to When a truck arrives at the port open, enabling the truck to leave the gate it is issued a temporary passive port. UHF RFID tag. Port authorities at Altogether, the terminal has the gate record the tag's ID number, installed two readers each at the along with data about the vehicle and port entrance and exit, as well as the load it is receiving or delivering. two at each entrance and exit to the The unique ID encoded to the tag is terminal itself. In addition, each crane then linked to the software and to the comes equipped with a reader and information regarding the trucking an antenna, totaling approximately company, the vehicle and the goods 70 readers installed for the container operations. At gates and on the RTG being transported. The software then Informatics Pvt Ltd. "Since there is no crane the tag can be read from a height forwards that data to the terminal's data entry at the gate and the yard, the of up to about 3 metres (9.8 feet), TOS solution, and the TOS software process has reduced the transaction while the read range on the crane can prints a receipt for the driver. time at the gate for each truck, along reach 8 metres (26.2 feet). The truck then proceeds past a with data-entry time of the RTG By using the technology, the port RFID reader that captures the tag's ID operator for selection and updating has been able to bring down truck number and forwards it to the TOS each job." What's more, terminal waiting time and labor costs, reveals software. The vehicle's status as having management now knows the exact Rajeshwar Bhatt, Director, Suraj arrived at the terminal is updated number of trucks present in the yard here and it prompts the gate to open, at any given time. The TOS solution allowing the truck to enter. can also issue alerts in the event that a Next, the truck proceeds to the vehicle takes more than the expected wharf location where goods are transaction time. either loaded or unloaded using The automation is said to have cranes. Here the vehicle's tag is read significantly brought down annual again by a reader installed on the labor costs. Proceeding with the crane. That data is sent to the back- automation process additional RFID end database via a ALTAI Wi-Fi readers were installed throughout the connection, after which the TOS yard, in order to provide container- software displays information about location mapping that will help the vehicle to the computer in front of terminal managers view each vehicle's the crane operator. The operator can exact position within the yard in real- then discharge or load the container time, as well as collect historical data as required for the assigned job, and for use in traffic-flow management. that data is stored in the Terminal Encouraged by the benefits, in the Operating System. second phase of installation, the port After loading or unloading the has extended the automation to other goods, the truck proceeds to the operations including general and exit gate where the tag is again read liquid cargo. Now the entire activity by another interrogator. The TOS at the port can be tracked using GPS solution prints an exit-gate pass, and technology.

december 2015 / maritime gateway 63 q&A Praveen Somani, Director Inland GROUP “Demand for logistics parks is set to increase” Inland Group’s Director Praveen Somani talks in length about the growing opportunities he sees in the Indian logistics sector, especially in the maritime sector by Itishree Samal

than 85 per cent in revenue. Around parks and CFSs is going to grow? 10 per cent of revenue comes from rail At present, the demand for transportation (Mainly in north and logistics park pan-India will be north-eastern regions) and 5 per cent around 4 crore sft, while the current comes from our warehousing vertical. availability is only 3.25 crore sft, At present, we have 357 warehouses leaving a gap of about 75 lakh sft. (10 lakh sft area) across major cities The demand for logistics parks may such as Hyderabad, Kolkata, Delhi, increase 15 crore sft in next five years. Nagpur and Raipur. Demand for CFS is going to grow Which are your major operational at 25 per cent in near future. geographies? What opportunities you see in We are present across 550 Indian logistics sector? operations. Our focus for the next There is a lot of demand arising few years will be expanding in Indian for bulk movement. Large projects are market, given in the backdrop of the happening now so also demand for current positive economic environment. project cargo has increased. We expect India itself is a growth centre. things will start moving in 2016, and You have mentioned about having necessary infrastructure development Inland which started as a cargo plans for CFSs under your logistics will enhance the progress. management company now has division. Please tell us in detail about What challenges do you face as a emerged to be a diversified group your plans? logistics player? in less than 30 years. Which are the IWL is planning to build CFSs First and foremost, the major divisions of the group? close to port. At present, we have documentation process – every state Over the years, we have diversified plans to build two CFSs – one near has different requirements. Second is into several sectors such as logistics, Mundra Port and another in the south. the development of highways, while power, food and beverages, etc. We We have identified a 100-acre site other challenges including rising toll have nine companies at present close to the Mundra Port to build a charges, connectivity and bad road including Inland World Logistics, logistics park-cum-CFS. We will mainly infrastructure. In domestic logistics or Inland Power, Inland Automate, target the agri-business segment as the fleet operation, a lot of time and energy Inland Courier, Inland Bearing agri cargo requires closed space for goes in at check-posts and toll gates. Centre, BE Gold, Bharatiyam Food & long warehousing stay. Currently, four If it will be checked, we can easily Beverage, The Gopalpur Tea, Inland logistics parks are there near Mundra improve 25 per cent of fuel efficiency Logipark and Inland Lifescapes. and all are reaping good benefits. Most and 12 per cent in overall efficiency. However, logistics is our major of those are focusing only container What targets have you set for division contributing most of the volume, whereas, we will focus on yourself five years down the line? Group’s revenue. IWL has presence creating space for both bulk as well as Apart from logistics parks and across India as well as in Nepal, container cargo. As per our current CFSs, we are exploring opportunities Bangladesh, Pakistan and Bhutan. We projection, the approximate investment in ‘Inland Waterways’. We are in are present across verticals such as in will be about `117 crore. The viability discussion with few companies for large warehousing, FTL, LTL and in has already been worked out. inland waterways. At present, we are project cargo. This apart, we are planning two operating in the Ganges route with Which are your key verticals in logistics parks – one in Ahmedabad bulk transportation from Haldia Port logistics? (56-acre) and another 105-acre in to Allahabad, Haridwar and central Road transportation is a major Bhiwandi, a suburb of Mumbai. regions. We will focus on eastern to vertical of IWL, contributing more How the demand for logistics northern regions.

64 maritime gateway / december 2015 SMARTO L GISTICS 2015 Ease of doing business

Upgrade transport and logistics infrastructure The summit gave a clarion call for upgrading warehousing, transport and logistics infrastructure to meet the needs of growing business, especially ecommerce MG Bureau government is committed to bring in GST considering indications like acceptance of several states’ demands, setting up committees to recommend Revenue Neutral Rate (RNR) for economy, committing a technology platform for the purpose and finally passing the Constitutional (Amendment) Bill in Lok Sabha. With the introduction of GST, the Indian industry will be able to migrate to an efficient supply chain model as against the present supply chain model, which is dependent on (From L to R): Sailesh Bhatia, MD, Bhatia Shipping Agencies, Ashish S Pednekar, President, Brihanmumbai Custom House Agents Association, tax considerations vi-a-vis operational Antara Sen, Associate Director, Indirect Taxes, Pricewaterhouse Coopers, Subash Desai, Hon'ble Minister for Industries, Govt of India, considerations, the report said. Tushar Jani, Chairman, SCA Group of Companies, Sheena Khara, Deputy Director , CII Desai also announced that the government is planning to regularise many things around Bhiwandi truck he Maharashtra government policy will be favourable to growth terminal. The government is planning is focusing on growth of of e-commerce, Desai asked the to re-plan and re-develop it to bring Te-commerce logistics in the state stakeholder industries to join hands it to global standards by improving by creating warehousing and transport for this project. proper access and stay infrastructure infrastructure, for which this fast Maharashtra already corners 40 and roads. Port and railway linkages growing industry is starved at present. per cent of the road transport and will be developed and the vicinity of This will also usher the demand for logistics business through Bhiwandi, JNPT will be upgraded with proper skilled workforce, and the Transport the largest transport hub in the infrastructure. The state is also and Logistics (T&L) industry will need country located near Mumbai, besides focusing on development of 720- about 20 million skilled manpower by 40 per cent of air logistics movement km long coastline under Sagarmala 2030. These are some of the ideas that too. Desai also released a publication project. have emerged at the Logistics Summit ‘Goods and Services Tax – Transportation Taking a note of the growing 2015 organised by Confederation of and Logistics (T&L) Sector, co-published demand for skilled human resources, Indian Industry (CII). by CII and PwC, which said that L&T Tushar Jani, Chairman, CII WR Announcing the government’s plan industry should adapt itself to the new Logistics Subcommittee said, to develop T&L infrastructure that ecosystem after GST implementation. “About 20 million of skilled the e-commerce business is eagerly After introduction of GST, T&L manpower is needed for this looking forward to at present, Subhash industry has to identify industries that industry by 2030. Give us space Desai, Minister for Industries, need to rejig their supply chain model, in all the MIDCs in the state for Government of Maharashtra set the report said. imparting skill training. I request the ball rolling. “Our focus is on Within 24-36 months from GST Maharashra government to prepare a e-commerce, which has created a introduction, these companies should comprehensive logistics policy around new trend by attracting customers plan consolidation of warehouses, this.This will be a good scheme to in large numbers. Such growth has redesign of route map and adoption be implemented in Marathwada brought up some challenges in the of technology-enabled fulfillment and Vidarbha regions, creating form of warehousing and transport centre model that effect operational livelihood to families of farmers in infrastructure needed,” the minister efficiencies, the report added.The operating truck business or setting up said. Stating that the state’s retail report expressed the hope that the warehouses,” he added.

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DECEMBER 2015 / MARITIME GATEWAY 67