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DECEMBER 2014 WWW.MARITIMEGATEWAY.COM

RNI NO: TELENG/2009/30633 POSTAL REGISTRATION NO: LII/RNP/HD/1137/2013-15 MMB LINES UP NEW PROJECTS DATE OF PUBLICATION: 26/11/2014 DATE OF POSTING: 28/11/2014 ALONG THE WEST COAST Parag Jain Nainuttia, Chief Executive Maritime Board

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e-commerce DGaeplsi ivne Lorgyi Wstoiecss: With the “click & shop” model gaining momentum in , more and more shoppers are taking the online route to purchase a range of products starting from grocery, apparels, electronics, to furniture. Though the success of an e-commerce largely depends upon its last mile delivery, the e-commerce logistics in India suffers with several bottlenecks including inadequate infrastructure and delivery inefficiencies maritime gateway / december 2014 OPENING REMARKS

Editor-in-Chief and Publisher Ramprasad [email protected] A Tactful Balancing Act Associate Editor Deepika Amirapu [email protected] Associate Editor Omer Ahmed Siddiqui If Prime Minister’s Modi’s official trips to the [email protected] countries were to be grouped, then certainly Assistant Editor Itishree Samal Japan and Australia could be bunched in to [email protected] one group and the rest in to another. And this Sr Designer Vijay Masa bunching of the Sumo and Syrah nations is Designers Nagaraju N S, Nadeem Ahammad not just a group of twitter friends, but also of Marketing & Sales tall leaders committed to special strategic and National Satish Shetti, Manager – Sales global partnerships. [email protected] – 099207 05534 Japan has been India’s largest donor helping in East Nikhil Doshi, GM – Sales [email protected] – 098369 96293 building roads and lighting up homes. Japan’s South & International Vinod G, Sr Manager – MarCom reassurance to build India should not be taken [email protected] – 099498 69349 lightly and we should make good use of their largesse. Bureaucratic delays Client Relations and denials should be nipped in the bud making way for easy construction. Madhukar – Manager India's inclusion of Japan into the Malabar Exercise that was restricted just [email protected] – 093937 68383 to Indo-US display of naval power is a welcome move. With the ‘Make Ashok T – Operations [email protected] – 094918 05508 in India’ campaign gaining tempo, Japan could be India’s philosopher and Digital Edition Wesley Rajiv guide as well in meeting infrastructure needs, now that friendship is a given. In the last one year, Australia has also conveyed its intent to strengthen its nautical position in the Indian Ocean Region. Safety of sea-borne trade was Subscribe to MG an another key point of agreement between Australia’s foreign minister and `1,200 ONE YEAR SUBSCRIPTION 12 ISSUES India’s then external affairs head AK Antony. India should take a cue and Phone : +91 (40) 2330 0061 / 2330 0626 initiate action towards enhancing maritime coalition in the IOR and the e-mail : [email protected] Malabar region. write to : Gateway Media Pvt. Ltd., # 407, Fifth Floor, Pavani Plaza, Khairatabad, – 500 004, INDIA. Maritime cooperation can now unfold a www.maritimegateway.com new chapter including economic interests in the blue seas Maritime Gateway is printed by R Ramprasad published by connecting the two continents. R Ramprasad on behalf of Gateway Media Pvt Ltd, #407, 5th Floor, Pavani Plaza, Khairatabad, Hyderabad – 500 004, Telangana, India While India has been quick to and Printed at M/s Kala Jyothi Process Pvt Ltd, 1-1-60/5, call both Australia and Japan old RTC Cross Roads, Musheerabad, Hyderabad - 500 020. and Published at Gateway Media Pvt Ltd #407, 5th Floor, Pavani Plaza, friends, many think it’s going to Khairatabad, Hyderabad – 500 004, Telangana, India be a new start with both countries. The free Regd. Office: H.No. 8-2-293/82/A/379 & 379/A, 2nd Floor, trade agreement between India and Australia Plot No. 379, Road No. 10, Jubilee Hills, Hyderabad - 500 033. could show the way. But if Modi’s tactful diplomacy and friendship CIN: U74900AP2007PTC054344 with the two leaders is anything to go by, then one would be lead to think that Editor: R Ramprasad India should improve trade ties with these nations as a token of friendship Please note Views expressed in the articles are those of the writer(s) and may to start with. The coal and uranium from Australia could help improve fire not be shared by the editor or members of the editorial board. up power plants and crude and fertilizers could be India’s alternate source of Unsolicited material will not be returned. securing its energy needs reducing the dependency on the Gulf. Copyright No material published here should be reproduced in any form India now has a tight rope to walk balancing both regional maritime without prior written permission from Gateway Media. security and enhancing trade potential with Japan and Australia so that Feedback Readers are advised to send all feedback and the Chinese don’t feel shortchanged. We hear that a trilateral agreement comments to [email protected] between India-Japan-Australia is in the making. This agreement should pave way to more such multilateral pacts between the countries extending Editorial Advisory Board in to more areas of economic cooperation and trade. Sabyasachi Hajara A Janardhana Rao Former Chairman, SCI, MD, Indian Ports Association Chairman Editorial Advisory Board S S Kulkarni Joachim von der Heydt Secretary General, Indian Private Ports & Chairman, Bengal Tiger Line, Terminals’ Association Singapore CONNECT Capt Deepak Tewari Capt Ram Ramchandran Ramprasad Chairman, Container Shipping Former President, NISAA Editor-in-Chief and Publisher WITH MG Lines Association (CSLA) Capt Sanjeev Rishi [email protected] Anil Singh Advisor, Worlds Window Infrastructure & Sr VP & MD, DP World Logistics Pvt Ltd Now you can read your favorite Subcontinent Capt Subhangshu Dutt magazine on the move. Jasjit Sethi Vice President, Institute of Chartered http://www.magzter.com/publishers/ CEO, TCI Supply Chain Solution Shipbrokers, Singapore follow us on @maritimegateway Gateway-Media-Private-Limited DECEMBER 2014 volume 7 issue 03

RAILWAYS Hey Prabhu! The new railways minister Suresh Prabhu has inherited a mess of red tapism. The need of the day is more than mere lip service ...... 38

technology Import or not to import As warehouses grow in size and scope of operations, the role of technology here gets more complex. A technology solution that meets operational requirements and fits in the balance sheet is the need of the hour. Indigenous warehousing technologies can surely fit the bill...... 44

Smart Logistics: Moser baer Leader in every way By developing an efficient supply system, Moser Baer has brought down the instances of delays in shipments to less than 0.1 per cent of COVER STORY p. 30 the total dispatches...... 46 Training: magic hive Set to train, re-train and rev up industry e-commerce workforce Training institute Magic Hive could be much Gaps in logistics: delivery woes needed shot in the arm for the logistics industry With the “click & shop” model gaining momentum in India, more and more shoppers are as it promises to churn out apprentices who can taking the online route to purchase a range of products starting from grocery, apparels, hit the ground running...... 54 electronics, to furniture. The e-commerce logistics in India suffers with several bottlenecks including inadequate infrastructure and delivery inefficiencies that result in delay in delivery, shipping routes choked airports, and products getting misplaced among others. NSR distant yet doable Expectations are high that Arctic shipping routes, particularly the Northern Sea Route Logistics SECTOR FOCUS (NSR), will rival traditional shipping routes Start-ups in e-commerce logistics The future of Indian ports and complement the Suez Canal route as a key The retail and e-commerce industry is seeing waterway for trade to and from by the A flurry of activity along the Indian coasts middle of this century. How realistic are such a revolutionary growth in India, where only has spurred interest among the powers in the scenarios? ...... 56 a handful of players have their own logistics North Block leading to a higher allocation of system while others solely rely on the third- budgetary expense for the shipping sector. european ports party logistics service providers. Bagging this Oil, coal and container movement will fetch Efficient coordination of mega-ship calls opportunity, many new players have emerged boosts Port of Hamburg in the logistics space boosting the ecosystem. big returns in the years to come. K Mohandas, Former Secretary, Shipping, Government of The number of ultra large vessels calling at the Port Players such as , DotZot and Ecom of Hamburg has been on the increase for years. This Express have come up in the last few years to India, provides a telescopic view of how is resulting in some major challenges for the port cater to the fast-growing sector at a faster speed. . India’s ports will look ten years from now operators, shipping companies and authorities. With ...... 34 ...... 36 the introduction of the Nautical Terminal Coordination (NTK), there is now a body to handle the centralised Interviews operational coordination of mega-ship calls for the first time – long before a vessel proceeds up the estuary of EFFICIENT PLANNING, MONITORING Finally anchored ...... 42 the river Elbe...... 58 KEY TO SUCCESS IN PROJECT CARGO Joy Saxena, Update MOVEMENT ...... 40 Group President and Growing demand for reefer containers Pankaj Gadhia Whole time Director, Jindal ITF Shipping lines expand their fleet of reefer CEO, Lee and Muirhead containers guided by the growing trade in perishables...... 62

ecmbs newsletter...... 22 MMB lines up new projects along Rhenus Group’s 100 years expertise the West Coast ...... 48 in logistics is a boon for the JV’ ...... 52 Others Paraag Jain Nainuttia Chief Executive Officer Vivek Arya Numbers...... 05 Maharashtra Maritime Board MD, Rhenus Logistics India News in Brief...... 06 News...... 08

04 maritime gateway / december 2014 NUMBERS

Voices Coal Consumption in India I met officials from the US recently Estimated sector-wise coal consumption Estimated sector-wise coal consumption in India (2016-17) in India 2031-32 and asked them to allow oil exports to

Electricity - 59% Electricity - 60% India. We are keen to Iron & Steel - 7% Iron & Steel - 5% import oil from the Cement - 4% Cement - 5% US. We will look at Others - 10% Others - 10% Russia and too Non - elect 20% Non - elect 20% for oil imports. Procurement has to be diversified, taking into account the changing geopolitics in the world. Source: India Energy Book 2012, (World Energy Council, Indian Member Committee) - Dharmendra Pradhan Union Minister of Petroleum and Natural Gas

Cargo traffic projections The officials we met with at all

CAGR: 13.0% 2,301.6 Increasing trade activities and By FY17, cargo capacity in India is levels in the Indian private participation in port 1,247.5 expected to increase to 2301.6 government infrastructure set to support port million tonnes from 1247.5 million infrastructure activity tonnes in FY12 were interested FY12 FY17E Cargo capacity (million tonnes) in understanding

CAGR: 11.0% 943.1 how they can partner with By FT17, cargo traffic at major ports 560.1 India has 13 major ports in India is expected to rise to industry to generate greater 943.1 million tonnes from 560.1 million tonnes investment at every level FY12 FY17E Cargo traffic at major ports (million tonnes) of the farm-to-fork food

815.2 chain. There is a real sense CAGR: 18.3% By FY17, cargo traffic at India's 176 non-major ports are non-major ports in India is in New Delhi that the strategically located on the world's 351.6 expected to grow to shipping routes 815.2 million tonnes from 351.6 government is serious about FY12 FY17E million tonnes Cargo traffic at non-major ports (million tonnes) the reforms that we have all heard so much about. Source: Ministry of Shipping; Planning Commission; Aranca Research, Note: E. Estimates - Paul Schickler President DuPont and head of US delegation to India

Crude steel production (65 countries) Jan – Sept 2014 To realise its full (In thousand tonnes) potential, India needs to continue European Union (28) - 127698 making progress Other - 27327 on its domestic CIS (6) - 80248 reforms agenda and North America-91249 encourage investments. South America-33800 The government’s efforts at -12032 improving the performance - 20699 of the manufacturing sector will Asia - 833696 lead to more jobs for young Indian Oceania - 4016 women and men. Source: World steel association - Onno Ruhl World Bank country director in India

december 2014 / maritime gateway 05 NEWS IN BRIEF

New buoy tender vessel launched by Cochin Shipyard ochin Shipyard launched a buoy Ctender vessel built for the Director General of Lighthouses and Lightships. The ship was launched by Mona Trivedi, wife of Shipping Secretary Vishwapati Trivedi. The vessel has been named ‘Indira Point’, in honour and memory of the 20 officials of the Department of Lighthouses and Lightships who lost their lives in the 2004 tsunami. This is a specialised multi- purpose ship designed for transportation and placement of buoys at deep seas, recovery and maintenance of buoys, towing and mooring of light vessels, distress management.

ABG shipyard India will soon Global oil giants Great Eastern posts losses become second invited to invest in Shipping reports Q2 India of `173 crore largest steel net profits producer etroleum and natural gas he country’s Pminister Dharmendra Pradhan reat Eastern Shipping Tlargest private ndia, world’s fourth wants to make India a refining GCompany Ltd, reported sector shipbuilding Ilargest crude steel and petrochemicals hub and is a growth of 28.6 per cent in yard, ABG Shipyard producer, is aiming to wooing international energy its consolidated net profits Limited, has reported become the second majors such as Saudi Aramco and at `206.64 crore for the Sabic to invest in India’s refining a net loss of `173 largest producer Q2 ended September 30, and petrochemicals sector. crore for the quarter of steel soon. This 2014. Rise in revenue from ended September 30 was announced “India already has big refining operations has helped in as against a net profit and petrochemical capacities by Narendra Singh increasing the net profits. The of `1 crore in the by companies like Reliance Tomar, Steel Minister, consolidated net profit of the corresponding quarter Industries and Essar Oil... I’m ` while inaugurating company stood at 160.63 of the previous fiscal asking energy majors to tie up crore during the same period Steel Pavilion at India due to a steep 80 with companies in India to set a year ago. Further, the International Trade up similar large-scale capacities per cent slump in its consolidated total income Fair (IITF). Crude Steel and use India as a base for further total income from of the company increased capacity in the country exports to Japan, Korea, China operations. by 14.4 per cent to `960.36 stood at 101 million and other South East Asian The company said in crore during Q2 2014-15, tonnes (mt) in 2013- countries. India’s proximity to the a filing to Bombay region can be explored to meet from `839.17 crore during the 14 and the crude steel Stock Exchange, the demand for refined products. same period a year ago. production was 81.69 “Due to slowdown in shipping and mt. India is a net exporter shipbuilding in global of finished steel and the India scraps South Korean minesweeper deal export of total finished markets, the company ndia is all set to scrap the long-pending deal for South Korean steel was 5.98 million faced large order Imine countermeasure vessels (MCMVs), which are highly- cancellations. This tonnes in 2013-14. India specialised small warships that detect, track and destroy enemy resulted in shortage maintains its position of mines to keep shipping traffic safe. Allegations on agents having of working capital, being largest producer of vitiated the entire selection process is said to be the reason for affecting company’s sponge iron in the world, scrapping the deal. performance. the Minister said.

06 maritime gateway / december 2014 Shipping fuel demand India may subsidise sugar exports Harley Davidson to export from India increases by 25 per he sugar harvest in output of 25 million cent TIndia, the world’s tonnes (mt) to 25.5 mt eith Wandell, global CEO, biggest producer after this season with domestic KHarley Davidson says India emand for shipping fuel at Brazil, will probably demand of 24.7 mt. was one of the countries fuelling Dmajor Indian ports has climbed climb to the highest level company's volume growth for the by up to 25 per cent as the cost since 2012 after farmers With output exceeding quarter. “You see countries like of refuelling at Singapore, Asia's increased plantings demand for a fifth India and China being called out bunkering hub, soared following and abundant monsoon year, India may need by the CEO in the earnings, as the collapse of the world's leading rainfall boosted yields. to subsidise exports emerging markets are important supplier – OW Bunker. Production may total to reduce stockpiles, for the company," said Anoop potentially extending Prakash, managing director, Marine fuel prices in , 26.25 million metric tonnes in the marketing a global glut. “If India Harley-Davidson India. India's largest bunkering port, were does subsidise exports, still around $15 a tonne higher than year that began October The company recently started the world market will in Singapore on a delivered basis, 1. That’s the highest since locally manufacturing of Street stay depressed for some but a Singapore-based trader said 26.34 million tonnes in 750 at its Haryana plant. Asia time,” Tom McNeill, shipowners could be interested in 2011-2012, according Pacific region reported the highest director at Green Pool bunkering in India when the price to Indian Sugar Mills growth with 12.8 per cent for the Commodity Specialists difference between Fujairah, United Association data. The company during April to October Pty said. Arab Emirates, and Singapore association had forecast this year. The company is now gearing up for exporting from narrows. UM Motorcycles make India India. Harley looks to add more “I’m seeing about 20-25 per cent export hub countries for shipping its India- more demand month on month,” made Street 750. said a trader who sells fuel in India. iami-based UM International has announced Shipping has increased “But buyers are also just watching Ma joint venture with Lohia Auto for entering the prices, as the market is still the Indian two-wheeler market by second quarter of pollution in open seas volatile, so they are trying to delay 2015. The manufacturing facility will be located in aritime traffic on the their purchases.” Singapore was Kashipur, Uttarakhand and will utilise Lohia group’s one of the cheapest ports in Asia to current facility with a capacity to produce 1 lakh Mworld's oceans has refuel. units a year. The company will introduce higher increased four-fold over the capacity motorcycles ranging from 300 to 500cc in past 20 years, owing to growing India. UM Motorcycles claims their products will international trade, causing more Denmark asks to ease be competitively priced with respect to their rivals water, air and noise pollution port tariff norms Royal Enfield. They have chalked out a plan of on the open seas. In the Indian opening 50 dealerships in the country by end of 2015 Ocean, where the world's busiest most of which will be based in major metro cities shipping lanes are located, ship enmark sees vast scope for across the country. They will be using the facility in traffic grew by more than 300 Dcooperation with the shipping India as an export hub, shipping made-in-India bikes per cent over the 20 year period, sector in India, but wants ports to the Asia Pacific region, Africa and even the US. reveals a research report. in India to ease tariff norms. Addressing an event on ports and shipping organised by FICCI, Freddy Svanne, Ambassador of Global Offshore Services adds Olympus to its fleet Denmark to India, said there was a need for tariff regulations to be he eighth vessel designed by relaxed in the port sector. He said he THavyard for Global Offshore had spent five years talking to the Services has been christened ‘Olympus’. Planning Commission and various Build number 116, Olympus, is the third arms of the Government but had not in the series of Havyard’s 832 design. found any action. The platform supply vessel (PSV) measures 72.19 m, has a deadweight of Supporting Freddy’s views, NN 4,000 tonnes and a cabin capacity of 26 Kumar, Chairman of JN Port, persons. also called for relaxation of tariff “This is a type of vessel that Havyard regulation norms, pointing out that specialises in, so there were no tariffs of non-major ports are not particular technical challenges in the regulated but those of major ports building process,” said Radek Kaminski, project manager for the newbuild. “But, are. He also expressed the need for although it was a straightforward project, the vessel was built during a particularly a clause that permits revisiting the hectic period at the shipyard.” contract between ports and port developers.

december 2014 / maritime gateway 07 NEWS

Foreign firms can now mine and sell coal Beefing up maritime from India security

ith an eye on beefing up maritime government will also spend about $1 Wsecurity, India is negotiating a billion by 2019 to buy railway wagons deal with 24 countries for exchange of and transport coal from remote mines, neutral merchant shipping data as it rolls Swarup said. out a national hub to tackle all aspects of coastal security to prevent another 26/11- The government in October made like attack. provisions for private firms to commercially mine coal but did not set A final paper for the creation of the any timeline for when actual digging long-pending National Maritime will start. Domain Awareness Grid (NMDA) is also complete and is pending approval ndia will allow locally registered The decision will open the door to with the Cabinet Committee on Security. Iforeign firms to mine and sell coal global giants like Rio Tinto and BHP The Indian Navy had earlier this year when commercial mining is permitted Billiton and help ramp up output from rolled out its National Command as part of the opening up of the India’s huge reserves – the world’s Control Communication and Intelligence nationalised industry after four decades, fifth biggest. Opening up the industry Network (NC3I) that allows surveillance Coal Secretary Anil Swarup said. To will increase private coal production to of waters around India and can even end a chronic coal shortage that cripples about 400 million tonnes by 2019 from track ships in South China Sea. These power plants and curb the country’s less than 50 million tonnes last year, are part of the decisions taken post the imports of the fuel, the Narendra Modi Swarup said. Mumbai terror attacks. Assistant Chief of Naval Staff (Communications Space First empty transshipment from Kochi and Network Centric Operations) Rear Admiral KK Pandey said India is looking he International Container M V Wan Hai-507 of INDFEX Service, at having a tie-up with 24 countries with TTransshipment Terminal (ICTT), a key service connecting the Indian which it wishes to exchange the wide- Vallarpadam, for the first time handled subcontinent to China. shipping data which is neutral merchant a massive ‘empty transshipment’ from shipping data. Shipping lines regularly reposition empty Kochi. containers to balance their inventory It is the first time a major mainline at different locations across the globe. Australia and India operator using the ICTT’s service However, they face a lot of difficulties to reposition its empty units back to in repositioning empty units from plan free trade deals China. Taiwan-based Wan Hai Lines has congested terminals like Nhava Sheva. repositioned 1,273 teu empty units from uring Prime Minister Narendra Nhava Sheva to China by using ICTT “Though such transshipments from other DModi’s visit to Australia, both the as the transshipment hub. The first lot ports, along the east and west coasts of countries have pledged to push for a of 470 units were loaded to M V OEL India, was envisaged at the planning major free trade deal. Australian Prime Trust on October 31. Wan Hai Lines will stage of the ICTT, this is the first time Minister Tony Abbott admitted that connect all the empty units arriving at the shipping lines are finding it viable to use bilateral ties – worth AUS$15billion in ICTT to its mainline vessel the ICTT for the purpose. 2013 – were “underdeveloped”, hoping for the new deal in 2015. Modi told Australia, “India will be the answer India to receive its biggest LNG cargo to your search for new economic opportunities.” ndia will receive its biggest shipment Cheniere Energy Inc’s Sabine Pass Modi said the two countries were Iof liquefied natural gas in December terminal in western Cameron Parish, seeking early closure on a nuclear as it prepares to import the fuel from Louisiana. The New Delhi-based energy agreement that will give Australia North America. The Q-Max LNG vessel, company also booked 2.3 million a chance to participate in one of the the largest in its class with a capacity of tonnes a year capacity in the Cove Point most secure and safe nuclear energy about 260,000 cubic metres, is expected LNG liquefaction terminal at Lusby, programmes in the world. Modi is the to reach Dahej in Western state Maryland. first Indian leader to visit Australia in in the first week of December, Petronet The shipments are expected to start in 28 years. He told Australian business LNG (PLNG) Ltd Chief Executive leaders they could expect improved Officer Ashok Kumar Balyan said. It will 2017 or 2018. In April, Petronet signed a short-term contract with Qatar’s Ras investment opportunities in India. be supplied to Indian Oil Corporation. A special train called Modi Express, Laffan Liquefied Natural Gas Company carrying more than 200 passengers from State-run Gail India Ltd has agreed to to import 800,000 tonnes of LNG over buy 3.5 million tonnes of LNG a year Melbourne to Sydney, was flagged off by 12 months to supply Indian oil refineries. for two decades from Houston-based an Australian minister.

08 maritime gateway / december 2014 Government mulling schemes to promote India records a coastal shipping decline in exports in October

ndia’s merchandise exports declined Ito the lowest since April 2014 to around $26 billion in October 2014. This is down about 10 per cent from $28.9 billion in September 2014, and down about 5 per cent from around $27.5 billion recorded in October 2013, reported the Ministry of Commerce. The Federation of Indian Export Organisations (FIEO) has expressed disappointment over the decline in exports and has urged the government to analyse the reasons to prevent a slide. Indian exports had seen strong growth in May and June this year, hitting the double-digit growth rate for two consecutive months and prompting exporters to eye a total of $350 billion subsidy of `0.5 per tonne per km on bulk cargo, a rebate of `2,000 per container worth exports in FY2014-15. However, Afor container cargo and an additional 20 per cent rebate on vessel/cargo-related exports have moderated in the following charges would be offered, according to a proposed plan for promoting coastal months and slumped in October 2014 shipping. The subsidy would be provided directly to shippers of general cargo items partly due to slowdown in export like salt, sugar, automobiles, fertilisers, tiles, steel, cement, marble and foodgrain. markets such as Europe and a drop in oil A similar subsidy scheme, offering a subsidy of `1 a tonne per km, was previously and other commodity prices. announced by the Kerala government, which is yet to take off. According to According to FIEO, exports in leading shipping ministry officials, an online portal is likely to be developed by National sectors such as Engineering (- 9 per Informatics Centre, which will automate the process of subsidisation. "The shipper's cent), Drugs and Pharmaceuticals (-8 per consignments, from the port of origin to arrival, will be tracked online. Once the cent), Gems and jewellery (- 2 per cent), cargo reaches the destination, the tonnage will be determined and the subsidy amount Cotton and Man-made Yarn (-14 per will be directly transferred by the government within a stipulated time frame. cent), Carpets (-2 per cent), Petroleum India has almost 70 per cent of 835 vessels engaged in coastal shipping, as of (-0.16 per cent), and Plastics (-17) all December last year, under the Indian flag. However, India's movement of domestic joined the negative list in October 2014. cargo through water transport is paltry in comparison to other countries. While it's 20 Imports rose 3.62 per cent to $39.45 per cent in China, 24 per cent in Brazil and over 42 per cent in Japan, it's a lowly billion, widening trade deficite to $13.35 7 per cent in India. billion, from last october's $10.59 billion.

A “MUST POSSESS” PUBLICATION FOR ALL STAKE HOLDERS IN MARITIME SECTOR MAJOR PORTS OF INDIA A PROFILE: 2013-14 JUST THE PUBLICATION PROVIDES COMPREHENSIVE STATISTICAL INFORMATION ON INDIAN PORT SECTOR RELEASED For Copies: Send a Demand Draft of `4000/- in favour of Indian Ports Association payable at New Delhi to Chief Administrative Officer, Indian Ports Association, 1st Floor, South Tower, NBCC Place, Bhisham Pitamah Marg, Lodi Road, New Delhi – 110 003 Phone Nos. : 011-24369061/63, 24368334 | Fax No. : 011-24365866 | Email : [email protected]

december 2014 / maritime gateway 09 NEWS

Seaways ties up with McQuilling of USA coastal shipping, the new JV would provide a platform for foreign owners to look into the Indian market. The recent changes in regulations to help enhance the Indian tonnage, would bring in prospective owners to invest in India. All this augurs well for this world reputed company to be in India. At the launch of Seaways McQuilling India Private Limited, John Schmidt, CEO of McQuilling Partners said, “We are glad to be in India through a valued partner like Seaways. Our step is consistent with our long-term expansion plan in a strategic market like India which throws vast potential in the field of broking, eaways Shipping and Logistics requirements of the country, the entry research and consultancy.” SLimited has tied up with McQuilling of McQuilling into India is most Seaways Group chairman, Capt PVK Partners, the third largest shipbroking appropriate. With world economy Mohan said, “The synergy between firm in the world. The new venture aims growing, there would be need for Seaways and McQuilling has created to provide tanker, dry bulk, chemical setting up of new ports in the country. a world-class platform for Indian and offshore brokerage services, as well Prospective bidders would benefit charterers, marine interests and shipping as research and logistics consultancy from the world-class technology and experts. We would provide well within India and its related markets knowhow that their marine consultancy researched services to our clients and through offices in Mumbai and New would provide. Also, with the new open the international contacts to the Delhi. With the increasing energy initiatives of the government towards Indian market.”

19,000-teu container ship joins CSCL fleet LOC sets up new yundai Heavy Industries has engine can improve fuel efficiency office in Mumbai Hcompleted the construction of by up to 20 per cent by automatically the world's largest container ship controlling fuel consumption ondon Offshore Consultants (LOC), capable of holding 19,000 twenty-foot according to the sea conditions and the Lthe leading marine and engineering containers and handed it over to China speed of the vessel. After winning the consultancy for the shipping and Shipping Container Lines (CSCL). first 10,000-teu containership in 2005, offshore energy sectors, has opened an Hyundai Heavy Industries has since office in Mumbai, India. The ship was named as CSCL Globe. built more than 80 such ships, the With the dimension of 400 m in largest among the world's shipbuilders. Located in the district of Vile Parle East, length, 58.6 m in width, and 30.5 m A Hyundai Heavy official said, The it is close to Mumbai’s international in height, the CSCL Globe is one of shipbuilding industry is planning to and domestic airports as well as many the five same-class containerships build ultra-large containerships over of LOC’s key shipping and energy commissioned by China Shipping 20,000 teu. Based on our experience, clients. LOC Mumbai will also be Container Lines in May last year. we will try to win as many orders in well-positioned to respond to any time- The electronically controlled main this area. sensitive requests from both its global and local clients. Paul Miles, regional head of the Middle East, India and Ban on ZPMC cranes to hurt Indian ports Caspian for the LOC group said, “We have recruited Rohan Murray who is a ndia’s decision to deny security investment plans of private firms such as marine engineer and Captain Valentine Iclearance to the world’s biggest Dubai’s DP World Ltd, Adani Ports and Dias as a marine consultant with Mark port crane maker, China’s state-owned Special Economic Zone Ltd (APSEZ) Lomas and I overseeing the management Zhenhua Heavy Industries and ABG Container Handling Pvt. Ltd during the initial stages.” Mark Lomas Co. Ltd (ZPMC), to supply cargo that are building new container loading is the Director of LOC Middle East handling equipment to cargo terminals facilities at , and India. “LOC has been very active at Union government-owned ports will Kamarajar Port and VO Chidambaranar in India for a number of years and we have “serious implications” for the Port, respectively. All the three firms are very optimistic that this office will country’s port industry, according to have separately ordered cranes from grow in the current expanding market. industry executives. The reasons for ZPMC worth a combined $115 million. Clients have welcomed the prospect the denial have not been disclosed by It could also delay the construction of a permanent LOC office in India to the government. The decision has upset schedule of these new facilities. service their requirements.”

10 maritime gateway / december 2014 Krishnapatnam Port bags CSR award

s part of the Dubai Maritime Week, As part of its broad Athe annual Seatrade Maritime CSR framework, the Awards was hosted on October 27, 2014, port has embarked wherein individuals and organisations on a series of from across the Middle East, Africa human development and the Indian subcontinent maritime initiatives specifically and shipping industry were honoured. creating novel Widely recognised as the region's opportunities for premier maritime awards, it attracted empowerment and 14 entrants to the CSR category. Award enterprise building. winners were chosen by an independent Currently, the port panel of judges based on a set of fair and invests its resources transparent criteria. The 2014 Seatrade into education; Maritime Award for the category skill promotion and – Corporate Social Responsibility job development; C Sasidhar, MD, Krishnapatnam Port Company Limited receiving the award from C F George, MD, was awarded to Krishnapatnam Port Simatech Shipping LLC, alongside Chris Hayman, Chairman, Seatrade. health, safety and Company Limited. environment; community and local programme for the nearby villages. economy development; and employee The port started its CSR endeavour It then created community & local development. All the activities by building 500 houses with all economy development programmes that are executed through its exclusive infrastructural amenities as a part have helped in empowering the local partnership with CVR Foundation. of its rehabilitation & resettlement community to grow along with the port.

Bernhard Schulte Sical to use iron ore port terminals for Ship Management other cargoes expands operations in India ogistics provider Sical has revealed has approached the management of Lthat the ban on the export of iron Kamarajar Port at Ennore to let the ore has impacted its iron ore terminal terminal handle coal for TNEB units. ernhard Schulte Shipmanagement at Ennore. The terminal, though was "The Port Board has considered the B(BSM), a leading Germany-based complete in all respects, however proposal favourably and the company ship management company said it is could not commence its commercial now awaits final approval from the planning to expand operations in India operations. The company invested ministry," said the company's chairman. and raise the headcount by 15-20 per around `540 crore on this project. Once the terminal is put to use it would cent by December next year. Elaborating support the company's growth plans. on the expansion plans, BSM India Sical Chairman R Ram Mohan said that The company is also facing similar Deputy Director Sanklap Shukla the investment in this subsidiary is yet issues at the Mangalore Port where it has said, "The current Key performance to yield any financial returns. Apart from invested in an iron ore handling facility. indicators given to Delhi and this, an amount of `4 crore per month To complete the project, the company offices is that a 15 per cent increase is required to service the principal, has approached the port authorities in the pool strength with regard to the interest and other expenses. To make seeking its permission to handle multiple seafarers annually." the investment productive, the company cargoes. BSM currently has 4,000 seafarers from India. "A difficulty we are facing is that Last mile connectivity for major ports Indian seafarers are in fact the highest paid seafarers in the world." o put port connectivity works on the administrative control of Indian Ta fast track, 12 Indian ports will Railways, will undertake project "If we are able to stagnate the wages and pool the resources to set up a new development and carry out other don't start increasing the wages all over company. The Union government is set engineering works. The movement of again then we are looking at substantial to clear a proposal for creation of a Port cargo by railway improves efficiency increase. It would even go to 20-25 per Infrastructure Vikas Nigam Ltd. The and reduces costs when compared to cent per annum," Shukla said. BSM company will construct, operate and movement through road. As reported India Director Swapan Paul said there maintain rail and road infrastructure to by Business Standard, the company's is a great dearth of quality seafarers in facilitate connectivity for transportation paid-up capital will be `50 crore, with the market and therefore the company's of goods from ports in India or abroad. equity participation from the 12 major primary focus would be on high-quality The Union shipping ministry is in the port trusts. The authorised share capital people in order to strengthen the process of seeking Cabinet approval will be around `100 crore, divided into a workforce. for this. Rail Vikas Nigam Ltd, under million equity shares of `1,000 each.

december 2014 / maritime gateway 11 NEWS

Shipping lines Maersk seeks to cut unprofitable contracts need to announce low sulphur surcharges

ith the deadline for the Wimplementation of Emission Control Areas (ECAs) drawing closer, shippers have become increasingly worried over the lack of information on low-sulfur surcharges coming from shipping lines. “With one or two notable exceptions, few shipping lines have provided information to their customers on their low-sulphur fuel strategies and the extra cost to be passed on to shippers aersk Line plans to cut unprofitable long-term contracts and raise its via increased rates or bunker surcharges," Mshipping rate again as weak demand and persistent over capacity are said Global Shippers’ Forum secretary likely to continue for at least two more years, a senior official at the company general Chris Welsh. said. Silvia Ding, who heads the South China operations said that the current So far, only Maersk Line, Mediterranean spot rate for shipments moving from Asia to Europe, the world’s busiest trade Shipping Company (MSC) and route, is unprofitable, and that Maersk Line will raise its shipping rate again. CMA CGM have released details on “We need to be more disciplined in pushing the general rate increase to make their charges, while Orient Overseas sure it is sustainable,” she said. Container Line (OOCL) has given Several attempts by large operators such as Maersk Line and France’s CMA information on its trans-Atlantic routes CGM SA to push through freight increases have failed. Long-term shipping only. deals typically offer operators lower margins in exchange for steady revenue and volume. “If we can’t get the rate up to a sustainable level, then in some IL&FS to develop cases it might mean we have to walk away from certain businesses,” Ding said. multipurpose Drewry Maritime Research said it expects dozens of large container vessels will be added on the Asia-Europe trade route this year, which it predicts will terminal berth at lead to a nearly 13 per cent boost in capacity through the end of 2015, putting Dighi Port further pressure on freight rates. L&FS Engineering and Construction ICompany has bagged a contract Container Corporation of India Ltd appoints for developing multipurpose terminal Director berth 5 of Dighi Port. The contract is valued at `179.84 crore. The project he Ministry of Railways vide CONCOR has announced the financial involves engineering, procurement, Torder dated August 11, 2014 has results for the quarter ended September and construction of multipurpose berth, communicated the appointment of 30, 2014. The Company has posted a backup yard development, and utilities N Madhusudana Rao, as part-time net profit of `1,918.80 million for the of multipurpose terminal berth 5 on Government Director of Container quarter ended September 30, 2014 as north side of the port in Agardanda in Corporation of India Ltd (CONCOR). compared to `2,426.80 million for the Maharashtra. The scope of the contract In this respect, the company has quarter ended September 30, 2013. Total includes design and construction of informed that the Board of Directors Income has increased from `13,324.70 multipurpose berth, reclamation of 50 have appointed N Madhusudana Rao as million for the quarter ended September acre of backup area and other works director on the Board of CONCOR w.e.f. 30, 2013 to `14,468.30 million for the like paved area, buildings, internal roads October 18, 2014. quarter ended September 30, 2014. among others. Maersk Q3 net profits rise by 33 per cent .P. Moller Maersk A/S has reported to 2,401k FFE, 0.9 per cent unit cost 12 out of 20 Triple-E vessels have been A33 per cent rise in Q3 net profits. reduction to $2,597/FFE and average rate delivered. Total costs increased by 2.8 Maersk Line increased profit by 24 per increase by 0.9 per cent to $2,679/FEE. per cent ($168 million) against a volume cent to $685 million ($554 million in increase of 3.7 per cent. Majority of Fleet capacity increased by 6.3 per cent 2013) and ROIC of 13.5 per cent (10.9 cost increase attributable to 5.3 per cent to 2.8 million teu as Maersk Line took per cent in 2013). The strong result was increase in terminal costs and 7.3 per cent delivery of three Triple-E vessels in Q3; driven by 3.7 per cent volume increase increase in inland transportation costs.

12 maritime gateway / december 2014 Indonesia’s focus on seaports development CIL may increase production to 1,000 million tonnes by 2019 nion Coal Secretary Anil Swarup Uhas revealed that Coal India Ltd (CIL) would mine 1,000 million tonnes of coal by 2019, doubling its present production of 500 million tonnes. As Swarup reviewed different projects of Mahanadi Coalfields Ltd (MCL), a subsidiary of CIL, he said, the progress of 15 projects of MCL, including Angul-Sukinda common rail corridor, were under review. The coal ministry has targeted completion of the railway ini Soemarno, State-Owned Enterprises (SOE) minister, Indonesia has line project through which coal will Rannounced to focus more on the development of sea ports and public transport be transported to various industries by in the country, supporting the new president’s maritime axis platform. Rini stated December 2017. “In the initial phase, that, her main task (as well as the task of other new ministers) was to translate the 30-35 million tonnes of coal would be president’s vision of a strong maritime country into reality. “One of my tasks is to see transported while it would be increased how our sea ports are developed by Pelindo I to IV and how to improve them. It is to 200 million tonnes by 2019. The the task of each minister in the new cabinet to materialise the sea-toll project,” said progress of the project is satisfactory in Rini in a press release. the state," said the coal secretary. During his presidential campaign, President Joko “Jokowi” Widodo had reinstated Recently, the Container Corporation of a maritime-axis platform that involved a sea toll and modern fishing ships, among India (Concor) decided to invest `156 other things. PT Pelabuhan Indonesia III (Pelindo III) and Pelindo IV had previously crore for 26 per cent equity to participate stated that they were repairing 24 ports in eastern Indonesia to accelerate the in the Angul-Sukinda railway line implementation of the sea-toll project. project. The project, being constructed under the public-private partnership KPCT focusing on West African market (PPP) model, will provide a rail link to the steel and power plants located in fter successfully introducing economies of India and Ivory Coast Angul, Dhenkanal and Jajpur districts. Aregular cargo shipping services to are poised to grow, KPCT is keen on Myanmar, Krishnapatnam Port Container becoming East India gateway for the two Terminal (KPCT), located 30 km from countries. As a first step, Krishnapatnam Jharsuguda-Barpali Nellore, has been focusing its attention Port Container Terminal organised a on Ivory Coast to operate cargo services trade meet in Abidjan recently to have rail project to be to Ports of San Pedro and Abidjan a mutual dialogue for bilateral trade ready by December (West Africa). India’s trade with West development with trade association. Africa increased 15 times since 2003. 2017 They were familiarised with the Rice being the main export, the port he Central and Odisha state infrastructure and operational advantages also handles exports of pharmaceutical governments have jointly resolved to of KPCT and the ease of shipping T products, machinery, articles of iron, ensure completion of Jharsuguda-Barpali chemicals, plastics, rubber and vehicles. containerised cargo owing to tariff railway link project by December 2017. Over 69 per cent of India’s cashew flexibility, connectivity to cashew and The rail line will connect different coal imports go to Ivory Coast, Guinea- timber processing units in the hinterland, mines in Odisha. Bissau, Benin and Ghana. Trade takes various vessel services connecting KPCT place largely from two important ports with Abidjan and future trade potential The Jharsuguda-Barpali rail link project of San Pedro and Abidjan. As both the benefiting West African countries. is a part of the three inter-state rail corridor projects proposed by Coal India SCI reports 18.5 crore profits Limited, which are dedicated to coal ` evacuation in Maoist-affected areas of hipping Corporation of India has income of the company during the period Odisha, Chhattisgarh and Jharkhand. Sreported net profit of `18.59 crore under review went up by 3.5 per cent to Two other projects are the 93-km for the quarter ended September this `1,093.52 crore from `1,056.43 crore in Hazaribagh-Shivpur-Tori-Kathotia fiscal. The company had registered a net the July-September quarter of previous rail corridor project and the 180-km loss of `123.53 crore in the comparable fiscal. Total expenditure came down to Bhupdeopur-Korichhapar-Baroud rail period of the previous fiscal. Total `1,113.07 crore from `1,134.50 crore. link project.

december 2014 / maritime gateway 13 NEWS

100 per cent FDI in railways to boost freight movement

Modernisation of Indian railways is a priority for Prime Minister Narendra Modi. To enable the transformation, his government has allowed 100 per cent FDI in railways infrastructure, a move that is also expected to boost the “Make in India” initiative. Among the new projects identified for FDI are around 11 freight lines including three new freight lines: Dankuni-Gomoh; Whitefield- Kolar; and the North-South Dedicated Freight Corridor that will connect Delhi with Chennai. Indian Railways runs around 11,000 trains everyday, of which around 4,000 are used to transport goods. Freight traffic has improved from last year and Indian Railways carried around 621.6 million tonnes of revenue earning freight traffic during April 1-October 31, 2014, outh Korea will provide India its India’s Ministry of Railways and the which is up about 4.8 per cent y-o-y. In Stechnical expertise to modernise the Ministry of Land Infrastructure and October 2014, the revenue earning freight Indian railways under a Memorandum of Transport (MOLIT) of South Korea in traffic carried by Indian Railways was up Understanding (MoU) signed between Seoul. about 8.5 per cent y-o-y.

SCI appoints DKT Allseas Shipping as its UK liner agent Delay in funds may halt work on e Keyser Thornton (DKT) Allseas Belgium since 2008.The UK venture DShipping has been appointed as will add an in-depth knowledge of the Belapur-Uran project the UK liner agent and representative UK market to the services it currently for the Shipping Corporation of India offers. SCI operates two services a entral Railway has threatened to stop (SCI). The company, which is based week into the UK, both calling at the Cwork on the Seawoods-Belapur- in Tilbury, Essex, will take over the Port of Felixstowe in a vessel-sharing Uran double line project as the City and agency with effect from November 1. agreement. Last year, SCI's services Industrial Development Corporation The new agency agreement is based on carried a total of 41,000 teu in imports (Cidco) has not released its share of funds a longstanding relationship DKT has and exports into and out of the UK, and – `78 crore – for 2013-14. The railway with SCI. DKT has been SCI's agent in 25,000 teu into and out of Antwerp. board has released its share of `39 crore this year. According to Central Railway officials, 20 per cent work on the 27-km- Mumbai to have its first marina off Princess and long corridor has been completed. Victoria Docks The project aims to connect residents of Jawaharlal Nehru Port Trust (JNPT), he Mumbai Port Trust (MbPT) has revived plans to build the city's first marina Uran, to Mumbai and Thane by railways. off Princess and Victoria Docks that will accommodate around 300 luxury T In anticipation of the proposed railway boats, including yachts and catamarans. The port trust had made efforts to have a line, massive development has taken marina near Ferry Wharf but its bidders were not impressed with the location, near a workshop, where the draft was less. MbPT deputy traffic manager Gautam Dey shape along the route. The project is said, The new location is easily accessible by road, and it will have enough space for being implemented on a cost-sharing operations and maintenance, besides leisure and shopping facilities. basis between Cidco and the ministry of railways in the ratio of 67:33. Railway MbPT has appointed Engineering Projects India Ltd (EPI) as consultants for the officials said the work progress depended project. According to the trust officials, “The successful bidder will be given the on release of funds from Cidco. Another area on a 30-year lease. Apart from refueling and maintenance services, the marina's bottleneck for the project is that Cidco operator can commercially exploit the land, for which floor space index will be is yet to acquire and hand over land granted by MbPT.” The successful bidder is expected to offer minimum facilities like parking, a reception area, wireless internet access, lockers, a fueling facility, besides required for 2.71-km section of the line to boat accessories and spare parts. the railways.

14 maritime gateway / december 2014 OOCL records Cargo handling improves at Haldia Dock modest rise in Q3 revenues espite low draught in the navigation channel, Haldia Dock Complex (HDC) Dunder the Kolkata Port Trust (KoPT) has succeeded in creating a record by OCL has posted a 0.5 per cent loading 24 rakes in a single day. The Dock hopes to reach the 30 million tonne Orevenue increase per teu in the mark in cargo handling by the end of 2014-15. In 2013-14, the port facility current Q3, as compared to 2013. This had handled 28.51 million is despite a rise in third quarter volume tonnes. and revenue on major networks. The We have achieved a lot. shipping company has recorded a 21 Between April to October per cent increase in Asia-Europe trade in 2013, the average turn volumes, and a 17.3 per cent increase in round time for ships was revenue on Asia-Europe trade to $310 4.80 days. Between April million. Trans-Pacific lines saw steadier and October, 2014, this growth, with volume increasing 6.3 per came down to 3.02 days. cent and revenue growing 5.5 per cent The average pre-berthing year-on-year to $519 million; a steady waiting time for ships but not significant growth on lines that (due to the port) was 34.88 account for around one-third of OOCL’s hours during the first seven business. months of 2013-14. This has now come down to 6.88 hours. The average output of cargo per ship day per vessel rose from 5,663 tonnes to 6,806 tonnes. We are “The better-than-expected supply at a disadvantage so far as draught is concerned but have more than adequately demand conditions and the low base last made up for this, said a dock official. We are also in the process of increasing year helped to support the freight rate the number of railway sidings to bring about further improvement, he added. uptrend. Looking forward, despite the recent clods over the global economy, we expect the freight rate to show a stabilisation trend in the following Planning some open space in Mumbai quarters given the low base,” revealed Citi Research analysts. “On the other edevelopment of Mumbai's mostly Port Trust, the largest landowner in hand, we also see the upside of freight Rderelict docklands is being planned India's financial hub, much of the seven rate to be capped due to the industry that will create a waterfront where square kilometres up for redevelopment oversupply condition, which is likely people living in the world's second- is occupied today by crumbling to deteriorate in 2015 if large vessel most densely populated city can go to warehouses, informal housing and delivery starts to pick up.” lift their spirits, and the rich can go to workers who eke out a living breaking play. The government has set a panel down disused ships or sorting through Ocean Sparkle Ltd to plan the waterfront. This is a real scrap metal. The government, which has opportunity to give Mumbai what it valued the land at $12 billion or around embarks on fleet doesn't have, to give it open space, said `73,200 crore, is pitching the project improvement Narinder Nayar, a businessman who as a shining example of what urban sits on the panel. Owned by Mumbai regeneration in India should look like. he Asian Development Bank T(ADB) is granting $40 million loan to Ocean Sparkle Ltd (OSL) for Global shipping industry growth dismal fleet improvements to bring further efficiency, lower freight costs, speed he rate of growth in global fleets limited to dry cargo flows such as up shipping, and underpin the country's Twas “lower than that observed bulk commodities, which grew by 5.6 push to expand maritime trade, the during any of the previous 10 years” per cent while world container port Manila-based bank said. and that the prospects for the current throughput grew by roughly the same The loan will help the company year suggested an even lower growth amount. Last year also witnessed more purchase up to 10 tug boats for use at rate – a trend reflecting the downturn of volatile maritime freight rates. All ports in India and neighbouring South of the largest historical shipping cycle shipping segments suffered substantially, Asian markets that are located along which peaked in 2012, reported the UN with freight rates in dry bulk and tanker busy east-west shipping routes. It will Conference on Trade and Development markets reaching a 10-year low in 2012 also help finance the acquisition of two (UNCTAD) in its review of maritime and similarly low levels in the liner platform supply vessels and anchor transport 2014. Maritime shipping market. Low performance of freight handling tug supply vessels, allowing grew by an average of just 3.8 per cent rates was mainly attributable to the poor OSL to take advantage of an expected in 2013, the equivalent of nearly 9.6 world economic development, weak increase in offshore oil and gas activities billion tons in total volumes. Much of demand and overcapacity in the global in the near future. the expansion in seaborne trade was shipping market.

december 2014 / maritime gateway 15 NEWS

India records decline in `1,500 crore fund for shipbuilding automobile exports

ndia has been witnessing a fall in Iautomobile exports and September has been a particularly bad month with most auto makers posting double-digit drop in shipments. While some companies cite increased domestic focus for the slide in export numbers, industry experts say the advantage that India enjoyed because of its low cost of manufacturing is slowly eroding, making vehicles manufactured here less competitive in the international market. Korean major Hyundai Motor, the top auto exporter from India, as well as Japan's Nissan Motor and French Renault have shifted exports of some models out of India, even as the government is pressing to boost local manufacturing. To attract manufactures including auto makers when regions like Eastern Europe are offering cost- effective alternative options, industry ndian government is in advanced stages of implementation to have a experts say India must first fix its Idedicated fund for shipbuilding industry to be handled by Exim Bank which creaky and inadequate infrastructure will help the ailing sector with at least `15,000 crore of funds. The fund will such as ports and roads and clear other be for financing the construction, refitting and repair of ships, said Exim Bank bottlenecks, including an unfriendly tax chairman and managing director Yaduvendra Mathur. The fund will serve as the structure. equity and when combined with Exim Bank's capability to leverage ten times, can result in the availability of `15,000 crore in fresh liquidity to the sector. Initially, there was talk of creating a corporation to handle this but given past experience of an unsatisfactory outcome after formation of such a Indian textile exports body, the government may come to Exim Bank, Mathur said. "The National Manufacturing Council is strongly supporting creation of this fund within Exim to US surge Bank and the PMO is also supporting the Exim Bank," added Mathur. ndian textile and garment exports to At present, private sector companies like Bharti Shipyard and ABG Shipyard Iits single largest market – the US- are engaged in the sector along with the state-run ones. Many of these have made a record surge this year. companies are undergoing financial stress due to tepid conditions in the While a renewed buoyancy in textile industry which experts say are cyclical in nature. and apparel exports is helped by a sharp improvement in raw material supplies, the strong performance by India this year is also a reflection of a combination of DCI to resume work at Visakhapatnam Port global factors – a steady improvement in demand as the American economy picks redging Corporation of India has expressed plans to resume dredging in up, a progressive decline in Chinese exports to major markets such as the the inner harbour of the Visakhapatnam Port. Even as the port is reviving D US, currency appreciation in Indonesia, shipping operations, DCI is waiting for arrival of Dredger-XVI from Kakinada labour unrest in Asian competitor after completing its job in the floating dry dock at Kakinada Port in a few days.The Cambodia and safety concerns after a trailing suction hopper dredger has a hopper capacity of 7,500 cubic metres. major factory fire in Bangladesh last In August, DCI dredged at the northern arm of the port after bagging the work order year. Indian textile and apparel exports for `34.86 crore. Dredging in the inner harbour to raise the draft from 14 to 16.1 have risen nearly 7 per cent during metres is being split into two – one by DCI and rock dredging by blasting by Dharti January-August 2014, compared with an Dredging Infra Ltd. The latter is dredging rock strata at turning circle and LPG jetty average 2 per cent annual growth in the at a cost of `212 crore. last five years.

16 maritime gateway / december 2014 Restructuring ABG The purpose of setting SEZs defeated Shipyard Ltd

ebt-laden ABG Shipyard Ltd Dhas started the long process of restructuring its business and reworking its debt obligations under the terms of its approved corporate debt restructuring (CDR) plan. At the behest of the shipping company’s lender consortium, turnaround specialist Alvarez and Marsal (India) has been appointed to oversee the implementation of the debt restructuring package. As part of this restructuring, a chief restructuring officer (CRO) has also been appointed. “When the restructuring ore than 50 per cent of land holidays granted to SEZs between package was approved, banks had allotted to special economic 2004 and 2010. The purpose of mandated that a restructuring officer M zones (SEZs) across the country setting up SEZs was to create will be appointed who will control the remains idle, and its very purpose largescale employment, investment, company’s cash flows and implement the has been defeated with no significant exports and economic growth. The package properly,” said a senior official increase in employment even as the CAG report, however, said national at a public sector bank, part of the government's revenue foregone was indices on economic growth, trade lenders’ consortium. The restructuring to the tune of `83,000 crore between infrastructure, investment and officer was appointed in October after an 2007 and 2013, the comptroller and employment generation did not show agreement to recast nearly `11,000 crore auditor general (CAG) has found. any upward trend due to SEZs. in debt was approved by the company’s lenders. According to the restructuring Exposing systemic weaknesses in "Land acquired for public purposes agreement, all bank accounts of the tax administration, a performance was subsequently diverted (up company have now been shifted to audit on SEZs by the CAG revealed to 100 per cent in some cases) that ineligible tax deductions were after de-notification," the report a single bank, as opposed to having extended to companies, some of said. "Seventeen states were not accounts with multiple banks earlier, which diverted land allotted to them on board in implementing the so that the 22-bank consortium has to other uses. There was overall special economic zones Act with complete control over the cash flow of decline in manufacturing in these matching state level legislations, the company. zones. A similar study on functioning which rendered the single window of SEZs was carried out by the system ineffective. Developers STX steps forward parliamentary standing committee and unit holders were almost on commerce in June 2007 where left unmonitored, in the absence to share expertise in it had estimated the duties foregone of an internal audit set-up. This LNG carrier building at over `1.75 lakh crore from tax posed a huge risk for revenue administration," the report added. orea based STX Offshore & KShipbuilding Co has offered to share technology with three Indian Allcargo Logistics announces Q2 2014 results yards for constructing LNG carriers in India. But the beleaguered South Korean llcargo reported its total revenue cent. Total revenue at `2,805.3 crore shipbuilder needs India's state-owned Aat `1,476.4 crore for the quarter for the half year ended September 30, natural gas firm GAIL (India) to relax its ended September 30, 2014, as against 2014, as against `2,072.2 crore for terms on a tender for nine vessels to let `1,079.9 crore for the corresponding the corresponding previous period, it participate. GAIL's shipyard eligibility previous period, an increase of 37 per an increase of 35 per cent, mainly criteria exclude STX mainly on financial cent, mainly on account of increase on account of increase in revenues grounds. "STX is the only global in revenues across all the business across all businesses of MTO, CFS shipowner with experience in building segments of MTO, CFS and Project & and Project and Engineering. 85 per LNG ships to come up with an offer to Engineering. 85per cent of the revenue cent of the revenue is from the global share technology with Indian yards such is from the global MTO business. MTO business. EBIDTA at `258.9 as Cochin Shipyard, L&T Shipbuilding, EBIDTA at `132.5 crore for the quarter crore for the half year ended September and Pipavav Defence and Offshore ended September 30, 2014, as against 30, 2014, as against `202.8 crore for Engineering Co," said a spokesman for `101.2 crore for the corresponding the corresponding previous period, an India's shipping ministry. previous period, an increase of 31 per increase of 28 per cent.

december 2014 / maritime gateway 17 NEWS

Kuehne + Nagel announces new SVP, Seafreight Plans to revive South Asia Pacific and MD of India Yamuna by 2017

uehne + whole. His international assignments inya Ejima, Indian head of Japan KNagel as SVP, Seafreight, South West Europe SInternational Cooperation Agency has appointed and most recent as SVP, Seafreight, (JICA), said that he expects to "swim Paolo North America also demonstrates his and drink the Yamuna river water by Montrone as strong network and exposure to the 2017." Moreover, the shipping ministry the new SVP, global market. Based in Singapore, has proposed to bring the river stretch in Seafreight, Montrone will continue to drive the Delhi under the National Waterway Grid South Asia development of sea freight solutions in so that the Centre can invest and take Pacific, Paolo Montrone the region. up work of cleaning and maintaining a succeeding certain water level. A senior executive with more than 30 Stephan Danne, years of extensive logistics experience, Nitin Gadkari had pushed for dredging who was Danne previously served as Kuehne and navigation in Yamuna soon after recently named + Nagel Managing Director for assuming charge. Urban development Managing both Thailand and Taiwan and most minister Venkaiah Naidu has launched Director, recent as SVP, Seafreight, South Asia the first phase of the 59-km interceptor Kuehne + Pacific where he established a solid sewer project that will help cleaning Nagel India. framework for sea freight operations Yamuna as only treated sewage will be A Kuehne Stephan Danne in the region. The combination of discharged into the three major drains + Nagel veteran of close to 25 years, his skill-set and extensive in-house that flow into the river. JICA is currently Montrone brings with him strong knowledge puts the growth and associated with 16 projects relating to knowledge and depth of experience development strategies of Kuehne + sewerage and water supply with a total within Seafreight and Logistics as a Nagel India in very safe hands. loan commitment of `28,660 crore in states, including Delhi, Uttar Pradesh, Rajasthan, Punjab, Odisha, West Bengal, , Andhra Pradesh, Kerala, Shipping ministry invites attorney general’s Karnataka and . opinion on regulating stevedores he shipping ministry has sought that all operations in a major port Maersk adds vessels Tthe advice of the attorney general (owned by the Union government) on a recommendation by a five- with regard to handling of cargo to run on emission member panel to set rates for services and subsequent operations in the controlled routes rendered by stevedores and shore port may be done either directly by handling agents at non-public-private- the port, but if these operations are partnership (non-PPP) berths of ports assigned to agents, such assignment aersk Line has announced owned by the Union government. shall be with the previous sanction Mtenders for 10 newbuilt feeder of the Central Government, and vessels expected to cost up to $550 “That’s the crux of the issue, whether that TAMP needs to notify rates million, which are optimised for use in the rates for stevedores and shore for these operations, and that the Emissions Control Areas. The planned handling agents should be notified by agents so authorised shall not ships are a series of 3,400 Twenty- the Tariff Authority for Major Ports charge in excess of these rates for foot Equivalent Unit capacity vessels (TAMP) or not,” a spokesperson the port operations,” a five-member designed specifically to be run on for the shipping ministry said. “The panel of port chairmen headed by ministry is referring the matter to lower sulfur fuel. These vessels will Paul Antony, chairman of Cochin attorney general for his opinion.” operate in the Baltic Sea and be ice- Port Trust, wrote in its report on class strengthened. Shipyards in Japan, “The Major Port Trusts Act 1963 states regulating stevedores. South Korea, and China are said to be likely to bid for the project, but market commentators noted the South Korean 34 highway projects up for revival yards were experienced in both ice-class vessels and low sulfur designs. total of 34 projects worth more than or converted from public-private Chinese shipbuilders do not have much `26,000 crore are being forwarded partnership to Engineering, Procurement A experience in building ice-class vessels, for revival in the Ministry of Highways’ and Construction (EPC) mode to get latest presentation on infrastructure them going. Five of these have been while Japanese shipyards have not been targets to the Prime Minister, Narendra handed over to the concerned state building them for a long time. This Modi. The said projects, spanning governments while another 18 will be only leaves the Koreans in the equation, over 4,084 km, are being restructured awarded in EPC mode. reported Tradewinds.

18 maritime gateway / december 2014 Vizhinjam Port bags Major ports report increase in traffic viability gap funding

he Vizhinjam international seaport Tand container transshipment terminal project has cleared another hurdle with the Union government recommending it for viability gap funding. A S Suresh Babu, Managing Director and Chief Executive Officer of Vizhinjam International Seaport Ltd. (VISL), said the Centre had recommended the project for a viability gap funding of `800 crore, 20 per cent of the latest estimate of `4,000 crore for ll the 10 major ports, barring Kolkata Port and New Mangalore Port, posted a the first stage. Amarginal increase in cargo traffic for the first six months of the current financial year. All these ports put together handled 288.48 million tonnes of cargo against Babu said the viability gap funding 276.86 million tonnes for the corresponding period last year, marking an increase of clearance would boost investor 4.2 per cent, according to data released by the Indian Ports Association. Mormugao confidence in the project since led the pack by posting 22.25 per cent growth, followed by Kamarajar Port (15.56 it signalled the involvement of per cent) and V.O. Chidambaranar Port (11.52 per cent). the . “It has significantly enhanced the prospects of Kolkata Dock System and Haldia Dock Complex posted a negative growth of 0.86 getting a good concessionaire.” per cent. Mumbai Port was pushed to fourth slot, Jawaharlal Nehru Port to sixth and Chennai Port Trust to the ninth. Tonnage-wise, Kandla occupied the first slot, The bidding process to select a followed by Paradip, JNPT, Visakhapatnam, Mumbai and Chennai. private partner is progressing. VISL hopes to complete the tendering During April-September 2014, all ports, barring Kamarajar and Kandla, handled 40.6 process by December, paving the million Twenty-foot Equivalent Units of containers against 37.63 million tonnes, way for commencement of work. The representing 6.46 per cent. JNPT led the show followed by Chennai Port and V.O. viability gap funding amount will be Chidambaranar Port. Visakhapatnam registered a decline in container. disbursed through banks to the selected concessionaire. Antwerp and exhibit strong growth Shipping lines facing uring the first nine months of striking is the 4 per cent increase D2014, the Port of Antwerp and in containers.” Rotterdam will be reefer container the Port of Rotterdam have witnessed boosted by the results, especially a container throughput growth of 5.0 as the completion of its Maasvlakte scarcity per cent and 4.2 per cent, respectively. II development is on the horizon. le Schack Petersen, head of global Antwerp has handled around 6.7 Antwerp has further revealed that Ocommercial reefer management, million teu, while Rotterdam, Europe’s 10,526 ships called between January Maersk line has revealed that the supply largest port, has handled well over 9 and September, a decrease of 2.3 of reefer containers is not keeping up million teu, according to Container per cent year-on-year, however, with with the ever-growing volumes of fresh Management. throughput increasing, the result can be attributed to ever-larger container produce being transported around the Allard Castelein, CEO of the Port ships being employed by shipping world. The scarcity of reefer equipment of Rotterdam Authority said, “With companies. The Port of Antwerp was a pressing issue in the perishables the exception of a few sectors, the generated a direct added value of $12.5 shipping industry and needed to be port is doing pretty well. Particularly billion in 2013. addressed quickly, particularly in the Southern Hemisphere, added Petersen. COSCO Pacific reports increase in profits “In the Southern Hemisphere where they have more on-off seasons, they have n the Q3 of 2014 COSCO Pacific reported 8.5 per cent increase in profit less equipment and they are receiving it Iattributable to equity holders amounting to $86,943,000. For the nine months later,” Petersen said. “Carriers are not ended September 30, 2014, the company recorded 4.4 per cent increase in profits building enough containers to provide amounting to $233,729,000. For the first three quarters of 2014, the group’s container for increased demand in shipping throughput growth was satisfactory, leading to growth in profit from the terminals lately.” The Southern Hemisphere would business. For the three months and nine months ended September 30, 2014, total generally have to divert a lot of its fresh throughput rose 8.7 per cent to 17,605,389 teu and 9.6 per cent to 50,086,956 teu produce away from Europe to Asian respectively. For the three months and nine months ended September 30, 2014, the markets. overall average utilisation rate was 95.7 per cent and 95.1 per cent respectively.

december 2014 / maritime gateway 19 NEWS

Service enhancements at Hapag-Lloyd CMA CGM vessels become more energy efficient

he CMA CGM Group is retrofitting T10 of its vessels’ bulbous bows to achieve improved energy efficiency for slow steaming. The modifications are in addition to the 15 CMA CGM ships that have already been retrofitted in 2013 and 2014. The bulbous bows exchanges reduce ship’s fuel consumption and cut

CO2 emissions by improving the ships’ wave resistance and hydrodynamic efficiency. All vessels that have entered apag-Lloyd has announced NZA1 (New Zealand Loop A-1) the CMA CGM fleet in 2014 are sailing Henhancements to its services with optimised bulbous bows. between New Zealand – South East Tanjung Pelepas • Singapore • Brisbane Asia – North-Europe / Mediterranean • Tauranga • Lyttelton • Port Chalmers • The bows were initially designed for 24 (via connectivity to Fareast mainliner Tanjung Pelepas knots sailing speed, but following the services). NZA2 (New Zealand Loop A-2) implementation of the slow steaming, the group’s vessels now sail at speeds Started in early November, Hapag- Tanjung Pelepas • Singapore • Lloyd offers extended port coverage, between 16-18 knots. Bulbous bows Wellington • Timaru • Napier • have therefore been redesigned in increased capacity and improved Auckland • Tanjung Pelepas transit time on its New Zealand cooperation with Hydrocéan, a French services. A new weekly service offering NZA3 (New Zealand Loop A-3) engineering company specialised in hydrodynamics and which performed competitive transit time to Auckland is Singapore • Tanjung Pelepas • Auckland the hydrodynamic calculations. also introduced. The port rotation of the • Tauranga • Singapore improved New Zealand services are as The fleet optimisation reinforces follows: CMA CGM Group’s environmental commitment, the company said, adding Maersk joins Trident Alliance that its objective of 50 per cent CO2/ teu-km reduction between 2005 and rident Alliance consisting of 10 in sulphur content to 0.1 per cent from 2015 is on good tracks to be reached. Tcontainer carriers has recently the original 1 per cent. Maersk Group welcomed Maersk Line as a new CEO Nils Smedegaard Andersen said: member in order to test enforcement of “The most natural thing is to talk about New automobiles new low-sulphur fuel regulations. These what’s close to home, and that is the freight train from new regulations will be implemented Baltics. We hope, of course, that the in emissions control areas in Northern governments in the area will survey very Melpakkam Sattva Europe and North America. The alliance closely what our competition is doing ICD will work together with the governments as well, so we don’t give people a free of the Baltic Sea nations to monitor ride.” In order to prevent this free ride, freight train called AutoLinxSM has compliance by shipping lines, with the Maersk Line has already announced low- Abeen recently flagged off by the International Maritime Organisation sulphur surcharges of up to $160 per teu former Railway Minister, DV Sadananda making efforts to broadcast a reduction in the North Atlantic. Gowda, from Melpakkam Sattva ICD/Rail terminal to the Container Corporation of India’s multimodal India may raise steel import duties logistics park at Khatuwas near New Delhi. The train would carry 300 cars he Indian government is considering import tariffs. While the government manufactured by various car companies. Traising import duties on steel, as has not yet specified on how much the domestic steel makers have complained duties will be raised, currently the duties The launch of AutoLinxSM is a about surging shipments from China. are in the range of 5 per cent to 7.5 per significant milestone for India’s A decision in this regard may be taken cent. Struggling with overcapacity at automotive sector and APL Logistics soon said the Steel and Mines Minister home, China has boosted exports of steel Vascor Automotive. This unique door- Narendra Singh Tomar. Steel imports qualifying for a generous tax exemption to-door service covers the entire supply from the dragon nation doubled in to countries like India and Japan, chain for our customers-from assembly April-September from a year earlier, triggering accusations that mills there line to distribution centre to dealership prompting JSW Steel Ltd and other are taking advantage of the rebate to sell floor, said Bill Garrett, President and Indian steelmakers to ask for higher surplus steel cheaply. CEO, Vascor.

20 maritime gateway / december 2014 East Coast is calling! where are you?

22-23 January, 2015 Novotel Varun Beach, Visakhapatnam

december 2014 / maritime gateway 21 22-23 January, 2015 Novotel Varun Beach, Visakhapatnam ECMBS newsletter ECMBSPRE-CONFERENCE NEWSLETTER ON EAST COAST MARITIME BUSINESSBULLETIN SUMMIT 2015 deceMBER 2014 More rice for Tripura via Bangladesh? Brief News he Indian government Krishnapatnam Port installs Tmay ferry another 35,000 ‘Mechanised Coal Handling tonnes of rice for Tripura via system’ that will enhance the berth productivity to 12 million Bangladesh as train services in tonnes per annum, eliminating the north-eastern states have all intermediary supply chain/ been stopped till March 2016 logistics costs, ensuring quality, due to gauge conversion. The zero handling loss and faster Food Corporation of India (FCI) evacuation of cargo. The port recently ferried 10,000 tonnes expects to handle over 40 of rice in two phases from million tonnes of cargo in the Visakhapatnam Port in Andhra current financial year as against Pradesh via Bangladesh. “Several 25 mt handled in 2013-14. ships carried the rice from in (eastern) Bangladesh. From warehouses in Nandannagar near Visakhapatnam Port to Kolkata Ashuganj Port, Bangladeshi Agartala,” FCI official Nilanjan Andhra Pradesh government Port, then to Ashuganj Port trucks ferried the rice to FCI Chowdhury told IANS. has given clearance for the second phase development of Gangavaram Port located at Myanmar’s average trade volume Kolkata dock Visakhapatnam, at a revised cost creates record in of `1,318.73 crore. Expansion over $2.2 billion per month plan consists of four berths yanmar’s foreign trade seen. Individual trading cards monthly container (1 coal+3 multipurpose) with Mvolume during the April- have been given at all border handling increased cargo handling October period of this year trade zones for individual trading harat Kolkata Container capacity from 17.55 to 41 was more than $2.2 billion of residents in border regions BTerminals Pvt Ltd, a MMTPA to be developed within on average per month. If this and this will help reduce illegal wholly-owned unit of PSA 5 years. amount continues, total foreign trade. Border trade zones which International, is due to trade volume at the end of 2014- are currently operating are commence container handling Visakhapatnam Port Trust to 2015 fiscal year will be higher Muse, Lweje, Chinshwehaw and operation at the Kolkata Dock strengthen four berths in the than the projection of $25.7 Kanpitetee in Myanmar-China System (KDS) of Kolkata Port inner harbour - EQ 2,3,4 and 5 - billion, according to the Ministry border; Myawady, Techileik, Trust (KoPT) Terminal from at a cost of `400 crore to enable of Commerce. From April 1 to Kawthaung, Myeik, Kungtung, December 2014 and has already handling of bigger vessels. October 31 of 2014-2015 fiscal Mawtaung and Nabulal/ started mobilising equipment. year, foreign trade volume was Hteekhee in Myanmar-Thai KDS handled 50,092 Twenty Kamaraj Port Limited at Ennore $16013.338 million. Foreign border; Sittwe and Maungtaw in Feet Equivalent Units containers to set up a Special Economic trade is made through sea routes Myanmar-Bangladesh border and in September, creating record. Zone or a Free Trade Zone over as well as border trade. In sea Tamu and Reed in Myanmar- During the first six months of a 650 acre land acquired from trade, imports are higher than India border; The foreign export the current financial year, KDS exports while exports are more the Union Salt Department. structure in Myanmar has to recorded a growth of 7.93 per Kamaraj Port has also signed than imports in border trade. To cent in container handling as improve the trade volume, illegal rely on a few main products a MoU with Puducherry including mineral resources, compared to the same period of government to develop a port trades are being cracked down the last fiscal and continued to for border trade as well as sea natural gas, teak, agricultural and there. aquatic products. hold third position among the route in which most trades are major ports.

There is a huge potential for trade and allied activities by developing ports. State’s development is linked with ports and hence we will focus more on this sector

Sri N Chandrababu Naidu, Chief Minister, Andhra Pradesh

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22 maritime gateway / december 2014 ECMBS NEWSLETTER | DECEMBER 2014

Kolkata Port Trust begins operations at Kanika Sands fter years of effort, the leave alone the Kolkata Dock AKolkata Port Trust (KoPT) System with a load of 72,500 finally commenced transloading tonnes. The ship would have operations at Kanika Sands. Coal to berth at some other port in started being unloaded from the India but transporation of coal large bulk carrier carrying 72,500 from there to Farakka wouldn’t tonnes of coal for the NTPC’s have been as cost-effective. We power plant at Farakka. have moved the M V Vighnraj, a With operations starting at Kanika transloader, to Kanika Sands. The Sands, KoPT can now carry out entire cargo from the M V Sapphire round the year Ship-To-Ship was shifted to the M V Vighnraj transloading. Operations aren’t and it remained anchored at the possible at the Sandheads during deep-drafted location till daughter the monsoon due to bad weather. vessels and barges moved the ”Given the draft situation, the coal to Farakka through National M V Sapphire couldn’t have Waterway-I,” a senior port official entered the Haldia Dock Complex, said.

Concor to participate in Angul- GAIL seeks FDI in Myanmar Sukinda railway project partner for LNG s Myanmar opens up Aeconomically, it is attracting ontainer Corporation of India Ltd will participate in import terminal at more attention from investors. The CAngul-Sukinda railway line (ASRL) project in Odisha, country received just $901 million giving a boost to state’s rail infrastructure and development. Paradip in FDI in 2010. In 2013, that sum Concor has become a stakeholder in the ASRL project by roughly tripled. The Myanmar making 26 per cent equity shares investment, a company AIL India Ltd is looking Investment Commission has release said. Angul-Sukinda railway line is being constructed Gfor a strategic partner for its revised FDI targets to $5 billion under public private partnership (PPP) model for providing `3,108-crore floating LNG import for the upcoming fiscal year, and a vital alternative rail link to Angul-based steel plants with terminal at Paradip in Odisha. it expects FDI to grow 14 percent Keonjhar-Bansapani iron-ore belt and Talcher coal field GAIL has floated expression of annually through 2030. Which to Kalinga Nagar industrial belt. Besides CONCOR, Rail interest (EoI) to induct a strategic countries have invested the most Vikas Nigam Ltd, Odisha government, Odisha Mining partner in 4 million tonnes a to date? China has funneled more Corporation, JSPL and IDCO are the other stakeholders of year floating liquefied natural gas than $14 billion cumulatively into the joint venture, the release said. (LNG) terminal planned off the Myanmar; Thailand is second with more than $10 billion. Sectors Concor is also developing two multimodal logistic parks Paradip coast, sources privy to the development said. seeing the most funding include (MMLPs) at Parjang and Duburi stations of the new railway oil and gas, manufacturing, mining line for expanding container traffic in the state. and hotels and tourism. Chennai Port hunts for land to ease congestion hennai Port is looking for look out for land outside the city is gathering pace. Land area to land has already been awarded Cland to shift some of its so that some of the operations an extent of 121.74 acres which to a concessionaire, Mishra said. operation from its premises of port are shifted. Mishra said is in three parcels at Mappedu Chennai Port has floated tenders to ease congestion, according Chennai Port is looking to have near Sriperumbudur had already for developing the remaining to Port trust Chairman Atulya talks to with state government in been taken on long lease (99 parcels of land. The proposed Mishra. This comes in the wake identifying land near the beach. years) from SIPCOT. dry port will consolidate the of Union Minister of Roadways, Meanwhile, the development at position of Chennai Port as Highways and Shipping Nitin multimodal logistics hub and dry The land has been parceled into container hub on the east coast Gadkari suggesting to the port at Sriperumbur to cater to 16 acres, 30 acres and 75 acres. and will facilitate enhancement Chennai Port Trust chairman to containerized traffic in the port “The work in the 16 acres of of the port capacity.

SAARC Motor Vehicle Agreement for passenger and cargo vehicles movement will be path-breaking with wider scope for movement of all types of vehicles across member-states

Sri Nitin Gadkari, Minister of Road Transport & Highways and Shipping, Government of India

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december 2014 / maritime gateway 23 ECMBS NEWSLETTER | DECEMBER 2014

Adani Ports lays foundation stone for `1,270-cr project he Union Shipping Minister and Managing Director M A TNitin Gadkari has laid Baskarachar said that while foundation stone for the ADANI Ennore Container `1,270-crore container terminal Terminal Pvt. Ltd, company at Kamaraj Port (Ennore), which floated by Adani Ports and SEZ will be developed by Adani Ports Ltd, will construct berths and and SEZ Ltd, through its newly equipment, the Port will invest floated company. The company around `300 crore in dredging has entered into a 37per cent and to create rail and road revenue sharing agreement with networks. The terminal which the port management for this will come in 36.5 hectares of project and this is considered land will have two berths and to be one of the highest in the first one will be ready in 27 industry in the recent times. months, while the second berth Kamaraj Port’s Chairman will be ready in two years.

Vizag: Future Logistics Hub Isuzu Motors AP he east coast, which has Confederation of Indian seamless connectivity to the unit to be ready Thitherto remained largely Industry (CII) Institute of hinterland,” said Mahidhar. by 2016 unexplored, is poised to become Logistics, Chennai. “The east Visakhapatnam can derive the a logistics hub. coast, particularly Andhra maximum advantage as it has he pick-up truck unit being Pradesh, which has a number one of the biggest major ports, established by Isuzu Motors The trade, which has remained T of coastal districts and the an international airport, and the India Private Ltd. in Sri City largely confined to the ports National Highway (NH) running NH running close to the port, industrial estate in Chittoor of Gujarat and Mumbai, is close to the coast, gives it an airport, and the Multi Modal district of Andhra Pradesh will expected to shift to the east added advantage to promote Logistics Park (MMLP), which be ready by 2016, according coast in future, according logistics in a big way. Providing would cater to the needs of to Managing Director Takashi to K V Mahidhar, Deputy roads from the ports to the logistics providers using road, Kikuchi. He said the company Executive Director and Head, National Highway would ensure rail, seaport, or airport. was at present importing the parts and assembling the trucks in Chennai at Hindustan Motors. Indian investment in Nepal “Our unit with an initial capacity of 50,000 pick-up trucks will be ndian ventures in Nepal are Paints, Essel Infra Projects • Everest Power: 184 MW ready 2016. We will gradually Iengaged in manufacturing, Limited and Tata Projects, etc. Upper Karnali St-1 services (banking, insurance, increase the capacity to 1,20,000 dry port, education and In recent years, hydropower • Bhilwara Energy Limited: vehicles per annum by 2019-20,” telecom), power sector and sector has emerged as an 120 MW Likhu-4, 50 MW he said. attractive sector for Indian Balephi, 194 MW Mugu tourism industries. Some “We are bullish about the Indian large Indian investors include, investments. Government of Karnali-1 & 274 MW Humla Nepal has issued 28 survey Kamali-I) market and as the economy is ITC, Dabur India, Hindustan growing the segment will register Unilever, VSNL, TCIL, MTNL, licenses for hydropower projects in Nepal having generation • Patel Engineering Ltd: 130 faster growth,” Mr. Takashi State Bank of India, Punjab MW Budhi Gandaki ka & 260 Kikuchi said The company was National Bank, Life Insurance capacity of 8249 MW to Indian companies/ joint ventures. MW Budhi Gandaki kha investing `3,000 crore on its Corporation of India, Asian project in AP in phases. “We are Paints, CONCOR, GMR These include: • PES Energy Pvt. Ltd: 210 MW Phulkot Karnali & 216 very favourably located in AP, in India, IL&FS, Manipal Group, the vicinity of Krishnapatnam MIT Group Holdings, Nupur • Satluj Jal Vidyut Nigam MW Upper Trishuli-l Limited: 900 MW Arun III Port, and on the Bengaluru- International, Transworld • LANCO Infratech Limited: Chennai industrial corridor. We Group, Patel Engineering, • GMR: 900MW Upper 303 MW Namlan Project, 200 are the biggest customers of Bhilwara Energy, Bhushan Karnali and 600 MW Upper MW Karnali-7 & 100MW Krishnapatnam Port right now,” Group, Feedback Ventures, R Marsyangdi Kaligandaki Gorge he added. J Corp, KSK Energy, Berger

Prime Minister Modi has emphasised rapid growth of the manufacturing sector in the eastern part of the country to match with the western part.

Smt Nirmala Sitharaman, Union Minister for Industry and Commerce, Government of India

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24 maritime gateway / december 2014 ECMBS NEWSLETTER | DECEMBER 2014

Myanmar: Increasing Trade SITTWE ndian exports to Myanmar for the period April 2012 to KYAUKPYU Kaladan Project: Transit route envisaged between Kolkata IMarch 2013 were valued at THANDWE (nearest Indian port / commercial hub) and Mizoram. $544.66 million, while imports during the same period pegged YANGON Stretch Mode Distance at $1412.69 million. During the PATHEIN Kolkata to Sittwe port in Myanmar Shipping 539 km 2013-14 period, India recorded MAWLAMYINE $787.01 million worth exports Sittwe to Paletwa (River Kaladan) Inland Water 158 km to Myanmar, recording 44.50 Transport per cent increase over the DAWEI Paletwa to Indo-Myanmar Border (in Myanmar) Road 110 km previous year. Imports from Border to NH. 54 (Lawngtlai) (in India) Road 100 km Myanmar during the period MYEIK were $1,395.67, marking a Source: Ministry of development of north eastern region decline by 1.20 per cent. Top five exports to Myanmar from India in Top five imports from Myanmar to India 2013-14 ranked by value in $ million in 2013-14 ranked by value in $ million There are a total of nine ports KAWTHOUNG in Myanmar extending from imports. Kyaukpyu Port, which 59.24 4.68 north to south of the country. lies on the route of Indo-China 9.69 2.77 137.19 By region, one is in Yangon, trade waterway, serves as a 60.77 624.13 748.74 three in Rakhine, one in corridor of Mekong-India trade. Ayeyarwady, one in Mon and The port has helped in boosting three in Tanintharyi. Yangon India’s trade with the South undertakes export and import East Asia countries. 82.16 of cargo; Sittwe, Pathein, 133.99 Pharmaceuticals Kaladan Multimodal Transit Timber, articles of wood and wood charcoal Mawlamyine and Myeik deal Nuclear reactors, boilers, machinery and mechanical only in export of cargo; and Project appliances & their parts Vegetables, roots and tubers Electronic goods Fruits and nuts Kyaukpyu, Thandwe, Dawei and India had inked an agreement Residues and waste from the food industries; prepared Coffee, tea and spices animal fodder Ores, slag and ash Kawthaung handle domestic with Myanmar for the Iron & Steel cargo. The port of Yangon is development of the Kaladan the premier port of Myanmar Multimodal Transit Transport Myanmar-Thailand trilateral up the northeastern region to and handles about 90 per cent Project in 2008.The Kaladan highway which are expected to vibrant economies of the South of the country’s exports and project along with India- be completed in 2016, will open East Asian countries.

Tamil Nadu: Infrastructure woes

amil Nadu’s expected to generate 6,640 MW many electronic manufacturing infrastructure was of electricity, are pending and units in Sriperumbudur have Tcomparable with the as a result, the state has been hit the state’s tax revenue badly. best in the country and the state suffering 10-20 per cent power Nokia, for instance, had been government, in 2012, set an shortage. In the road sector, paying `222 crore VAT annually. ambitious target of achieving `25,000 crore worth National The automobile sector in the a double-digit GSDP growth Highways Authority of India state rolls out one out of every annually and attracting `15 lakh projects are stuck owing to third car manufactured in crore worth investments by issues in land acquisition. `5,000 India. But to dispatch them to 2023. The state, unfortunately, crore worth national highway Chennai Port, the manufacturers has not moved forward from projects have not progressed have to wait till midnight. And there as decision paralysis beyond the proposal stage. The to cover the 19 km distance has struck the administration. state is fast gaining an industry- between Maduravoyal and Close to `39,000 crore worth unfriendly tag. The closure of Chennai Port, it takes 48 hours. thermal power projects, Nokia and slowing down of Courtesy: The Times of India

I am truly delighted to host this meet and would look forward to seeing all of you here. As a Host Port, we are proud to associate ourselves with Maritime Gateway. I hope each one of you receives as much as you all give to these deliberations

M T Krishna Babu, IAS, Chairman, Visakhapatnam Port Trust.

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www.ecmbs.in december 2014 / maritime gateway 25 ECMBS NEWSLETTER | DECEMBER 2014

ODISHA: Land of cargo

ajor industries in the state include power, INDUSTRIAL ZONES AND PORTS Msteel, aluminum, cement and mining. Power sector Investment in Odisha Odisha is one of the power SI. No. Industrial units INV (USD surplus states on the path to BN) become the power house of 1 NINL 0.33 ZONE - I India. The state government has estimated an investment of 2 MESCO 0.19 `54,000 crore for improving the 3 VISA 0.06 power sector over the next five years, of which government’s 4 JSS 0.29 ZONE - II DHAMRA PORT contribution is `20,000 crore. 5 MAITHAN 0.12 Of the proposed investment, PARADEEP PORT `16,000 crore would be made in 6 YAZDANI 0.03 transmission while `12,000 crore 7 ROHIT FERRO 0.12 in generation. ZONE - III GOPALPUR PORT 8 TATA STEEL 3.96 The government has decided to 9 UTAM GALVA 1.45 extend the lapsed MoU with 10 Zone-I Kalinganagar Industrail independent power producers 10 BRPL 0.36 Complex (IPPs): GMR Kamalanga Energy Ltd, Lanco Babandh Power, 11 APEEJAY (ICD) 0.05 Zone-II Sambalpur-Sundargarh Monnet Energy, Jindal India TOTAL Inv in USD BN 7.0 Zone-III Kalahandi-Rayagada Thermal Power Ltd (JITPL), Ind-Barath Energy Utkal Ltd, CESC Ltd, Visakha Power, Mahanadi Aban Power Ltd, BGR Energy Systems and Maa Other investments in the sector of 108,000 tonnes of coal for 9 MT in 2015-16 and 20 MT in Durga Power Company Ltd. include, Adani Group’s plan to MSME units in 2014-2015. 2016-17. invest `12,500 crore for setting Two IPPs, Sterlite Energy up a 2,500-MW thermal power Iron ore production Steel and GMR Kamalanga Energy project in Odisha. Ramakrishna Odisha is the largest iron The state has 20 per cent of have already commissioned Prasad Power Private Limited ore producing state in India, steel making capacity and more their units. Sterlite Energy (RKPPL) of Hyderabad is contributing more than 50 than 50 per cent aluminum has fully operationalized its also planning to set up a 120- per cent of the country’s smelting capacity in India. 2,400-MW coal-based plant at MW thermal power plant in production. For the year 2014- Adding to this, Posco India is Burkhamunda near Jharsuguda, Chatrapur, in Ganjam district of 15, the state government has setting up an ultimate 12 million GMR has put on stream two Odisha. capped iron ore production at tonne steel plant at Paradip 350 MW units at Kamalanga 57 million tonnes (MT). with an investment of $12 Coal consumption in Dhenkanal district. The rest billion. Jindal steel is setting up Following the state cabinet’s eight IPPs are in advanced stage There are about 57 coal 6-MTPA integrated steel plant decision, Odisha Mining of commissioning their projects. consuming units in the state at Angul. Tata Steel plans to Corporation will provide that includes refractories, operate its Kalinganagar and Increasing its capacity Odisha minerals to the industries, which casting units, chemical units, Gopalpur units at Odisha in Power Generation Corporation have signed MoUs with the coal briquettes, textile units 2015-16. While the first phase has commenced work on the state government for five years. etc. Odisha state government of the 6-million tonnes per 320-MW expansion project at its In this regard, the corporation has recommended the Coal annum steel unit at Kalinganagar units 3 & 4 at IB Thermal Power will increase its production to Station. India Limited for allocation

I eagerly await the Gateway Media’s ECMBS event every year for three good reasons…firstly it is in Vizag, secondly the large participation from the shipping fraternity & trade and lastly the high profile speakers worth listening to. With the Indian government’s ‘Act East’ instead of just ‘Look East’ policy, this year’s summit will be all the more interesting as the focus is on East Coast of India. Sushil Mulchandani, Chief Operating Officer, Visakha Conatiner Terminal Pvt Ltd

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26 maritime gateway / december 2014 ECMBS NEWSLETTER | DECEMBER 2014

ODISHA: Land of cargo will be operational by the end of Odisha being developed Target units for the cluster: of FY-15, construction of the under the plastic park scheme Downstream units in aluminium ferro-alloy unit at Gopalpur of department of chemicals Components envisaged in casting, extrusions, cables, will be completed in another 18 & petrochemicals, Govt of at the Paradeep plastic foils etc. months. India. It is managed by an SPV: cluster: M/s Paradeep Plastic Park Ltd • Developed industrial Inland container depots in Steel cluster at Kalinganagar (promoted by IDCO). 120 plots (58%) with well Odisha Know as the steel hub of the acres of land has been provided connected roads, power CONCOR operates one ICD at country, the cluster produces for the purpose to the SPV by & water pipelines Ballasore. Apeejay Infralogistics nearly 3.5 million tonnes of IDCO. Total project investment • Open space (10%) is developing an ICD at steel which shall be upgraded to is $20 million. A cracker unit Kalinganagar. The customs 22-24 million tonnes in the near is proposed by IOCL to feed • Warehouses/storage department is also planning to future. It is managed by an SPV HDPE / LDPE to the park. facilities open an ICD at Kalinganagar -Jajpur Cluster Development. Government approval has • Utilities : steel hub. Another ICD is being been obtained and land is in Substation(132/33/11 planned by Paradip Port Trust. The SPV has implemented posession. Investment is invited KV) the following common from plastic manufacturers. Odisha state export policy infrastructure / facilities with • Common water storage 2014 an investment of `80.60 crore: Angul aluminum cluster facility The policy has set a target to Road & common corridor, water The cluster is being set up on • Truck park & packaging supply, street lighting & power increase export turnover from a 450-acre parcel adjacent to house ` distribution infra, central tool 12.246 crore during 2012-13 to NALCO smelter at Angul. This ` room. Total investment made • Common facility centers 38.714 crore in a span of ten is a downstream & ancillary Investment is invited from years. Containerised facilities to in the Kalinganagar industrial cluster jointly promoted by cluster is $7 billion. plastic manufacturers. be improved at the ports located IDCO and NALCO. It is the within the state to promote Upcoming industrial clusters first of its kind in India with export of goods through facilities for directly having these ports. Establishment Paradeep plastic cluster aluminium in hot metal form. material recycling and handling of warehousing and inland Located near IOCL refinery Components envisaged at the facilities; skill development container depot at different at Paradeep, the Paradeep cluster include developed plots; centers and ITIs; landscaped locations of the state has been Plastic Park is the second warehouses/storage facilities; (green) areas, buffer zones; truck proposed for cargo storage and plastic manufacturing cluster common facility centers; terminal and parking facilities. customs clearance.

Coastal shipping on the east coast

onsidering the vast Limited, a pioneer in coastal seamless manner and further FCI official, Kollam Port would Indian coast line and shipping in India, to move the movement of containers be included in the next phase Cthe growing pressure 20,000 tonnes of foodgrains can also be tracked. There are for handling cargo based on the on other modes of domestic every month by sea from also plans to link other minor success of Kochi. transport, coastal shipping has Andhra Pradesh to Kerala. ports such as Vizhinjam, the opportunity to garner a Beypore and Azheekal in this Container handling capacity greater percentage of India’s This will also boost Kerala’s venture. The service is further along the east coast ports in total traffic. Catching up with efforts to promote coastal expected to enhance the India is expected to increase this more economical mode of shipping. Carrying food grains connectivity and frequency to from 2 million TEU in 2009 transport, the Food Corporation in containers will reduse other east coast ports, thereby (20 per cent of India’s total of India (FCI) is using coastal transit losses and damages. making Vallarpadam an ideal container-handling capacity) shipping for transporting food Containerised cargo can also transshipment hub for cargo to 10.8 million TEU by 2020 grains. FCI has contracted with be delivered at the door step originating from India or landing (33 per cent of India’s total Shreyas Shipping & Logistics of FCI designated depots in a up in Indian ports. According to container-handling capacity).

On East Coast there is enormous potentiality for business. We have not fully exploited the sea transportation. However, existing port infrastructure should be strengthened instead of setting up new ports

M A Bhaskarachar, Chairman, Kamaraj Port

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december 2014 / maritime gateway 27 ECMBS NEWSLETTER | DECEMBER 2014

Invitation from chairman, Visakhapatnam Port trust

Lª.by. NwÉmç ¤ç¤î Tel: (91) +891 2562758 ECMBS 2015: Background 2873102

M.T. KRISHNA BABU, I.A.S CHAIRMAN Cargo: The first to strike the pot of gold were the ports with a ISO 9001 :: ISO 14001 :: OHSAS 18001 :: ISPS PORT surge in coal imports. With the ultra-mega power plants dotting the coast, the import of black gold is only set to increase. Container traffic at many of the east coast ports has registered Dear Colleague, growth. With Andhra Pradesh inching up every space for more SEZs, the ports are gearing up to handle more cargo. Down Iam writing to you with much pride and pleasure announcing the Third South, Tamil Nadu enjoys the privileges bestowed by the edition of "East Coast Maritime Business Summit",afocused initiative to automotive and telecom sector with most of them ramping up showcase the business potential of the east coast. their production units. This session will provide insights into This year has heralded many changes for the country and us a sector. Several the hinterlands of newly born Sunrise State of Andhra Pradesh, initiatives have been announced by the Ministry to facilitate and improve immensely potential Odisha, rich hinterland of Jharkhand, trade. New services to different parts of the world have been announced and Chhattisgarh and parts of Karnataka. Recent launch of weekly we see greater traction among major and non-major ports to enhance their services to ports in Myanmar and Bangladesh expected to push productivity. But what is perhaps the biggest geographical change is the EXIM cargo movement. creation of the new state-Andhra Pradesh. With the coast unto itself and the industries thronging to the state for investments, development is waiting to Connectivity: Existing and proposed corridor projects on the happen. east coast are expected to be game changers in the country by creating the much required transportation capacities. The Each district in the new state has been earmarked for export-oriented 1,839-km Eastern Dedicated Freight Corridor proposed from development, where many industries have already pledged to set up shop. This, simply put, will result in heightened port and port-related activity for Ludhiana in Punjab to Sonnagar, and further connecting Dankuni the state. It is against this backdrop that I call for all the stakeholders to be a is expected to carry bulk cargo. Giving a big fillip to the eco- part of this summit. A meeting of minds would help chart out and identify nomic growth of residuary Andhra Pradesh, Asian Development new hinterlands,VPTimproving connectivity LETTERto existing ones and provide a fillip Bank will be funding $2.5 billion to develop the Visakhapatnam- to the state domestic product. Chennai Industrial Corridor proposed by the NDA government. The corridor envisages self-sustaining industrial townships with The 'East Coast Maritime Business Summit 2015' is scheduled for two days on 22 and 23 January 2015 at Hotel Novotel Visakhapatnam world-class infrastructure, road and rail connectivity for freight Varun Beach in Visakhapatnam, the port capital of Andhra Pradesh.Iam movement to and from ports and logistics hubs, domestic, truly delighted to host this meet and would look forward to seeing all of you international air connectivity and uninterrupted power. The here. As a Host Port, we are proud to associate ourselves with Maritime Chennai- Industrial Corridor Project is expected to Gateway.Ihope each one of you receives as much as you all give to these boost commerce between South India and East Asia by enabling deliberations. quicker movement of goods. Cargo traffic on the two National I congratulate Maritime Gateway for conceptualising and organising this Waterways is expected to double to around 65 million tonnes. conference. Infrastructure: Over the last few years new generation green- field ports have emerged on the east coast with promises of I personally look forward to hosting you all in January. less congestion, more expansion room, and closer proximity to Sincerely, growing consumer markets. These ports have been aggressive in targeting additional cargo volumes luring major exporters/ importers to their docks. Many of the ports and terminals have expansion plans on the drawing boards which will add huge cargo handling capacities. With growth of container cargo on M.T. KRISHNA BABU, IAS Chairman, Visakhapatnam Port Trust north-east looks promising, so the growth in south-east seems to be on slow pace. Market analysts expect stiff competition among port operators to gain access to the hinterland. In the near future, which facility will turn out to be customers’ paradise :(91) + 0891-2563202 : PORTRUST is anybody’s guess? Visakhapatnam Port Trust, Visakhapatnam - 530 035, Fax : (91) +0891-2563202 Grams : PORTRUST E-mail : [email protected] Web : www.vizagport.com

Our decision to participate in the Angul-Sukinda railway line is primarily to promote the development of rail infrastructure and logistics in the state of Odisha.

Anil Kumar Gupta, CMD, CONCOR.

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PROGRAMME AT A GLANCE

2.00pm onwards : Registration Open DAY ONE 3.30pm to 4.30pm : CEO Round Table (By Invitation only) | High Tea THURSDAY, 4.30pm to 5.30pm : Inaugural Session JANUARY 22 5.30pm to 6.30pm : Keynote Session: Maritime Business Growth on East Coast – Vision and Road Map 2015 6.30pm onwards : Networking, Cocktail Dinner

DAY TWO Session One: 9.00am to 11.00am : Cargo Track: Vibrant Hinterland and Rising Cargo Volumes FRIDAY, 11.00am to 11.30am : Tea and Coffee Break JANUARY 23 Session Two: 2015 11.30am to 1.30pm : Connectivity Track: Corridors of Growth 1.30pm to 2.30pm : Networking Lunch Session Three: 2.30 to 4.00pm : Infrastructure Track: Growth Strategies at Ports and Terminals 4.00pm : Closing Remarks

22-23 January, 2015 Novotel Varun Beach, Visakhapatnam

Powerd by Presenting Sponsor Host Port Corporate Sponsor Lanyard Sponsor Cocktail & Dinner Session Sponsor Sponsor Visakhapatnam Port Trust

Supporting Partners

W W W W CSLA W Indian Private W W W W Ports & Terminals W Association IPPTA ContainerShipping LinesAssociation ESTD. 1929

To register and for more information, contact:

National & west : Satish Shetti, National Sales Manager, +91 9920 70 5534, [email protected] east : Nikhil Doshi, General Manager - Sales, +91 9836 99 6293, [email protected] south & international : Vinod G, Sr Manager - Marcom, +91 9949 86 9349, [email protected] speaker opportunities : Ramprasad, Editor-in-Chief and Publisher, +91 9177 33 6607, [email protected] delegate registration : Madhukar, Manager-Client Relations, +91 9393 76 8383, [email protected] event logistics : Ashok, Executive-Operations, +91 9491 80 5508, [email protected]

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december 2014 / maritime gateway 29 Cover Story

com

e-commerce Gaps in Logistics: Delivery Woes With the “click & shop” model gaining momentum in India, more and more shoppers are taking the online route to purchase a range of products starting from grocery, apparels, electronics, to furniture and home accessories. The e-retailing industry which made its debut in around 2008 with a handful of players has seen many-fold growth over the years, whereas the logistics and delivery segment that caters to e-retailing have not seen much growth during the period. Though success of e-commerce business largely depends upon an efficient last mile delivery, the e-commerce logistics in India suffers with several bottlenecks including inadequate infrastructure and delivery inefficiencies that result in delay in delivery, choked airports, and products getting misplaced among others.

Itishree Samal

30 maritime gateway / december 2014 ast month, Snapdeal, one daily orders. “With the massive adoption networks are struggling to handle of the country's largest of online shopping, which in turn, the explosive demand growth. The L e-tailers, faced a delivery saw e-commerce in India growing by logistics infrastructure of online retailers debacle where one of its almost 200-300 per cent over the past struggles to deal with the sudden rise in customers received a piece of brick few months,” according to an industry the flow of shipments, leading to pile- and a dishwashing bar instead of the insider who prefers to go undisclosed. ups at airports and packages failing to mobile phone he had ordered. In a reach customers on time. For instance, Same was the case with the supply similar case this month, one of Flipkart’s leading fashion e-tailer Myntra, which chain providers. End-to-end logistics customers received empty boxes for has seen a significant 150-per cent services provider Gojavas, which had a three times instead of his placed pen- y-o-y growth in last four years, is facing peak shipment of 50,000-60,000 a day drive. In another blunder, Flipkart even several delivery bottlenecks including in last year's Diwali, saw its shipments failed to keep its ‘two-to-seven-days delay in delivery. “With the increase rising to 100,000 a day this year. The delivery’ promise on its ‘Big Billion in demand, the overall load in flight company believes this kind of surge is Day’ sale. These instances give a clear is increasing by all the e-commerce bound to happen in the coming months picture of the inefficiencies existing players. As the demand is much higher too. “Over the next 18-24 months, this in the logistics, packing and delivery compared to the flight’s capacity, many kind of stuff will happen on a daily mechanisms of the e-commerce players a time our goods are getting offloaded basis. The peak we saw during the in the country. According to analysts, from the flight,” Ashutosh Lawania, festive occasion last year now happens the inefficiencies are bound to happen Co-Founder of Myntra, told MG, adding on a daily basis and we will have in a market where e-commerce has seen that “The situation becomes worse to continuously beef our systems, a several-fold growth in last six years as during festive seasons and bumper sale company official said in a media report. against the limited growth happened in period.” India has just six dedicated its allied logistics sector. At a time where people are eagerly cargo aircraft, operated by Blue Dart embracing online shopping, under- Aviation, while the average speed of The country has caught the developed shipping and delivery intercity trucks is a meagre 23-km e-commerce bug. An underdeveloped retail sector and a flourishing network of online merchants offering huge Growth in e-commerce and e-tailing selections at cheap prices has led the shoppers to look to the Web first to buy In billion USD everything from shoes and apparels to mobile phones and furniture. Flipkart alone sold 20 lakh products during its 29% 12.6 ‘Big Billion Day’, its biggest sales event 32% 9.5 on October 6 this year, compared to 29% its peak sale of 1.3 lakh orders in one 37% 7.0 10-20 5.3 53% CAGR day in June last year. Even Amazon 3.8 57% 58% 1.0 1.5 2.3 40-50% recorded a jump in traffic of up to 300 0.4 0.6 per cent on various days during its 30- 2009 2010 2011 2012 2013 2017 - 20(E) day festive season sales this year and Source: Crsil, IAMAI, PwC analysis and Industry experts Snapdeal claimed to receive 3 lakh of E- tailing E-commerce

december 2014 / maritime gateway 31 Cover Story

per hour. Though erstwhile Railway providing designated pick-up centres at The race to sort, package and ship Minister Sadananda Gowda had identified stations, an alternative to the millions of products within a stipulated announced in his first rail budget that expensive air cargo, nothing has been time frame and staying ahead of railways would extend logistic support materialised yet. competitors has forced many e-tailers to various e-commerce companies by to create their own supply and logistics chain, including having their own fleet of delivery vehicles, customised delivery Delivery Mechanism times and partnering with brick-and- mortar firms to provide pick-up points. India has seen a huge shift in shopping. Not many options were there for consumers Currently, around 50-60 per cent of till the liberalisation took place in 1991 that gave way to many bigger brands delivery logistics are handled by large e-tailers themselves. “We receive over to enter Indian market and gave shoppers a plethora of options to choose from. 75,000 shipments per day on an average, Shopping got a further boost post 2008 with the emergence of e-retailing. and close to 70 per cent of our delivery India saw e-commerce boom post 2000 – initially it was majorly dominated by travel is done through our dedicated partners sites. It is after the year 2008 the e-retailing sector took shape. Once online shopping and rest by third-party logistics majors was unthinkable for many, while now people are buying everything online. Growth such as BlueDart, DTDC, First Flight, in e-retailing is majorly being driven by country’s burgeoning middle class and among others,” he says adding that the growing internet penetration. India is expected to become the second-largest internet dedicated partners are distributed across users in the world after China (600 million users), overtaking the US by end of this the country and have set up 100 delivery year. According to the Internet and Mobile Association of India (IAMAI) and IMRB centres. The e-tailer Myntra has 29 International report, internet users in India are expected to grow 32 per cent to reach warehouses in Gurgaon and Bangalore. 302 million by December 2014 from last year’s 213 million, and 354 million by June Even Flipkart largely depends upon 2015. While the online shoppers were at 13 million last year, the number is growing its in-house supply chain division, at 30 per cent year-on-year. Betting big on this trend, many e-tailers have flooded e-Kart, to meet all its deliveries. It now the market across sectors taking a pie in organised retail; players such as Flipkart, reaches about 1,000 cities and towns in Jabong, Myntra, Pepperfry, FabFurnish, HealthKart and CaratLane offering wide India through its in-house logistics team categories of products from apparels to furniture. and third-party partners. While few players have their own logistics set up for the ‘Kart to Doorsteps’ In another instance, Pepperfry, the delivery, others largely depend upon third-party logistics. The “Kart to Doorstep” e-tailer for furniture and home décor involves several steps – once the consumer places the order, products are brought products, which took two-and-a-half from warehouses, gets consolidated and packed and handed over to our partners years to ship its first 100,000 pieces and third-party logistics players for the last mile delivery, Lalwani of Myntra says. of furniture, now expects to sell the same number in four months. The Within the cities, the products are handled by respective transport partners and start-up has scaled from its initial from there it goes to the delivery centres and the last mile person takes places from shipping of 150 pieces a month to there to the end consumer. the current 15,000 pieces a month. Though the company has shipped furniture to 2,700 towns across the country, its own delivery network Conventional retail model can only reach to 127 towns. “Unlike apparels and other goods, furniture Retail store 1 requires specialised handling and Domestic delivery mechanism ensuring quick suppliers Retail store 2 and damage-free doorstep delivery Master warehouse Regional distribution centers Retail store 3 of bulky furniture,” Ashish Shah, International suppliers Founder and Chief Operating Officer Retail store 4 of Pepperfry, told MG. Pepperfry ships to 15,000 pin codes across 480 cities E-tail model and hopes to touch a gross merchandise value of `500 crore by January. It Domestic suppliers aims to double that by end-2015. The start-up has 11 fulfillment centers in Mumbai, Bhiwandi, Jodhpur, Pune, Domestic suppliers Parcel hub / sortation center Delhi, Bengaluru, Kolkata, Vadodara, E-fulfillment center Hyderabad, Chennai and Cochin to enable smooth and speedy delivery of products. Beyond its large-item Delivery Pick-up point shipment network of 127 towns, it takes the help of the third-party logistics service providers to reach other towns.

32 maritime gateway / december 2014 in back-end investment and another 100,000-150,000 logistics employees – against an estimated 25,000 now – to cope with the projected growth of the market. The other growth driving factor is reverse logistics – products rejected by customers due to some defect or for repair need to be taken back and delivered to the customer. The e-commerce return rate in India is 10-12 per cent. Currently, for every `100 spent on e-tailing, `35 is spent on supporting services like warehousing, payment gateways, and logistics, among others. Delivery costs a platform owner 8-10 per cent implying significant burn. A Technopak suggests that the logistics industry will earn about $5 billion (over `30,500 crore) annually from the booming e-commerce market by 2021, which is estimated to become an upward At the same time, the deluge of $32-billion industry during the period. in demand, rising shipments and Emerging trends Betting big on the opportunity, competition has also forced the logistics players have beefed up their traditional logistics players that offered • Compared to 8 million in 2012, about 35 million people are now expansion plan. Delhivery, which plain vanilla courier services to set up commenced operation in 2011, is efficient logistics and delivery divisions buying products online. This number is expected to grow expanding its capacity to address the for rapid delivery of shipments. rising demand of online shoppers. It has Realising the growing demand the almost three times to 100 million in the next two years. plans to expand its network to 260 cities traditional logistics players that set up from its current 175 cities by the end dedicated e-commerce divisions such as • India's etailing market is expected of 2014-15 and increase its distribution Gati set up Econnect and DTDC created to become a $15 billion market stations to 1,000 from the 225 at present DotZot; many new players have also by 2016 by June 2015. Consumer demand is fast entered the industry providing exclusive outstripping the supply chain capabilities • Among the challenges, 67 per services in e-commerce delivery and of e-tailers, as well as supply chain cent buyers highlight that the transportation including Delhivery, partners like us. As a supply-side player, current return process is too Ecom Express and Gojavas. we need to invest more aggressively in complicated and expensive Market opportunity for logistics creating capacity since even our highest players • As customers increasingly projections fail during times of high demand shorter lead times demand and need to do a far better job As e-commerce competition and complain about unreliable at managing demand,” a senior official intensifies, efficient logistics providers or inexperienced third-party of Delhivery said. Delhivery, run by will emerge as big winners in this logistics providers, e-commerce e-commerce logistics firm SSN Logistics fiercely competitive logistics space. players are confronted by a slew Pvt Ltd, manages shipments of 120,000- According to a Crisil Research report, of logistics-related challenges 150,000 on a daily basis working with India’s booming online retail is expected the top five e-commerce players in to become a whooping `50,000-crore • The single weakest link to the Delhi area. industry by 2016. The e-commerce growth of ecommerce business GoJavas is also expanding its market in India is currently estimated to is the inadequacy of the logistics and last mile link network to 200-250 cities in the next six be worth about $3 billion according to to eight months. The company which analysts. • Going forward, rapid build-out of had a headcount of 1,800 a few months warehouses and logistics capacity Currently, the logistics and delivery back has seen to go up 3,500 in two can save the delivery debacle in companies service less than a third of months. It plans to expand its headcount coming years India’s postcodes. Traditional couriers to 4,000 employees by this year. GATI, have also focused mostly on bulk • As fast growth is coming from plans to double its capacity to 60,000 business-to-business deliveries and smaller cities and towns, a robust customer deliveries per day, up from thus lack a robust network to make delivery network to reach the 30,000 now, and is building 19 new numerous small deliveries to individual remotest town is need of the hour warehouses, mainly in smaller cities, to consumers. India needs some $2 bn service e-commerce industry needs.

december 2014 / maritime gateway 33 Cover Story Start-ups in e-commerce logistics The retail and e-commerce industry is seeing a revolutionary growth in India, where only a handful of players have their own logistics system while others solely rely on the third-party logistics service providers. Bagging this opportunity, many new players have emerged in the logistics space boosting the ecosystem. Players such as Delhivery, DotZot and Ecom Express have come up in the last few years to cater to the fast-growing sector at a faster speed. Itishree Samal

t a time where the e-commerce industry in India is growing in A leaps and bounds in the backdrop of country’s exceeding 1.1 billion population, a burgeoning middle class and growing internet penetration, delivering the products/consignments bought online at customer’s doorstep at scheduled time and much faster rate than competitors remains a huge concern for many of the logistics and supply chain players. Currently, a major chunk (approx 90 per cent) of the logistics market in the country is dominated by established players such as First Flight, Fed Ex, DTDC, Gati, Bluedart,

34 maritime gateway / december 2014 Aramex, Quantium, OnDot Courier & based deliveries. It is also working on trials. The firm, with an employee base Cargo, TNT, Indian Postal Services, providing data analytics as a service of over 1,300, focuses on non-metro among several others. The humongous to the offline retailers selling online. cities and towns to provide greater reach growth in the online retail space has Having a reach of over 150 cities in the to clients. It is targeting to expand this enabled a robust delivery network and country, it offers a technology platform to about 500 towns and cities in the forced many existing logistics players that helps thousands of small traders next three years, with a focus on smaller to create separate divisions to cater to list products and manage sales across centres. We opened up in Aligarh the e-commerce growth, for instance multiple online marketplaces. It is also before we launched in Bangalore and DTDC’s DotZot. It has also enabled partnering with offline brands that now we handle over 1,000 pieces a many new players emerging in the space want to go online. In the past year the day in that town, said TA Krishnan, 50, and providing innovative, cutting-edge company has diversified from a logistics cofounder of Ecom Express. The startup products. The start-ups in e-commerce player to become an e-commerce is also setting up a fully automated logistics that have emerged in the last enabler, said a company official. hub in Delhi where machines will sort few years include GoJavas, Delhivery Recently, it has raised funds of $35 packages for shipments at various levels and Ecom Express. million (over `210 crore) from private in order to handle the volumes that are equity fund Multiples Alternate Asset being projected. Capital Advisors, the Though some of the big e-tailers Management and existing investors. investment firm, pumped in over` 100 have their own delivery arms, which crore into year-old Ecom Express. work on hybrid models and have It is targeting turnover over `220 crore presence where the order volumes are by this fiscal. E-commerce logistics firm DotZot high; they face several delivery related SSN Logistics Pvt. Ltd runs its business DotZot in which DTDC one of the issues such as not having adequate under the brand Delhivery. largest logistics companies in India delivery network to reach all nook and Gojavas holds a majority stake will set up corners of the country. For instance, collection centres in urban and rural Flipkart’s own logistics division e-Kart Supply chain solution provider GoJavas, locations where consumers can pick is finding it tough to meet the increasing which has grown over three times in up packages and drop off the ones they demand from over 1.8 crore registered the past year, brought a first-of-its-kind want to return. The company, which is users. Of its 13,000 employees at innovative tool GoTrack, which allows now on track to earn `20 crore this fiscal Flipkart, 7000 are engaged in last-mile customers track the exact location of and `100 crore by 2016, uses DTDC's delivery. Still, the company is looking their shipment on Google Maps. Earlier, extensive network covering over 5,200 at hiring nearly 3,000 this year for the the startup had introduced initiatives locations in India to deliver 12,000 delivery purpose. With e-commerce such as GoOpen – Open-Delivery, shipments a day. Initially logistics players such as Flipkart and Amazon Go48 – 48 hours COD remittance, companies were not able to meet the launching same-day delivery across few GoFill – Fulfillment Services, GoRupiah requirements of online companies, said a cities and the growing need for delivery – Instant cash refund etc. Covering over senior professional of DotZot said. That staff and an efficient last mile delivery 2,500 pincodes across 100 cities, the is now changing. have forced the e-tailers to depend startup so far has delivered more than 10 upon the third-party logistics players million shipments. Currently, it handles ShipRocket who offers specialized solutions for nearly 50,000 shipments a day. It has a ShipRocket, launched by KartRocket, e-commerce. special projects team of about 20 who a Delhi based SaaS ecommerce develop the new services, run the pilot The logistics sector is a hot area enablement platform, is an automated programmes and perfect the process for new startups as country’s overall shipping and order fulfillment platform before handing over operations to the logistics market is estimated at over for all retailers. It provides automated regular team. The e-commerce-focused $100 billion, growing at a rate of shipping for 12000 pre-paid and over logistics company recently ran a pilot in about 20 per cent. The sector employs 6500 COD pin codes. They have five cities for Jabong before launching about 45 million people in the country, acquired more than 500 merchants GoRupiah – the instant cashback plan according to consulting firm Deloitte. shipping around 50,000 orders per – in Delhi. It targets a revenue of `150 In the constantly changing competitive month. As for a start-up company crore this fiscal and is already profitable. e-commerce logistics landscape, the tying up with multiple courier service It is growing at about 15 per cent first-generation entrepreneurs are and meeting their minimum order month-on-month. Its customers include offering customised solutions in order to requirement is not feasible, they Jabong, Lenskart, FabFurnish, YepMe, attract and retain e-commerce clients. can avail free distribution through Healthkart and Koovs. ShipRocket. KartRocket is an end-to- Startups in the space Ecom Express end ecommerce enablement platform Delhivery that allows entrepreneurs to create their Launched in 2013 by a group of former ecommerce store, mobile app, accept Delhivery, which started its operation Blue Dart executives, Ecom Express online & COD payments, ship their in 2011 from Gurgaon, is bringing provides specialised services like orders across India and also get sales innovation to the table. Unlike its delivery staff wearing uniforms of the from marketplaces such as Amazon, counterparts, it is now exploring locker- ecommerce site and at-home apparel eBay and Snapdeal.

december 2014 / maritime gateway 35 sector focus

K Mohandas Former Secretary Shipping Government of India

although crude imports are subject to A flurry of activity along the Indian coasts has spurred interest external risks. The share of containers is more than 20 per cent. This has the among the powers in the North Block leading to a higher allocation potential for dramatic increase, with national policies that boost investment of budgetary expense for the shipping sector. Oil, coal and container and trade and with some recovery in movement will fetch big returns in the years to come. , the economies in the western world. K Mohandas China has been the manufacturing base Former Secretary, Shipping, Government of India, provides a for the rest of the world; with a focused effort, India could also successfully telescopic view of how India’s ports will look ten years from now. ‘make it in India’. The third biggest item of cargo is coal. With the budget run Jaitley’s last budget by 2020. It is perhaps appropriate now announcing the commitment to provide speech touched upon almost to look beyond 2020, farther into the 24x7 uninterrupted power supply to all A all aspects of maritime future. homes, the power sector will witness transportation – port rapid growth, thereby increasing the development, connectivity, shipbuilding, Port development in the recent past import of thermal coal. The demand for Indian tonnage, coastal shipping, has been through the Public Private coking coal could also increase with the service tax anomalies and the seafaring Partnership (PPP) route and will development of the steel industry. Iron profession. Such comprehensive continue to be so. While some of the ore had been a major item of export attention to the shipping sector is container terminals are world class, there from India, but it got hit by policy unprecedented and raises expectations is need for modernisation of the land paralysis and judicial overreach and about the development of the generally based linkages. The railways opening became a modern case of burning down unseen and unheralded potential of this up for FDI and private investments is the house to kill a rat. There are several sector, which is critical for the growth of heartening though and the structuring other items of cargo which would see the country’s trade. of PPP projects in the rail sector in the definite growth – agricultural products, past was tough for investors. Dredging limestone, fertilizers, timber and The development of ports – both is a good candidate for PPP but it above all heavy machinery and project the major ports under the Central would need innovative designing of the equipments. Government and the non-major ports projects. under the state governments – has In this background, it would be been impressive, but inadequate. The The cargo profile is also bound to interesting to assess (although somewhat Maritime Agenda envisaged a tripling change. Oil, which is more than 30 per subjectively) how the Indian ports will of port capacity, with the major and the cent of the cargo handled at Indian ports, be positioned in the future, say a decade non-major ports having equal shares will probably continue at the same levels from now.

36 maritime gateway / december 2014 Gujarat has been the leader among map, but this is not reflected in the data has recorded the fastest growth among Indian States in port development. on cruise ship arrivals. The presence of the Central Government ports and will Adani’s Mundra Port has emerged as the a fishing jetty in the main harbour is a develop further. The L&T container largest port in India in terms of cargo disincentive for cruise vessels. While terminal at Kattuppally is yet to take off. handled, overtaking the nearby major a standalone cruise terminal may not MARG Karaikal Port, which has a lot of port at Kandla. With additional capacity be viable, it could be linked with other potential, has been hit by the economic coming up for coal and containers, tourism infrastructure to attract private slowdown, but could benefit from the Mundra Port could retain its numero uno investment. new power projects coming up in the position for the next ten years. Kandla region. The New Mangalore Port handles was the country’s largest port for several a wide variety of cargo, the key items Andhra has a long coast line. years; it has several disadvantages like being oil and coal. The hinterland is The star port on the east coast is poor draft, maintenance dredging and limited, with the Bangalore industry the inefficiencies associated with the Krishnapatnam which has a hinterland preferring to look east in view of the consisting of northern Tamil Nadu, public sector. The establishment of better connectivity. Karnataka State has SEZs will earn more business for the southern Andhra and south eastern lagged behind in the development of non Karnataka. The port has the capacity port. Pipavav Port managed by APM -major ports. terminals in southern Gujarat has had to receive cape-size vessels and has impressive growth; the port has also The Vallarpadam International recorded impressive growth over the benefitted from the inefficiencies in Container Terminal in Cochin port has years. The Budget has provided for a JNPT. There are several other ports been a great disappointment, handling smart city in Krishnapatnam and two in Gujarat, and some of them on the just above 3 lakh teu per year. It was other places in the Chennai-Bengaluru northern banks of the Gulf of Kutch, intended to attract transshipment Industrial Corridor. Visakhapatnam will could develop as handlers of coastal cargo being handled at foreign ports. continue as a top port in India handling cargo emanating from or destined for In spite of huge investments by the all types of cargo. Gangavaram, which northern India. private promoter DP World in the is close to Visakhapatnam, would benefit terminal, by the Central Government if there is deficient service in the latter. JNPT being India’s biggest in the connectivity and by the port in Kakinada is also recognised in the container port, one could observe dredging, ICTT is yet to get acceptance Budget as a key region for development, three positive developments. The as a hub port for the transshipment of especially for hardware manufacturing. award of the fourth container terminal, EXIM containers from/to the other The new government in the State is the capital dredging underway and Indian ports. The Kerala Government expected to be proactive in supporting the budget announcement of an is developing Vizhinjam, again as a the ports and in promoting coastal SEZ could help the port increase its transshipment port. Vizhinjam has shipping. handling capacity. The port however advantages like natural draft and needs to improve its infrastructure In Odisha, Paradip handles bulk proximity to the international sea cargo, both solid and liquid. Dhamra and procedures for the handling of routes. The primary disadvantages are the cargo other than at the berths. The has been acquired by Adani and has that it has little land and hardly any tremendous potential, with deep draft Mumbai Port is developing an offshore hinterland. The Kerala Government container terminal in addition to the and good connectivity. Paradip and has itself presented the project as an Dhamra could also get the benefit of liquid terminals and the old terminals unviable project needing viability gap which handle about 20 million tonnes inland waterway connectivity. These funding. The success of Vizhinjam ports would also serve West Bengal. of bulk cargo. The port owns prime would depend on the private promoter urban land in Mumbai and earns a part who is awarded the project. Kolkata and Haldia are riverine ports. of its revenue from its real estate. The The Central government spends almost utilisation of precious land in the heart The VOC Port in Tuticorin holds `500 crore annually on dredging; such of the city for handling solid cargo is tremendous potential for growth. The expenditure is certainly unsustainable. clearly suboptimal use of a valuable port has an ambitious outer harbour The future of these ports would be in resource. The port activities in Mumbai project with an outlay of `11,000 crore. handling small vessels and barges; must be restricted to tourism related This could provide stiff competition to transloading cargo will emerge as the ones like cruise shipping and marinas the nearby ports including Colombo. business model here. Barge movement for yachts, releasing land for multi- Chennai Port now handles only clean further up the river would make sense, faceted city development. Among the cargo and has become a loss-making similar to the NTPC-Jindal project for private ports in Maharashtra, Dighi and enterprise due to the huge commitments Farakka. Sagar Port, proposed by the Jaigarh ports have been the pioneers; on salaries and pensions. It does not Central Government a couple of years the improvement of the rail and road have the freedom to use its gates or back, is an unviable project. connectivity will stimulate their the adjoining roads, and has literally growth. been choked by the city with powerful The present performance, the potential neighbours like the Secretariat and the and the constraints throw up certain Mormugao Port was heavily High Court. Ideally the Chennai Port inevitable conclusions as discussed dependent on iron ore exports and its land should be utilised for the city’s above. However, the ultimate outcome business now is only one-fourth of development, port activities being is based on the governmental policies what it was three years ago. Goa is a restricted to cruise terminals, marinas, and actions and the unfolding economic prominent location on the world tourism water sports and the like. Ennore Port scenario.

december 2014 / maritime gateway 37 RAILWAYS

Hey Prabhu!

Suresh P Prabhu The new railways minister Union Minister for Railways Suresh Prabhu has inherited a mess of red tapism. The need of the hour is more than mere lip service

Ritu Gupta

t has started with a big bang, Indeed, the minister has a lot on but for how long will the his plate, starting from the rising I fervor continue is yet to be expenditure on fuel and pay to stagnant seen. For the time being, it passenger volumes and erosion in the seems that Suresh Prabhu is all set to share of the freight market. His biggest implement Prime Minister Narendra challenge comes in the form of delays Modi's agenda. Soon after taking over in big private public partnership (PPP) the reins of the railways ministry, projects. These include a part of the Prabhu held discussions with the railway `18,000-crore (`180 billion) Dedicated board on multimodal logistics projects Freight Corridor (DFC) project and and supervised the signing of an MoU the Madhepura and Marhora rail with the transport department for the coach factories, planned to be built in speedy construction of road over bridges Bihar and West Bengal respectively. on the national highways – a move that While the DFC project was to be will kick-start stalled work of almost completed in 2016, the railways is now `10,000 crore. An online grievance targeting completion of the Delhi- redressal platform for passengers is Mumbai and Delhi-Ludhiana stretches also on the cards. "Railways cannot be on the western and eastern arms by seen as a part of the problem. It has to 2018. “The main reason for delays is be seen as a part of the solution. Any confusion about the policy on private initiative that removes the bottlenecks is participation. The private investor praiseworthy. The big problem is that we wants assured returns like freight and get stuck on small issues, the last mile operation of mainland trains. But these matters. But a solution can be found are not on the anvil.. Also, absence out only by innovative ideas and by not of a dedicated rolling stock leasing pointing fingers at anybody," Prabhu agency is also a reason for low private was quoted as saying by the media. participation,” says R Sivadasan, a

38 maritime gateway / december 2014 constraints. It has been lagging on both Some of the key steps to get railways back on track for a lot of reasons. The railways should Modernisation of track & Modernise about 19,000 km of tracks on routes A, B & D special that carry 80% of also make the accounting system more bridges traffic; eliminate level crossings & provide fencing alongside tracks. transparent. This will end the scope for Improving signaling Introduce GSM -based mobile train control communication system on A, B & C routes window-dressing of accounts to show a system better balance sheet, which may have the cascading effect of making some of our Introducing new rolling Invest in new generation electric and diesel locomotives, high speed coaches & heavy political tigers acknowledge the realities stock haul freight bogies of the railway rather than using it for Modernisation of stations Modernise 100 key stations immediately; modernise top 50 freight terminals; vote bank purposes. develop 34 logistics park for integrated transport facility Prabhu should also seriously look Building dedicated freight Make Eastern &Western DFCs in next 5 yrs; Upgrade feeder routes to DFCs. at implementing some of the measures corridors mentioned in the report of Sam Pitroda Building of high speed pas- Make high speed railway line between Ahmedabad & Mumbai in next 10 yrs panel on the modernisation of the Indian senger train corridors railways. The report points out that modernisation of railways will increase Introducing new PPP Attract private sector for locomotive & coach manufacturing, power units, freight track life, improve loading capacity and Initiatives terminals allow operations at higher speeds. These Using Information and Use radio frequency identification for good management of wagons & real time improvements will contribute to system Communication Technol- monitoring; computerise files efficiency and thus improve revenue ogy generation in railways. The panel has More indigenous R&D Establish Indian Institute of Railway Research also suggested levying a modernisation surcharge on passengers and disinvestment of railway PSUs among former financial commissioner, Indian other options to generate funds. The Railways. Derailed, so soon? report has urged the authorities to attract private investment to augment core According to experts, the Soon after joining office, the new capabilities related to stations, terminals, government should tread cautiously, Union railways minister sparked and the railway ministry should go step off a controversy when he proposed and development of high speed rail by step by announcing programmes in to give 2 per cent of the pending corridors. It felt that GIS mapping of key areas, with clear goals, measurable project cost to the executing teams land resources available with railways milestones and defined timetables. and their chiefs as a reward for should be done expeditiously for Prabhu has a mammoth task ahead of finishing work on time. According complete digitisation of land records, him, especially considering the fact to critics, public servants should which can then be used for monetisation that in the first half of 2014-15 the not be given monetary incentives of blocked assets. “Such measures and performance of the railways has not for doing their jobs. They add the heavy investment for modernisation been quite up to the mark. Freight that this will be a big loss for the of railways would certainly go a long earnings rose 10.5 per cent to `48,062 exchequer if a project like the way in strengthening the network if crore (`480.62 billion) between April Dedicated Freight Corridor (DFC) taken seriously,” says Sushil Jiwarajka, and September, the first six months of gets implemented on time, with its president of Infrastructure Industry and the financial year, which is well behind estimated of more than `18,000 Logistics Federation of India (ILFI). target. And, freight volume rose only crore, the 2 per cent of that would The panel has also suggested some 4.2 per cent, to 532 million tonnes be a whopping `360 crore, which administrative reforms, including (mt), showing any rise in earnings would be given to the officials. reorganising the railway board and is driven by higher rates, rather than Critics aver that the move to gratify constituting a railways tariff regulatory volume. The roads network continues public servants in one department authority. It says it is crucial to empower to eat into the railways share of the for performing their official zonal railways and the present system of freight market. “The situation has duties is likely to throw up similar seeking sanction for capital investment been deteriorating and passenger demands in other departments from the Railway Board should give amenities are virtually non-existent. too. Prabhu’s proposal is similar way to a more decentralised form or Railways should be considered as a to a move by ex-finance minister decision making. Other suggestions profit-making organisation rather than a Vishwanath Pratap Singh, who include improving signalling system social service,” says Vishwas Udgirkar, had announced that all tax officials to avoid fatal accidents. Indeed the senior director at Deloitte. According to would get a share of the total black recommendations of the report are a experts, railways has for long required money unearthed by them through step in the right direction, and many are effective steps to tackle short-term issues raids and searches or investigations. hoping that a pro-active politician like on lack of efficiency and low quality of This move was eventually dropped Prabhu will appreciate their worth to passenger services, beside the long-term after all-round criticism. ensure that the railways’ crisis does not challenges of infrastructure and capacity go from being bad to worse.

december 2014 / maritime gateway 39 INTERVIEW Lee and Muirhead

Pankaj Gadhia CEO, Lee and Muirhead

Could you please care to explain the Qsupply chain process involved in moving EFFICIENT PLANNING, project cargo? The project cargo that comes into India Ais largely imported. In most cases, it is MONITORING KEY TO receiving cargo on cost and freight basis under hook from the shipping lines at various ports. It is at this point that our work begins. We look in to port handling, inter-carting of cargo if SUCCESS IN PROJECT required inside the port, storage, re-loading, transporting cargo to the site, unloading cargo and sometimes even engaging at project CARGO MOVEMENT warehousing at site. In some cases, we also handle international shipments on a free on board (FoB) basis. Since we have our own With six decades of experience in handling some of the custom house agency licence and port handing largest projects into India for various sectors of industry, ability, we utilise the service of the labour from Lee and Muirhead is one of the oldest companies in the the contractors when cargo arrives. Who are the customers who ask for profession of project cargo movers. The company's expertise Qthe largest pie of your services and what differentiates between your firm and in project logistics covers the full scope of international others in the market? transportation, charters to customs clearance, port handling, Most of our customers are those from the Apower and infrastructure segment since they stevedoring, warehousing & distribution to project sites. import odd sized equipment for their power generation plants or for construction purposes. Chief Executive OfficerPankaj Gadhia helps us understand Some key clients are Nuclear Power Corporation his business in this interview. Edited excerpts of the interview of India Ltd., for whom we handle cargo for the Kudankulam nuclear plant, Lanco, Reliance with Deepika Amirapu Infra, L&T, GMR, Toshiba BGR Energy.

40 maritime gateway / december 2014 What sets us apart from other cargo cargo, we also have to study the entire old and they cannot take more than 70 movers such as Damco, DB Schenker route checking for bridges, by-passes MT in weight. The private operators and other international companies is and construction of jetties if any and re- making roads have their own norms of that we have our own equipment. The engineering of jetties if required. Inputs moving cargo on the road. These are other upside of being an Indian company and involvement from the customer infrastructural related problems in the is that we can tie up with other firms are a key to the designing of a logistics road sector since most of our cargo is for freighting with shipping lines and solution. moved by road. Project cargo movement shipowners. The MNCs have to outsource by rail is limited since availability of all functions, whereas we have control on So how would you categorise wagons is a problem. While BHEL our operations and movement of cargo. Qthe approach and involvement and some other have some tailor-made of customers given all the planning wagons for heavy equipment, from a If you are one of the biggest involved? logistics point of view the matrix is Qmovers of project cargo, what is We always involve the customers difficult to work. We need special cranes your market share likely to be? Also Ain letting them know the route and to load and unload cargo on to the please elaborate on the market for equipment planned as their involvement wagons. This is a challenge. project cargo? is crucial in designing and delivering Given the market for requirement Qand movement of project cargo, are there enough suppliers of equipment movers? Today since the market is down, Athere is lot of competition. But we notice the customer also looks at dealing with companies who have experience, expertise and efficiency levels and also has his own equipment. If I am dependent on somebody for equipment, it may or may not be available when the shipment arrives. For Lee and Muirhead, It is difficult to quantify our market the cargo. We have specific software the relationship and transparency with Ashare since it is a highly disorganised that can be used for solution designing. the clients has led to a number of repeat sector. There are not definitive statistics The safety of equipment is a major orders. But I agree that the customer is available. But Lee and Muirhead has issue and we also have to make sure the shopping around. been among the top project cargo local villagers don’t cause any trouble while moving cargo as some roads What are the most crucial forwarders in the last couple of decades factors to succeed in the Indian in the eastern and southern regions. are barely wide to allow movement of Q ODC cargo. If the customer is involved, project cargo market? What efficiencies are involved coordination becomes much easier. For Operational expertise and planning. Qin moving project cargo without example, we were moving some cargo AEvery project is different and offers affecting the quality of service? for a customer where the height was a new challenges. Availability of resources concern. When we communicated this A lot of planning is required before including right equipment at the right with the customer, he altered the design we move cargo. And for this, we time and at the right place is also A of the transformer and this ensured need the clients to be involved so that crucial. Finally, you have to be flexible, faster transit time besides ensuring easy they give us inputs about the dimensions customer friendly and transparent as it is movement and in reducing logistics of the cargo before we design the not a monopoly business. costs considerably. solution. The weight, height and width How fetching are returns in this of the cargo are crucial to design the Could you give us a break up Qsector? equipment and also decide on the course Qof your revenue from all the of movement. The testing processes services? The returns vary. There is no fixed required before moving cargo are all Apercentage. In this industry the dependent on the inputs. Timeline Project cargo contributes about providers do not look at individual is another crucial factor involved in A80 percent to our revenue. The pricing. It all depends on the type moving cargo as the equipment has to rest comes from freight forwarding, of cargo, distance involved, special be mobilised to the port where the piece warehousing, bulk handling etc. equipments needed etc. In most cases is going to be discharged. For coastal What challenges do you face even the customer is not aware of the transportation, the window available Qwhile moving over dimensional full specification of the project cargo for transportation becomes very crucial cargo? involved when contracts are finalsed. We to meet the delivery schedule. Thus, providers do a costing and add a nominal planning and monitoring is a continuous The permission required while profit to that. We own some of the best job for us movers. Amoving cargo in each state are equipment. Pricing is the biggest risk circuitous and cumbersome. That is one we face apart from the risks involved in Once the customer mentions about the aspect. Second, all our bridges are very moving ODC cargo on the roads.

december 2014 / maritime gateway 41 waterways

very cloud has a silver lining, and this has been true for the E state of inland waterways in India. The dismal fate of the waterways finally took a u-turn when Finally the much-needed bulk movement of coal started through the national waterways a few months back. Today, the project is proving to be a big success, unlike what many sceptics believed. Under the project, JITF Vector a pioneer in anchored coastal and inland waterways business is transporting 3 million metric tonnes The JITF vector project of transporting coal through inland per annum of imported coal through the waterways is proving to be a great success inland waterways from Sagar Islands (near Kolkata) to NTPC's thermal power Ritu Gupta plant at Farakka. JITF Vector has signed a tripartite agreement with NTPC and options where inland waterways can be cranes and a conveyor system of 2.1 km. Inland Waterways Authority of India used for transportation. According to For unloading the coal from ocean going (IWAI) for executing the project. On Amitabh Verma, IWAI chairman, the vessel the company has placed a floating behalf of NTPC, IWAI had floated a transportation of coal through inland terminal called transhipper at high seas. tender for the creation of infrastructure waterways will be about 15 per cent It has a storage capacity of 65,000 MT as well as transportation of coal on the cheaper than transportation by roadways and can unload bigger size of vessels up waterways from the sandheads to the or railways. Under the JITF Vector to capsize at rate of up to 25,000 MT/ plant. JITF Vector was selected by IWAI project, NTPC would save about `450 day. The company also has a dedicated in an open competitive bidding for an per tonne on import of coal transported. fleet of 25 barges which are being used investment of about `650 crore. Earlier, coal used to be unloaded at for transportation of cargo to Farakka. Haldia docks and transported through The project is expected to harness the For the time being, the going seems to railways to Farakka. The landed cost of huge potential of the waterways in be good for JITF Vector. The project imported coal at Farakka through Haldia transporting bulk cargo such as coal, will bring a paradigm shift in Indian was about `7,300 per tonne, while food grains, fertilisers, fly ash, over shipping operations. But many more transportation required another `6,750 dimensional cargo and containers at a such projects are needed to ensure that per tonne. Now, thanks to the JIFT competitive cost, while also easing the India uses the asset of inland waterways Vector project, the cost of transporting burden on rail and road infrastructure. wisely. According to experts, the a tonne of coal from Sagar Islands to Immediate future projects may include biggest problem plaguing the sector is Farakka is estimated at `1,150 per tonne. importing 9 million tonnes of coal by a shortage of vessels (barges). Vessel In contrast, NTPC had to earlier spend NTPC from Sagar Islands to Barh in building is highly capital intensive and about `1,540 per tonne on just railways Bihar. It is indeed ironical that the Indian faces difficulties in obtaining project freight and port charges. waterways till recently had faced a finance from banks/FIs since it does not policy paralysis, as it is one of the most For transporting the coal, JITF vector enjoy infrastructure status currently. cost-effective and least environmentally has developed unloading facility at “Private sector is reluctant to make damaging mode of transporting goods Farakka consisting of 2 Liebher CBG investment in barges unless long term worldwide. India has 14,500 km of navigable waterways, including rivers, backwaters and canals. While the entire length of waterways is not available for mechanised transportation, a significant proportion stretching over 5,200 km of rivers and 485 km of canals is suitable for mechanised transportation. However, the sector presently has a meagre share of about 0.4 per cent in the total transport sector in India as compared to 42 per cent in and 8.7 per cent in China and over eight per cent in the US. In China, much of the increase has occurred in recent decades, in tandem with its phenomenal industrial- agricultural growth. The JITF Vector project would prove to be role model for exploring more

42 maritime gateway / december 2014 cargo commitments for onward and What kind of policy support return trips are made available from Qis required for developing the the user industry,” says an industry waterways? player. Therefore, more companies like NTPC should come forward and show Policies should be such that these their interest in using the waterways. Akind of projects are supported. As of now, 10 thermal power stations We need support from ports, customs, are operational in the proximity of the and other such institutions. Endless National Waterways-1. Furthermore, 11 support from secretary of the more thermal power plants are expected shipping ministry has helped us in the to come up in Bihar, West Bengal, and commencement of project. We had faced Uttar Pradesh in the next five to eight issues like custom clearance of cargo years (with a total installed capacity since anchorage is not a customs notified of 15,000 MW). The total requirement area. Therefore, sandheads and Kanika- of coal for new the power stations is sands were declared as customs notified estimated to be around 70 million metric area. Fast resolution of such small issues tonne per annum (MMTPA), of which will help in more projects seeing the light of the day. around 14 MMTPA would be imported Joy Saxena coal. This would need to be carried to Group President and Whole time Director, What are the future expansion these stations from the Haldia port, and Jindal ITF plans? due to this the government needs to Q seriously look at IWT. Furthermore, two We are planning to bring in another private sector thermal power stations Joy Saxena, group president and Atranshipper and shall be actively and are slated to come in Allahabad, and whole time director, Jindal ITF, talks aggressively participating in similar they alone are looking for transporting about the nitty-gritty of their project projects. We are keeping track of Barh 10 million tonnes per year of imported on transporting coal through inland Project and Transhippment project of coal also from the Haldia region. Hence waterways Haldia Dock. all existing and proposed thermal power What has been your experience What is happening to the plants along river Ganga are potential Qso far? Qproposal for exporting coal from shippers for IWT. If these power plants Haldia to NTPC's Barh power plant? provide long term commitment for We have been able to overcome the transporting coal by IWT mode and Ainitial issues and have successfully Barh tender is expected to be floated IWAI can provide assured channel of 2.5 handled five vessels from the high seas. Asoon. We look forward for bidding m depth or more then upto 25 MMTPA It is a challenging task and it was a in same. concept which has been turned into of coal could be transported by IWT What about lack of night mode in the coming years. Furthermore, reality. We have got great response from the shipping industry and people are Qnavigational facilities and all a fly ash – which is a byproduct of coal year navigability? production – could also be transported looking at this as an solution to overcome through IWT to cement plants, where it the constraint of draft availability and IWAI is working on providing 24 is used for cement manufacturing. congestion at Indian ports specially ports hours navigational facility. on the east coast of India. A But to ensure implementation of such Do you think the PPP mode What about the returns? plans, the need of the day is to create Qfor development would be a rational institutional framework. Q We are in the initial phase of successful? Right now there is no level playing Aimplementation and currently Considering the cargo potential, PPP field between the waterways and are in a process of streamlining the Ais definitely a successful formula if roads/railways and experts lament that operations. Our prime focus is to make same is backed by guaranteed cargo as inland waterways still appears to be this possible; profitability will come in case of NTPC. more of a hobby project than a serious by itself. It is important to understand alternative transportation option for the that this is a cost-effective and viable Why are the waterways not government. “There is an urgent need alternative for railways and roads. Qaccounting much for the total for transport subsidy for industrial units surface transportation? What operational problems is to bring IWT at par with rail and road. Qthe company facing? Inland waterways require substantial The government should also provide Afinance for infrastructure. People inland vessel building subsidy and Since this is a marquee project are not considering this mode as freight subsidy, which were discontinued Ahappening for the first time in India, infrastructure is not sufficient whereas in the Eleventh Five Year plan. Vessel people are not aware of the process and infrastructure developers are saying that building should be included in priority methodology. Even policies are not in we can develop infrastructure but users lending for infrastructure projects and place for this kind of operations. We do not exist. It’s a chicken and egg story. inland vessels should be a part of the faced issues in getting permission from Things will change and success of our tonnage tax regime,” says a leading ports, customs and all other statutory project will encourage everyone to take industry player. authorities. this mode seriously.

december 2014 / maritime gateway 43 technology import or not to import As warehouses grow in size and scope of operations, the role of technology here gets more complex. A technology solution that meets operational requirements and fits in the balance sheet is the need of the hour. Indigenous warehousing technologies can surely fit the bill. Vijay Kurup

he parleys on the implementation of GST have spurred a reorganisation of warehouses across T the country. A recent CBRE report stated that the logistics and warehousing market in India had attracted steady transaction activity, with large sized transactions of around 100,000–250,000 sq ft reported during the first half of 2014. The Government is funding` 5,000 crore towards improving warehousing infrastructure. The warehouses are going to be much bigger in size and the operations therein progressively more complex. The question many of the owners/ stakeholders would be considering is, ‘would it be better to go for imported or indigenous technology.’ So should you go for imported technology? The best With e-commerce gaining traction, the numbers of SKUs of technologies are available, but they come with a not too that are being stocked in the warehouses have dramatically comfortable a price tag. A Sorter, for example, is a machine that increased – exacting flawless warehousing operations to satisfy sorts products based on certain parameters. If you have a vast customer demands. There are instances across the world where number of products across multiple selling points, it would be large distribution centres have choked because of labour issues a humanly impossible task to sort the products. The cost of a leading to fall in share prices by as much as 50 per cent in the Sorter is about $10 million or `50 crore. If this equipment were share market. “That is what a warehouse can do to a business,” to be imported into india, there would be additional costs by said Anshuman Singh, MD and CEO, Future Supply Chain way of Customs Duty etc., further escalating the cost. Solutions, speaking in a seminar organised by CII on, Building Would it be justifiable to buy such expensive equipment? Warehousing competitiveness 2014. Would it be possible to pay off a `50-crore product within The warehouses are getting bigger, smarter and faster. reasonable time? Anshuman advises caution. He feels that in A decade ago, the cost of building a warehouse was about the US where the labour cost is about $35000 per annum, it `40 lakh. Today it would cost around `150 crore, to build an would be possible to pay off the cost of the product within two efficiently functioning warehouse. More the number of SKUs a to three years. However in India where the labour cost is just business has, more would be the number of products. These in one-twentieth of that of US, it would take several more years, turn would lead to more retail shops and therefore more selling perhaps up to the lifetime of the product itself, to payoff. points catering to larger number of customers. “What is the solution then?” asks Anshuman. “You need Obsolescence has taken on a new dimension. Items to indianise, indigenise the product.” To operate profitably, which became obsolete in four to five years are now easily it is necessary to go for Indian products. “Get the best of replaceable within six months. To match these dynamic global technology available at Indian costs.” There is an changes, the warehouses can no longer be just warehouses and urgent need to set up a warehousing design institute that could godowns functions as mere godowns. Warehouses will become study international practices and offer consultancy to people distribution centres, and large distribution centres, would be as interested in setting up warehouses with Indian technology. good as factories. Specialised industries dealing with IT in warehousing could also develop a specialised tailor-made software programmes. All this would render the process of storing, sorting and distribution a highly complicated enterprise. All these activities In the drive to match the ever increasing customer would not be possible without technology. Today technology expectations, owners/stakeholders would need to look and automation is available off the shelf. “Getting technology increasingly at indigenous warehousing technologies. Big is not difficult,” says Anshuman. “The biggest challenge is players may be in position to import technology. However the that automation and technology being a globalised product challenge is for medium and small sized companies to embrace is available at the same cost anywhere.” That’s the rub. these very technologies to make the projects economically Technology does not come cheap anywhere. viable. ‘Make in India,’ is correctly, the right slogan!

44 maritime gateway / december 2014 logistics

Further, the park is just half a kilometer away from the National Highway-7. This facilitates easy movement to ports and hinterland. It also helps reduce the detention to trailers. The rail siding too is planned such that it allows rakes to move in without any change of traction. Setting up its own transport and handling agent has allowed VLMS to offer lower cost Future cargo hub of handling and transportation to various destinations by road, than other ICDs Despite being centrally located in India, Nagpur so far lacked in Nagpur. The handling agent, Vikram Logistics, has over 20 years experience. logistics parks to cater to road and rail movement of cargo. Sathianathan hinted at a superior IT system to be installed shortly which The Integrated Logistics Park set up at Borkhedi can be the would make operations efficient. first step towards transforming the city into a cargo hub. VLMS has already made a soft launch in July with movement of Vijay Kurup domestic cargo to Mumbai. The next in line for commissioning is the Tank Farm dealing non POL products. It will cater to both EXIM and domestic cargo. Leveraging the facility’s central location in the map of India, Sathianathan plans to commission the auto logistic park–a natural choice since it would serve as an ideal distribution center for various cities and towns in India. The fourth facility to be commissioned is the ICD for EXIM cargo and the last would be Private Freight Terminal to handle bulk commodities. He expects the facility to be fully functional by January 2015. But with the Nagpur facility Sathianathan has barely scratched the surface. He expects to remain busy and is confident of setting up similar facilities in agpur’s potential as a cargo The choice of the location was made Bangalore and Palwal. An FTWZ is hub just got a shot in the arm. after careful consideration. The logistic expected to come up in Chennai, as well. N With the Integrated Logistics park spread over 75 acres of land is Park at Borkhedi, promoted by situated on the outskirts of the city. Sitting in his simple yet elegant office, Vikram Logistics and Maritime Services The park has 40,000 square metres of Sathianathan exuded quiet confidence in Pvt Ltd, (VLMS), soft-launched just paved area for storage and handling of the logistic park that he was launching. a month ago in July 2014, the private containers at the rail side and 2,500 sq “We intend to provide, at one place, sector has showed its commitment to metres of customs bonded warehouse. logistics services for different kinds of Nagpur as a cargo hub. Despite Nagpur The automobile logistic park has an cargo.” This one-stop service is the USP being centrally located in India, there is a area of 5 acres and the liquid tank farm he is banking on. “The basket of logistics paucity of logistics parks to cater to road has the capacity to hold 5,000 tonnes services offered by us is larger than any and rail movement of cargo. of commodities, making it, by far the of our competitors. Therefore a customer biggest logistic park in Nagpur. The coming to us does not have to go to “It is not an ICD, but an integrated different places for his requirements. logistic park,” said K Sathianathan, yard planning for rail movement is superior in as much as the rake does And in the process we would be Managing Director of VLMS. “The able to provide end-to-end logistics not require changeover from electric Integrated Logistics Park at Borkhedi solutions by road and rail.” He promises to diesel and can move into the yard will comprise of an ICD to cater to speed, reliability and transparency in directly for loading and unloading of cargo, a domestic container terminal, a his dealings, at a lesser cost and an cargo, said Sathianathan. It is a mere 7 liquid tank farm, an automobile logistic experience that would be difficult to park and a private freight container km from the Industrial Hub at Butibori. replicate. At a time when many other terminal to carry bulk cargo.” He sees Unlike other logistics parks that are projects in north India have posted a huge requirement. “Going a little within the city limits and hence subject sluggish growth, Sathianathan’s foray into towards south in Wardha, there are many to traffic restrictions, the VLMS Park this sector has been bold. He however has industries which we can also target, both being a peripheral location, the cargo gone for a package deal, which he expects for domestic and exim cargo.” can completely bypass the city limits. will make all the difference!

december 2014 / maritime gateway 45 Smart Logistics moser baer Leader in every way By developing an efficient supply system, Moser Baer has brought down instances of delays in shipments to less than 0.1 per cent of the total dispatches.

Ritu Gupta

oser Baer is certainly a company with a difference; M it is one of the few Indian companies which realises that an efficient and seamless supply chain is crucial to its global competitiveness. No wonder, the company has invested a lot of thought and energy into ensuring that its supply chain operations are linked and customer deliveries are made swiftly and at a minimal cost. customers and suppliers at the back-end. The entire production planning process Moser Baer leverages this integration of the company works in perfect to respond with alacrity to changes synergy with the logistics department. in customer expectations and market It is a bit of a trendsetter in the way Taiwan, and Middle East to conditions. It exports around 150+ exports are handled in north India and ICD Dadri. By air, it imports about 50+ containers per month to Europe, the US, there are several 'firsts' to its credit. tonnes per month. Japan, Middle East, Australia, South For instance, the first round-the-clock America and some other destinations. As one of the major containerised customs clearance facility at ICDs was It has a self-clearance team and prefers cargo shipping companies, Moser Baer introduced at its insistence. It is also one to deal directly with the shipping lines. has reduced its shipment lead time by of the few companies to provide total Preferred exit ports are Mudra and more than 20 per cent in the last few logistics solutions to its customers. It Pipavav. Few of the shipments are also years; it has also brought down the has even built its own in-house software moved through Nhava Sheva. Moser instances of delays in shipments to less for managing inbound and outbound Baer does some air exports also to meet than 0.1 per cent of the total despatches. shipments to help track documents and the immediate delivery requirement This has happened because its applies containers instantly. of customer and also for solid state the strategy of directly dealing with Indeed, the company owns a memory (SSM) business which is shipping lines as well as with the comprehensive logistics and supply exported by air only. Imports are also freight forwarder, depending upon how chain system, enabled by an in-house done both by sea and air. By sea, the effectively one can meet Moser Baer IT system, which is integrated with company imports around 150+ teus per KPIs. Proactive communication of the freight forwarders, major shipping lines, month mainly from Thailand, China, logistic team with PPC has brought

46 maritime gateway / december 2014 Evolution

Moser Baer India Limited headquartered in New Delhi, is a leading global tech-manufacturing company. Established in 1983, the company is one of the world's largest manufacturers of Optical Storage media like CDs and DVDs. Every fifth disc manufactured globally belongs to Moser Baer and it is the lowest cost optical media manufacturer in the world. The company is also the first to market next-generation of storage formats like Blu-Ray discs and HD-DVD in India. Over the years the company has entered into exciting areas of solid-state media with the launch of pen drives and flash memory cards, content replication, home entertainment and is a market leader in the high growth photovoltaic space. It is the only company worldwide to receive the prestigious 5-star rating from TÜV Rheinland for three years in a row maintaining highest standards of quality in manufacturing PV modules. The company has a presence in over 100 countries, serviced through 15 marketing offices and representatives in India, US, Europe, Japan, Russia, Ukraine, Egypt, Argentina, Chile, Malaysia and has strong tie-ups with many global technology players in the optical media storage business. In the PV space, the company has a presence in the entire value chain with products being sold to more than 82 countries. Its products are manufactured at its three state-of-the-art manufacturing facilities located in the suburbs of New Delhi employing over 8,000 employees. Through its wholly owned subsidiaries, the company manufactures photovoltaic cells and modules using crystalline silicon and thin-film technologies. Being one of the most credible brands focused on hi-tech manufacturing and R&D activities, it continues to unfold the next- generation innovative technologies that will catapult India into a respectable manufacturing hub.

CONCOR and shipping lines is the trains with CONCOR, increased transit key to our achievement. However, at time between the ICDs and port and times, because of heavy congestion at delays in clearance at times due to the ICDs or arrival of container at port continuous public/customs holidays. after vessel cut-off, Moser Baer ends But despite these hindrances, Moser up incurring additional cost on priority Baer takes pride in itself for having this major change, says Girish Tuteja, loading or “via” charges so that CRDD over 99 per cent on-time deliveries to general manager, logistics and supply (customer required delivery date) is its customers. This would not have been chain, Moser Baer India Ltd. Now the met. Furthermore, close monitoring possible without strong systems and shipment is dispatched based on the helps us to change the port of loading its technology backbone. Moser Bar is vessel sailing days to avoid the idle to get minimum transit time. Also our an example of how robust technology time of containers lying at port. We self-clearance process (instead of using infrastructure can provide critical consider seven days maximum between a third party) has contributed a lot on information to people to assist them in PGO (planned gate-out) and SOB priority clearance/early rail-out from taking right actions at the right time to (shipped on board). During this period, ICDs for planned vessel connectivity," meet the business goals. At Moser Baer, a container needs to be dispatched from adds Tuteja. we have been able to align this to a large the plant, get customs clearance, handed According to him, port congestion extent, borne out by the fact that we over to shipping line and arrive at port is a major issue faced by them in have not lost a single customer since our (before cut-off of planned vessel). A the recent past which has resulted in inception. This has been facilitated by daily management information system reduced window timing or “cut and run” a strong information technology system helps us to plan the best suitable action situation for vessel without completing enabling seamless working of different to get the minimum possible transit planned export container loading. Other functions towards strong customer time. Good liaison/relation with both problems include non-availability of orientation, adds Tuteja.

december 2014 / maritime gateway 47 maritime board MMB lines up new projects along the West Coast With a coastline of 720 km, Maharashtra is perhaps the only state apart from Gujarat that has an active maritime board. Parag Jain Nainuttia, current chief executive of the MMB illustrates the projects underway in the state.

Maharashtra Maritime Board Mora: In Mora group, we have Qcompleted 20 years shortly. two captive jetty projects; one each What are your goals for the next for Ambuja Cements Ltd at Ulwa- five years for ports under your Belapur and M/s JSW Dharamtar jurisdiction? Port Pvt Ltd (Formerly Ispat Industries Ltd) at Dharamtar. One Maharashtra Maritime Board multipurpose jetty is also operational A(MMB) was established on in Dharamtar creek in this group. November 22, 1996 and is in her 18th In addition, there are six shipyard Year. MMB has signed Concession projects approved in Mora Group Agreements for developing six of Ports in locations like Vasai, Greenfield ports with private Kalyan and Ulwa-Belapur. MMB entrepreneurs. Three of these ports is also considering development namely, Dighi, Dhamankhol- of passenger services from South Jaigad and Angre have commenced Mumbai to Belapur, which will also operations, two ports namely, support a marina facility. MMB Vijaydurg and Redi are awaiting operates passenger services between environmental clearance and one port South Mumbai and Mandwa Port at Rewas-Aware is awaiting Right of where passenger jetty and terminal Way (RoW) through Mumbai Port facilities have been constructed by waters. It is planned to commission/ MMB. This terminal on an average operationalise all three ports within Paraag Jain Nainuttia Chief Executive Officer handles about 10-12 lakh passengers next 3-5 years. MMB plans to Maharashtra Maritime Board annually. stabilise the six Greenfield ports with proper rail and road connectivity Rajpuri Group: One captive jetty during the next 4-5 years. The rail and road connectivity would and one multipurpose jetty are operating in Revdanda creek give a boost to the efficiency of our ports. We are also in the (Kundalika river). The captive jetty handles iron-based process of identifying more locations, which can be considered raw material for the steel plant in the vicinity whereas the as Phase-II for port development activities in Maharashtra. multipurpose jetty imports coal for local market and the hinterland requirements. Greenfield port is under development What progress has been made under the five at Dighi in Rajpuri creek wherein two berths have already groups of ports in the State – Bandra, Mora, Rajpuri, Q become operational. Export of bauxite and import of steel coils Ratnagiri and Vengurla? and coal are undertaken in this port. MMB has permitted a Bandra: We have a lighterage facility operating in Dahanu Ro-Ro facility from Agardanda to Rohini, which is operational. Awhere coal is imported to support Reliance Infrastructure In order to give a boost to the water transport, jetties and Ltd's 2X800 MW Power Plant. A shipyard project at village terminal facilities for passengers are being constructed at Safale in Satpati Port jurisdiction is also functional. In Rajpuri, Dighi, Agardanda and Janjira Fort. There are two addition, we have given some more permissions for jetties, shipyard projects being developed in Rajpuri creek under which are in different stages of development. Rajpuri Group of Ports.

48 maritime gateway / december 2014 Ratnagiri Group: M/s Finolex owned jetty at Vijaydurg during fair Industries Ltd has a captive jetty for weather season and export of iorn ore is importing chemical and coal to meet undertaken from the loading facilities the raw material requirement for its In the last few years at Redi Port. MMB has also approved PVC pipe plant at Pawas-Ranpar and the tide has been a multipurpose jetty at Aronda for captive power plant. M/s Ultra-Tech M/s White Orchid and captive jetty at Cement brings clinker from Gujarat turning in achieving Kavthani for M/s Samruddha Overseas to the MMB jetty at Ratnagiri for its Ltd for support its plant located in the cement plant at Ratnagiri. M/s Ratnagiri responsible and nearby area. Gas & Power Pvt Ltd has a captive jetty for importing LNG at Dabhol which is sustainable ship Could you state the commodities operational. RGPPL also has a Single Qthat are shipped from and to the Point Mooring (SPM) facility at Dabhol, recycling through State's ports from India? which has been used for importing Import: LNG, coal, coke, clinker, Naptha and HSD. There are two new regulations, Acement, coke breeze, Iron ore, shipyard projects in Dabhol creek, one Dolomite, H. B. Iron, HRS Plates, I.O. by M/s Bharati Shipyard and another public pressure and Fines, I. O. Lumpy, Limestone, Mill by M/s Panduronga Timblo Industrias Scale, Rock Phosphate, Steel coils, Ltd MMB owned jetty at Kelshi (Tal. European Union Sulpher, Ethylene di-chloride, Ehtylene, Dapoli) is also in use for export of VCM bauxite by M/s Ashapura Minechem intervention. Ltd Greenfield port facilities have been Export: Heavy Machinery, Bauxite, Mill developed at Jaigad Port, one by M/s Scale, Molasses, Steel coils. JSW Jaigarh Port Ltd at Dhamankhol Bay and other by M/s Angre Port Pvt Ltd (Chowgule Group) at What volume of cargo is traded among the minor Lavgan in Jaigad creek. Angre Port has also developed a ship Qports in Maharashtra and how is tariff regulated in repair facility, which consists of a ship-lift system. In Jaigad these ports? creek, M/s Marine Syndicate Pvt Ltd has a multipurpose jetty Cargo during 2013-14 is 24.66 milliion tonnes. The which is used for exporting bauxite and a ship-repair facility. AGovernment of Maharashtra has notified charges Marine syndicate is constructing a Floating Dry Dock at site for various commodities for cargo handled at captive, for repair of ships and are going to venture into ship-breaking multipurpose and MMB jetties. Cargo handling at Greenfield activities, which have been approved by the MMB. port sites is governed by separate Concession Agreement and Vengurla: Two Greenfield ports at Vijaydurg and Redi have is subsidised to encourage investment in the port sector. been planned in Sindhudurg district. The ports are awaiting What thrust is being given to coastal shipping and environmental clearance before any construction activity can moving cargo via inland waterways? commence. Export of molasses is undertaken from MMB Q MMB encourages coastal shipping and is currently Ahandling about 2 million tonnes of cargo annually through coastal shipping namely, at Belapur where cement is brought in mini bulk carriers by M/s Ambuja Cements Ltd from Gujarat for bagging and consumption in local market. M/s Ultra-tech Cement also brings Clinker from Gujarat to Ratnagiri for the cement plant. MMB has allowed construction of cargo jetties in the creeks like Dharamtar, Rajpuri wherein cargo is brought through barges from the ships at anchorage through the coastal and inland waters to these facilities. Would the State Maritime Board look at developing Qnew jetties in ports this year to handle commodities? The Maritime Board has a policy of privatisation for cargo Ahandling and encourages private entrepreneurs to come and invest in this sector. Additionally, the Greenfield ports under development are also undertaking construction of jetties to increase their cargo handling capacities in phases. How is MMB promoting tourism in the state and Qhow is infrastructure being bolstered to support the activities? MMB provides jetties for embarkation and disembarkation Aof passengers and tourists and is also developing water

december 2014 / maritime gateway 49 maritime board

transport facilities at Rajpuri, Dighi, MMB offers a gamut of opportunities with the State Government and the State Agardanda and Murud-Janjira Fort. Afrom private port developers to port Public Works Department, Konkan MMB is also encouraging water infrastructure, which are outlined as Railway, Central Railway and Rail sport activities along the coast where follows: Vikas Nigam Ltd. (RVNL) to address good beaches are present. MMB has various issues connected with road and also provided Ro-Ro facilities Vesvi Investment opportunities rail connectivity. The MMB has also to Bagmandla for tourists visiting New Greenfield Port: • Private Players taken a decision to participate in rail Harihareshwar Temple, at Dabhol- • Terminal Developers connectivity issues through equity up to 11 per cent. MMB has also undertaken Dhopave in Dabhol creek and in Jaigad • Dredging creek from Tavsal to Jaigad. These feasibility study for connecting Konkan • Logistics Operators Ro-Ro facilities provide connectivity Railway to Central Railway through its for coastal tourisms wherein tourists Captive and Multipur- • Terminal Developer own funds to improve the connectivity. can move with their vehicle and spend pose jetties • Logistics Operator Lack of light houses is another time with nature enjoying the Konkan Inland Water Transport • Docking Facilities Qwhy coastal shipping and inland hospitality. • Ancillary Industries waterways has not taken off in the country. Will the MMB now look The Maritime States • Service Providers Development Council (MSDC) at enhancing night navigational Q Shipbuilding & Ship • Shipbuilding Players comprising of maritime boards, infrastructure? repair • Ancillary Industries Coast Guard, State Police, and The lighthouses are provided, Customs was constituted to look Connectivity • Road and Rail Aconstructed and maintained by the into security related issues. What linkages Directorate General of Light Houses specific issues pertaining to ports in Marine Tourism • Marinas and Light ships (DGLL), Government Maharashtra need to be addressed? • Floatels of India. In the coastal stretches and the creeks/rivers, navigational lights are The MSDC council monitors • Water sports provided by MMB. Sites where cargo Aimplementation of International • Ferry operators handling is undertaken are provided with Ship and Port Facility Security (ISPS) • Tour operators lighted navigational buoys to mark the code in various ports and port facilities • Ancillary Industry navigational channels to facilitate night to address the security concerns. Under navigation. the ISPS code, ports have to address the security of the movement of men How does the Maritime Board The recession had caught a and material from the port to the ship Qfinance all the new projects and Qnumber of small vessel and and vice-versa. All port facilities, those that need maintenance and barge operators in a whirlwind of where international ships berth for upgradation? debt and poor business. What steps will the State take to ensure smaller cargo handling operations, are ISPS The Maritime Board has a policy of compliant. We are also encouraging operators are back on their feet? Adevelopment of port sector through Will there be a separate financing smaller facilities to comply with ISPS privatisation. MMB utilises its own code where cargo operations are handled scheme in the State for smaller funds for providing passenger facilities players to avail loans? through barges. in the coastal stretches, which include What actions are you taking passenger jetties, passenger amenities/ Earlier a 30 per cent subsidy was Qon non-performing ports or facilities and dredging in approach Aavailable for construction of coastal entrepreneurs who have been channels as well as approach roads to vessels through Ministry of Shipping, sanctioned land and have not made the terminal facilities. Govt. of India, which has since been much progress since signing the withdrawn. MMB has taken up this issue MMB also undertakes coastal with the Ministry of shipping to revive MoU? protection works on behalf of the this scheme of 30 per cent subsidy The ports and port facilities are State Government, for which, the for coastal vessels. Secondly, I would Aregularly monitored and regular funding is provided by the State like to state that recession and boost in meetings are conducted with the Government. However, in cases where the shipping sector generally follows entrepreneurs to resolve the difficulties the requirements are critical and a sine curve, which is cyclical. The faced for during development activities. Government funding is not available, operators in this field have to undergo Some cases where continuous non- MMB utilises its own fund to provide these difficulties and need to inbuild performance has been observed, the coastal protection works. sustainability to tide over periods of projects have been cancelled. What support infrastructure recession and look at alternate areas to support their operations. MMB, on What investment opportunities Qsuch as improving connectivity will be undertaken by the MMB? its part, has also undertaken a process Qare available for private of revising its inland water limits to investors to develop ports or berths MMB is seized of the connectivity facilitate coastal movement of barges at smaller ports that cannot fund Aissues for the ports and jetty facilities and vessels of such kind to avail of their expansion plans? along the coast. MMB is coordinating opportunities at alternate locations.

50 maritime gateway / december 2014 Update

aersk companies respond Ocean Carrier Booking Responsiveness shipping is proven to cause errors, fastest to e-booking requests Analysis). Three of the top five fastest unnecessary costs and delayed shipments. M reveals a study conducted responding carriers were AP Moller- by INTTRA, an e-shipping Maersk-owned. With carriers forming four major east- solution provider. INTTRA ranked west alliances, the ability to differentiate carriers by the speed with which they “As the shipping industry gains new on the reliability of shipping line respond to electronic booking requests, efficiencies through process automation, services is reduced because members something that could allow them to we recognised that responsiveness – and share vessels. In response, carriers are differentiate from other lines, and MCC the speed in which shippers can book emphasising on their customer services Transport that handles all Intra-Asia with a carrier electronically – is a critical levels to differentiate from rivals. containerized cargo for the Maersk factor driving customer satisfaction,” said Naresh Potty, Chief Commercial When carriers respond faster: Group tops the list. Notching the second • Operating costs are reduced position is Safmarine, a sister company Officer, MCC Transport. to MCC that was acquired by Maersk The median response time • Processes get more efficient Group in 1999. United Arab Shipping • Across all trade lanes, the median • Promotes further automation Company occupies the third position booking response time is 113 • Utimately, customers are more followed by Hamburg Süd. minutes satisfied In INTTRA's Ocean Carrier Booking • The fastest trade lane – the Trans- Maersk stands out in customer Responsiveness Analysis, carrier Pacific Westbound (North America service training responsiveness was measured across to Asia) lane has a median booking Maersk Line’s program for improved all major trade lanes on a multi-carrier response time of 81 minutes customer service – CARE PROgram – e-commerce platform by looking at • Maersk Line leads this particular has been rated as ‘best-in-class’ training. electronic booking times from the trade lane responding 30 per cent moment a shipper enters a booking faster than the median time. “A customer called me and asked request to the carrier’s first definitive whether we had hired new people,” response time. According to INTTRA, too many recalls a customer service manager at shippers still rely on manual means to MCC delivered a responsiveness score Maersk Line in Pakistan. The company conduct business – including phone calls, hadn’t hired any new faces in fact, 64 per cent faster than the median figure. faxes, and email – which do not provide The median industry responsiveness but so visible was the impact of the the same level of savings, shipment behavioural training which all customer time on the INTTRA network is 113 data quality, or customer satisfaction as minutes (based on INTTRA's 2014 service staff in Maersk Line has gone booking electronically. In fact, manual through during the last two years. “CARE PROgram” is now acknowledged as best-practice by the external benchmarking company, Corporate Executive Board (CEB) on its overall training effectiveness. CEB Fast, faster, fastest analysed over 500 different competency development programmes across various As competition grows and carriers form alliances, shipping industries, and Maersk Line’s CARE PROgram is rated ‘Best in Class.’ lines are ever on their toes to offer better and speedier The analysis specifically highlighted customer services than their rivals. how the programme successfully applies behaviours in daily work; Omer Ahmed using manager-led training; and how colleagues help each other in developing the desired competencies. The CEB is the world’s leading member-based advisory company which specialises in talent management and functional best practices. They work with 90 per cent of the Fortune 500 companies. Coaching people into new behaviour requires a very different skillset from that of traditional management, says Tom Sproat, Global Head of Customer Service at Maersk. “The success of the CARE PRO training is partly due to the fact that instead of being super problem solvers, our leaders are focusing on coaching and colleague development.”

december 2014 / maritime gateway 51 INTERVIEW Rhenus Logistics ‘Rhenus Group’s 100 years expertise in logistics is a boon for the JV’

Vivek Arya Managing Director Rhenus Logistics India

henus Logistics India Limited is a joint venture between R Germany-headquartered Rhenus Group and Indian logistics player Western Arya Group, where the former recently increased its stake to 49 per cent following the merger of Western’s domestic trucking activities in 2010. With a 51:49 ratio, Western Arya is the majority shareholder in the JV and brings its more than six decades of experience in transport and logistics business, while Rhenus having a wide European and Asian network and customer base brings its 100 years of expertise in a variety of logistics activities ranging from high- tech to hospital logistics and from home How has been the journey so far delivery to e-fulfillment. Q– from an independent logistics In India, the JV Rhenus Logistics provider to the joint venture with the operates across the major gateways and European logistics major Rhenus? provides end-to-end logistics services Western Arya Group, is a third- in freight forwarding, warehousing, Ageneration, family-run company distribution, value-added services, that started as a transport and trucking foreign trade management services, solutions provider about 60 years back. customs clearance, and handles FTL, Over the years, we have moved from LTL, express, milk shipments etc. In domestic trucking business to other value an interview with MG’s Itishree Samal, added services such as freight forwarding, Vivek Arya, Managing Director of customs clearance, warehousing and Rhenus Logistics India, explains the distribution. In 2010, we had a tie-up company's long journey from being a with the Rhenus Group, which had transport and trucking solutions provider acquired 25 per cent in one of our Group to become one of the leading logistics company Pro Logistics India, which providers in India today. later named as Rhenus ProLog Logistics

52 maritime gateway / december 2014 Ltd recently, this year we have merged revenue and rest comes from contract Any plans to increase the stake our trucking business with the Rhenus logistics. we have seen significant growth further? Group. The latest deal involves merger of in trucking and warehousing business. Rhenus ProLog Logistics with Western But with the dollar fluctuations in the No, we will not liquidate any further. Arya which has been now rechristened as last two years, the international freight AWe would like to be the majority Rhenus Logistics India Ltd. The journey and customs business has become a little share holder in the JV. so far has been interesting. We have put unexpected. We also have presence in Are you also scouting for taking a lot of effort in getting the people and liquid cargo and cater to chemical and Qthe inorganic route for growth? putting the infrastructure. Today, the petroleum chemical products. We do biggest advantage we have compared to about 300,000 tonnes in liquid cargo. Yes. Going further, we will take our competitors is that we do not need to Athe inorganic route for growth. We outsource any activity. Are you looking at venturing into already have set some targets in mind. Qnewer verticals? However, nothing can be disclosed at Rhenus Group is a large European this stage. company with having presence across We want to bring an array of products Asia, Europe and other markets. Aunder the group in order to become What are your expansion plans? The JV enables us to access to those an end-to-end logistics provider. We are Q interested in focusing on more specialised Going forward, our focus will logistics services such as hi-tech logistics, Abe on adding capacities, human hospital logistics, e-fullfillment and capital and large customers, along with data management etc which are still increasing our top line and bottom line. untouched and possess a huge business Currently, we have significant presence in potential. We have already taken some warehousing with more than 11 lakh sft steps towards the hi-tech logistics, and of warehousing space across the country. yet to put the other proposed verticals We want to add 100 trucks in our fleet of on the drawing board. It may happen 300 trucks (200 dedicated + 100 Owned) sometimes during the next year. and another 5 lakh sft in warehousing. What opportunities do you see in The Indian e-commerce market is Qthe hi-tech and medical logistics Qset to become a `36,800 crore- divisions in the Indian market? market by 2015. Does Rhenus have any plans to enter the segment? Hi-tech logistics is an emerging Abusiness vertical that deals with The Group has a 360-degree logistics of hi-end electronics products Ae-fulfillment and offers complete and heavy office accessories. It could logistics solutions for e-commerce. be the transportation and installation While in India, we believe the of ATM machines to Xerox machines, e-commerce market has not evolved while the medical logistics involve the completely compared to the western transportation of medical equipments markets. Once the market matures such as C T scanners, MRI and further, we may start looking at the sonography machines. The market segment by end of 2015. opportunity is huge in these two How do you assess the current segments. To put a perspective, more Qlogistics market in India? than 100,000 machines are expected to be installed in the next two-three years. The market is majorly unorganised markets; we now have the expertise of Currently, there aren’t many players in Aand has been stagnant since last few a 102-year-old entity, which is a biggest the country who offers complete end to years. But with the new government in advantage for us. Our aim is to become end services from logistics to installation place, we see a lot of positivity around. an integrated logistics player having of these equipments. Rhenus Group Taking into account the government’s operations across segments – be it rail, being a pioneer in these two segments, it announcement on the GST roll out, we road and ocean under one group. will help us in expanding in India. expect the whole logistics landscape to undergo a sea change. We see GST as a Which are your major growth- How has been your growth? major growth driver for our business as Qdriving verticals in India? Q Rhenus Logistics India has been well. Predominantly, we have four major Agrowing at 25 per cent year-on- What opportunities do you see in Abusiness divisions – warehousing, year. However, we will not be able to Qthe market? international freight, customs disclose any financial numbers. The clearance, and domestic freight and Rhenus Group is over a EURO 4 billion In India, none of the existing logistics contract logistics. The two verticals entity in revenue. Aservice providers even have one – international freight and customs per cent share of the market. Having a clearance – contribute more than 50 per The Group recently increased its wide array of services, we see a huge cent in our top line, domestic freight Qstake to 49 per cent this year opportunity in the market. We want to contributes around 30 per cent in the from the previous 25 per cent stake. double our revenue in three years.

december 2014 / maritime gateway 53 training magic hive

he global logistics industry in the last decade has T metamorphosed from being the plain Jane cargo transporter to a more composite function requiring closer attention from providers Set to train, in the wake of intense competition and demanding customers. Tighter timelines, unyielding cost structures and a small talent pool have ensured profits are always in transit for those operating in the industry. re-train and The Indian story is no different except with the addition of infrastructure hold-ups to the list of humps slowing the pace of growth of this otherwise promising sector. All players big and small cogitating on the best possible rev up industry matrix to integrate supply chain management and logistics agree the one spoke in the wheel that could be a party pooper is an ill-informed and incompetent workforce. Employers and Schools are workforce constantly singing the blues because Training institute Magic Hive could be much needed shot in the arm candidates, they say, are not kosher for the industry. Not all students who walk for the logistics industry as it promises to churn out apprentices in for an interview armed with a degree are savvy. But, pray, just whose job is it who can hit the ground running. to show these students the ropes? While the degree helps learners get a cursory view of the industry, one would tend to pin the task on the employer to put his hire up to speed with the practices in vogue. But since no exec has the time or wherewithal to spend a few bucks training his team, he depends heavily on industry veterans like Ramkumar and Vinita who’ve now pledged some of their time to train people and help match the expectations of the industry. Drawing from a combined experience of over four decades, the

TION two professionals set up Magic Hive as T a "people development" company that AINING

will be involved with all aspects of this TR sphere-consultancy, career counseling, EDUCA recruitments, training and education, RECRUITMENTS arising from a passion to give back to the industry and make a difference in enhancing quality of people in this neglected industry. Nestled in Chennai’s green neighbourhoods, this institute has training programmes for both the worker and queen bees – freshers and executives. Started as a partnership firm,

54 maritime gateway / december 2014 Magic Hive is the holding company that intends to offer short term courses under Initially we intend its subsidiary TALK to begin with for to slant towards Magic Hive’s students who are inclined to pursue a career in the maritime-logistics sector. providing content Sometime next year, the firm will begin and training in primary task is to offering diplomas in various aspects of international logistics, maritime, warehousing and train and alter a supply chain management. Ramkumar logistics solutions Ramachandran, Founder Partner, Magic and then branch out in more candidate’s outlook by Hive, who spends the better half of his specific demands of the trade. day managing his firm says the aim is to Students would be trained acclimatising them to offer a one-stop solution for companies looking for job-ready candidates. both on-site and off-site to be the industry. “Initially we intend to slant towards familiar with the way business providing content and training in happens on ground zero. The international logistics solutions and then aim is to offer a one stop branch out in more specific demands recognized body offering any support of the trade.” Eventually, they intend solution for companies looking or counseling to working professionals. to have an impact in other areas of for job ready candidates. As heads of effort that have experienced logistics and supply chain. Students will business culture across verticals, the be trained on site to provide a practical two promoters would eventually look at exposure and we intend to serve clients Ramkumar Ramachandran helping organisations chart a migratory in India and abroad with our products. Founder Partner, Magic Hive path to succeeding in their business. “There are a number of medium and Once this concept gains traction who’ve already set foot in the industry. small scale companies that need help in with the trade, what will follow in a TALK expands itself as The Academy restructuring their businesses. We intend couple of years will be a full-fledged for Logistics Knowledge and is wholly to re-model their activities,” Ramkumar two-year course readying students for owned functional subsidiary of Magic mentions. The performance management employment. Vinita, who is a Director, Hive. As a prequel to the graduate suggested by the academy will probably Krishnapatnam Port who assists in the courses, Vinita and Ramkumar have revolve around bringing about changes Magic Hive’s functioning in her spare introduced thoughtfully planned in people deployment and management. time says the training firm’s aim to modules in freight forwarding, essentials churn out productive candidates in to the of warehousing, shipping and super Once this people problem is fixed, industry. “We would like to establish and selling skills, to name a few. In the last TALK’s last vertical can also help exhibit a quality stamp because today three months, about six modules were companies strategise. Mergers and being good is not enough. You have to conducted for working professionals acquisition, expansion in to other be your efficient best always,” she says. over weekends for a nominal fee. countries and adding new services – this will be the last dollop of honey from While Magic Hive’s primary task is These open-enrollment education Magic Hive’s TALK. The aim of this to train and alter a candidate’s outlook courses provide a 360-degree view of again, is to help the Indian Logistics by acclimatising them to the industry, the latest trends and developments in industry thrive despite the shortcomings. the institute’s role might be also the particular segment. “We wish to While the courses will help the students construed as a staffing firm from where provide genuine value to a small section graduate from a finishing school of prospective employers can engage in of people. These short, comprehensive sorts, other management counsels will body shopping. For this, both partners modules will help them with help companies and individuals out of agree there has to be greater awareness understanding the nuances and also the their growth crises. The hope is that among students about the opportunities larger gamut of work from a knowledge this unorganised sector transcends in this sector. Graduates from colleges perspective,” Ramkumar says. these deficiencies to emerge as a will be sensitised about the sector and These modules are open to a more confident and dependable sector employment opportunities, and those cross section of people working in providing stability and growth to its who evince interest will be mentored different areas of trade. For example, an patrons. A number of sectors in India after a basis diagnostic test to assess their employee working in the IT solutions such as Infrastructure, retail and understanding. These select students will wing developing a code for freight e-commerce look forward to logistics then be placed in firms at the end of the forwarding can attend this weekend being the game-changer. The realisation training period after handing out a degree course to help understand better of this perception depends on how admissible across countries. the movement of boxes. TALK will quickly its people adapt to changing Since this post-graduate is two also venture in to career counseling, times. For now, the movers who want summers away, TALK has hit the ground guidance and placement as the two to be part of the game, have an address attempting to re-train professionals partners reckon the industry has no to go to!

december 2014 / maritime gateway 55 shipping routes

BARENTS SEA KARA SEA NSR distant MURMANSK yet doable UST - LUGA Expectations are high that Arctic shipping routes, particularly the Northern Sea Route (NSR), will rival traditional shipping routes and complement the Suez Canal SUEZ CANAL route as a key waterway for trade to and from Asia by the middle of this century. How realistic are such scenarios? Deepika Amirapu 48 days new report by The Arctic seven vessels traveled exclusively within Institute on shipping traffic the NSR. Of the 41 ships that transited A along the Northern Sea Route the full length only 30 carried cargo, INDIAN OCEAN (NSR) concludes that its transporting 1.19 million tonnes. potential is likely overstated and limited shipping opportunities exist. This report Oil products, including diesel, fuel uses data from the 2013 NSR shipping oil, and naphtha, made up the lion’s share season to identify and analyse traffic of cargo on the NSR in 2013. In total patterns, point out differences compared 31 vessels carried 911,000 tonnes of oil to the Suez and Panama Canals and products representing 67 per cent of all draw conclusions about the future cargo. Iron ore accounted for 203,000 potential of the NSR. tonnes representing 15 per cent of all cargo in 2013. General Cargo, also called The 2013 shipping season on the break bulk cargo, accounted for 7.4 per Northern Sea Route (NSR) commenced cent of goods on the NSR. Coal deliveries on June 28 when the Russian-flagged represented 5.5 per cent of traffic. LNG vessel Varzuga, carrying 13,658 tonnes accounted for 5 per cent of all NSR traffic of diesel, entered the NSR at Cape in 2013 and a single vessel, the Arctic eastward direction, supplies for local Zhelaniya north of Novaya Zemlya. Aurora, carried 66,868 tonnes of LNG communities, mainly oil products, and Over the course of 154 days a total of from Hammerfest to Chiba. 49 vessels transported 1.35 million two iron ore shipments dominated the tonnes of cargo. A further 22 vessels “Traffic patterns on the NSR first two months of the season, July and transited the NSR unladen carrying differ significantly between east- and August. Unfavourable ice conditions 507,000 tonnes of ballast. The shipping westbound transits and the NSR exhibits near Severnaya Zemlya and in the East season concluded on November 28 a strong bias for eastbound journeys. Siberian Sea during the first half of when the Russian-flagged vesselBukhta Products, primarily natural resources, September led to a drop in traffic before Slavyanka exited the NSR at Cape are shipped to the markets in Asia, with a second peak emerged at the end of the Dezhnev in the Bering Strait. limited cargo shipped in the opposite month. Westbound traffic commenced direction. This imbalance in the flow of around July 15, about two weeks after The Northern Sea Route Information goods leads to a higher share of ships eastbound transits. The first peak in Office lists 71 transits for 2013 but a traveling the route empty and thus shipping activity occurred between July closer analysis of the data shows that reduces profitability,” says the report’s 15 and August 15. Almost all volume only 41 vessels traveled the entire length author and Executive Director, Malte carried during this time consisted of of the NSR and qualify as full transits. Humpert. ballast. The second increase in shipping An additional 23 vessels either departed in late September and October included from or arrived at ports inside the NSR The 2013 season saw two primarily oil products, general cargo and did not fully transit it. A further distinct peaks in shipping activity. In and coal.

56 maritime gateway / december 2014 ARCTIC OCEAN regional shuttle service are Murmansk

CHUKCHI SEA and Arkhangelsk in the west, Ob Bay LAPTEV SEA 35 EAST SIBERIAN SEA in the centre, and Pevek in the east. Out days of 71 total transits, 43 were exclusively BERING SEA between Russian ports Traffic patterns on the NSR ARCTIC SHIPPING - NORTHERN SEA ROUTE 2013 differ significantly between east- and SEA OF OKHOTSK westbound transits. In 2013, 40 vessels traveled eastbound carrying 895,000 tonnes in cargo and 6,000 tonnes of ballast. In contrast, the 31 westbound vessels carried 460,000 tonnes of cargo PACIFIC OCEAN and 500,000 tonnes of ballast. The NSR exhibits a strong bias for eastbound The vast majority of transits, 54 of journeys. Products, primarily natural 71 journeys, originated in Russian ports resources, are shipped to the markets in SOUTH KOREA and those vessels transported 705,000 Asia, with limited cargo shipped in the tonnes, equal to 52 per cent of all cargo. opposite direction. This imbalance in The lack of diversification, especially in the flow of goods leads to a higher share terms of country of origin, is striking. of ships traveling the route empty and The NSR is primarily utilised as a thus reduces profitability. In contrast to domestic supply and export route for the Suez and Panama Canals, the NSR Russia and much less as an international largely represents a one-way traffic route. transportation corridor by countries After delivering cargo at ports in Europe in Europe or Asia. Key hubs for this or Asia few ships make the return voyage either with or without cargo via the NSR.

INDIAN OCEAN The NSR remains a niche trade route with limited numbers of true transits. The export of Arctic hydrocarbon resources, primarily from Russia, and their transport along the NSR can be expected to grow over the coming years. However, this will not establish the NSR as a true trade route but in contrast place even greater emphasis on one-directional traffic from west to east. Putin’s hope to establish the route as a northern export highway may yet be dashed by unfavourable market conditions, varying ice levels and the lack of available Russian icebreakers. “The export of Arctic hydrocarbon resources, primarily from Russia, and their transport along the NSR can be expected to grow over the coming years.

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december 2014 / maritime gateway 57 european ports

The number of ultra large vessels calling at the Port of Hamburg has been on the increase for years. This is resulting in some major challenges for the port operators, shipping companies and authorities. With the introduction of the Nautical Terminal Coordination (NTK), there is now a body to handle the centralised operational coordination of mega-ship calls for the first time – long before a vessel proceeds up the estuary of the river Elbe.

ince 2008, the number of ultra large vessels calling S at the Port of Hamburg has increased from 621 to 989. Efficient Coordination of This includes not only container ships, but also cruise ships, bulk carriers and other vessels, all of which are subject to different restrictions when navigating Mega-ship Calls Boosts the estuary to and from Hamburg, caused by, for example, the water level in the river Elbe or the width of the navigation channel. These restrictions have to be taken into account when ship Port of Hamburg calls are being processed and this results in there being interdependency on the Two container mega-ships and a the vessels pass each other? What arrival or departure of other ships. With bulker are coming in with the tide, happens if the water levels change? Nautical Terminal Coordination, there is while two container ships head out. The Additionally various aspects also have now a coordinating body that monitors vessels are between 300 and 400 metres to be considered: When will the ship the interdependency of all ship entries in long and up to 56 metres wide. NTK currently docked at the berth be ready Northern Europe and can then identify staff monitor the ships from various to go? For which shift has a terminal conflict situations and reduce the impact terminals and calculate the possible ordered dockers with the intention of on the entire port system. passing options as well as the vessels’ starting work on a ship? What is the How does NTK work? A typical terminal arrival and departure times on optimum operational arrangement? NTK traffic situation that occurred this the basis of their individual draughts. staff members must constantly consider summer and which happens in the Port There are additional requirements that the effect that a decision regarding one of Hamburg on a regular basis serves as also have to be taken into account: vessel might have on the operational an example of the complexity of NTK’s When can the vessels pass under situation of other vessels and must coordination duties: the Köhlbrand Bridge? Where may update their calculations for these ships

58 maritime gateway / december 2014 With Nautical Terminal Coordination, there is now a coordinating body that monitors the interdependency of all ship entries in Northern Europe, identifies conflict situations and reduce the impact on the port.

Port of Hamburg – not only in relation to Nautical Terminal Coordination to pool container ships, but also to much more communication channels and to identify besides. Everyone involved benefits the interdependency of decisions made from the work of Nautical Terminal in mega-ship handling early on and to Coordination. They refrain from trying resolve these issues as far as is possible. to assert their own specific interests here In contrast to public port authorities, and there, because this allows the system we already track the ships on their as a whole to operate more smoothly.” approach routes, for example all the way from Gibraltar and in particular from Heinrich Goller, Managing the previous ports. We are therefore Director of FLZ/NTK, describes the able to spot potential disruptions very facility’s character: “It’s the job of accordingly. NTK monitors the ships early on and to then develop operation- throughout Northern Europe long before based proposals. We actively coordinate they arrive and is therefore the workflows and develop demand in a position to devise situations from the perspective of the coordinated operational Hamburg terminals, which we reach solutions in good time. It agreement on with the relevant public shares these solutions with port authorities. By acting as the central the public port authorities, point of contact, we eliminate bilateral who then handle the traffic communication for the other parties situation on the river Elbe on the one hand and avoid operational and who ultimately decide friction on the other.” what route a vessel is to take. Nautical Terminal Coordination has Dr Stefan Behn, member been working since the start of October of the Executive Board of on the basis of a two-shift system. A HHLA and responsible for third shift is set to be introduced as the Container segment, soon as possible, and preparations are stresses the importance currently under way to increase staff of Nautical Terminal numbers to accommodate this. Three Coordination: “We are employees currently work for NTK. continuing the successful NTK’s duties for the Hamburg container work of the Feeder Logistics terminals and Hansaport include cross- Center with Nautical terminal coordination of the preliminary Terminal Coordination. planning, approach guidance and Both of these are prime departure planning of mega-ships in the examples of the cooperative Port of Hamburg. NTK will also assume approach that we adopt in a central and active communication order to jointly rise to the role in relation to the Vessel Traffic challenges we face in the Service Centre.

december 2014 / maritime gateway 59 Port Management

WebMap, plays a key role in this system, because it now allows all employees A common perspective to access a common spatial database, tightly integrated with their work processes. The functionality of the Web- drives operational GIS is able to reflect different users’ needs, from providing an information retrieval system, to data capturing and efficiencies specialist business applications. Since every area of the business requires different information, bremenports GeoMedia WebMap has enabled Bremen ports to develop a common greatly values the high level of flexibility GeoMedia WebMap affords, information database which forms the base for driving operational both in terms of data and application efficiencies, enabling the entire workforce at the port to share a common integration as well as the design of workflows. For us it was not a question operational perspective. of setting up entirely new workflows, but rather one of optimising existing processes," Franz recalls. For example, following this pragmatic approach, the electrical engineering as-completed drawings were scanned, overlain on a base map of the port with descriptive attributes and published online for users to access. This way we can see, at a glance, where to find which installations – this saves a lot of work. Additional spatial information is integrated as needed. In this way, employees managing water depth can access the latest sonar data to optimise dredging activities. In addition, real-time data are available to support smooth logistics within the port. In the context of bridge or building management, GeoMedia WebMap provides not only the necessary spatial ermany's seaports are the include the entire land, buildings and information, images and factual data, interface between land and infrastructure management. We take care but also direct access to the appropriate G maritime transport, service of flood and environmental protection, specialist applications. Intergraph’s centres and industrial sites. we carry out construction and civil solution provides more extensive GIS Bremen and Bremerhaven are one of the engineering works, and of course, we functionalities in the areas of cadastre of most important, with a throughput of 60 also cover all commercial functions. building lots, management of dikes and million tonnes per year; together they flood protection. Here the relevant data The requirements for IT solutions make up Europe's fourth largest port. and processes can be documented and are diverse. My primary goal in the managed directly in the system. Complex Infrastructure development of the infrastructure management concept was data Sustainable use The seaports of the Federal State of and application integration, Franz Bremen, which includes Bremerhaven, For Ralf Franz, the benefits of the recalls. "Effective working requires, owe much of their performance and Intergraph solution are being felt as prerequisites, a non-redundant draw to impressive infrastructure whose in many areas: "Many of our work database with consistent rules, maintenance, operation and expansion is processes have become much more processes and metadata models. On that down to bremenports GmbH & Co. KG effective because of our unified, foundation you can build the specific company, which was founded in 2001. geospatial information base. We now applications for functions like document literally share a common perspective on "We are almost like a private management, geospatial information, things which, in a complex operation community," explains Ralf Franz who, land and property management and like ours, is priceless." Summing up, as head of organisational development, commercial solutions." Franz is convinced that "GeoMedia also data processing and IT, is responsible Spatial references in every process leaves us ideally equipped from the for the development and implementation perspective of both our medium- and of new IT concepts. Our responsibilities Intergraph’s solution, built on GeoMedia long-term corporate objectives."

60 maritime gateway / december 2014 Scandal

W Bunker A/S, the Danish total sum sought by them sums to publication Finans quoted Andersen shipping-fuel supplier $21,528,920.05. saying that the alleged fraud concerns that sells 7 per cent of the massive credits to Tankoil Marine O The collapse of OW Bunker came fuel used by the world’s Services in the form of credit sleeving. to light when the company announced shipping fleet, filed for bankruptcy Dynamic Oil Trading had pushed its about a fraud committed by senior on November 7 in Denmark, after a debts to $750 million which prompted employees in the Singapore-based $125-million internal fraud and other banks to refuse to extend further subsidiary Dynamic Oil Trading, failures surfaced, with Dynamic Oil credit to OW Bunker which collapsed as a result of which a previously Trading the Singapore based subsidiary under the weight of losses posted by announced $24.5 million loss was now at the centre of the alligations. this subsidiary. The case could be estimated at $150 million. Following the parent company, three one of the biggest trading scandals in of its subsidiaries subsequently Defending Lars Møller, CEO of Singapore in a decade. filed Chapter 11 petitions in the US Dynamic Oil Trading, Attorney Arvid Eight months before the Bankruptcy Court, listing assets of as Andersen calls it a case of "Untimely bankruptcy, OW Bunker had issued much as $50 million against debt of up lack of care." He further states that an IPO which is the second-biggest to $100 million. OW Bunker informed the question is not if illegal activity in Denmark since 2010, valuing investors that the company's equity has taken place, but whether internal the company at almost $1 billion. has been wiped out due to losses at company guidelines have been broken. "When you go bankrupt... months Dynamic Oil Trading. The case is not that somebody has after an initial public offering, then stolen money, billed fictitious trades or The total number of plaintiffs it's a scandal," commented Jesper given kickbacks. The case is that a big filing claims against the fuel supplier Langmack, head of PFA Asset credit given to one customer was built has come to seven so far, and the Management in Copenhagen. up, Andersen said. Danish business Several traders are speculating that the problem was likely related to the recent sharp fall in oil prices. Considered as a benchmark, Brent OW Bunker bankruptcy: crude oil futures have dropped almost 30 per cent in value since June to levels last seen in 2010 as rising Fraud or lack of diligence? supplies clash with cooling demand. If OW Bunker or its subsidiary were very long on their hedges then OW Bunker collapsed under the weight of losses posted by obviously they had to suffer losses when oil prices came down, opined its Singapore subsidiary Dynamic Oil Trading. What triggered a trader who has had counterparty the bankruptcy – a well planned fraud or mere lack of positions with OW Bunker. Dynamic Oil Trading had $2.1 billion diligence – is yet to be seen. in sales from its incorporation in August 2012 to December 2013. The Omer Ahmed company posted net income of $8.9 million for the period, giving it a profit margin of 0.43 per cent, according to records filed with Singapore’s Accounting and Corporate Regulatory Authority. These records also shed some light on its involvement in triggering the bankruptcy. The 2013 annual report of Dynamic Oil Trading revealed that it had no significant concentration of credit risk with any single customer. It used swap contracts with maturities of less than 12 months to hedge against the floating price physical contracts. The $1 million paid-up capital company had $53 million in bank overdrafts, about $144 million in trade receivables and $71 million in trade payables, according to the Singapore records.

december 2014 / maritime gateway 4161 Update

trong demand for perishables coupled with improvement S in refregerated containers technology that enables long distance transport of perishable goods is fueling the global demand for reefer Growing containers. According to a latest Drewry report, an estimated 300,000 40-foot reefer containers are expected to be added to the global fleet by 2018. Latest Reefer Shipping Market demand for Annual Review & Forecast by Drewry reveals that reefer capacity on the container ship fleet will increase by 22 per cent by 2018 to 1.9 million slots, growing from 1.6 million 40-foot slots reefer containers in 2013. The global reefer container fleet increased by one-third to 1.2 million Shipping lines expand their fleet of reefer containers teu between 2009 and 2013. Drewry guided by the growing trade in perishables. estimates that the worldwide seaborne perishable reefer trade rose at an annual Omer Ahmed rate of 3.2 per cent in the 10 years to 2013, reaching 98 million tonnes last year. Sectors driving this growth have been meat and exotic fruit, with the latter rising as much as 9.3 per cent each year over the period. Between 2013 and 2018, overall seaborne perishable reefer trade will increase by 17 per cent, providing an additional 16.5 million tonnes of cargo. In tonnage terms, reefer trade will grow by 20.5 million metric tonnes up to 2018 – 16.5 million tonnes will be organic growth and 4 million tonnes at the expense of the shrinking specialised reefer industry, forecasts Drewry. China: Perishables trade on the rise Rise of an affluent middle class, open trade policies and the advancement of cold treatment technology are propelling imports/exports of fruits and vegetables, which inturn is guiding the demand for seaborne transport in refrigerated containers. FTAs drive trade in perishables Free trade agreements (FTA) are strong drivers of the perishables transport business, opening up overseas markets that improving reefer technology had brought into play, says Ng Kar Loke, head of special cargo at APL Ltd. “The governments opening up of these markets is an important process for fruit and vegetables, but when it happens transport providers need to be able to react quickly,” he added.

62 maritime gateway / december 2014 Perishables exporting countries such Global Market 2013 - Reefer Cargo as Canada, New Zealand and Mexico International Perishable Cargo are trying hard to add more fruit and vegetable items to the trade agreements they have with China to avoid taxes Worldwide trade by commodity 27% Other as this can bring down the prices. For Seaborne

9 12 instance, if Mexican avocados are sold Bananas 9% 6 3 Citrus in China, they carry a 25 per cent tax. 69% 7% Others 35% Deciduous Import/export 8%

Exotics Import of fresh fruits in China has 137 m MT / year 3% Total cargo under refrigeration Fish/Seafood grown by 9 per cent per anum since Dairy 13% 4% 2009 with 2.7 million tonnes entering Meat-Poultry the country in 2013. Dragon fruit, < Meat-poultry is the largest and fastest growing segment 21% < At 4.8% CAGR from 2002-2012 (or 36.3m MT) mostly from Vietnam, tops the list of fruit imports, growing at 29 per cent Source: Drewry Container Forecaster annually over the past five years and reaching 538,542 tonnes in 2013. In the Fresh vegetable exports notched at 5 same year, China exported $7 billion Reefers dominate the new Silk Way million tonnes. Garlic tops this list at worth of fresh fruit and vegetables, with rail 1.6 million tonnes, and there was an imports reaching $4 billion, up 26 per increase in demand for onion exports Reefer containers will form a huge cent over the past five years. that grew 20 per cent year-over-year. part of the cargo carried on the New In 2013, China exported a total of 2.8 Almost all of Hong Kong’s vegetables Silk Way rail network between China million tonnes of fresh fruit, with apples are sourced from the mainland. and Europe as shippers are forced to topping the list at almost 1 million tons. counter the extreme temperatures found Technology on the route. Darryl Hadaway, a senior consultant for Kazakhstan-based KTZ Five or six years ago, a 35-day transit Express said, he expects at least 50 from South America to China was per cent of the containers to be reefers, considered impossible, but this can be even in summer. The company is taking done now in reefer boxes where not only delivery of 200 45-foot reefer containers is the temperature controlled, but also to meet the demand from shippers. the atmosphere. The oxygen and carbon dioxide levels are adjusted to slow the India dominates in fruit/vegetable ripening process and lengthen the fruit exports and vegetables’ ability to emerge from a long transit as fresh as when they were India is the second largest producer packed in. of fruits and vegetable in the world, also the second largest exporter of Cold chain logistics, historically a vegetables. The country is the world’s weak point for domestic distribution largest producer of milk, and a top of perishable goods, has attracted exporter of meat and seafood products. significant investment over the past five years. "Cold storage capacity has Russia to import more from India greatly improved in China. Before it Indian food product exports to Russia was pretty basic – brick warehouse, have been negligible, partly due to the chain link fence and a padlock. But now strict quality standards and Russia’s investments are coming, which enables China to handle more perishable imports," Reefer container fleet - 2013 said Michael Britton, Asia-Pacific region

general manager 25% Maersk at Hamburg Süd. 38% MSC More perishable CMA CGM Hamburg Sud goods that used to be 6% transported by air are APL 6% CSAV now being shipped by Hapag-Lloyd 2% 5% 3% Evergreen sea freight, slashing 3% 4% transport costs 4% 4% MOL and enabling more Hanjin Other affordable prices for

consumers. Source: Harrison Consulting and Nordea Markets

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preference for agriculture products from 20-foot equivalent (teu) unit, 8 to 10 Europe and neighbouring countries. times the cost of a dry freight container of the same size. The trade also tends Following an agreement between CMA CGM group to be more seasonal than dry freight. Russia’s phytosanitary watchdog Thus, entry barriers may be too high Rosselkhoznadzor and India’s recommenced its for newcomers. The market has become Agricultural and Processed Food Products a battleground for about 10 carriers, Export Development Authority (APEDA), “Seasonal Citrus even more concentrated than the overall Russia is expected to increase imports of container shipping industry, which fruits, vegetables, meat and dairy products Express” for exporting counts 20 sizeable players. from India starting December 2014. The move will help boost India’s seafood Firms such as Hamburg Süd and citrus fruits and exports to Russia as well. Hapag-Lloyd, both based in Hamburg, apples from East India’s largest exporter of milk Germany, are looking to expand reefer products, Amul, is the first Indian dairy capacity. Hamburg Süd, which has 16 Mediterranean to company to enter the Russian market. per cent of its container fleet in reefers, According to Anatoly Sirotinin, Chief the highest proportion in the world, said the Black Sea. It Executive, Galactica Group, the Russian it is planning a sizeable purchase by the dairy company will begin distribution end of the year. Hapag-Lloyd, which supports citrus export of Amul’s milk and dairy products in is waiting on regulatory approval in Russia soon. various jurisdictions for its merger with development to Turkey Compañia Sud Americana de Vapores, a Shippers add more of reefer Chilean carrier, also plans to capitalise and Egypt. containers on the growth of reefer trade. For shipping lines, reefer trade is This year, the CMA CGM Group a growing niche market that offers acquired more than 7,000 of last Reefer volumes carried by CMA higher returns, but with higher upfront generation 40-foot high cube reefer CGM are increasing by 13 per cent per investment. To mitigate this high containers including 6,000 low year. With its Reefer fleet of 185,000 investment requirement for buying new consumption engines. These reefer teu, the CMA CGM Group is ranked reefer containers, many container lines containers reduce carbon print by 60 per second carrier and carry 850,000 teu have switched to leasing 40-foot high- cent as compared to the first generation’s per year. The company’s objective is cube refrigerated units, evidenced by a reefers, allowing precise controlling of to transport one million 20-foot reefer reported 70 per cent of new equipment the cold chain. Commodities transported containers before end of 2015. orders now being for reefer boxes. by CMA CGM in reefers include fruits United Arab Shipping Company A new reefer container is priced and vegetables, frozen food, wine, (UASC) has expressed plans to make at between $15,000 to $20,000 per flowers and pharmaceutical products. significant investment in new reefer units. The expansion of its fleet of Ten major reefer carriers account for 63% of total reefer supply refrigerated units and enhanced Owned Fleet Leased Fleet Total Total Mkt Share Containerized geographic access to the South America Fleet Mkt Share trades – following UASC’s recently announced cooperation with Hamburg ML 425000 25000 450000 18% 24% Süd – ensures that all UASC customers MSC 40,000 80,000 120,000 5% 6% now have access to the important South America trades as part of UASC’s CMA CGM 50,000 70,000 120,000 5% 6% comprehensive global reach, including Hamburg Sud 90,000 10,000 100,000 4% 5% those moving refrigerated cargo. APL 38,000 42,000 80,000 3% 4% “Expanding our reefer fleet will ensure that we continue to offer our CSAV 10,000 70,000 80,000 3% 4% customers the most cutting-edge, Hapag-Llyod 45,000 21,000 66,000 3% 4% energy-efficient solutions for the Evergreen 59,000 - 59,000 2% 3% carriage of frozen and chilled cargoes,” said Gareth Madsen, head of reefer MOL 32,000 18,000 50,000 2% 3% management at UASC. Its reefer fleet Hanjin 35,000 7,000 42,000 2% 2% is one of the youngest in the industry, with an average reefer container age of Other lines 426,000 257,000 683,000 27% 37% three years. Significantly, 80 per cent Total Container 1,250,000 600,000 1,850,000 74% 100% of UASC’s current reefer fleet has the

Carriers ability to measure the CO2 levels of the cargo and automatically ventilate as Conventional Carriers 26% required, enhancing both product quality Source: Drewry Reefer Shipping Market Review and Forecast, Annual report, 2013/14 and environmental performance.

64 maritime gateway / december 2014 leasing

n China, the world’s platforms, the two segments that CSSC been so keen on becoming lessors and largest shipbuilding nation, had sought to enter. owning ships themselves. In South developing leasing business is Korea, yards normally only take I The success is reflected on its parent’s especially in fashion for yards ownership of vessels when their clients financial results. In the first nine over the past few years, with several fail to meet contractual obligations. months of this year, CSSC recorded top players expanding their own fleets. Japanese players adopt a similar net profits of Yuan 907.8 million, more approach, except for the Imabari than doubled from the year-ago level of Leading the pack is CSSC Shipping, Group. which has helped its parent China Yuan 377.5 million. State Shipbuilding Corp expand its More often than not, Shoei Kisen Some other Chinese shipbuilders shipbuilding and offshore businesses. acts as a deal facilitator for Imabari are following suit. Yangzijiang The Hong Kong-based unit would Shipbuilding and its affiliate yards. Shipbuilding, the most profitable place newbuilding orders at CSSC The owner, also part of the Imabari non-state yard in China, has aimed to yards backed by long-term bareboat Group, would order vessels from group expand its leasing business to own at charter commitments, targeting vessel yards for charter parties. Compared to least 14 vessels, according to its latest operators unwilling to make capital Chinese players, Shoei Kisen prefers annual report. investments in ships as clients. time charter contracts and positions In March, Sinopacific Shipbuilding, itself as a full-fledged non-operating This business model has worked well a private player that focuses more owner, however. so far. CSSC Shipping booked vessels on offshore supply vessels, signed a worth more than Yuan 17 billion ($2.8 Having leasing business can strategic cooperation agreement with billion) at the parent’s group yards undoubtedly help yards attract more AVIC Leasing to expand in this area. last year, and is now aiming to place clients – but it is not really everyone’s Other yards that act as lessors include newbuilding orders totalling Yuan 23 game. With payments from charter Sainty Marine, a Jiangsu-based yard billion this year. Those orders include parties spreading over long periods, controlled by local authorities. three 18,000 teu boxships on charter to yards needs to have access to a lot of CMA CGM and some jack-up drilling Elsewhere, shipbuilders have not capital to enter this business. CSSC Shipping and AVIC are linked to Chinese state conglomerates, which tend to have an easier time borrowing from banks in China. Yangzijiang and Imabari both have strong balance Shipbuilders as Lessors: sheets. Moreover, there could be more business risks for yards as lessors. Growing interest in Sun Bo, vice-president of China Shipbuilding Industry Corp, another Chinese state shipbuilding giant, pointed out that charter and newbuilding markets are in “the same leasing business cycle". When charter rates are low, newbuilding prices tend to fall as well, hurting those dual players on How can shipbuilders attract more orders when many two fronts. “We are not really keen in shipowners are still in financial stress? For the wealthier developing our leasing business,” Dr Sun said. ones, turning into a lessor is the way to go. Quiet newbuilding markets Newbuilding markets were uneventful in the past 10 days, with some owners NEWBUILDING DEALS REPORTED FROM NOVEMBER 11 taking up the remaining 2016 slots. Yard Buyer Sector Number Capacity Delivered period Price per Wisdom Marine, the expansion-minded unit Taiwanese bulker player, is set to book another two panamax vessels at $35.5 HHIC NA Reefer 2 1,900 teu 2016 July $34.1m million each at Japan Marine United – Sundong Tsakos Tanker 1+1 160,000 dwt 2017 1Q NA a relatively higher price compared to JMU Wisodm Bulk 2 80,800 dw 2016-2017 $35.5m recent deals in China. Marine * The article was authored by Max Tingayao Source: Company announcements and sources, Vesselsvalue.com, Lorentzen & Stemoco and Asiasis.com Lin for the Lloyd’s List.

december 2014 / maritime gateway 65

67 maritime gateway / december 2014