WORKING GROUP ON PORTS AND SHIPPING FOR THE NATIONAL TRANSPORT DEVELOPMENT POLICY COMMITTEE MINISTRY OF SHIPPING GOVERNMENT OF INDIA AUGUST 2012 CONTENTS Chapter Chapter Page No. No. Executive Summary i - xxvi 1 Background 1 - 5 2 Challenges for Ports & Shipping Sector 6 - 8 Cargo Traffic, Port Capacity, Investment requirements in 9 - 19 3 the Port Sector 4 Rail Road Connectivity with Ports 20 - 42 5 Water Transport Statistics 43-47 6 R&D and Technology Evolution in Shipping 48- 52 7 IT Investments & Interface 53 - 73 8 PPP Framework & Bench Marking 74 - 91 9 Shipping 92 - 131 10 Inland Water Transport 132 - 156 Annexure - I 157-159 Annexure - II 160-164 Appendix - I 165-167 EXECUTIVE SUMMARY Maritime Transport is the shipment of goods (cargo) and people by sea and other watreways. Port operations are necessary tool to enable maritime trade between trading partners. Ports represent a complex structure in a country’s transportation system providing ship harbour interface services such as pilotage, dredging, provision of berths, maintenance of navigational channels, etc., ship-port interface in terms of loading and unloading cargoes and port-land interface in delivering cargo to and from the hinterland. They serve as the interface between maritime and inland transportation, play a significant role in the economic development of a country. Maritime transport is the backbone of global trade. 2. It is essential that ports provide efficient, adequate and competitive services. If they fail, ship-owners who find them too costly or too slow will go elsewhere. Hence if ports do not provide cost-effective services, imports will cost more for consumers and exports will not be competitive in world markets. 3. Draft limitation at Indian ports constrains access of large main line vessels. This entails transportation of goods from India to major export destinations to be transshipped at larger ports (Dubai, Singapore). Transshipment means additional handling of shipments, which is more expensive. Consequently shipping costs escalate which erodes cost advantage of Indian exports. 4. Ports should not be viewed in isolation but as being interdependent with the other modes of transports, road or/and rail for their existence and efficient performance. Lack of integrated or intermodal transportation constrains quick evacuation of cargo through other modes of transport if rail-road connectivity from the ports and hinterland is inadequate. 5. We must ensure that there is adequate, safe and seamless access to ports from land and at the same time ensure modern, navigable waterside access with channels that are deep and wide enough to handle today’s modern vessels and marine highways to provide transportation options for moving cargo between ports. 6. These priorities should be included in a long term, national transportation plan that addresses freight mobility, congestion and productivity. Without such a plan and the necessary investment to support it, economy will be less competitive. 7. Shipping is necessary for the development of the national economy as well as to keep supply lines open for transportation of essential commodities during peacetime and emergencies such as war and famine. The existence of strong and viable national fleet serves as balancing factor in the freight market. The key issues facing Indian shipping sector are greater cargo support, cargo assurance through long term charter of vessels, tax regime which enables Indian shipping companies to compete globally, promotion of coastal shipping and equal treatment for Indian seafarers plying i on vessels in International Waters and Indian territorial waters. 8. Inland Water Transport is the most environment friendly mode with its excellent fuel efficiency and lower emission levels. Lack of development of IWT infrastructure has constrained full exploitation inland water transport mode. National Waterways come under the purview of the Central Government while rest of the waterways come in the domain of State Governments. The National Waterways carried 4.92 million tonnes of cargo in 2010-11. These have the potential to carry 18 times the present cargo by 2029-30. IWAI has taken up some projects in collaboration with private sector for movement of cargo on National Waterways. The challenges for inland water transport sector are integration of waterways with other modes of transportation to form an efficient multimodal transport network to achieve sustainable development of IWT sector; development of waterways in North Eastern (NE) region which has large potential/navigable stretches for IWT; Policy support for creation of floating infrastructure i.e Barges/ Inland Vessels is critical to attract private capital for development of IWT sector and Creation of adequate education and training facilities to help sector specific capacity building is necessary. Cargo Traffic, Port Capacity, Investment requirements in the Port Sector 9. India has a coastline of 7517 km with 12 Major Ports and 199 notified Non-major Ports along the coastline and Island. Major Ports are the ports which are administered by the Union Government, while Non-major Ports are administered by the State Governments. Seaports in India moved more than 80 percent of the country’s overseas cargo, and handled about 912 million tonnes of cargo in 2011-12. Out of this 61.4% is handled by Major Ports while remaining is handled by Non-major Ports. 10. During 2011-12 Major and Non-major ports in India accomplished a total cargo throughput of 911.7 million tonnes reflecting a modest increase of 3.0% over 2011-12 compared to a growth of 4.2 % in 2010-11. The growth in cargo handled at Major and Non-major ports in 2011-12 was 1.7% and 11.5% respectively compared to 1.6% and 9.1% achieved in 2010-11. The deceleration in overall growth in India’s seaborne cargo traffic in 2011-12 reflects slowdown in global and domestic growth during the course of 2011-12. 11. The year 2011-12 was a challenging year for the Major Port Sector as it was buffeted by three exogenous shocks (a) growth in major industrial countries which are a major market for Indian merchandise trade decelerated from 3.2% in 2010 to 1.6% in 2011 and is projected to grow at mere 1.4% for 2012. Similarly, growth in world merchandise trade decelerated sharply from 14.3% in 2010 to 6.3% in 2011; (b) India’s GDP growth slowed down from 8.4% in 2010-11 to 6.5% in 2011-12. Slowdown and decline was pronounced in case of India’s GDP pertaining to manufacturing and mining sectors: while growth in manufacturing slowed from 7.6% in 2010-11 to 2.5% in 2011-12, growth in mining sector made a complete about turn from 5% in 2010-11 to - 0.9% in 2011-12; (c) series of judicial interventions leading to ban/restrictions on iron ore exports which resulted in more than 30% decline in its export. Iron ore loadings at major ports at 60.69 MT ii in 2011-12 were 27 MT lower compared with iron ore loadings 2010-11 leading to overall shortfall of 30.5 MT between the target and achievement for overall cargo traffic for 2011-12. These exogenous factors to a large extent reflect in sharp fall in iron ore loadings and deceleration in container traffic from 12.7% in 2010-11 to 5.4 % in 2011-12. Major Ports 12. Cargo traffic at 560.1 million tonnes at India’s 12 major ports during 2011-12 accounted for 61.4% of India’s total sea borne cargo. Total cargo of 560.1 million tonnes comprises of cargo loaded, cargo unloaded and transhipped to the tune of 194.1 million tonnes, 341.6 million tonnes and 24.4 million tonnes respectively. The overall compound Annual rate of Growth (CAGR) of traffic at major ports during 1950-51 to 2011-12 has been 5.6 percent, whereas during the post- liberalisation period i.e. from 1991-92 to 2011-12, the CAGR was 6.6 percent. The CAGR of traffic growth at major ports for the last 5 years was 3.8 percent. 13. Commodity groupwise analysis of last 5 years of CAGR reveals that the highest CAGR of 10.4% has been observed in container traffic, followed by 7.0% for Fertilizer and Fertilizer raw material and 5.5% for the coal. As far as the cargo composition is concerned, there has been a significant change in the share of Iron Ore and container traffic during the past 5 years. The share of container traffic increased from 15.8% in 2006-07 to 21.5% in 2011-12 while the share of Iron Ore decreased from 17.4% in 2006-07 to 10.8% in 2011-12. During 2011-12, POL traffic maintained a dominant share of more than 32%, followed by Container traffic (21.5%), Other cargo (18.0%), Iron ore (10.8%), Coal (14.1%) and Fertilizer & FRM (3.6%). Non – Major Ports 14. There are 176 non-major ports situated along the peninsular coast-line and sea-islands. The traffic is handled by only 61 Ports (including ports of Andaman & Nicobar Islands under the administrative control of Port Blair Port Trust). 15. Non-major ports in India collectively handled 351.51 million tonnes of traffic during the year 2011-12 as compared to 95.52 million tonnes of cargo handled in 2001-02. The CAGR growth in traffic during 2001-02 to 2011-12 achieved by Non-major ports was 13.9% compared with 6.9% achieved by Major ports in the country. The share of cargo traffic of Non-major ports in the total cargo traffic handled by all ports in India has increased steadily from 24.9% in 2001-02 to 38.6% in 2011-12.