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| Coastal shipping in India need to be promoted for cost savings |
India's economy has grown by leaps and bounds in recent years and this growth has pushed its transport system to full capacity. The movement of bulk commodities is one of the major responsibilities of India's transportation system. Thermal coal alone accounts for around 61 percent of the freight volume on the Indian Railways and 24 percent of the seaport freight mix.
Water based transport currently contributes less than 10
percent to India's modal mix.
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| Coal can be moved through coastal ships thereby decongesting rail networks |
China uses its inland waterways to transport raw material and finished goods between Eastern and Western provinces; water contributes 24 percent to China's freight modal mix. Australia carries 17 percent of goods through coastal shipping. In Germany, 11 percent of goods are moved through inland waterways and coastal shipping. A strong economic case for coastal movement can be made for most of the key commodities in our study.
In 2013–14, nearly 740 MMTPA of coal moved through the
country predominantly through rail. Only 23 MMTPA moved through coastal shipping
even though this mode costs one-sixth that of rail cost (INR 0.2 per tonne km
vs. INR 1.2 to 1.4 per tonne km). More than 90 percent of the rail routes
relevant to coal are running at over 100 percent utilization. With the expected
ramp-up in coal production by Coal India Limited, India may need to move 1,000
to 1,200 MMTPA coal across the country by 2025, creating tremendous pressure on
the already congested railways.
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| There are significant cost savings if Coastal shipping is used to transport Coal instead of Rail |
A similar comparison of logistics cost for plant to demand
centre for five other key commodities—POL, steel, cement, fertilizers, and food
grains reveals a total potential of 70 to 80 MMTPA coastal movement, with
potential savings of INR 4,500-5,600 Crores per annum.
It is estimated that coastal shipping of about 180-200 MMTPA
can be achieved from current and planned capacities across coal, cement, iron
and steel, food grains, fertilizers, POL by 2025. This would translate into
estimated INR 10,000-15,000 Crores saving annually.
How can coastal
shipping's share be increased in modal mix of India
Creation of supporting infrastructure can increase the share
of coastal shipping in modal mix
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| Dedicated infrastructure for coastal shipping is a prerequisite for its growth |
One major reason that coastal shipping has been unable to
pick up in the country is due to the lack of suitable infrastructure that
enables movement through coast. Hence availability of dedicated infrastructure
will go a long way in promoting coastal shipping as a mode of freight
transportation. Hence infrastructure at ports and supporting infrastructure
using rail/road to facilitate coastal movement should be created.
1 Dedicated coastal shipping berths, bunkering, storage at relevant ports
2 Creation of supporting transport infrastructure (e.g.,
Talcher-Paradip railway line), slurry pipelines etc
3 Last mile connectivity projects with industrial areas
4 Appropriate ship-repairing/ship-building facilities on key
ports; currently most of the ship repairs happen outside the country
5 Dedicated capacity fleet under shipping companies
6 Management of dedicated coastal berths(if any) and their
operations
Efforts of Shipping
Ministry keen to encourage Coastal Shipping to reduce Logistics costs
The Government has relaxed a law allowing only Indian ships
to be hired for carrying cargo within the Country’s ports, in special
categories where the local players do not have a presence.
The so-called Cabotage law protects Indian shipping companies
from the big international players. But the Indian fleet owners do not operate
in the categories that have been opened up, such as roll-on, roll-off in
movement of passengers, cars and trucks; and LNG vessels.
The Shipping Ministry is keen to encourage Coastal Shipping
to reduce the logistics cost and also bring down the Country’s carbon
footprint.
The new rule, notified on September 2, says that the
provisions of Section 4O7 (1) of the Merchant Shipping Act, 1958, will not
apply to above ‘special’ vessels for a period of five years.
The new relaxation is a welcome move that could encourage
transport of automobiles, large project cargo and boost tourism. However, many
issues need to be sorted out. There should be dedicated facilities at Major
Ports and Non-Major Ports with different rates for coastal ships.
Advantages of Coastal
Shipping
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| Advantage Coastal Shipping |
The Shipping Ministry in a report published last January said
that fuel consumption by Coastal Shipping at 4.83gm/km is just I5 per cent of
the consumption by road and 54 per cent of that by rail. .
Rail and road transport because of their limited capacity and
infrastructure cannot handle large quantities of coal, iron ore. The cost of
carriage of goods, from coast to coast, by Coastal Shipping (about 2I per cent
of cost by road and 42 per cent of cost by rail) works out to be much lower
than that by road and rail.
Despite a vast coastline of nearly 7,500 km, 12 Major Ports
and nearly 200 Non-Major Ports from Kolkata to Kandla, domestic shipping
traffic is miniscule.
The Shipping Ministry’s ‘Vision for Coastal Shipping, Tourism
and Regional Development’ prepared in June has a vision to increase the share
of coastal and inland water transport to 10 per cent in the next five years.
Success stories in
Indian Coastal Shipping
1. RORO: In February 2016, Hyundai Motor India Ltd had sent 800
made-in-Chennai cars from its Sriperumbudur plant through MV IDM Symex, a
roll-on-roll-off (RoRo) vessel, from Chennai port to Pipavav port in Gujarat.
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| Success stories - RO/RO coastal movement of cars in India |
Following this, now Automobile makers are ready to follow HMIL in using the coastal shipping route to move vehicles from their factories to other cities — an initiative that could de-congest highways and reduce pollution. However, the companies say using this route is not viable at the moment and that the government should give financial assistance to promote coastal shipping.
2. Other cargoes: In January 2015, the Food Corporation of India decided for the first time to move a parcel of 20,000 tonnes of foodgrain from Kakinada Port on the Andhra Pradesh coast to Kochi in the West by sea instead of the usual land route. Weeks later, the company announced that it would move at least one consignment of 20,000 tonnes every month using this mode for a year, as it was cheaper than road and rail movement.
Steelmakers such as the Tatas and Jindals are exploring ways to ship their finished products from Kolkata to Mongla in Bangladesh, avoiding the circuitous land route. Rashtriya Ispat Nigam, the corporate entity of Vizag Steel, is toying with the idea of buying barges to shift part of its movement from road and rail to coastal shipping.
Slowly, but surely, India’s congested highways are pushing companies to opt for coastal shipping to transport foodgrain, industrial raw materials and commodities such as steel, cement and fertilisers.
3. Coastal Shipping between India - Bangladesh : For the first time in their history as nations, neighbors Bangladesh and India launched direct cargo services in March 2016 that enabled goods shipped by sea to reach each other’s ports in a maximum of four days. Previously, goods sent from India took more than three weeks to reach Bangladesh’s Chittagong or Mongla ports because shipments first had to pass through Colombo or Singapore. The coastal shipping is the best option to increase trade in the sub-region comprising Bangladesh, landlocked northeastern states of India, Nepal and Bhutan.
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| Coastal vessel M V Harbor - launching ceremony in Krishnapatnam on 28 March 2016. Neepa Paribahan Ltd. (NPL) is Owner and Operator of the MV HARBOUR-1 which operates between India & Bangladesh |
Bangladesh and India signed an agreement during Indian Prime Minister Narendra Modi’s visit to Dhaka on June 6, 2015, followed by the signing of a protocol in November, which cleared the way for direct maritime cargo services. The countries’ bilateral annual trade volume is worth more than U.S. $6.6 billion. Cargo ships from Bangladesh’s Chittagong, Narayanganj, Ashuganj, Paira, Khulna, Mongla and Pangaon (near Dhaka) ports can carry goods to seven Indian eastern coastal ports in Kolkata, Haldia, Paradip, Vishakhapatnam, Kakinada, Krishnapatnam and Chennai and vice versa, according to the agreement papers. The text of the bilateral deal stipulated that the maritime shipping services between India and Bangladesh would enable the movement of cargo to the Northeastern states through Chittagong, and thereafter by road or river routes.
“The deep draft ports on the eastern coast of India can be ‘hub ports’ for the onward transportation of cargo to Bangladesh via the coastal mode. The Indian ports will attract enhanced cargo and also the overall transportation cost to Bangladesh will get reduced,” the document said. The rapid growth of India-Bangladesh trade has resulted in congestion at the main Petrople-Benapole land port. The traffic congestion at the Bangladesh side of the land port has emerged as one of the biggest impediments to export-import trade, it said.
Role of The Indian Coastal Conference - ICC Shipping Association (Formerly known as "The Indian Coastal Conference")
The ICCSA was formed in 1951 by 13 leading Indian shipping companies as a platform to facilitate and grow the Indian coastal shipping trade. For almost 6 decades now, the ICC Shipping Association (ICCSA) continues to be the representative body for the Indian coastal shipping industry. With 82 member companies, ICCSA today represents the interests of the coastal shipping industry at- various forums including the Ministry of Shipping, Directorate General of Shipping, the National Shipping Board, Tariff Authority for Major Ports, etc. ICCSA's prime focus is the development of sea-borne trade along the Indian coast and in line with that focus, ICCSA welcomes all stakeholders in the Indian coastal trade as members. This includes ship-owners, ship-managers, freight and logistic companies , shipping agents, etc.
The way forward for Coastal Shipping in India..
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| Coastal Shipping has bright prospects in India |
The future of the port sector in India, especially for the minor
ports hinges a lot on coastal movement and inland waterways. Minor private
ports have to play an extremely critical role in the development of coastal shipping.
The government needs to encourage PPP models for development of infrastructure
at ports and rivers to develop connectivity and promote coastal movement. While
the debate on cargo vs infrastructure has been ongoing, the port developers
need to build capacity for attracting domestic cargo and by doing so reduce
waiting time and improve operating efficiencies.
