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Once the coastal shipping picks up, one could see an increase in container handling in the East Coast: RST

Author

(Interview Continued)

Sagar Sandesh: No new major port has come up in the government sector during the last ten years. The Shipping Ministry is however saying it is constructing six new ports in the country including Colachel and Sirkazhi in Tamil Nadu. Even the DPRs for these new port projects have not been completed. What do you think is the hitch?
Ravee S Tittei:  JNPT in Maharashtra is the only port where all the terminals are working at 90 percent of their capacity. Mundra port’s terminals in Gujarat are also working at 80 percent of their capacity,
All other Container Terminals in the country especially in the East Coast are working at 40 to 50 per cent of their capacity.
Once the coastal shipping picks up, one could see an increase in container handling in the East Coast. There are possibilities of East Coast ports transshipping cargo for the ports in the West Coast.
SS: India is moving towards attaining a one trillion US dollar economy soon. While trade in the country is picking up, Indian ports have not been able to match with the expectations of the trade. There is some growth in the west coast ports. The turn- over of the all Indian ports put together works out to 75 per cent of the turn-over of Shanghai Port. We are behind China by over one hundred years according to experts. Your take on this.
RST: Out of the twenty top ports in the world, eight ports are in China. India is yet to create a World Class Port. The connectivity both rail and road to the port and from the port to the hinterland has to improve especially in the case of East Coast Ports.
 In China, the ports were developed along with the Highways and Inland waterways. The development was simultaneous and that has been the reason for the success achieved by that country.
Summary of the interview of the previous session with Ravee S Tittei Chief Operating Officer, German Express Shipping Agency (India) PVT LTD

Shipping Industry
The recession in the shipping industry is likely to continue for one or two years and indications are that the industry has not come out of the woods.
To address the issue of continuing recession in the industry, big shipping companies are going in for massive restructuring of assets. They are coming out of the sectors which are not profitable. They are also collaborating with smaller companies for sharing their vessels.
Mergers have also not helped the situation if one took into account the fate of One Line, merged entity floated last year. Despite three major Japanese shipping companies have merged into a single company, the newly created entity suffered huge losses this year. But s Chinese state owned shipping company COSMOS with aggressive marketing strategy is expected to do well.
So the industry is witnessing something good and bad. The market is however bound to improve in the coming years .The shipping freight is not likely to go up anytime soon. Consequently the consumers all over the world will be the beneficiaries of being able to avail of quality goods at affordable prices. We have not seen freight increase in the last five years and there has only been reduction in rates
Trade War
The impact of the trade war between United States and China will be catastrophic for the shipping industry. While America is a big consumer of goods, China is world’s leading manufacturer. So any change in the tariff regulation or any disruption of trade between the two countries will have a cascading impact on the global shipping industry.
Fate of Container Freight Stations after the introduction of DPD of imports and DPE of exports
The government has introduced Direct Port Delivery of Imports and Direct Port Entry of exports in select ports to benchmark our Logistics Standing to Global Standards that are in vogue in the neighborhood ports of Malaysia, Singapore and China.
Though the DPD DPE concepts are good, the study made by the international agencies missed out on key factor: what is causing the delay was not gone into in depth.
The study missed the fact that freight stations are generally used by the trade to park their containers and that Indian ports are used by the manufacturing industry as storage spots. Some shippers use it as warehousing space. The study went by the sole issue that containers took fifteen days to clear out of the port and came out with a knee jerk reaction.
Initially impact of the changes had a minimal impact on the fortunes of Freight stations. But when the Customs Authorities mounted pressure on the shippers and the industry to switch over to the new system, the impact was felt. The quantum of imports handled by the CFS in Chennai Port alone on average plummeted by 20 per cent. If this trend continued, it is going to be difficult times for the CFS
To tide over the situation, the CFS industry has represented to the government to permit them to handle the duty paid goods. If the government conceded the demand, the CFS could assist the shippers by providing Warehousing facility.
Another business opportunity that has opened up for CFS is handling of empty containers of foreign flag vessels. The Shipping liners have become our new customers.
West Coast Versus East Coast Ports-former flourishes while the latter flounders
North India especially the National Capital Region is a big consumption area which is connected to the JNPT and Mundra Ports through Dedicated Railway Corridors for the past several years. Railways have not provided such facilities to the Ports in the South East coast.
Combination of several factors have contributed to the poor showing of the East Coast Ports. There is no dedicated railway corridor linking ports like Chennai and Visakhapatnam to National Capital Region. Container trains from Chennai to Tughlakabad Inland container depot, the largest in the country have to move through existing railway lines  shared by the passenger trains. With passenger trains getting precedence in movement over freight traffic, the movement took a long time, sometimes several days for the train to reach Tughlakabad from Chennai.
The mainline vessels have opted out of the East Coast ports since the port infrastructure is poor. The draft is not adequate and hence only feeder vessels operate in this segment (east coast). Feeder vessels carry cargo from the east coast ports to Colombo or Singapore and some ports in China for onward transmission to global ports. This meant additional cost to the shipper, by way of transshipment.
With coastal movement of cargo by foreign flag vessels facilitated by changes in the cabotage laws, there is some silver lining in the horizon for East coast ports. Currently India bound cargo from Singapore goes directly to JNPT or Mundra ports. If the coastal movement of foreign flag vessels pick up, there is possibility of revival of services by mainline vessels to the East coast ports. The feeder vessels will pick up the cargo from east coast ports and transport them to the west coast.
Coastal movement of cargo is bound to improve with the introduction of Goods and Services Tax. There is therefore some hope that east coast ports will get some additional cargo.
Transshipment of cargo helps a Port normally to increase the volumes handled. JNPT and Mundra Ports have location advantage that cargo handled there is bound to move to North India, the highest consumption centre in the country. It is also emerging as manufacturing base of the country.
Alternatively there should be local industrialization. While industries have grown manifold in Maharashtra and Gujarat, the same cannot be said of manufacturing states like Tamil Nadu in recent years.

(To be Continued...)