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There was actually no need for Sethusamudram Ship Canal project considering the traffic pattern and volumes: Capt Achanta Sivakumar

(Interview Contd)

Sagar Sandesh: Logistics is emerging as major industry, working on thin margin and keen to cut cost all levels. Major economic powers like China and Japan are thinking of cutting Thailand to build a shipping canal in an effort to reduce the distance from Pacific and Indian Ocean countries. What needs to be done in India considering that Logistics cost is around 14 per cent of the GDP? What are the steps the government should take to cut logistics costs so that our exports become competitive in the Global Market?

Capt Achanta Sivakumar: In order to improve the cost of logistics, in my view, following measures would help:
1.     Reduce volume of cargo moving on road, and switch to rail or coastal shipping.
2.     Reduce the road haulage costs significantly, by offering tax breaks, waiver of tolls etc.
3.     Make the coastal shipping, cheaper by offering significant waivers on port dues, easing up on regulatory restrictions etc, tax breaks etc.
4.     Develop domestic manufacturing facilities for container handling equipment and reduce cost of container handling during each custody change. 
5.     Each government or private owned facility service provider must get rid of the cost-plus mindset when fixing tariffs for various activities, including rail/road haulage, port dues, container handling etc and work towards building reliable and competitive services.
SS: Sethusamudram Ship Canal project remains stuck for the past 12 years after the shipping ministry had invested Rs one thousand crores. The project has proceeded half way and got stuck.   What are the steps that need to be taken to revive the project? How will this project help promote development of industries in South Tamil Nadu, as claimed by the proponents of the project? Or should it be taken up as a strategic project as Hambantota Port has fallen into the hands of China?

CAS: The SS SHIP CANAL PROJECT in my view was a total waste of public resources as the intended traffic volume and perceived savings on fuel, would have never justified the cost for the project. There was actually no need for SS Canal project considering the traffic pattern and volumes.
SS: Coastal shipping has not taken off in India despite several concessions offered by the Shipping Ministry. Can you identify the obstacles and how they can be overcome?  Coastal shipping of a unitized cargo like automobiles could not succeed and had to be given up at Chennai port recently.
(Coastal shipping: representational image)

CAS: Few things will help improve coastal shipping:
1.     Separate terminals or ports to be earmarked for handling domestic cargo
2.     Have them as close to manufacturing hubs, to reduce landside costs
3.     Port dues and taxes to be reduced to a minimum
4.     Easy entry and egress of vessels and the cargo to be permitted.
5.     Subsidize the fuel cost for ship fuels and lubricants
6.     Offer tax sops by way of tax breaks for seafarers sailing on coastal ships. Ease the certification process for officers sailing on coastal ships.
7.     Start a separate pool of coastal officers and ratings, for manning the coastal ships.
8.     The list is rather long - but above are few quick and easily implementable measures.
SS:  Owner of a container terminal was quoted as saying recently that India needs more cargo, better connectivity to ports rather than creating more Greenfield ports. World over container traffic is picking up. The trend is not visible in India except in select west coast ports? What could be the reasons for the low container traffic in Indian ports and how this trend could be reversed?
CAS:  This trend can be reversed only through better thought out manufacturing hubs in SEZ's.
SEZ's should be foreign territory in every sense of taxation and administration, and be located in large parcels of land, closest to ports.
Make in India initiative will work only when SEZ's are created with proper framework of regulations, which will permit them to succeed.
SS: Three decades ago Shipping Corporation of India conceived a project of aggregation of cargo for the entire East Coast at Tuticorin Port so that main line vessels could pick up or drop cargo for east coast ports but the proposal did not take off. Vallarpadam Transship terminal has been failure despite several concessions offered by the shipping ministry. What are the lessons to be learnt of the failure of Vallarpadam for the proposed transshipment terminals at Vizhinjamand Colachel?. Can the facility being created near the tip of south India compete with Colombo and Singapore ports, leaders in transshipment traffic?.

Vallarpadam Cochin 

CAS: The terminal operators and their landlords (port trusts) should be able to assess the per unit cost of handling a container at their terminal vis--vis Colombo, SIN etc.
While assessing above, they must factor their own geographical location( and inherent disadvantages, such as cost of deviation from main routes etc.), in addition to handling efficiency, marine charges etc. The stand taken should be holistic and long term, and not piece meal as being done now.

(To be Continued)

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