Captain talks on shipping, flow of facts
Captain S K Achanta, Managing Director, Pan Asia Logistics Private
Limited said this in an informal chat with Sagar Sandesh last month. In this
brief chat, he dealt with the What needs to be done to shore up the coastal
shipping service, state of the international shipping industry and how to
attract ships to east coast ports which are working at fifty per cent of their capacity.
There has been a huge gap
between the governmentís policies and their implementation on the ground. This
is because the industry is not fully involved in the policy making of the
government. If I from the industry give an opinion on an issue, I (the
industry) should be given the responsibility to execute it.
When the coastal shipping policy was formulated a few years ago, coastal
shipping operators approached the government seeking special favors. They
include subsidy on diesel for operating coastal ships. Government ruled it out
on the ground that they do not subsidize diesel for truck operators performing
the same job of transporting goods by road.
In a number of countries especially in United States, European Union
or Japan, Coastal ships do not need pilots to maneuver ships to enter Ports.
The Master of the ship who is familiar with the Port basin terrain takes the
ship into the Port without the assistance from the Portís Pilots. There will be
tremendous saving in transportation Costs if the services of the Portís Pilots
are dispensed with.
Full fledged Logistics set up
The coastal operator should have a full fledged Logistics set up
including a fleet of trucks for handling cargo at ports, reliable ship
schedules and the ability to deliver cargo at the doorstep of the industry.The
reliability of ship schedules remains a major problem for the industry. While
the road is able to ensure reliable supply chain, coastal shipping is yet to
evolve itself on the cost and reliability factors. Despite tremendous odds
Indian entrepreneurs are pushing for coastal cargo.
Six years ago a small container ship used to carry 400 containers weighting
12,000 tones. Today, even the smaller ships, volumes have gone up to 30,000
containers. The coastal cargo is heavy on an average 24 tons per containers.
The cargo includes tiles, steel and cement. The coastal volumes have gone up
over the years not because of the sops offered by the government. The container
terminals who handle coastal cargo charge almost the same rates as
Separate ports for coastal shipping
According to him the coastal shipping needs a separate port as
exclusive berths announced by the government is inadequate. The satellite ports
exclusive meant for handling coastal cargo should be setup near major ports so
that the coastal port can share the infrastructure Logistics of major ports and
If the coastal shipping has to be viable the costs offered by the
coastal operator should be at least fifty per cent cheaper than road. At
present the costs is cheaper by 30 per cent.
Crew membersí pay
Coastal ship operators are unable to attract talent since the crew
members operating in coastal circuit need to pay income tax on the emoluments
drawn by them. Crew operating on foreign vessels and international routes are
exempt from paying income taxes. More over coastal operators are not able to
match the salaries offered by major shipping lines. While oil tankers offered a
salary of 16,000 US dollars per month, in container vessels the salary is
around 12,000 to 14,000 US dollars per month
Coastal shipping also calls for development of massive infrastructure
in the ports. The countryís regulatory body, Directorate General of Shipping
did not have the manpower for regulatory work and conduct inspections. There is
a need to outsource the Indian Register of Shipping. Give the responsibility to
the private sector but not the authority he said.
Main line vessels not attracted to the
East Coast Ports
On why main line vessels do not get attracted to the east coast ports
but make a bee line to JNPT and Mundra and other ports in Gujarat to handle the
requirements of the country he said it has got to with the geographical location of the ports in Western
The private port Krishnapatnam has not
earned profits not because of lack of effort on the part of the Port
administration. The mainline vessels moving from China to Dubai prefer to
unload cargo at JNPT or Gujarat Ports as the said ports fall in the east west
trade route rather than take diversions deep into the east coast,.
To Sail to East coast ports like Chennai
or Visakhapatnam, the mainline vessels need to take lot of diversion and the
cargo available in these ports are not commensurate with the cost of diversion.
Some vessels do come to East coast port as a sop to the International container
terminals operating in Chennai.
states need massive industrialization
Southern states like Tamil Nadu Andhra
Pradesh need to reinvent themselves and undertake massive industrialization of
the area. This is the only way to attract ships to the East Coast through
The recovery of the Indian shipping
industry affected by economic down turn for the past ten year is not any time
now since the problem of excess capacity remains. Still lots of ships are in
order in major ship yards.
Size of the
Size of the ships has also gone up to
20,000 TEUs. The number of TEUS deployed, are far in excess of available cargo.
While operating costs of ships have gone up, a 14,000 TEU capacity vessel on an
average carried 7000 TEUs in international trade routes. While small vessels
have perished due to lack of business, there is over capacity with global
shipping companies..The fact of the matter is that the shipping industry does
not create demand. We are only transporters if cargo is available, Cap Achanta
Chinaís exports volumes have come down
due to lack of global demand. Currently South American countries are buying
goods from China. So there is some demand for ships in this trade route. The
ocean freight rates has nose-dived to such an extent that vessels carried
containers from JNPT to Dubai without charging freight during May this year.
They were charging 50 US dollars per TEU in this route during the previous
In the case of freight rates from Chinese
ports to JNPT, the shipping companies charged 175 US dollars for a 20 foot
containers and 200 US dollars for 40 foot containers while the break even rates
are 500 and 900 US dollars respectively.
In the shipping industry there are more
mergers than acquisitions. Number of operators has come down. The consolidation
phase has been on for the past two years. Top twenty shipping companies few
years ago, have become Top Ten now. Three leading Japanese companies KL, NYK
and MOL have merged. He saw no significant improve in prospects of the
international shipping industry in near term. .
Long term the industry will go the E
Commerce way. Ships will become mere platforms of the E Commerce industry in
the long run and assist the process of consolidation and aggregation of cargo.
The US E Commerce Major is planning to
tie up with FEDEX to enter the Shipping sector shortly. Amazonís chairman Jeff
Bezoz had made an announcement in this regard recently..The liquid and dry bulk
cargo will however remain out of the purview of the e commerce industry.
Captain Achanta who has worked in Chennai for over twenty years sees
no hope for the Chennai port. Both the container terminals in Chennai will close
down once Adanis start operations from the Kamarajar port Ennore. Chennai port
has already lost dry bulk cargo as well as car carriers.