Face-lifting initiatives like Sagarmala Programme and Inland Waterways is soon expected to revolutionise India’s ports and maritime operations. Fuelling this is the Government’s increased focus on infra-spending. EPC World takes a closer look on the trends driving the sector…
Plush with a rich coastline of 7,517 km long coastline, India is the sixteenth largest maritime country in the world and is a home to 13 major and about 200 non-major ports. The sector, like any economic activity though had to face its fair share of hustles due to global market uncertainties, is now expected to soon regain its lost galore. Thanks to the proactive measures and ambitious initiatives like Sagarmala, Inland Waterways and much more, the ports and port infrastructure is soon expected to undergo a facelift in its operations. This positive wave of development has brought with it a cheer among the stakeholders and investors involved in the sector.
Expecting an upsurge to soon sprout up the port operators are on a constant plan of expansion and on upgrading their operational activities. Striding along a similar pace are the infrastructure service providers and equipment manufacturers who are also supporting to scale up the port operations. With the sector becoming increasingly competitive a keen interest is being seen among the stakeholders to explore and utilise the new-age modes of communication and operations, ie, the webbed world, to scale up their business activities.
Owing to the variations in the terrain conditions, Indian ports differ substantially in its topography and involve – deep sea ports to tidal ports and even river ports. The ports have been a major source of handling all bulk trading activities (including dry bulk like coal and iron ore, containers, break bulk and liquid bulk).
According to recent research analysts, the sector has pegged a positive growth of about 2.9 per cent (699.04 million tonnes compared to 679.37 million tonnes in 2017-18) in 2019-20. The country’s major ports in particular indicate a positive improvement in regards to the average turnaround time and berth productivity (scaling up from 14,576 tonnes to 15,333 tonnes) in the last fiscal. As per the analyst findings, the Cochin Port Trust registered the shortest average turnaround time to 1.10 days and the Jawaharlal Nehru Port Trust leads as India’s busiest container gateway.
A similar encouraging growth figure was also seen in the port infrastructure sector. Wherein, as per the experts, the market currently standing at 1,212 MMT (FY18) is soon projected to reach 1,784 MMT by 2024. And a major source to drive in this growth will be the proactive Government policies and initiatives being pipelined.
Commenting on the proactive and favourable Government approach Sanjay Bhatia, IAS, Chairman, Mumbai Port Trust says, “Government is persistently following up development of Inland Waterways through its ‘Sagarmala’ and ‘Jal Marg Vikas Project’. Inland Waterways provide internal trade an access to the port. Also, industries can be set up away from urban areas avoiding straining of cities’ infrastructure by utilizing economical means of transport without affecting the environment. Consistent approach in development of this Sector has added confidence in the mind of the stake holders and the sector is poised to exhibit substantial progress in the months to come. Mumbai Port Trust has realized this potential by permitting the trade/ industry to establish and operate around its harbor areas.”
“The government has been playing a significant role in boosting the maritime sector and has taken several measures to promote operational efficiency of ports through mechanization, draft deepening and faster turnaround of vessels. The focus on logistics through Bharatmala, Sagarmala, Inland waterways and Railways seeks to improve connectivity that is essential for growing the economy. This will have a direct impact on the port and logistics sector, decreasing the logistics cost and making Indian exports more competitive. This will ensure enhanced cargo requirement and thus boost port traffic and sectorial growth. Cargo traffic volumes at non-major ports have been growing at a CAGR of over 10 per cent. Under the Sagarmala programme, the overall traffic volumes across both major and non-major ports are expected to grow by at least 8 per cent in the medium term. Essar’s Ports business, which operates four terminals on the east and west coasts of India, has registered a 17.4 per cent growth in cargo volumes in QI of FY2019-20 with a throughput of 13.5 million tonnes (MT),” shares Rajiv Agarwal, MD & CEO, Essar Ports.
Paradip Port Trust on the other hand, as a part of its growth strategies aims to scale up the cargo and traffic volumes. The Port Trust registered an all-time high traffic throughput of 102.01 million tonnes during FY17-18, posting a growth of 15 per cent. “We have already handled 68 mt of cargo and aim to handle 112 million tonnes by March 2019. We will become the number one port in cargo handling in the next financial year. The port has already taken a slew of measures which has ensured improvement in productivity of ship day from 23,976 tonnes in 2017-18 to 24,849 tonnes for ship day in 2018-19 (up to October, 2018), witnessing a growth of 3.64 per cent and average turn-round-time (TRT) has improved from 82.12 hours in 2017-18 to 63.15 hours in 2018-19,” opined Rinkesh Roy, IRTS, Chairman Paradip Port Trust during the recently held ‘Make in Odisha’ conclave.
With opportunities evolving the country’s Port sector is expected to gain newer opportunities of development, wherein the stakeholders from both the private and public realm is broadly engaging towards developing port infrastructure and management – even making it more effectively functional in the digital arena.
As per the Economic Survey 2018-19, India’s Shipping Ministry has put forth a slew of parameters focused towards simplifying customs procedures and eliminating bureaucratic barriers to lower cargo dwell times, as well as handle rising trade volume at major ports. Of the several measures outlined noteworthy among them is the widespread focus levied on digitization for directing port delivery, entry services and thereby eliminating the errors that might be raised in manual procedures. Installation of container scanners, e-delivery or orders and radio frequency identification based gate automation systems are the other key developments to be put into practice.
Embracing this wave is the Mumbai Port Trust. To support its operations, the Port is currently using Integrated Port Operating System covering its Marine Cargo, Container and Rail Operations. This system is Integrated with Port Community System. Port has associated itself with Indian Ports Association to upgrade its systems by introducing Enterprise Business Solution (EBS) on cloud. The solution covers SAP covering (Supplier Relationship Management (SRM), Materials Managment (MM), Plant Maintenance (PM), Project System (PS) Finance & Control (FICO), Sales & Distribution (SD), Customer Relationship Management (RM), Port Operation, DMS and eOffice. The resulting solution is expected to interact with operational Technology consisting of automated equipments and other systems such as Vessel Traffic System, Access Control System using RFID, CCTV based on Surveillance and other Security Systems. The Port has also installed and commissioned Access Control System comprising of multi applications which includes Access Control of Visitor, Vehicle, Employee ID Card, Time and Attendance, RFID tags for tracking Vehicles and Smart cards to regular visitor.
Sharing information on the same Bhatia adds. “The Indian Ports Association has issued a work order to Tech Mahindra for implementing Enterprise Business Solution in the month of October 2018. The EBS is being implemented in all functional areas within Ports by introducing Standard processes and procedure across five Major Ports, namely Deendayal Port, Mumbai Port Chennai Port, Kolkata Port, Paradip port. The EBS is a large turnkey Project being implemented across five Major Ports. It will enhance Transparency, Accountability and integrity and transform the government work culture and ethics. The EBS is expected to release Staff energy and time for other productive work procedures.”
Walking on similar lines is Essar Ports, one among the frontrunners from the league of non-major ports in India. Competitive advantage through the high degree of mechanisation at the terminal and the state-of-the-art cargo handling equipment is credited as the prime factors in ensuring rapid turnaround times. Essar Ports has invested Rs. 11,000 crore in developing five world-class terminals in three Indian states. Expressing on the same, Agarwal shares, “Essar Ports is a leading private port terminal developer & operator in India with current capacity of 110 MTPA, which is roughly 5% of India’s overall ports capacity. We operate four terminals in India - Hazira and Salaya (both in Gujarat) on the west coast, and Visakhapatnam (Andhra Pradesh) and Paradip (Odisha) on the east coast. We have invested extensively in building world-class mechanized terminals which has translated to some of the best vessel turnaround times in the Indian ports sector, giving the business and our customers a competitive edge.”
A noteworthy and encouraging move was adopted recently by the Indian Ports Association who joined hands with technical solution provider Portall Infosystems for a digital platform to upgrade the supply chain activities. The initiative marked about 165 of the 219 targeted stakeholders inking to adopt on to the web-based program. The platforms connects marine terminals, transport service providers (shipping lines, forwarders, truckers, and railroads), and related intermediaries (customs brokers, storage yards, and stevedores, among others) through a single window. The process lends the users a helping and an easy aid to process delivery orders, transport orders, gate open cut-off times, delivery gate schedules, gate-in bookings, and pre-gate schedules, ultimately increasing efficiency and productivity in operations.
Though the port operators are keenly functioning to scale up their activities and expand operational frontiers, the much eyed growth targets looks achievable only with an effective infra-bank. The exploding opportunities in port infrastructure have thus sourced in numerous construction and infra-major to tap in these potentials.
Simplex Infrastructure is one such major involved, since late 1960’s (major thrust since 1999), with the construction of Marine structures like Jetties/Berths in almost all major Ports in India and at present we are a market leader in this sector. Simplex has helped build many green field Ports and Jetties in India right from concept to commissioning at Kandla, Dahej, Mundra, Dhamara, JNPT, Tuticorin, Cochin, Goa, Mumbai, Kolkata and many others all along the coastline & river banks of India. It would be almost impossible to identify a single Port in India, where Simplex has not contributed in its development whether in green field or expansion. Outlining the need for quality marine infrastructure A N Basu, Whole-time Director of Simplex Infrastructures Ltd echoes, “Historically water transport has played a crucial role in development of any nation and it is acknowledged that the currently identified developed nations like US, UK, France, Germany, Japan, Russia are having a robust water transport system. The benefits of an efficient water transport system are many starting from economics to environment. Port-infra is an integral part of water transport system and thus to develop a fully effective water transport system, port-infra development is a prerequisite. As India is aspiring to become a developed nation in the coming years, the focus is rightly fixed on port-infra development.”
RKEC Projects Ltd, another noteworthy player involved in the marine infrastructure business also holds a similar approach. The company with over three decades of core expertise in the field of marine structures and bridges has so far executed over eight major projects for port infrastructure development. Garapati Radhakrishnan, Chairman and Managing Director, RKEC Projects Ltd mentions, “We have received the distinction as amongst the top 10 companies in the country for designing and executing marine works. We are amongst one of the few companies to work with 500 tonnes jackup barge for offshore construction efficiently.”
However, despite the sprouting opportunities the infra-providers also point out the challenges being faced in the smooth execution of projects. Radhakrishna adds, “There are 205 non-major projects in the country of different sizes. The government of India and state government will have to involve a transportation policy for effective utilization of the sea port facilities and inland water ways on one side and to ease the load on rail and roads. As such there is sufficient opportunity for established players like us. The key limitation, rather the only limitation is non-availability of funds. We are processing various strategies to get this key limitation addressed too. The other key challenges include delays on the part of clients for providing of sites, delays in obtaining environmental clearances, stringent lending norms by Indian banks and fear syndrome in the mind of officials, insistence on high value of performance guarantees against retention money etc.”
The Positive Push
Analysts and market experts however anticipate such concern to be soon resolved with the Government’s increased focus towards infra-spending. The Government’s intention towards scaling up the country’s port operations and infrastructure is clearly being put forth through its slew of initiatives and face-lifting projects being pipelined. Union Finance Minister Nirmala Sitharaman in her recent Budget announcement put forth a clear indication to enhance port-led development through the Sagarmala Scheme and develop inland waterways. With initiatives like Sagarmala and many more pipelined on similar front, the focus has been increased to convert and use more rivers for cargo movement – aiming to decongest road and rail networks, reduce the cost of transportation as well as cut oil import. The major objective of this initiative is to ensure optimum utilization of the existing port assets and infrastructure, to enhance the capacity of ports in order to attract more trade through seaports, and to improve the transportation connectivity including road, rail, inland waterways, sea and air.
Adding to this, the Government has also outlined a plan to develop about 14 coastal economic zones aimed to aid growth, functionality and efficiency in India’s port infrastructure. Also, the new Model Concession Agreement, introduced in January 2018, is expected to address major issues related to PPP (public-private partnership) projects in major ports. The Major Ports, on the other hand, have framed a vision plan in consultation with its stakeholders for the next five years, which are being reviewed at the Ministry’s level for prompt execution.
With the future of India’s port and maritime activities projecting a promising outlook it would be interesting to see on how the years ahead unfold for the stakeholders and the sector as a whole.
@EPC World Media