Vision for Port sector: the creation of world-class infrastructure

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The Chintan Baithak meet in Mamallapuram discusses both challenges, and solutions to challenges faced by ports. The challenges are to strengthen Major Ports to directly compete with private ports, e-governance initiative to make ports faceless and paperless, developing India as ‘trans-shipment hub' and other aspects of Vision 2030.

Status of Major Ports, including innovations, were presented and areas requiring ministry interventions were put forward. Shipping minister resolved some issues and pledge full support. He asked Major Ports to follow the vision of ‘Smart, Sustainable and Safe Ports of India’. VP M Venkaiah Naidu stressed on the need to harness India's vast coastline for sustainable growth and development of the country.

He supported Sagamala project and said India has an excellent opportunity for port-led development as ports were vital means for exports and imports. Creation of world-class port infrastructure was necessary to bring all Indian ports on par with leading global ports, and for India to become a $5 trillion economy. Transshipment hubs would also be required on both coasts.

Further, he advised ports to adopt best practices to effectively utilise their financial resources for maximum benefit. To reduce logistics costs, ports should strife for energy- efficiency, lower dredging costs, digitisation and reduced human interface, and improved turn-around performances. Measures that are environment-friendly should be promoted to counter climate change, and CSR funds should take care of local communities and skill youth so they can grab job opportunities.

Renewable Energy

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The entire power requirement of all 12 Major ports will be met by solar and wind power via Green port initiative. It covers port operations and ships berthed there, which spew 10 times greater emissions than ports. Earlier, savings were made when grid power was connected to all berthed ships so ships' auxiliary power could be switched off. Major Ports are pursuing renewable energy and energy efficiency drive to meet tighter emission norms, and reduce cargo charges and shipping costs to increase traffic to the ports.

Environment-friendly Measures

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Major ports are combating dust pollution by environment-friendly technologies (eg closed conveyor system, mechanisation of bulk cargo handling). Recycling of Ships Act and the accession to IMO’s Hong Kong Convention makes India the prime destination for ship recycling and it expects to double volume by 2024.

Port connectivity incl National Grid for Ports

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At Oct 2019, only 44 out of 202 minor ports were functional. Under the National grid for ports, 100 minor ports would be renewed and integrated with nearby Major ports through improved connectivity. Port-led development would be stimulated further by establishing and integrating Inland waterways. This is based on a study that looked at the revival of each minor port, identifying the specific cargo linked to it and the downstream industry.

Over 235 port-connectivity projects (~ Rs. 235,000cr) have been identified under Sagarmala. These include multimodal hubs, Inland waterways (1st phase), pipelines for crude oil, refined petroleum products and natural gas, besides 91 roads and 83 rail projects incl. freight expressways, DFCs, major rail projects, and last-mile connectivity.

Major Port at Vadhavan

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In Feb 2020, Union Cabinet approved a new Major Port (Rs65,500cr, 10m TEU, JV JNPT/PPP) at Vadhavan, Maharashtra, complete with reclamation & excellent connectivity. Govt will have a 51+% share in the SPV through JNPT. SPV will develop infrastructure and all business activities will be handled by the private developer. Environmental (CRZ) clearances and concerns of opposition groups may be settled by reclamation of 570ha.

Centre is interested in developing Vadhavan as a Major port despite the environmental problems because JNPT has exhausted all scope for expansion. With completion of JNPT's terminal 4 in 2023, the capacity rises from 8m to 10m TEU. But the govt expects the containerised trade to double and cross 10m by 2022-25. It is banking on the major Make-in-India drive and value addition that favours containerisation. After Vadhavan is completed by 2025, JNPT will be in the top 10 ports with the largest capacity.

Minister of shipping explains eg, "While the ports in the country are able to handle the largest sea-going vessels in the world for liquid cargo, including POL and bulk cargo, there is an inadequacy in India’s ability to handle and receive ever-increasing large containerised ships. This can be attributed to non-availability of deep-draft ports."

Vadhavan Port is a gamechanger for the West Coast, due to the 20m draft, its huge capacity, and a very well-connected and vast hinterland. With a natural draught of 20m close to the shore, it is able to accommodate mega-vessels with 15,000 to 25,000 TEU, without expensive dredging. Most full-loaded shipments will then call directly at Vadhavan and avoid costly transshipment elsewhere. In contrast, the present situation is thus: "JNPT has a draught of 15 m which is grossly insufficient to handle vessels above 10,000 TEU. Mundra, farther north in Gujarat, has a maximum draught of 16 m and can handle only mid-size container ships. This discourages mainline operators from sending their latest-generation container vessels to India."

New Transshipment Ports

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India's desire to become a manufacturing hub and engage strongly in world trade gives the necessary push to develop world-class ports. Sagarmala project looked at the optimal distribution of ports for Indian needs and realised that while other nations' ports had mushroomed, they made Indian trade more expensive and jeopardised India's strategic interests.

Vizhinjam port due for completion in 2020-21, is a transshipment port located near the southern tip of Kerala. Not only is it ideally located, but as a private port, it is best placed to seriously challenge Colombo port on costs, operational efficiencies and trading volumes. Vizhinjam port is one of many initiatives to secure dominance of India in IOR and help counter China’s Maritime Silk Route.

Andaman and Nicobar Islands are in a very strategic location in the Bay of Bengal and also closest to international shipping lanes. The Nicobar Islands have a natural depth, which with a proposed investment of $1 billion, can develop into a stopover port for big containers. India is also interested in ship-to-ship transshipment of containers and port-led trade in nearby population centres.

Proposed Colachel port can be a new deep seaport (~ Rs 27000cr). Though NGOs and local political parties have drummed up opposition to the plans, procedures are getting completed and the land is being allotted. A DPR has been released for the port.

Port Policies: Cabotage liberalisation and Competitive tariffs

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Cabotage liberalisation in May 2018 has shown a 29% surge in coastal container cargo from 1.1m to 1.4m TEU. More domestic trade is done directly with Indian ports or using Indian port transshipments. It is helped by the emergence of deep minor ports and dredging of major ports, to establish a domestic-only circuit, where 6500 TEU container loops 5 South & East ports of Cochin, Tuticorin, Chennai, Krishnapatnam and Visakhapatnam. Though the foreign share of Indian export-import container trade remains at 40%, some change is happening. One international shipping line (Wan Hai Lines) has added Tuticorin and Cochin (besides JNPT) for direct calls in the India-China route. Cost of handling Indian goods at foreign ports is "hefty and avoidable" @ $200-250/ container. To push for a meaningful change, Govt is set to rework vessel-related charges made by mainline vessels at Major ports, to make discounts less ad-hoc in nature and bridge the pricing gap with minor ports and regional rivals. This will be done via Major Ports Authority Bill 2020 in the current sitting of parliament.

Operational efficiencies and E-governance: Faceless and Paperless Ports

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Operational efficiencies come under modernisation, mechanisation, and digitisation. Install of Container scanners, RFID system, Enterprise computing hardware, network cabling and user interfaces, etc. are combined with new software like automatic berth allocation, plot planning, booking to port linkages, seamless goods throughput, etc. Machine learning and Artificial Intelligence software are to come in the future.

Besides, Port Community System (PCS) a centralised web-based system for e-governance was introduced for all Major ports. It has a common interface and allows seamless, secure transfers of data between participants. It is part of the e-governance initiative. It is paper-less, has single-window access, is available to all participants, and used for all port-related tasks. As such, it reduces time and cost for all. Data can be used for research and analysis. To further promote paperless ops, E-invoicing, payments, and document transfer via PCS's e-DO (Electronic Delivery Order) are now mandatory. Blockchain technology and Smart Contracts raise confidence in information sharing and make e-transactions very fast and highly secure. PCS is upgraded to PCS1x to include a "latch-on facility" so it could interact with all trade partner portals. This forms the National Maritime Single Window, an all-encompassing portal and India's method to transform EoDB and cost-efficiency.