South Asia, notable in the past for infrastructure problems, chaotic traffic and lack of coordinated planning, may be trying to reform.
The main complaints centre on red tape and costs of inland transportation, something Chris Runckel, of Runckel Associates, agrees with.
“Bureaucracy is a big issue…. Inland transportation can be a challenge and prices are not just inconsistent – they are often unpredictable, and this can be the kiss of death for a business that wants predictability.”
Other industry experts, like Captain Satish Anand of Henderson International India, say the very nature of business in the region is demanding. “But problems have to be resolved and overcome,” says Capt Anand.
“Ours is a complex area” adds Capt Anand. “However, work does carry on and surprisingly, at the desired rate too.” But there are positive signs that the various governments and agencies are attempting to tackle the difficulties.
India, for example, has been putting together a major ports overhaul that aims to double the capacity of the country’s ports as a whole, resting largely on the expansion of private/public partnerships (PPP) in the 12 major (ie centrally owned) seaports and other new deep water ports along the Indian coast.
It is not just India. The influx of PPPs is giving rise to newer port developments all around the subcontinental coastline, including in Pakistan, which should ease some of the spikes in congestion and distribute traffic more evenly, says Capt Anand.
Notable is the Indian state of Gujarat which borders the Arabian Sea. The first state port development came about only around a decade ago, but now there are a number of functioning ports in the area, with more being planned.
Gujarat’s Port Pipavav, which caters for container and bulk traffic, was the first private sector port in India, opening in 1996 for the reefer trade. Its growth is impressive – its published 2008 container figures come to around 200,000 teu.
The port of Mundra is another example: the port is already challenging the neighbouring major port of Kandla. Further expansion is also planned for Mundra, privately-owned by the Adani Group.
Suren Vakil, managing director of BMT India admits that “there are a number of problems to address,” but he is upbeat about the developments, pointing out that the state authorities are now actively trying to help things along. He says that a number of states such as Gujarat have recently changed their laws to enable private investors entry to port developments, and are taking actions such as assisting in acquisition of land for greenfield projects.
However, there is a word of caution – it seems that in the past, private ports have put levies or restrictions on inspections and overseeing of cargo operations, simply because these actions were not considered to be in the port’s favour.
This means, as one consultant in the area puts it, there is ‘unwarranted pressure’ on the loading or discharging of vessels and quite sensibly says that shipping needs to be offered complete freedom to oversee these actions unhindered.
All the more so since in order to court the calls, loading and unloading rates have pushed up, and while no-one wants this to be at the cost of methodology it seems that vessels may not be getting sufficient time to organise themselves for their sea passage.
One industry source claims that since the majority of those involved stand to gain from a fast turnround of vessels, it has now become normal procedure to take some hasty safety and planning measures after sailing.
Alongside these port developments, there is also a new Indian regulatory body for the shipping industry that will also have the powers of a civil court. To circumvent some of the country’s notorious red tape, it will be set up under a separate, independent Act to oversee the country’s ports.
This may well be the kind of spur that will help private investors overcome concerns on investing, since the body will have the ability to act as a grievances council and will have powers to settle disputes and set performance standards for both port authorities and private operators.
PSA, which operates container terminals at state-owned Tuticorin and Chennai ports, has in the past been pushed into taking the existing port regulator, the Tariff Authority for Major Ports, (TAMP) to court about the lack of stability on its rates at its facility in Tuticorin. TAMP had tried to cut the rates charged at the port by 34% earlier this year, an ‘unsustainable’ level argued PSA in the Madras court, which granted a stay against the cuts.
Therefore some, like PSA, seem to be hoping this new body will provide more of a level playing field between local ports and foreign investors.
Further, the new regulatory body, the Insurance Regulatory & Development Authority (IRDA) is looking into various issues and making rules and adjustments – but most of these, say one source, are preventive measures against claims or claims recovery from the government bodies. If so, this may result in yet another layer of rules and regulations.
Lastly, BMT India’s Mr Vakil points out one very salient issue. “India’s public sector has never moved very quickly, and this is going to have to change to allow the new ports to fulfil their potential and perform – the public sector will just have to learn to go much faster,” he says.
