Towards hub status

The dynamics of business growth in South Asia has fuelled tremendous growth in container traffic in the past few years.

The Indian Ports Association, an apex body of the major ports of India, reports that traffic through its ports increased to 569.9m tonnes while container throughput increased to 7.5m teu, an increase of 9.37% over the previous year.

“Major Ports” fall under the jurisdiction of the Indian Government and are governed by the Major Port Trusts Act of 1963. Ennore is the only exception, coming under the administration of the provisions of the Companies Act, 1956. There are however suggestions the ports will be corporatised, giving them operational and financial autonomy and leading to efficiency gains.

India’s Major Ports handle around 67% of the nation’s total cargo, with JNPT (India’s largest container terminal located on the west coast) recording double-digit growth for several years. Other ports with high growth have been Paradip on the east coast and Mormugao on the west, both predominantly handling bulk cargo.

India’s Minister of Shipping G K Vasan has announced ambitious plans for port growth, aiming to augment port capacity to 3.2bn tonnes by 2020, from the approximately 1bn tonnes now in the 13 main ports (Mumbai, Jawaharlal Nehru Port Trust, Kolkata, Chennai, Visakhapatnam, Cochin, Paradip, New Mangalore, Marmagao, Ennore, Tuticorin, Kandla and Port Blair).

Shri Vasan has written to all the governments of coastal states Odisha, Andhra Pradesh, Tamil Nadu, Karnataka and Kerala to identify and provide land for setting up a new major port or shipbuilding yard. The number of ports to be set up, timelines and the estimated investment will depend on the response received from the coastal states.

Now, most Indian container terminals are unable to reach the productivity levels of overseas ports, prompting the belief that new transhipment hubs are needed, possibly one each on the east and west coasts.

A study by the Indian Institute of Management Ahmedabad suggests that it is important to focus on a few ports on both the coasts with deep draft, key requirements being strategic location, potential to reduce total transport costs using “hub and spoke” arrangement, less need for dredging and the ability to receive larger vessels.

Currently, much of the country’s container traffic goes through Colombo in Sri Lanka, or is fed through more distant hubs in Singapore to the east, or Dubai and Salalah to the west, which entails double-handling of cargoes which theoretically could be handled in India itself.

Estimates suggest that of the Indian traffic of 21m teu in 2015-16, about 9m teu will be hubbed, almost all of it overseas.

Developing an Indian transhipment hub will, however, present difficulties. JNPT is the largest container port in the country and would be the logical choice for a hub port on the west coast, but is constrained by draft.

With container ships of 18,000 teu under construction, new Indian hub ports would be required to look at a draft exceeding 16 metres, forcing investors to look at offshore construction as an option.

The limits inherent in current port infrastructure are revealed when one considers that Mumbai port is now developing an offshore container terminal with two 350-metre berths with a draft of 14.5 metres.

These will accommodate ships of up to 6,000 teu currently unable to call at the port. But even then, Jawaharlal Nehru Port Trust and Mumbai would have to maintain the 21km-long approach channel with costly dredging necessary to maintain sufficient draft.

Given the established infrastructure at JNPT and Mumbai, the cost of dredging may be justified, but for a new greenfield terminal such cost may be avoided. An example is the Gujarat Maritime Board’s (GMB’s) proposed transhipment hub off Nargol village in South Gujarat.

The proposed port is strategically located 140km away from JNPT, on the so-called “golden corridor” in Gujarat, with good deepwater draft of above 16 metres.

Indian maritime consultant Surendra Sharma, an expert on greenfield marine project development, says the coastline faces acute erosion which requires structural changes such as offshore breakwaters to succeed.

“An offshore model would have a greater degree of flexibility to expand easily with additional berths, which may not be possible with other ports due to land and dredging constraints.

“A mega container terminal with 5km of quay line would be necessary to exploit the strategic location of being on the Asia-Europe sea route and would be able to effectively cover a vast hinterland with its linkage with the Western Dedicated Rail Freight Corridor (DRFC),” he says.

“A combination of coastal erosion benefits and a mega transhipment container terminal will add value to the project and increase its viability and benefit to the nation.”

Four leading corporate groups entered technical bids to develop the South Gujarat hub late last year, and in January it went to a consortium of Cargo Motors Pvt Ltd and Israel Ports Co.

First priority will be to develop a container terminal with the possibilities of setting up a car terminal and roll-on/roll-off (ro-ro) facility.

Another major development is underway at Paradip, which aims to expand capacity to 251m tonnes through a series of projects including channel deepening and construction of deep draft iron ore and coal berths.

Meanwhile Krishnapatnam port, a private greenfield deepsea port, now claims to have the deepest draft in the country, at 18 metres. When the port was opened in July 2008 its draft was only 10.5 metres, and the transformation has been achieved with a massive dredging operation.

This has allowed Krishnapatnam to begin offering services to container vessels along with its ambitions to become a South Asian focus for dry bulk, heavy lift and project cargo.

Martin Mannion, global head of maritime for URS Scott Wilson, says there is no doubt that South Asian growth as well as a lack of efficient ports as gateways to trade means that there will be a great need for port infrastructure development.

“There will continue to be ongoing pressure for more port development to keep up with the needs of industry and local/national economies. That will lead to both hub port and local port improvements. Different industry sources all indicate port development expenditure of several billions of dollars over the next decade for South Asia,” he says.

Great constraints arise however due to poor connections to highway and/or rail networks. Often, these onshore improvements can be outside the direct control of the ports. For many Indian ports, dredging and water depth are also constraints to accommodating larger vessels, says Mr Mannion.

Outside of the container trade, India needs to import coal and other products while it also exports raw materials such as iron ore. This has led to the ongoing development of many private bulk ports/bulk terminals, such as Dhamra in Orissa for which URS Scott Wilson acted as project management consultant.

“In Sri Lanka, Colombo remains the dominant port particularly for the container trade and is expected to continue to do so, with the Colombo South Harbour expansion including nine new container berths contributing to this leading position,” says Mr Mannion.

Sri Lanka has been following the same trend of expansion as India. The newly-opened port of Hambantota, largely funded by the Ex-Im Bank of China, is seen as an important catalyst for a major economic development in the country.

Hambantota is part of a $6bn drive to rebuild Sri Lankan infrastructure after the war. However the main opposition United National Party (UNP) has said the port’s maximum depth of 17 metres is not deep enough for the largest vessels.

Elsewhere in South Asia, Bangladesh has hopes of adding to the options, with a programme to develop two new deepwater sea ports to add to the country’s principal facility at Chittagong, one at Sonadia Island and another situated in Patuakhali. Sonadia could become a shipping hub for north eastern India, China’s Yunnan province, Myanmar and landlocked Nepal and Bhutan.

Pakistan is also getting on the large port bandwagon with its Pakistan Deep Water Container Port, which is due to be completed in 2014.