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G Raghuram, IIMA
CONTAINERIZATION
BUILDING GLOBAL TRADE
COMPETITIVENESS
Prof. G Raghuram
Indian Institute of Management
Ahmedabad
EXIT
http://quit/ -
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Outline
Potential of Container Traffic
Drivers of Container Traffic
Potential Hub Ports in India
Hinterland Connectivity
Other Issues
Concluding Issues
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Potential of Container Traffic
Where are we?Year National GDP Container Total
US $b1 Growth2 (%) 000 TEUs Growth(%)
2000-01 409 4.4 2468 13.0
2001-02 441 4.8 2886 16.9
2002-01 467 3.8 3366 16.6
2003-04 554 8.5 3900 15.9
2004-05 633 7.5 4502* 15.42005-06 725 9.0 4998* 11.0
2006-07 827 9.3 5964* 19.3
1At current market prices2At factor cost (constant prices)
*Includes traffic from Mundra and Pipavav
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Potential of Container Traffic
Where are we?
119694Total of Above5510Total of Above
9690Rotterdam
377Tuticorin
7
9774Kaoshiung
177Kandla
6
12030Busan
227Cochin
5
18468Shenzhen
240Kolkata
4
21710Shanghai393Mundra323230Hong Kong798Chennai2
24792Singapore3298JNPT1
2006Ports2006-07Ports
Top Seven World
Container Ports
Top Seven Indian
Container Ports
(000 TEUs)
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Drivers of Container Traffic
International trade growth
Penetration of containerization
Hub and feeder service structure
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Penetration of Containerization
Currently, containerized cargo represents about30% by value of Indias external trade.
This proportion is likely to grow ascontainerization increasingly penetrates thegeneral cargo trades and increases its share fromthe current 68% to nearer international levels of
around 75-80% [World Bank, 2007]. Traditional bulk cargoes like cement and
foodgrains are also getting containerised.
Principal containerized commodities that Indiatrades in include engineering goods, agriculturalcommodities, textiles and readymade garments,
pharmaceutical products (bulk formulations) andmachinery (auto and electronic).
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International trade growth and penetration,
being the basic demand drivers, will resultin the 21 m TEUs by 2015-16 at 15%
growth rate
Given recent trends, growth rates could be
higher upto 20%
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Container Traffic Projections
By 2011-12, container traffic is expected to cross 13 mTEUs and by 2015-16, 25mTEUs
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Year
mT
EUs
15.0% CAGR 17.3% CAGR 19.7% CAGR
30 mTEUs
25 mTEUs
21 mTEUs
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Hub and Feeder
Overall port traffic will increase depending on the amountof increased hubbing that will take place in India.
Each Indian TEU hubbed in an Indian port will addtwo more TEU handlings at the hub port.
Neighbouring country traffic hubbed in an Indian port will
also add two more handlings. However, we view this asa negligible activity over the next decade, though therewould be potential to be exploited in the long term.
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Direct and Hub Shipments
JNPT Other Ports Total
Share of
Container Traffic
55 45 100
Direct 80 13 50
Through Hub 20 87 50
Per cent
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Hub and Feeder
As per as is projections, 9m TEUs (43%) of the Indiantraffic of 21 mTEUs will be hubbed in 2015-16. Of the
hubbed traffic, 0.95 m TEUs (11%) will be hubbed inIndia, implying a transhipment of 1.9 mTEUs.
This is conservative. Hubbing in India can andshould develop. If 50% hubbing were to take place inIndia, then 4.5 mTEUs will be hubbed in India, implyingtranshipment handling of 9m TEUs. About 7 more
mTEUs will need to be handled at hub ports. Thisrequires port handling capacity of 30 mTEUs, with 9mTEUs as transhipment at hub ports.
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Hub and Feeder
The reasons for a hub port not evolving in India are
insufficient traffic cabotage law
insufficient infrastructure including draft requirement for a
mainline ship
The advantages of having a hub port in India would be
feedering time to other ports would reduce the revenue from the transshipment remains with India
traffic from and to the hub port will move faster and cheaper
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Drivers of Container Traffic Given the above three drivers of container growth, it
appears that 30 mTEUs, including 9 mTEUs oftranshipment, is likely to happen by 2015-16 and weneed to get prepared for that.
Thus, out of 21 mTEUs of Indian traffic, 12 mTEUs would go direct, 4.5 mTEUs would go to
foreign ports for hubbing, and 4.5 mTEUs to Indianports for hubbing.
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Potential Hub Ports in India
Hub ports in India should aim for at least 16 meter draft
and feeder ports upto 12 meter draft.
Criteria Strategic location Potential to reduce total transport cost
Significant originating/terminating traffic
Land availability and lower land values Less need for dredging
Facility to receive higher capacity vessels
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Potential Hub Ports in India
Readiness
Level
West South East
High JNPT, Mundra,
Pipavav
Cochin, Chennai Visakhapatnam
Medium Kandla, Mumbai Tuticorin
Low New Mangalore,
Mormugao
Kolkata, Haldia,
Paradip
[CRISIL, 2006]
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Maximum DraftS No Container Terminals Draft (meter)
1 JNPT 12.5
2 Chennai 13.4
3 Tuticorin 10.8*4 Mundra 17.5*
5 Kolkata 7.5*
6 Cochin 12.5
7 Mumbai 10.7
8 Kandla 11.7
9 Haldia 10.0
10 Pipavav 12.5*11 Visakhapatnam 15.0
12 New Mangalore 10.5
13 Mormugao 12.5
14 Paradip 11.5
[World Bank, 2007; *Port Website, 2006]
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Potential Hub Ports in India
Based on commercial criteria, JNPT. Infrastructurally, it does not
have the draft nor the evacuation capability for future growth.
Mundra is better placed as far as draft and evacuation is
concerned. However, investments are on the anvil for JNPT.
Visakhapatnam is the most viable port for hub operations on the
eastern coast. It is in the centre of the Indias eastern coast, andcan even service Bangladesh and Myanmar. It has a natural water
depth of 20 metres within a nautical mile. The sea drift there is
such that maintenance dredging requirements are less. Chennai
ofcourse currently has the commercial advantage.
Vallarpadam and Vizhinjam are possibilities from the South
but may not work on commercial criteria, due to less hinterlandpotential.
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Hinterland Connectivity
30% of the traffic expected to move hinterland byrail
The remaining moves entirely by road, mostly to
nearby CFSs, and some to interior ICDs
Roads around ports dont explicitly plan for
consequential trailer movements for emptycontainers and empty trailer moves (recent studies
show that these could be as high as six to seven
movements per TEU) Coastal and IWT are untapped for hinterland
connectivity
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Rail Evacuation
For 21 mTEU, at 30% movement by rail, and 90 TEU pertrain, over 190 trains would need to run per day.
(Currently, about 40 trains are running per day, over 25 of
which are on the JNPT Tughlakabad corridor). Doublestack would ease this to about 120 trains per day. About
35-45% of these would be on the stretch near JNPT,
picking up an additional 25-30% from the Gujarat ports.
PPP model with ports and related stake holders should be
used for rail capacity development. Kutch Railway
Corporation and Pipavav Railway Corporation are
examples. The DFCCIL should evolve appropriate
models, based on past experience and future
requirements.
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Road Evacuation
Beyond just the four laning of highways, expressway
connectivity to the ports to service major flows wouldbe essential. The currently envisaged future phases of
NHDP do not provide for this.
PPP model for roads around ports can be used with
ports and ICD/CFS operators as the stake holders. A
need for immediate attention would be the ICD at
Tughlakabad.
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Coastal Shipping and Inland
Waterways
Feedering is synonymous with coastalshipping. The possibility of a dedicated sea
corridor with inter-port connectivity needs to
be explored.
Integration inland water transport, especially in
back water and tidal regions for evacuation,and consequent location of facilities, needs
proactive consideration.
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ICD/CFS Infrastructure
Location and access, giving consideration to distanceto manufacturing units, and local connectivity withminimum traffic interference. CIDCO land aroundJNPT is inappropriately priced.
Customs and bonded warehouse. Idea of FTWZ isgood.
Rail connection to gateway ports
Parking spaces and maintenance facility
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Other Issues
Information Technology (IT)
Domestic Traffic
Location Policy of Industries Including SEZs
Regulation
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Information Technology
RFID, GPS, EDI, Knowledge Products,Standards
Domestic Traffic18% of CONCOR Traffic is domestic
Customized (out of the BOX thinking!) Eg:
Autos
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Location of SEZs(as on November 30, 2007)
Coastal Non-Coastal Total
Manufacturing 48 37 85
Services 31 75 106
Total 79 112 191
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Regulation
Licensing
Competition
Security
Operator, and operations
Port Tariffs
Is TAMP required for Container activity?
Shipping Line Conferences Competition Commission
Customs
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Regulation
Cabotage
Feedering?
Environment and Conservation
Role of Conservator? Safety
Quality of Service Dispute Resolution
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Concluding Issues
For 30m TEU, as per normal international
standards, we need 30 km of berth length. By JNPT standards, this could be as low as 15
km.
At around 70% of JNPT standards of
occupancy, we need 21 km.
At 300 mts per berth, this translates to 70
berths.
Port wise Container Traffic
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Port-wise Container Traffic2006-07 2005-06
S No Port Operating CompanyTotal
(000 TEUs)
%Total
(000 TEUs)
%
1 JNPT
1. Port
2. DP World
3. AP Moller/Concor
3298 55.3 2667 53.4
2 Chennai1. DP World
2. PSA International/SICAL798 13.4 735 14.7
3Mundra*
(MPSEZ)DP World 393 6.6 299 6.0
4 Tuticorin PSA International/SICAL 377 6.3 321 6.4
5 Kolkata Port 240 4.0 203 4.1
6 Cochin DP World/Concor 227 3.8 203 4.1
7 Kandla ABG 177 3.0 148 3.0
8 Pipavav* AP Moller 135 2.3 86 1.7
9 Mumbai Port 128 2.1 156 3.1
10 Haldia Port 110 1.8 110 2.2
11 Visakhapatnam DP World 50 0.8 47 0.9
12 New Mangalore Port 17 0.3 10 0.2
13 Mormugao Port 12 0.2 9 0.2
14 Paradip Port 2 0.0 4 0.1
Total 5964 100.0 4998 100.0
[CI Magazine, 2007; Indian Infrastructure, 2007; IPA, 2006]
*Non-major and private ports, both under GMB
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Port-wise Container Traffic
Rewas container terminal in Maharashtra is being
developed by Reliance Logistics Investment Dighi container terminal in Maharashtra is being
developed by Balaji Infrastructure Project Ltd
Vizhinjam in Kerala is being tendered for aninternational container transshipment terminal (in
competition to Vallarpadam in Cochin), and
A 0.5 mTEU per annum container terminal at Kulpi
in West Bengal is being developed by DP World.
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Concluding Issues
Currently we have 30 (?) berths. While 70 is atarget, market forces will drive the actual berthdevelopment.
Finance does not seem to be an issue.
There is not enough focus on scale of containerterminals. This is necessary to drive down costs.
Tendering and bidding should be done in a timedefinite manner.
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Concluding Issues
Indian infrastructure for logistics is poor
compared to world class and at best reactive todemand. There is need for continued focus on
quality infrastructure development with speed.
Commercialization and private involvementthrough PPP contracts is the key for building
global trade competitiveness throughcontainerization.
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THANK YOU
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