Ports Perspective

Perspective on Port Sector in India Gujarat Maritime Board

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India

Contents: 1. Importance of Maritime Sector 2. Maritime Engagement of various countries in world 3. World Maritime History 4. Port Development configuration 5. Port and Supply chain security 6. World Seaborne Trade 7. Issues and constraints (Global) 8. Indian Maritime History 9. Trade and shipping trend 10. Containerization Growth 11. Issues and constraints (India) 12. Gujarat ports 13. 

Importance of Maritime Sector  Marine transportation plays a key role in Global economy  90% of the world’s trade involves shipping  Importance of water transport is increasing with economic Globalization  Only mode of transport that can effectively linked the centers of industrial production to their markets . Ports in developing countries represent a key asset for economic development  They need to operate efficiently and be properly structured in order to support an increase in trade and GDP by linking countries, both coastal and land locked, productive hinterland and consumers to global markets  Through their nodal role of facilitating intermodal transport ports have a

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significant role in contributing towards achievement of the Millennium Development Goals,

Importance of Maritime Sector  James Cook, captain of the Endeavour, first sighted the Victorian coast in 1770, aborigines had been living in the ort Phillip Bay region for at least 40,000 years.  Generation of the first people would have seen the creation of the bay itself, as the water rose to fill Bass strait and cut off Tasmania from the mainland about 11000 years ago  British ship first visited Port Phillip in 1802 and 1803.  

Maritime engagement of major trading nations

Source: Compiled by the UNCTAD secretariat on the basis of data supplied by UNCTAD Handbook of Statistics (trade) and Lloyds Register – Fairplay (fleet ownership).

Maritime History  Maritime history is a broad thematic element of history that often uses a global approach, although national and regional histories remain predominant. The earliest seaworthy boats may have been developed as early as 45,000 years ago..  In ancient maritime history, the first boats are presumed to have been dugout canoes, developed independently by various stone age population, and used for coastal fishing and travel.  The indigenous of the pacific Northwest are very skilled at crafting wood.  In the history of whaling, man began whaling in pre-historic times by boats  

Contd..  It is believed that navigation as a science originated on river Indus some 5000 years ago.  Pre-columbian transoceanic contact refer to interactions between the Americans and people of other continents – Europe, Africa, Asia or Oceania; before arrival of Christopher Columbus in 1492.  

Age of Navigation  The magnetic needle compass for navigation was not written of until the Dream Pool Essays of 1088 AD by the author Shenkuo (1031-1095), who was also the first to discover the concept of true north  First use of magnetized needle for seafaring navigation in Europe was written by Alexander Neck ham, circa 1190 AD.  In 1300 AD, the pivot-needle dry-box compass was invented in Europe. 

Ships & Vessels 

Various ships were in use during the middle ages.

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The long ship was a type of ship that was developed over a period of centuries

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and perfected by its most famous user the Vikings, in approximately the 9th century. The Caravel was a ship invented in Islamic Spain and used in the Mediterranean from the 13th century. Carrack was another type of ship invented in the Mediterranean in the 15th Century. It was a larger vessel. Age of discovery was a period from the early 15th century and continuing in the early 17th Century, during which European ships travelled around the world to search for new trading routes and partners.

Age of Sail  Age of sail technically and formally speaking, is the period in which international trade and naval warfare were both dominated by sailing ships  The Age of sail mostly coincided with the age of discovery, from 15th to the 18th Century  Naval ships used for wars  In 1862, the steam powered CSS Virginia destroyed the sailing ships USS Cumberland and USS Congress

Age of Steam  Steam technology was first applied to boats in 1770s.  Technology only became relevant to trans-oceanic travel after 1815, by external combustion heat engines vessels.  First ironclad battle ship was launched by the French Navy in 1859  In 1900s, the internal combustion engine and gas turbine came to replace the steam engine in most ship applications.

Port development configuration  Components of Maritime Sector  Ships Bulk carriers, VLCC, ULCC, Container ships- 20/40 ft containers Liquid carriers, LNG ships, Support Vessels-tugs, barges, bunkering vessels etc.  Oil Rigs      

Port Configuration  Infrastructure  Harbour side – Quay, jetty, breakwater, SPMs, Liquid terminals, beacons, channel marking buoys  Land side – Warehouses, platforms, godowns, CFS, logistic parks, Road and rails, Administrative buildings, Pipelines

 Activities involved

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 Traffic Management  Demarcation of channel, Navigation and Navigational Aids, Communication, Electrification, Dredging, Light House, VTMS

 Port operation  Handling equipments, Mooring buoys

Port and supply chain security

 ISPS code of IMO was introduced in July 2004  Implementation of ISPS resulted in small increase of port /terminal handling costs  2007: IMO statement that there still is much confusion about the actual ISPS requirements  Supply chain security concentrates on security issues in the entire chain from Producer to consumer  Pilot projects in several countries  Negotiations on initiative to produce Supply Chain Security Toolkit  Scanning of cargo increasing  Discussion about the procedures and costs  WB involved in feasibility studies

World seaborne trade a by country groups, 2006 (In millions of tons)

World seaborne trade a by country groups, 2006 (In millions of tons)

Export/Import trade Value Export

Figure in Billion Dollars

Import

Figure in Billion Dollars

Source: UNCTAD

EXPORT/IMPORT WORLD TRADE

Trend in ship size development  During a long period ending in 1939 the size of tankers gradually rose to between 10,000 and 12,000 deadweight tons  by 1959 more than 37 per cent of the world fleet consisted of ships over 25,000 deadweight tons and 16 per cent were rated at more than 35,000 tons  By the beginning of this year 1964, 1 5 tankers of at least 100,000 deadweight tons were plying the seas  Gradually VLCC and ULCC have been introduced.  Higher discharge rates at the Ports and large sized vessels lie at the heart of

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the present day maritime economics. This also means more deep water ports.

Issues and constraints (Global) 

Economic Distance from world market affects most landlocked developing countries negatively, as it entails a serious cost disadvantage in comparison with competitors in coastal countries.

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Severe challenges to growth and development due to wide range of factors, including: 

Poor physical infrastructure

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Weak institutional and productive capacities

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Small domestic markets

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Remoteness from world markets and

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A high vulnerability to external shocks

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Trade Barriers- Tariff and Non-Tariff

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Genuine Development of multi-modal transportation system. Issues of transition

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Improving Security in ports

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Creating a level playing field between ports

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Indian port sector

Indian maritime history 

India's maritime history predates the birth of Western civilisation.

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The world's first tidal dock is believed to have been built at Lothal around 2300 BC during the

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Harappan civilisation. The Rig Veda, written around 2000 BC, credits Varuna with knowledge of the ocean routes commonly used by ships and describes Naval expeditions using hundred-oared ships to subdue other kingdoms. Two Indian astronomers of repute, Aryabhatta and Varahamihira, having accurately mapped the positions of celestial bodies, developed a method of computing a ship's position from the stars The Andaman and Nicobar Islands then served as an important midway for trade between the Indian peninsula and these kingdoms, as also with China. As trade between India and the Greco-Roman world increased spices became the main import from India to the Western world, bypassing Silk and other commodities. The Indian commercial connection with South East Asia proved vital to the merchants of Arabia and Persia during the 7th–8th century.[

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The period of 4000 years between Lothal and Bombay Dock, therefore, offers tangible evidence of seafaring skills the nation possessed in the days of sail. In the early seventeen century, when British naval ships came to India, they discovered the existence of considerable shipbuilding and repair skills, as well as seafaring people. An ideal combination was thus available for supporting a fighting force in India. During the mid-holoc Ocean witnessed the rise of three major civilizations of the Mesopotamian, Egyptian and Indus Valley. They had strong trade and Maritime linkages.

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Dholavira is another Harappan site located in the great rann of Khadir bet.

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The Mauryan empire (322–185 BC)- navy continued till the times of emperor Ashoka(reign 273—32 BCE), who used it to send massive diplomatic missions to Greece, Syria, Egypt, Cyrene, Macedonia through the sea route.

Map showing the history trade route

Milestone – Indian Ports

Contd..

Contd..

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Indian Port Sector at a Glance Major Ports, India

India along its coastline of 7,517 km, has 13

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major ports. It is a Concurrent Subject 12 major ports are Port Trusts, governed by the

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provisions of Major Port Trust Act and 1 major port is a corporate port. In addition, there are 187 minor and intermediate

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Kandla

Kolkata

ports out of which, 41 minor ports are based in Gujarat.

Haldia Mumbai

Paradip Jawahar lal Nehru Port Vishakhapatnam

Indian ports handle 95 per cent of India’s total

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foreign trade in terms of volume and 70 per cent in terms of value. Indian ports handled cargo of 720 million tonnes

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in 2007-08, a 11% increase over 2006-07

Marmagoa New Mangalore

Ennore Chennai

Cochin Tuticorin Major Ports

Source: Indian Port Association, National Maritime Development Program

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Legal frame work 

It’s a Concurrent subject. Most of the laws administered by GoI.

 The acts that govern the shipping activities in India are  India Ports Act, 1908  Major Port Trusts Act, 1963  Inland Vessels Act, 1917  Coasting Vessels Act 1837  Merchant Shipping Act, 1958  Merchant Shipping (Amendment) Bill, 2003  Seamen’s Provident Fund Act, 1966  Inland Waterways Authority of India Act, 1985  Dock Workers (Regulation of Employment) Act, 1948  Multimodal Transportation of Goods Act, 1993 

Story So Far…. significant increase in India’s maritime traffic increasing

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from 165 MTPA in 1991 to over 649 MTPA in 2006-07. The cargo handled at the ports has been growing at an

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Average Growth Rate of 11.1% over the period of 200406

Traffic Composition at Major Ports Note: General cargo including Containers

Growth rate of container traffic is growing at a rate of

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19.3% in 2006-2007. Traffic projctd tp grow to a level of 790 MTPA by 2010

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based on assumed GDP of 7%. $13.5 billion (Rs.60,750 crore) of investments is envisaged

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for the major ports under National Maritime Development Program (NMDP). 37

Growth in India’s Foreign Trade (Merchandise)

(US $ billions)

1.External Trade showing greater dynamism. Exports rising by 20% plus and imports by 30% plus in recent years. 2.While exports took 10 years to double in the nineties, the doubling is now taking place in 3-4 years time. 3.India is not an export led economy. But external trade as a percentage of GDP is steadily rising.

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Commodity composition of exports (Percentage shares)

Main drivers of growth are Chemicals, Engineering items, Iron ore and Petroleum

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Commodity composition of exports (Percentage shares) 2002-03

2004-05

Main drivers of growth are Chemicals, Engineering items, Iron ore and Petroleum

2003-04

2005-06

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Comparative Rank in Cargo handling ( 2007-08) Major Ports vis -a- vis other port Rank 1st

Rank 10th

Containerization 

Containerization has a deep impact on the maritime sector around the world.

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In early 1970s through the 1980s. Containerization was seen primarily as a technological revolution

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It could improve ship turnaround time in ports and ensure cargo security.

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It gives economic benefits, transition from labour to capital intensive port operations and finally recognized not just as a technological revolution, but as the “trigger” for institutional, operation and changes which are still continuing to impact on the maritime sector.

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Earlier the trend was to transport aggregate smaller valuable cargo in containers. However, now the bulk cargo is also being transported in form of containers

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Since 1980, container vessels of 2500 TEUs capacity were used. By the year 2002 ship in excess of 7000 TEUs came into operation. In the upcoming years, ship in excess of 18,000 TEU is expected.

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Container Traffic: Where are we? (Lakh TEUs)

Source: IPA, Port Authorities

Container Traffic: Where are we? Top 20 Container Ports TEU

Provisiona

Penetration of Containerization 

Currently, containerized cargo represents about 30% by value of India’s external trade.

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This proportion is likely to grow as containerization increasingly penetrates the general cargo trades and increases its share from the current 68% to nearer international levels of around 75-80% [World Bank, 2007].

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Traditional bulk cargoes like cement and foodgrains are also getting containerized.

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Principal containerized commodities that India trades in include engineering goods, agricultural commodities, textiles and readymade garments, pharmaceutical products (bulk formulations) and machinery (auto and electronic).

Driver factors of Indian ports

 Future of Indian may be driven by large private investment  Development of complex industrial cluster/zone onshore like Vizag, Haldia, Hazira, Dahej etc.  Upcoming SEZs will need outlet for cargo movement  Ship building Industry  DFC- the Railway’s biggest ever venture will enable port cargo movement

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 A network of high performance of freight corridors will be developed through SPV-DFCCIL.  Feeder route of western corridor connecting the western ports of Gujarat will be upgraded with estimated cost of Rs. 236.80 billion

Issues and constrains (india)  Refinery exists in the hinterland, economies of hinterland would never grow unless pipeline network  Availability of land is main constraint for the transportation.  India – self sufficient country and internal development oriented and not export oriented. Internal trade has been inherent fragmented trade.  Private sector could not exists before 1995. GOG introduced private port policy and first private port of Pipavav developed.  In the changed scenario of drastically development of ports tends to congestion in logistic road and rail connectivity.  Indian flag ships are very small and also GRT is less  Not many good sheltered locations for port, results in more cost of port  Silting rate is comparatively high, results in additional cost of capital and maintenance dredging

Background - Gujarat Port Sector §

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Strategically located with India’s longest coastline of 1600 km. Nearest maritime

Gujarat : Strategic Location

outlet to Middle East, Africa and Europe State has 42 ports - includes 1 major port and 41 non-major ports The state has favourable marine conditions with medium to large tidal variation

Main Ports of Gujarat

The first state in India to invite Private Sector Participation through competitive bidding The first state in India to have Chemical Terminal, first private port of India –

Gujarat Mundra

Kandla Navlakhi Jamnagar

Okha

Sikka

Porbandar

Pipavav, the world’s one of the largest ship recycling yards at Alang, India’s first two

Dahej Pipavav

Hazira Magdalla

LNG Terminals in India 49

Traffic and Capacity Growth – GMB ports

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Commodity composition – GMB ports

Traffic – Comparison with National Ports Million Tons

Capacity Augmentation Capacity in MMT

Investment (Rs. Cr.)

Hinterland connectivity improvement at Gujarat Ports  The port hinterland connectivity of Gujarat ports play a vital part in growth of port traffic.  The quality and availability of roads and railways also determines optimal capacity utilization of Gujarat ports.  With a view to this, it is planned to improve and upgrade road connectivity and provide rail linkages to ports of Gujarat.

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Contd..  The linkages and logistics would be improved by ;  Setting up SPVs and operationalization of projects for railway connectivity to Hazira, Dahej and Bedi.  Setting up of port connectivity and SPVs for other ports not having connectivity viz. Porbandar, Okha.  To ensure that four lanes good quality exit and entry to each port, which is handling traffic above 1 million tons.  To develop in tandem with other State Authorities the major access-roads viz. coastal highway, Ahmedabad – Vadodara-Surat express highway etc.  To improve the Coastal highway upto NH standard

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Contd..  Railway:  Dahej  64 km long BG rail connectivity (Project cost Rs. 198 cr.)  SPV formed, Agreement signed amongst Equity share holders  RVNL to take up the project soon . Tenders are underway.

 Hazira  37 Km BG rail connectivity (Rs. 160 cr.)  RVNL approved the project. MOU signed with RVNL. SPV formed.  Re-alignment of rail route in SEZ area is under revision

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Contd..  Railway:  Bedi  15 km BG rail connectivity joining Bedi and Rozi port (Rs. 25 cr.)  Techno Economical survey carried out. Private port users have shown interest for participation  Railway board is requested for in-principle approval and form SPV  Porbandar  5 km missing link - (Rs. 21 cr.)  Techno Economical survey carried out.  Railway board is requested for in-principle approval  For upcoming new Greenfield ports, Techno-Economical PFR entrusted to M/s.Rites.  Proposal submitted (April 2008) to GoI in Ministry of Shipping for BG rail connectivity to minor ports of Gujarat under Delhi Mumbai Dedicated Freight Corridor 58

Contd..  Roads: (10 m wide)  R&B department set up SH development project cell leading to NH/SEZ and Ports.

 Phase 1  Jakhau, Mandvi, Mundra and Dahej ports  Total 170 km connectivity amounting to Rs. 426 cr. proposed.  To be completed by May 2011

 Phase 2  Pipavav, Navlakhi, Jodiya, Porbandar, Jafrabad, Ghogha, Dholai, Sikka, Okha and new Greenfield ports  Total 320 km road connectivity amounting to Rs. 795 cr. Proposed  To be completed by Dec. 2011 

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Contd..  Roads: (10 m wide)  Phase 3  Magdalla  17 km road connectivity amounting to Rs. 43 cr.  To be completed by July 2012

 ISSUE: Need for upgrading the roads up to 4 lane 

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State Wide Connectivity to GMB ports – Rail, Road & Air To Delhi

Gandhinagar Kandla Navlakhi Mundra Jamnagar Okha

National Highway State Highway

Baroda

Bhavnaga r

Airport/Airstrips Railway Network

Dholera

Rajkot

Porbandar

Dahej

Mithivirdi

Veraval Pipavav

Hazira Vansibors i Maroli

To

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To Delhi

Port Connectivity to Dedicated Freight Corridor

Palanpu r

Existing Rail Line DFC

Mahesan a

Ahmedaba d

Kandla Mundra

Bharuch Dahej

Surat Hazira

To Mumbai

Pipavav

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Port services  Maritime Transport Services  International Transportation (freight & passengers) less sabotage transport

 Maritime Auxiliary Services  Maritime Cargo Handling Services  Storage and Warehousing services  Customs Clearance services  Container Station and Depot Services  Maritime Agency Services  Maritime Freight Forwarding Services

Contd…  Port Services  Pilotage  Towing and tug Assistance  Provisioning, Fuelling and watering  Garbage collecting and ballast waste disposal  Port Captain’s services  Navigation aids  Shore-based operational services essential to ship operations, including communications, water and electrical supplies  Emergency repair facilities  Anchorage, berth and berthing services

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Logistic parks in JV with GIDB  To improve container transportation  Aggregation & Disaggregation of cargo  Proposed possible locations – Dahej, Pipavav, Ahmedabad, Simar, Palanpur  Land identified at Dahej for 1st Logistic Park. Lay-out planning is under way

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Dredging  Presently GMB carries out 13 to 15 lac cum dredging at GMB ports  There will be huge requirement and therefore, GMB proposed to form separate Dredging Company

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Bunkering facilities  In Indian cost, there is no substantial bunkering facilities.  Storage and supply of Fuels  Proposed location Okha and Porbandar

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Port mechanization  Bulk Handling facilities to improve discharge rate  Environment issues

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Portal – online e-services

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Tourism oriented projects – purchase of Hower craft, speed boat, Cruise liners

Ro Ro Ferry services  Ro Ro / Ferry services  Initially plan for Ghogha to Dahej Ro Ro Ferry service  Administrative Approval obtained from GOG  EIA at Ghogha under progress. Tenders to be invited by Sept. 2008  Dahej land already acquired  Offers from private ferry operators already invited  Project cost – Rs. 100 cr. Expected to be operational by second half of 2010  Services from destination Mandvi in Kutch, Porbandar and Okha in Saurashtra are planned

Security, Safety and Environmental Measures at Gujarat ports 

Coastal Security – GMB provide 3920 sq. mt. land for 5 marine police station at various ports

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ISPS Implementation – As per IMO directives 6 ports have been made ISPS Compliant. They are certified by DG Shipping

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Setting of VTMS in Gulf of Cambay – through private participation (Investment Rs. 100 cr.), scheduled to be completed by August 2009.

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Setting of VTMS in Gulf of Kutch in association with GOI – work in progress (Rs. 160 cr.) Delayed

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Navigational aids – constant monitoring and maintenance

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Oil Spill contingency plan

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Mangrove plantation – Plantation carried out at Jakhua and Dahej port in association with Gujarat Ecology department in 90 Hector area

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Improving Environment standards by providing 

Increasing height of compound wall in cargo staking area

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Improving bulk cargo staking and handling facilities

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Plantation at various ports

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Man power capacity building in the maritime sector in Gujarat  Due to huge investment in port sector, employment opportunity of about 26,700 manpower will be created in 29 talukas of 15 Districts under Sagarkhedu Sarvangi Vikash Yojana  Looking to the tremendous development in maritime sector, there is requirement of personals  Managerial – Port Management, Research, Operation  Technocrats – Port Planner, Designer, Engineers  Skilled manpower – Technician, Tug operators, fitters, Electricians, turners, drivers etc.  Manpower in services industry  68

Issues and Constraints 

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Land would be a major issue for fast implementation of the proposed projects. 

GMB would be procuring lands along new project sites and also building up land banks.

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GIDC may have to procure additional lands beyond back up area.

Dispensation of captive jetties by giving them a set off needs to be revisited. It affects commercial port development.

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Government agencies like GMB and GIDC may have to enter into joint-venture to set up Logistic Parks.

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GMB Issues: 

Greater delegation to take up capital projects - proposal already submitted.

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Capacity building within GMB by way of training, retention and bringing in additional manpower with specialized skills.

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Proposed amendment to Section 22(A) has largely resolved in tax related issues.

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Considering responsibility of huge capacity augmentation over next five years, bifurcation of GMB at this stage is not advisable.

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Thank you