- Only 60% of Indian bulk berths currently are Panamax class compliant. Hence, Ports should focus on developing at least one Capesize compliant berth.
- Indian container terminals must target a minimum of one berth with 16-16.2m draft and container terminals with mainline calls must target 18m+ draft.
- Presently, out of a total 240 cargo berths operating at major ports, 66 berths are on PPP model while 174 berths are state owned.
- Productivity improvements 10 to 40% are possible by deploying Dual Cycle Cranes and implementing dual cycling of TTs.
How can Indian ports improve their ranking among the best performing global ports?
According to the Container Port Performance Index (CPPI) developed by World Bank and S&P Global Market Intelligence, which measures the time needed to spend at a port, Saudi Arabia’s King Abdullah Port tops the ranking in 2021, with Port Salalah in Oman, Hamad Port in Qatar and Khalifa Port in Abu Dhabi rounding out the top five. Saudi Arabia’s Jeddah Islamic Port also featured strongly in eighth place overall.
Three Chinese ports viz., Shanghai, Ningbo and the southern port of Guangzhou, feature in the top ten. As far as Indian ports are concerned, Pipavav port is the highest ranked at number 26, while Mundra is ranked at 48. Under this Index, JNPT is at 54, Hazira at 68, Chennai at 79, Krishnapatnam at 95, Visakhapatnam at 98 and Cochin at 99.
Heavy investments on modernization of Indian Ports in the form of increased drafts, induction of modern equipment and digital technology will be key to improve their ranking among global ports.
Role of ports in bringing down the logistics cost?
Ports can contribute to reduction in logistics costs by improving their productivity. Generally, the productivities at Indian ports are low because of low level of automation, deployment of old equipment, low drafts etc. The productivities can be improved, and the turn round time of the ships reduced by deploying modern cargo handling equipment with state-of-the-art- technology.
Along with this, a move towards a market-determined tariff, investment in state-of-the-art technology, and maintaining deeper drafts are among other measures that will boost the sector to make it more attractive and support India’s trade growth.
Productivity improvements 10 to 40% are possible by deploying Dual Cycle Cranes and implementing dual cycling of TTs.
For the bulk segment, a significant reduction in transportation cost is observed with economies of scale as we move from Panamax to Capesize vessels. Approximately USD 1 to USD 2 per ton savings are possible between a full load Panamax and small Capesize vessel for coastal & international routes, respectively. Only 60% of Indian bulk berths currently are Panamax class compliant. Hence, Ports should focus on developing at least one Capesize compliant berth.
A major component of expenditure is on dredging. Internationally, the respective Federal and State Governments are entrusted with the responsibility of developing and maintaining channels through public exchequer. By adopting a similar practice in India, the vessel related charges at Indian ports can be drastically brought down.
Trends that will drive the shipping and logistics sector in the months to come?
After all the tumultuous events of 2021 and 2022, the Logistics Industry is now ripe for digital transformation and new opportunities. With the constant roll out of technological advances, the Companies that succeed in this environment and beyond are those who can adopt a combination of the latest logistics industry trends, becoming better equipped and resilient to supply chain shocks.
The shipping industry is moving towards mega-size vessels, with more than 40% of the order book in next 3-5 years accounted by ships of size 20,000 TEU and above. While a Capesize vessel required upwards of 18m draft, draft at Indian ports varies widely from 7m to 20m. Ports must increase draft according to the respective cargo profile. Indian container terminals must target a minimum of one berth with 16-16.2m draft and container terminals with mainline calls must target 18m+ draft.
As JNPT paved the way for a true Landlord model by privatising all its berths, the transformation of Indian ports to fit into a true landlord model has just begun. Presently, out of a total 240 cargo berths operating at major ports, 66 berths are on PPP model while 174 berths are state owned. The National Monetisation Plan (NMP) launched by the Government has aimed to unlock the value in the existing brown field berths by inducting private sector.
There is a need to develop smart ports which are automated ports using data analytics to make right business decisions and run operations effectively. The concept is to use smart technology to increase ports’ efficiency, improve performance and economic competitiveness etc. Implementing automated processes will not only benefit the port but the wider supply chain.
The current geo-political scenario and its impact on the global supply chains?
The general belief that constitution of global supply chains depends on economic efficiency has been shattered with the recent geo-political changes redefining the supply chains. Historically, the Global supply chains evolved based on the specific economic advantages of different countries being suppliers of raw materials, intermediaries, having the ability to design and market etc. But the changing political equations and the regional conflicts have redefined the way in which the logistics activities will be performed.
The Russia-Ukraine conflict has brought to fore the realities in this regard. Hardly had the economy recovered from the effects of the pandemic which had crippled the warehouse capacity and container availability when the Russia-Ukraine war broke out impeding the flow of goods, fuelled cost increases and product shortages, and created catastrophic food shortages across the globe.
The global supply challenges can only be met at national/international level by the formation of a new genre of likeminded geo-political allies which needs to take active measures to mitigate risks and soften the blow of rising prices and energy shortages.
