AP's 10 new ports: Gate­ways for global cargo?

Re­al­is­ing the need for port-led de­vel­op­ment and with the avail­abil­ity of a long coast­line, the Gov­ern­ment of Andhra Pradesh has de­cided to build 10 new ports to boost the mar­itime sec­tor. Ex­perts dis­cuss the var­i­ous facets of this new gov­ern­ment pol­icy an

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The Andhra Pradesh gov­ern­ment has re­cently started to fo­cus on aug­ment­ing eco­nomic growth by making use of its long coast­line to at­tract cargo. The gov­ern­ment an­nounced its de­ci­sion to de­velop 10 ports in the state, thus turn­ing its 974 km coast­line into a ma­jor port hub and a gate­way to In­dia for global cargo.

Boost­ing mar­itime cargo

The state has an in­fra­struc­ture de­vel­op­ment plan to help achieve a traf­fic tar­get of 2.5 Mil­lion TEUs by 2015 and 5.5 Mil­lion TEUs by 2019. Also the state is ex­pect­ing 250 MMTA of bulk cargo by 2019 and 550 MMTA by 2025 and the new ports will en­sure speedy de­vel­op­ment.

Evac­u­at­ing the cargo

The state gov­ern­ment is giv­ing pri­or­ity to the evac­u­a­tion of cargo from the ex­ist­ing ports. G Sambasiva Rao, Man­ag­ing Di­rec­tor, Sra­van Ship­ping Ser­vices says, “The gov­ern­ment’s ba­sic aim is ports de­vel­op­ment and the con­nec­tiv­ity of ports via roads and rail­way sid­ings and they are pro­vid­ing a sixlane con­nec­tiv­ity to the ex­ist­ing ports. Af­ter the six-lane con­nec­tiv­ity is es­tab­lished, there will not be any prob­lem in the evac­u­a­tion of cargo for ship­pers.”

The gov­ern­ment is con­sid­er­ing build­ing sup­port­ing in­fra­struc­ture for the evac­u­a­tion of cargo from ex­ist­ing ports by plan­ning to take up some key port re­lated rail­way lines and roads projects. Th­ese are ex­pected to en­hance the evac­u­a­tion ca­pac­ity.

Re­vamp­ing the ca­pac­ity

While the three op­er­a­tional ports of Kr­ish­na­p­at­nam, Gan­gavaram and Kak­i­nada Deep Wa­ter Port have plans for the ad­di­tional aug­men­ta­tion of more than 150 MTPA in the near fu­ture, Pra­bal Basu, Chair­man & Man­ag­ing Di­rec­tor, Balmer Lawrie & Co opines, “There is a need for the Andhra Pradesh Gov­ern­ment to have a clearcut mar­itime pol­icy. Fur­ther, the de­vel­op­ment of link­ing roads to the Vizag–Chennai In­dus­trial Cor­ri­dor is a must. At present, the con­tainer cargo is find­ing its way to the Chennai Port for sev­eral his­tor­i­cal rea­sons as well as due to the high tax struc­ture in the state of Andhra Pradesh. The state gov­ern­ment needs to ad­dress th­ese is­sues to in­cen­tivise the ports to re­vamp their fa­cil­i­ties.”

Con­nec­tiv­ity with the hin­ter­land

Discussing the lack of con­nec­tiv­ity be­tween Andhra Pradesh and the hin­ter­land, Basu ex­plains, “At present, there ap­pear to be ma­jor is­sues in re­spect of con­nec­tiv­ity to the hin­ter­land of Ch­hat­tis­garh and Odisha. There is an ur­gent need to im­prove the con­nec­tiv­ity with the ports both via rail and road. Al­lied in­fra­struc­ture like con­tainer freight sta­tions (CFSs) and ware­houses will then de­velop and through­put vol­umes through Andhra Pradesh ports will con­se­quently in­crease.”

Need for 10 ports?

The build­ing of the new ports will be taken up in a planned and phased man­ner tak­ing into ac­count the traf­fic po­ten­tial, the ex­ist­ing port ca­pac­ity and the evac­u­a­tion of cargo from both new and ex­ist­ing ports. The im­prov­ing con­nec­tiv­ity and the cre­ation of a proper lo­gis­tics hub will make Andhra Pradesh ports the pre- ferred des­ti­na­tion of trade in In­dia. But Mihir Das, Pro­moter & Port Con­sul­tant, Portwerk Con­sul­tants warns, “The gov­ern­ment’s ‘Look East’’ pol­icy must take con­crete shape for the proper mes­sage to be re­layed to shipown­ers that th­ese east­ern ports are ready to do busi­ness ef­fi­ciently. Only then can they mo­bilise their fleet and align mar­ket­ing poli­cies. Ports alone can­not suc­ceed. Thus, a cau­tious ap­proach is nec­es­sary.”

Risk of ports turn­ing into stack­ing yards

Scep­tics sug­gest that the idea of build­ing new ports, if im­ple­mented hur­riedly, will re­sult in them be­ing turned into mere stack­ing yards. How­ever, Rao does not agree. He says, “There will be no dis­ad­van- tages as it will in­crease com­pe­ti­tion amongst the ports, which will lead to ef­fi­ciency in rail in­fra­struc­ture and fur­ther de­vel­op­ment of the new ports as they will be vy­ing with each other to at­tract cargo. With new ports, port-based in­dus­tries can come up and the lo­gis­tics cost can come down. Road con­ges­tion due to evac­u­a­tion can also be avoided. ”

The growth of all the ports will de­pend on the growth of in­dus­tries in Andhra Pradesh, else th­ese ports will only re­main un­der­utilised. The de­ci­sion of build­ing new ports is be­ing looked upon as a con­scious ef­fort to at­tract in­vest­ments and im­prove the ease of do­ing busi­ness.

G Sambasiva Rao Man­ag­ing Di­rec­tor Sra­van Ship­ping Ser­vices

Pra­bal Basu Chair­man & Man­ag­ing Di­rec­tor Balmer Lawrie & Co

Mihir Das Pro­moter & Port Con­sul­tant Portwerk Con­sul­tants

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