Future looks bright for terminals
Future bodes bright for the Indian container ports with container traffic on either coasts growing at a CAGR of 6 per cent during 2011-2016 period.
Positive demand in Europe and North America, reversal of fortunes in South American economies, improved economic environment in South Africa from the second half of 2016, as well as rising imports from China tethered the container traffic growth at Indian ports in 2016. India’s container port throughput that grew by a paltry 2 per cent annually in 2015, registered an 11per cent growth in 2016. Barring ports of Greater Mumbai where traffic was stagnant last year, the remaining regions recorded a double digit increase in throughput. While the container throughput at Indian ports grew at a CAGR of 13 per cent during the six years period from 2005 till 2010, it slowed to 6 per cent during 2011-2016. The decline was attributed to the global slowdown, following the economic recession of 2008.
Major vs non-major ports
The share of major ports in container handling has shrunk dramatically in the last ten years, while non-major ports, particularly in the upper west coast of India have grown by leaps and bounds. The market share of major ports declined from 92 per cent in 2005 to 63 per cent in 2016. The rapid expansion of private ports attracted a significant chunk of the traffic. The market share of non-major ports collectively surged to a whopping 37 per cent in 2016 from 3 per cent in 2005. On the east coast, Krishnapatnam and Kattupalli have amassed significant volume in three years (operational from 2013), adding to the growth story of non-major ports. In 2016, barring Pipavav that is on a weary footing with rumours of ownership change from APMT, the other four private ports registered humongous growth. Mundra handled 20 per cent additional boxes in 2016 over 2015 even as traffic at Hazira zoomed by 54 per cent during this period and a further 73 per cent boxes passed through the quay of Krishnapatnam in 2016. The rival Kattuapalli port after its operational take over by Adani is mending its slow start. It handled about 3 lakh teu in 2016 from 31,000 in 2014.
East coast ports vs west coast ports
The west coast ports continue to dominate the container market in India and its share in the country’s total container handling is hovering in the range of 70-75 per cent since 2001, while that of east coast ports is in the range of 25-30 per cent. The traffic at both coasts grew at a CAGR of 6 per cent during 2011-2016. However, the capacity growth on the east coast at a CAGR of 15 per cent from 2011 to 2016 is much higher than the 7 per cent growth on the west coast of India. Despite higher capacity expansion at east coast ports, their share in the total container movement was pegged at 28%. This also indicates that the inter-port competition is rife between ports on the same coast and in the same range and not between ports on different coasts.
On the west coast, competition is palpable between upper west coast ports in Gujarat and ports on the Greater Mumbai coast. The JNPT that had a share of 66 per cent in the west coast traffic back in 2010 slipped to 48 per cent by 2016. On the other hand, Mundra expanded its share from 18 per cent to 35 per cent during the same period. On the east coast, the tussle is between Chennai and ports few miles north of Chennai. Krishnapatnam and Kattupalli that started operations from 2013, currently hold a market share of 5 per cent and 8 per cent respectively in the east coast traffic, while Chennai’s share plummeted from 52 per cent to 41 per cent.
India’s trade with west and east
Trade with western countries continues to dominate India’s export market with a share of 72 per cent of the country’s total exports. The share remained unchanged during 2011-2016. However, imports from western countries are gradually declining and decreased from 59 per cent in 2011 to 51 per cent in 2016. On the other hand, inbound from eastern countries reached 49 per cent in 2016 from 41 per cent in 2011. India’s exports to developing and emerging economies have been rising, while the pie is shrinking to advanced economies. Exports to the EU countries slide by 6 per cent during 2011-2016. Moreover, imports from 28 EU countries shrunk by 28 per cent during the same period. India’ trade with South East Asia is on the rise. Exports to this region have increased by 12 per cent during 2011-2016.
If we analyse India’s export basket, the country continues to rely on exports of primary goods and low-value, low-tech manufacturing goods. Agricultural products such as cotton, rice, tea, meat and spices continue to dominate the exports. A shift to exports of medium and high-tech manufacturing products such as engineering goods is visible; however, their share in the total export goods lags behind China and other emerging economies.