Growth Driv­ers & Chal­lenges

Maritime Gateway - - India Container Market Report 2017 -

The fu­ture of con­tainer growth in In­dia is bullish in the wake of var­i­ous pol­icy ini­tia­tives such as Make in In­dia, GST, Dig­i­tal In­dia, new For­eign Trade Pol­icy and port linked in­fra­struc­ture projects. On the flip side, en­cour­ag­ing growth pic­ture comes with sev­eral rid­ers like frag­mented port ca­pac­ity, in­creased pres­sure on ter­mi­nal as­sets from ves­sel up­scal­ing and de­lay in the im­ple­men­ta­tion of in­fra­struc­ture projects

The global con­tainer traf­fic, ac­cord­ing to Drewry’s es­ti­mate is ex­pected to grow by more than 5 per cent in 2017 and 3.5 per cent in 2018. The tide is turn­ing in Latin Amer­ica, par­tic­u­larly in Brazil that was in dol­drums un­til the third quar­ter of 2016. The con­tainer traf­fic in North Amer­ica and Eu­rope is ex­pected to grow by 3 per cent and 3.9 per cent re­spec­tively in 2017. The pos­i­tive de­mand out­look glob­ally will re­flect on the box traf­fic in In­dia.

New For­eign Trade Pol­icy (FTP)

Un­der the new For­eign Trade Pol­icy (2015 – 2020), In­dia aims to in­crease its share in the global trade to 3.5 per cent by 2020. In­cen­tives to agri­cul­tural ex­ports and ex­ten­sion of the same un­der Mer­chan­dise Ex­ports from In­dia Scheme to units in SEZ are part of the new FTP. This is aimed to in­te­grate with Make in In­dia and Dig­i­tal In­dia ini­tia­tives.

In­fra­struc­ture projects linked to port

Some of the key projects that will be a game changer when fully op­er­a­tional are:

Multi-modal ter­mi­nal un­der Jal Marg Vikas project:

The `170 crore multi-modal ter­mi­nal at Varanasi that will open be­fore De­cem­ber 2018, will con­nect North In­dia to North East In­dia. The gov­ern­ment will also de­velop 35 MMLP.

Port based multi-prod­uct SEZ at JNPT

A port-based SEZ at JNPT will be de­vel­oped with Free Trade Ware­hous­ing Zone, En­gi­neer­ing Goods sec­tor, Elec­tron­ics & Hard­ware sec­tor and Pharma sec­tor. Ded­i­cated Freight Cor­ri­dor (DFC)

Two of the three DFCS are sched­uled to be op­er­a­tional in the next three years. DFC will re­duce the in­land tran­sit time sig­nif­i­cantly.

Sa­gar­mala pro­gramme

Four hun­dred and fif­teen projects have been iden­ti­fied for port mod­erni­sa­tion, new port de­vel­op­ment, port con­nec­tiv­ity en­hance­ment and port linked in­dus­tri­al­i­sa­tion. Six new port lo­ca­tions have also been iden­ti­fied.

Pro­posed tran­ship­ment hubs in the south

The gov­ern­ment has ap­proved `27,000 crore port project at Enayam. The port is ex­pected to be­come a gate­way port for In­dia by shift­ing boxes that are cur­rently tran­shipped at Colombo, Sin­ga­pore or Port Ke­lang. The lo­ca­tion has a nat­u­ral draft of 16 me­ters, and its prox­im­ity to East-west ship­ping route will en­able it to be a tran­ship­ment hub for cargo from Bangladesh and Myan­mar, which are cur­rently be­ing tran­shipped at Colombo.

The Vizhi­nam Port be­ing de­vel­oped by Adani en­joys a nat­u­ral draft of more than 20 me­tres will also com­pete as a tran­ship­ment hub.

Chal­lenges for con­tainer ter­mi­nals

1. Spa­tial dis­tri­bu­tion of ports:

Frag­mented con­tainer ter­mi­nal ca­pac­ity and de­velop ment of new fa­cil­i­ties in close vicin­ity will lead to traf­fic di­ver­sion. This will be a sig­nif­i­cant head­wind to opt imum util­i­sa­tion of ter­mi­nal fa­cil­i­ties.

2. Ves­sel up­scal­ing:

In­creas­ing pres­sure on ter­mi­nal as­sets from ves­sels up­scal­ing will in­flate the sunk cost for ter­mi­nal opera tors as con­tainer han­dling equip­ment be­comes ob­so­lete and yard space be­comes scarce. For in­stance, in March the gov­ern­ment ap­proved a project worth `2,029 crore for the widen­ing and deep­en­ing the Mumbai har­bour chan­nel to en­able large ves­sels to call at JNPT.

3. De­lay in pol­icy im­ple­men­ta­tion and project ap­provals:

The best ex­am­ple to cite here is the Vizhin­jam port. The plan to de­velop this port was mooted way back in 1991 and it ma­te­ri­alised af­ter 24 years. Another ex­am­ple is the de­lay in the con­struc­tion of the fourth con­tainer ter mi­nal at JNPT that has proved costly for the port, in terms of traf­fic di­ver­sion to the neigh­bour­ing ports.

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