Indian ports grow 5.1% as coal volumes surge
Continuing with the momentum witnessed in H2FY2018, coal volumes have rebounded largely on the back of improved demand and domestic coal supply disruptions, resulting in healthy import requirements, as per ICRA sector note.
The growth in cargo throughout the second half of FY2018 was strongly supported by a jump of 19.9 per cent in coal volumes and 8.7 per cent in container volumes. Exceptions to volume growth were iron ore and other cargo, which declined by 11.2 per cent and 4.3 per cent, respectively.
Explaining further, K Ravichandran, Senior Vice President and Group Head, ICRA, said, “The overall weakness in coal cargo has been a cause of major concern for the ports sector over the last two years. Over the long term, a sustainable pick-up in industrial activity and power demand will be crucial for the sustenance of healthy coal imports as domestic production also ramps up to meet the incremental demand. Container volumes continue to grow, but iron ore volumes have declined, reducing the scope for growth of export.”
With regard to new port development, the government, under the Sagarmala project, had set ambitious targets under the four pillars of port modernisation (including new port development), port connectivity enhancement, port-linked industrialisation, and coastal community development for phase-wise implementation over the period 2015 to 2035. Recent MoS data indicates that out of the initial 700 projects identified, about 577 projects valued over `8,000
billion are at various stages of execution. However, only about 61 projects have been completed till date and another 162 projects are in implementation, while the balances are either at tendering or DPR preparation stage.
ICRA believes that on all four pillars of Sagarmala, there has been some progress especially under port capacity enhancement, efficiency improvement, and port connectivity where there are visible results. On port connectivity, there has been gradual progress on both road and rail connectivity projects.
Commenting on this, Ankit Patel, Assistant Vice President and Co-Head, Corporate ratings, ICRA, said, “While these incremental projects could also take a long period to complete and start yielding results, we believe that directionally, this is positive as the development of good evacuation infrastructure would drive the development of more industrial clusters. Parallelly, the orders rolled out on national waterways and the policy initiatives put in place to help coastal shipping like the removal of cabotage restrictions, the coastal berth scheme, etc., are all positive.”
Overall, the ICRA note says that diversified port sector players will continue to experience moderate growth in cargo in the near term.