Di­ver­si­fied cargo: Ca­pac­ity con­straints and way for­ward

Rep­re­sen­ta­tives from in­dus­tries in Odisha spelled out lo­gis­tics chal­lenges they face in mov­ing cargo. The panel co­in­cided on the need for an in­te­grated ap­proach for im­prov­ing end-to-end lo­gis­tics

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Rep­re­sen­ta­tives from in­dus­tries in Odisha spelled out lo­gis­tics chal­lenges they face in mov­ing cargo. The panel co­in­cided on the need for an in­te­grated ap­proach for im­prov­ing end-to-end lo­gis­tics

Hav­ing dis­cussed in­fra­struc­ture, in­vest­ment, ca­pac­i­ties com­ing up and con­nec­tiv­ity is­sues in the pre­vi­ous ses­sion, the sec­ond ses­sion of the event moved on to fo­cus more on the op­er­a­tional is­sues. Where ex­actly are the prob­lems and how they can be sorted out was the crux of the dis­cus­sion by the panel which had a bal­anced mix of ser­vice providers and users.

Ports will evolve to be­come end-to-end sup­ply chain providers, em­pha­sised Subrat Tri­pa­thy,

CEO, Dhamra Port. “Port in­fra­struc­ture strength­en­ing is not the ex­clu­sive realm of the port. We can’t even take the first baby steps that we are hav­ing to­day if we did not have Dhamra,” said Tri­pa­thy, as he took the au­di­ence down the mem­ory lane, touch­ing upon the es­tab­lish­ment of the first ports in In­dia and Paradip be­ing one among them. “Peo­ple of­ten talk about com­pe­ti­tion be­tween Paradip and Dhamra ports, but when we think of in­fra­struc­ture de­vel­op­ment in the coun­try the fo­cus should be on com­ple­men­tar­ity rather than com­pe­ti­tion,” averred Tri­pa­thy.

Hint­ing at the en­abling en­vi­ron­ment pro­vided by the cen­tral gov­ern­ment he said, “It just took me a cup of cof­fee to con­vince the ship­ping sec­re­tary for fourlan­ing of Chandikhol­paradip road to ease cargo move­ment.” Di­vert­ing from road to rail freight, he said, “The need is to re­struc­ture the en­tire railways oper­a­tions and take it the way Euro­pean railways have gone. It is not about own­ing wag­ons or lo­co­mo­tives, but about own­er­ship of an as­set, let­ting pri­vate en­ter­prise come in and run that as­set, mak­ing de­cent money rather than fo­cus­ing on ab­nor­mal prof­its.”

Hint­ing at the fu­ture of ports in the state Tri­pa­thy said, “The next level will be about end-to-end lo­gis­tics, wherein ship­ping lines will not have to wait for berthing. Elab­o­rat­ing on this as­pect Tri­pa­thy said, When SAIL moves cargo from Aus­tralia to Paradip, the com­pany should have a clear idea of costs in­volved and the punc­tu­al­ity of time in which the cargo will be de­liv­ered.”

PC Choubey, Ex­ec­u­tive Direc­tor, In­dian Oil Cor­po­ra­tion, touched upon the key as­pects of off­shore crude oil move­ment, which is very cost ef­fec­tive and eco-friendly as com­pared to move­ment by pipe­line or rail. He en­cour­aged es­tab­lish­ment of in­dus­trial hubs based on syn­er­gies – such as the es­tab­lish­ment of an­cil­lary in­dus­tries for oil re­finer­ies and petroleum prod­ucts in Paradip. Ear­lier the oil ma­jor used

Hal­dia Port for oil move­ment to re­finer­ies in the eastern re­gion, but the port charged high wharfage, which be­came the very rea­son for IOC to di­vert its cargo to Paradip Port. The oil in­dus­try has so far avoided Paradip Port due to the ad­verse sea con­di­tions, but IOC has taken the lead and with 57 per cent berth oc­cu­pancy, IOC is con­fi­dent of han­dling 60 mil­lion met­ric tonnes of crude oil at the ter­mi­nal. “We have plans to sup­ply crude oil to Nu­ma­li­garh re­fin­ery from Paradip,” re­vealed Choubey.

All the re­quire­ments of re­finer­ies on the eastern part of In­dia is fed by Paradip. We are plan­ning to ex­pand ca­pac­ity of Paradip re­fin­ery to 25MMT. But the big­ger pic­ture is that “I am plan­ning to repli­cate the in­dus­trial struc­ture present in Mun­dra at Paradip as well.” This will in­clude es­tab­lish­ment of pipe­line coat­ing and man­u­fac­tur­ing plants in Paradip. An­other busi­ness op­por­tu­nity he pointed at is for man­u­fac­tur­ing ma­rine hoses in In­dia, which are cur­rently im­ported.

Hint­ing at cost ef­fi­cien­cies at sea he said, when we move crude oil off­shore its cost is only 5 paisa per MT per km, as com­pared to pipe­line which is 1.50 paisa per Mt/km and `2.50 per MT/ km by rail. The best mode of trans­port for mov­ing bulk cargo is through VLCC tankers.

Venkateswara Rao, Head (Out­bound Lo­gis­tics & Ship­ping Busi­ness) Vedanta Ltd, brought to the fore the raw ma­te­rial sourc­ing woes of the com­pany, as it is forced to im­port ma­te­ri­als from as far as Africa, in spite of pres­ence of min­eral re­serves in the very state. 50 per cent of the Hal­dia, Paradip and Vizag ports ca­pac­ity is used by Vedanta. The com­pany is also In­dia’s sin­gle largest con­tainer ex­porter, ex­port­ing 50,000 teus.

Hint­ing at the rea­sons for chos­ing Odisha for its oper­a­tions Rao said, 90 per cent of Baux­ite re­serves are in Odisha, which forms a ma­jor raw ma­te­rial for Alu­minum. But the com­pany still im­ports Baux­ite from West Africa as the min­eral is not be­ing mined in Odisha. In spite of avail­abil­ity of raw ma­te­rial re­serves in In­dia, the com­pany has to im­port from across the globe. Vedanta ex­ports 40 per cent of its out­put to Asian coun­tries and 25 per cent to Amer­i­cas and 35 per cent to Eu­rope, but all of this hap­pens through far off ports like Vizag and Hal­dia. “Vedanta gives com­mit­ment from this fo­rum that we will be the first mover if con­tainer ter­mi­nals are de­vel­oped in Paradip,” an­nounced Rao.

LN Mal­lik, Ex­ec­u­tive Direc­tor (T&S) SAIL, elab­o­rated on the ca­pac­ity con­straints his com­pany faces on a day-to-day ba­sis. SAIL pro­duces 16 mil­lion tonnes of steel and holds a ca­pac­ity for pro­duc­ing 21 mil­lion tonnes of steel. This re­quires 80 mil­lion tonnes of raw ma­te­rial which has to be moved in spite of con­ges­tion at ports and short­age of rakes. For in­stance, Paradip and Dhamra have pre-berthing de­lays of about 7 days, fol­lowed by is­sues of evac­u­a­tion and stor­age. As Gopalpur Port opens up the com­pany is plan­ning to im­port lime­stone through the port, while the same is cur­rently be­ing done at Hal­dia. “It is not only the ports and railways to be blamed. Many man­u­fac­tur­ers do not have the ca­pac­ity to han­dle dif­fer­ent types of wag­ons and re­duce the un­load­ing time,” clar­i­fied Mal­lik. In­te­gra­tion and syn­the­sis of the avail­able in­fra­struc­ture and re­sources to im­prove ef­fi­ciency is the need of the hour and this can cut down avoid­able ex­penses such as de­mur­rage and wait­ing charges.

Prashant K Pati, Vice Pres­i­dent (Mar­ket­ing), OSL Group, pointed at the grow­ing hin­ter­land ac­tiv­ity in Odisha that prom­ises more cargo for all the three ports in the state. The up­com­ing coastal high­way con­nect­ing all the three ports will en­sure eq­ui­table dis­tri­bu­tion of cargo to them. Talk­ing about the prob­lems of con­tainer im­bal­ance and repo­si­tion­ing he said, it is a global phe­nom­e­non as there are no com­monly adopted con­tainer man­age­ment strate­gies by car­ri­ers. Sug­gest­ing ways for re­duc­ing con­tainer repo­si­tion­ing cost in Odisha he said, abo­li­tion of port en­try charges for ves­sels car­ry­ing emp­ties, con­ces­sional tar­iff for empty con­tain­ers, use IT so­lu­tions for flow fore­cast into the re­gion and tri­an­gu­lat­ing move­ment by send­ing emp­ties di­rectly to ex­porters.

“In­fra­struc­ture is­sues are PAN

In­dia and not re­stricted to any one part of the coun­try. All lo­gis­tics providers be it ship­ping lines, CHAS or freight for­warders are us­ing this op­por­tu­nity,” said Ra­jiv Ran­jan Ku­mar, CEO, Apee­jay In­fral­o­gis­tics Pvt Ltd. Busi­nesses in Odisha are strug­gling due to lack of con­tainer port, sourc­ing cargo from dis­tant ports such as Vizag or Kolkata. But whether you source from Vizag or Kolkata, the cost re­mains same. Even if a con­tainer ter­mi­nal is opened at Kalin­gana­gar, the im­port cost will marginally re­duce by 30 per cent be­cause of in­fra­struc­ture is­sues, paucity of trans­porta­tion and union­i­sa­tion of truck own­ers. This can be re­solved through a con­certed ef­fort by gov­ern­ment and the in­dus­try. Sum­ming up his dis­cus­sion Ra­jiv said, as the ports and lo­gis­tics ser­vices in­crease, the cost will au­to­mat­i­cally go down and ef­fi­cien­cies will come in with grow­ing com­pe­ti­tion.

L to R: R. Ram­prasad, Edi­tor-in-chief, Mar­itime Gate­way; PC Choubey, Ex­ec­u­tive Direc­tor, In­dian Oil Cor­po­ra­tion; LN Mal­lik, Ex­ec­u­tive Direc­tor (T&S) SAIL; Ra­jiv Ran­jan Ku­mar, CEO, Apee­jay In­fral­o­gis­tics Pvt Ltd; Venkateswara Rao, Head (Out­bound Lo­gis­tics & Ship­ping Busi­ness) Vedanta Ltd; Prashant K Pati, Vice Pres­i­dent (Mar­ket­ing), OSL Group

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