Sunday, November 17, 2013

Coastal Shipping is a need rather than a desire!!


India with an expansive coastline of about 7517km,  studded with 12 major and 185 Non-Major (Minor / Intermediate) ports ,  should be having  a vibrant and viable shipping industry. The maritime industry should be the cornerstone of India’s transport industry given that more than 95% of India’s  EXIM trade by volume and 77% by value, moves by sea.
 

In recent years coastal shipping have increasingly become the focus of attention in India. Coastal movement of cargo by sea in the country has grown at a CAGR of 3.3% during the period of 2001-10, while overseas cargo movement has registered a CAGR of nearly 12% during the same period. However, at present country’s domestic transport demand is being mainly met by the road (54.4%)and rail (34.4%) transport systems. Coastal shipping carries only 6.84% of domestic freight( Delotte report , 2011). In fact, it should have been the natural transport choice for domestic supply chain logistics!
 

Coastal shipping has many advantages, such as better fuel efficiency, lower unit transportation cost, eco-friendly, free of congestion, etc. over competing modes of transportation such as road and rail.   However the economic viability of a transport mode depends mainly on the actual trade size, distances involved (Origin – Destination) and competitive forces. Unlike road transport, coastal shipping can only be a link in a multimodal transport chain. Hence for coastal shipping to be viable, the multimodal chain as a whole, including the land legs, should be efficient and cost effective. 
 
 
In developed countries, coastal shipping forms a vital link in the overall transportation infrastructure. European Union perceives coastal shipping as an integral part of its transport policy to develop efficient, multi-modal transport system for meeting existing and future business requirements, achieve modal balance, reduce pollution, congestions, accidents etc. Presently in European Union, 43% of cargo is handled by coastal shipping.
 

In India, though seaborne trade has been growing at a rate of over 11% in the last 10 years, the Indian tonnage is not growing in pace with the fast growing maritime trade. As on 31st March 2011, India had 708 vessels under coastal trade and 347 vessels under overseas trade totalling to a fleet size of 1055 ships (source INSA report) with a 10.36 million gross tonnage. In terms of fleet size, the Indian shipping industry makes only a marginal share of just about 1% of the global fleet.
 

Though coastal vessel number increased from 244 in 2001 to 708 in 2011(as on 01.03.2011, source INSA report), actual number of cargo carrying fleet is very small. The major percentage of fleet comprises of passenger – cum – cargo vessels, passenger vessels, dredgers etc. As per INSA report, around 52%of the Indian shipping fleet are over 20 years of age and overdue for replacement.
 

Government of India has envisaged an ambitious plan to grow the Indian shipping fleet from 10 million GT to 40 million GT by the year 2020. Despite the global downturn, Indian domestic trade is expected to remain strong and coastal shipping would retain its strong potential. It is to be noted that the maritime states with developed infrastructure and favourable environment for business growth, are likely to have larger share in cargo traffic with high pace of growth.

 

Among the maritime States in India,  Gujarat (29%) and Maharashtra (19%) leads in growth of coastal cargo traffic at ports. With the implementation of the Delhi-Mumbai Industrial corridor by the next decade, the maritime environment in the two states will remain bullish. Further, the four states namely, Gujarat, Maharashtra, Andhra Pradesh and Tamil Nadu, clubbed together have more than 75% share of coastal cargo. These states have been forerunners in creation of infrastructure and attracting investments. Also, these states are blessed with thriving industrial hinterlands.
   

The challenges facing the coastal shipping industry may be significant, but a number of opportunities are also emerging.  Booming automobile industry, increasing industrialization, growing project cargo moves for power and construction sector , port development and retail trade reforms are expected to give a thrust to the coastal traffic in India . Following factors are expected to be the growth drivers which would contribute to the sustained growth of coastal shipping in India.

 
ü  Population growth and thereby consumption growth

ü  Growth of economy and trade

ü  Increase in transportation demand thereby requiring the need to explore alternative transportation modes

ü  Increased emphasis on clean development

ü  Fuel scarcity forcing to utilize fuel efficiently

ü  Increase in containerization

ü  Huge investments in maritime infrastructure
 

Shipping connectivity is an important determinant of trade competence. The time has now come for policy makers to rethink their development philosophy to focus on non-major ports, transhipment hubs, inland ports, container freight stations, transport corridors, IWT as well as coastal shipping. A relatively modest investment in coastal sea routes with appropriate policy changes would bring substantial benefits by reducing burden on present transportation system, traffic congestion and pollution.
 

A number of prominent committees have made their suggestions and recommendations to the Ministry of Shipping (Government of India) to revive the fortunes of coastal shipping. These recommendations are still gathering dust in the corridors of the Shipping Ministry. These are compelling times and efforts have to be made to divert cargo from road and rail transport to coastal shipping as it is the most energy efficient and economically viable mode of transportation.
 

The economic progress of India depends on the value addition of its trade, commerce and industry. A comprehensive and strategic transportation plan, national and intermodal in its scope, is the need of the hour.  Therefore, coastal shipping should be put on fast-track development, as it would not only lead to reduced cost of transportation but also reduced social and environmental costs.  

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