India Port Report
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  • 1. 1 Introduction
  • 2. 3 Chapter 1 Introduction ndian seaports are today more than just governmentowned public utilities, they are indeed, focal points of convergence for several contending and competing business interests – from shipping lines, port authorities, individual terminal operators to freight forwarders and inland logistics agencies; not to leave out the shippers (the exporter-importer fraternity) whose cargo is what is being ultimately being transported. They represent what may rightly be considered a complex mosaic of contractual and business relationships, which in turn give rise to maze of regulatory and operating institutions and procedures and ever-changing rules of dynamic inter-play. I Under the impact of first-generation port reforms, initiated since the mid-nineties, following economic liberalisation and globalisation policies, the entire gamut of existing institutional arrangements and underlying transactional and business processes in the port sector have been undergoing a profound transformation. Consequently, conventional port and terminal ownership, management and regulatory frameworks guiding the port operations are undergoing changes in line with broader process of functional evolution of ports and global maritime trade. The critical changes underway in the port sector have many facets that need to be brought under a comprehensive review and research scr utiny from contemporary perspective. Few attempts made in the past have merely focused on the historical and social aspects of Indian port sector, without examining the underlying business and economic processes that make port inalienable part of a larger national and international economy. Not too surprisingly, there are hardly any significant books or research monographs that portray a contemporary emerging picture of the Indian port sector, as the gateways to global trade. This leaves a large gap to be filled and considering that Indian port projects are now increasingly becoming key destinations for strategic business investments and are increasingly becoming key links in the rapidly expanding global trade, understanding of the working of the port sector becomes an urgent and critical task both from the public policy angle and strategic business decisions. Indeed, there have been a number of project-specific and port-specific studies and long-term forecasts on cargo traffic growth made by a number of technical and business consultants to the port and shipping sector. Recently, Rail India Technical and Engineering Services (RITES) has come up with “Perspective Plan for Indian Port Sector Vision 2020” for the Union Ministry of Shipping. On Gujarat port development, the Dutch government and the Gujarat Maritime Board have jointly come up with “Port Development Gujarat Programme (PODEG)”. The Planning Commission sub-group too has recently also come out with a Report on General Cargo including Containerised Cargo for the Tenth Five Year Plan (20022007). The scope of these studies are however, limited to specified objectives of analysis and are not designed to contribute to wider level understanding of the process of port sector reforms and the macro-level workings of the port sector in the country. It is against this backdrop that we thought it necessary and relevant to come out with the present report. The India Port Report – is a maiden attempt to present a broader overview of the port sector in the country and macro-level business and public policy perspective. The effort has been to focus on some key issues of interest to current participants in the port sector and be discursive rather than recommendatory. The report seeks to thus basically aggregate range of issues and viewpoints in the
  • 3. India Port Report 4 process; weaving together different and discrete issues and contentious points of debate in the ongoing process of port reforms in the country. While the report seeks to extensively capture various view points and recommendations made by leading multilateral organisations like the World Bank, Asian Development Bank, UNCTAD, and UNESCAP, we must however, clarify that this should not be construed as our concurrence with those views and recommendations. The level of generalisation possible in the analysis of ports is extremely limited, as each port in the world is different from other. As noted international port expert H.E. Haralambides, Center for Maritime Economics and Logistics (MEL), Erasmus University Rotterdam, aptly notes: “There is no such single thing that could be adequately described by the mere word ‘port’ and no two ports are alike. A port could be from a small sheltered patch of sea that protects fishermen from the roughness of the sea, allowing them to moor their boats and trade their wares in safety somewhere in the South Pacific, to the huge industrial complex of the city-port of Rotterdam, embracing in its expanse hundreds of companies, roads, railway lines, distribution centres, refineries and other industrial and manufacturing activity.” Table 1.1 Key Economic Indicators (2002) India Total Population (million) Urban Population (%age of total) GDP (USD billion) GNP per capita (PPP, USD) 1,030 28% 480 2,464 Real growth in GDP per capita, 2000 to 2001 2.5% Export of goods (as %age of GDP) 9.1% Import of goods (as %age of GDP) 10.4% Unemployment rate Inflation (Consumer prices) 9.16 4.5% Source : EIU; Statistical Outline of India; World Economic Forum Nevertheless, we have sought to encapsulate some key trends in the port sector, in terms of the changing profile of the port infrastructure development and port terminal operations, under impact of privatisation and corporatisation of ports. The report also has a major focus on the unfolding traffic dynamics at various major and minor ports and the evolution of regulatory policy framework for the port sector both at the global and national levels. We hope this report serves an important objective of generating broader awareness and interest in macro-level issues and concerns impacting future development of port sector in the country. We hope it will also meaningfully contribute to the ongoing national debate on the ongoing port reforms, which has key implications for the development of the national economy by more fully unleashing the potential of ports. 1.1 India’s Maritime Trade India’s maritime trade comprises of export-import trade in various bulk commodities like crude oil and other petroleum products, iron ore and coal, besides generalpurpose cargo. Over the last ten years, since the onset of economic liberalization, there has been a significant spurt in handling of value-added goods mainly in form of containerised cargo movement, in several Indian ports. This has given rise to many new dimensions in the development of the port sector in the countr y. Containerisation of cargo has with it brought about a significant redefinition of port services, with its demands for highly sophisticated handling equipment and logistics service efficiencies. The shift away from commodity nature of India’s export trade is particularly, noticeable in the marked shift towards increasing value added exports and drive for global competitiveness. The shift in the pattern of trading is however, yet to find adequate support in terms of a maritime infrastructure. Interestingly, in the past ten years while overall cargo growth (reckoned at about 9-10 per cent) has been quite impressive, new demands have been generated on the port sector for adding on more cargo handling capacity and creation of new-dedicated berths and cargo terminals. Consequently, the port sector is agog with considerable business optimism with respect to generation of increasing cargo traffic volumes and of trade in general in the coming years. Considerable future business potential is also seen with respect to generating enhanced ear nings from port sector operations through improving efficiencies and other value-added activities contributing also thereby to making country’s external trade competitive in the global market.
  • 4. Introduction 5 Table 1.2 Though India’s overseas trade in value terms is still less than one per cent of the total world trade, the physical cargo volumes handled at the seaports have however been quite sizeable. The Indian major ports have together handled 287.6 million tonnes of cargo in fiscal 2001-02 and taken together with 98 million tonnes of the cargo traffic handled in the same year by the minor, intermediate ports, the aggregate cargo traffic volume handled in the Indian port sector actually stands at about 386 million tonnes in 2001-02. Key Infrastructure Indicators (2001) Units Cargo Handled at Major & non-major Ports million tonnes Registered vehicles 334.3 0.4 15.0 1.1 22.0 million 1,284.0 Passenger Traffic 22.5 Paise / km Passenger Fare India’s has around 6,000 km of natural peninsular coastline strategically located on the crucial East-West trade route, which links Europe and Far East. The coastline has 12 major ports and about 180 other minor and intermediate ports. Most of the major ports have been established in the last few decades of post independent economic planning, while two of the older major ports like Kolkata and Mumbai were established more than hundred years back during the British colonial rule. The development of the port sector in India till recently has been exclusively responsibility of the Central government and had grown into a “natural public monopoly” of sorts. In fact, it still continues to be so despite recent trend towards privatisation of port infrastructure development. 2000 ‘000 kms Electrified Railway Traction 1.2 Development of Port Sector in India 1951 45,85.0 ‘000 nos Revenue Earning Freight 306.0 48,001.0 million tonnes 73.0 456.0 ‘000 kms 53.6 62.8 000 grt 3.9 7.6 Railway Route Kms) Shipping Tonnage Surfaced Roads ‘000 km Telecommunications million lines Road Length ‘000 kms 157.0 1,394.0* 0.1 400.0 2,466.0* Source : Statistical Outline of India * Data available up to 1996-97 only important changes over the last five decades since India’s independence, in line with the broader macro-level changes in the economy. The last ten years of economic reforms and globalisation, in particular, have accelerated the process of change towards a more diversified commodity composition of trade. There is also a perceptible shift in the growth of the economy, in terms of changing The seaports of India have played a historical role in the development of maritime trade and economy in India. Indeed, maritime trade in India has been and continues to be almost synonymous with India’s overseas trade, accounting for over 95 per cent of India’s total cargo volumes. The structure, composition and direction of India’s overseas trade has however, been undergoing Table 1.3 India’s Foreign Trade Growth – 1970-71 to 2000-01 1950-51 1980-81 1990-91 2000-01 Rs. crore 606 642 1,535 6,711 32,553 203,571 1.3 1.4 2.0 8.5 18.1 44.6 Rs. crore 608 1,122 1,634 12,549 43,198 230,873 1.3 2.4 2.2 15.9 24.1 50.5 Rs. crore 1,214 1,764 3,169 19,260 75,751 434,444 USD billion Total 1970-71 USD billion Imports 1960-61 USD billion Exports 2.5 3.7 4.2 24.4 42.2 95.1 Source : Economic Survey of India, Ministry of Finance 27.4
  • 5. Introduction 7 composition of Gross Domestic Product (GDP), initially represented by shift from pre-dominance of agriculture to increasing share of industry and subsequently of the services sector. Table 1.4 Cargo Traffic in Indian Ports (million tonnes) Major Ports Non-Major Ports Total 1950-51 20.01 2.50 22.51 1960-61 39.63 4.40 44.03 1970-71 58.14 7.90 66.04 1980-81 80.51 10.00 90.51 1990-91 152.85 12.78 165.63 1995-96 215.34 25.71 241.05 2001-02 287.59 98.00 385.59 Table 1.5 Commodity-wise Traffic Break-up (1991-2002) (million tonnes) 1991-92 2001-02 Crude oil 42.9 108.9 Products 27.7 43.7 0.0 2.2 Total Crude 70.6 154.7 Coal 23.5 53.2 Iron ore 33.7 50.9 Foodgrains 2.0 5.1 Fertiliser and FRM (dry) 7.8 11.4 66.9 120.6 Containers - million tonnes 7.5 36.3 - million TEUs 0.7 2.9 0.1 0.9 25.7 73.1 170.8 385.6 LPG Total dry bulk Container Transshipment (million tonnes) Others Total cargo handled Source : Indian Ports Association, Ministry of Shipping Future of Indian Ports Will Indian port sector really see the emergence of private sector as a major player in the port sector in the future? Will major ports be fully corporatised, and bring about greater rationalization and transparency in functioning? Are minor ports in India poised take a lead over performance of major ports? Is there enough room for new green field port projects in Indian port sector? Several of these questions loom large, as the Indian port sector is increasingly coming under the impact of wide ranging port reforms and private sector investments, in line with larger transformations underway in many global ports. The development of the port sector as concomitant to development of maritime trade is an axiom that no littoral nation can afford to ignore in today’s globalised world. This was equally true in the distant past, when maritime nations undertook extensive overseas maritime explorations and trade to set their mark on global economic history. In fact, littoral nations of the world are advantaged in being clusters of relatively faster economic growth, compared to other land-locked and hinterland regions. Needless to say, some of the world’s most developed nations have also been among the most important maritime nations of the world, actively involved in global maritime trade. India’s shipping and port sector saw dramatic growth in the first four decades of post-independence, under the initiative of planned development and active government support. More than two-thirds of the port cargo handling capacity and more than half of India’s national shipping tonnage were established in the first four decades of independence. However, with a basically inward looking economic policy perspective that emphasized more on self-reliance and import-substituting development strategies, the overall trade and technology-driven growth of the economy remained constricted. However, with the paradigm shift in economic policy since early nineties, the government has sought to liberalize the port sector by opening it to private sector investments. As a result, ports have now begun to assume a more proactive role as facilitators of trade with a range of value-added service offerings in terms of cargo handling efficiency and actively seeking to benchmark their performance with international ports. 1.3 Emerging Context for Port Reforms Ports as one of the important maritime institutions have continued to evolve with the changing demands of the global shipping trade and are more than just a stop-over points for ships to load and unload cargo. They have
  • 6. India Port Report 8 indeed, emerged to be highly sophisticated and integrated systems, which provide full range of services for the shipping industry and are increasingly getting integrated into logistics value chain, which extends from origin of cargo to its final destination. However, much as the strategic business attention has focused on the dynamics of shipping and global maritime trade, the importance and changing role of seaports has not been adequately understood till recently. After the privatisation process was extended to the port sector in United Kingdom since the eighties, the debate on public policy implications of port privatisation and the regulatory framework for the port sector has now spilled to many other countries, struggling to cope with increasing demand for investment in port infrastructure and formulating a new institutional roadmap for the port sector. Indeed, while technological changes in seaports have begun long before the containerisation boom of early seventies, it was only during nineties following globalisation of world trade, that seaports have truly began to attract broader policylevel and strategic business investment attention. Concurrently, ports all over the world, especially container cargo ports have also begun to witness fierce competition for cargo, with each port trying to gain a competitive advantage over the other. While the degree of competition still varies among different ports, there are few ports today that can ignore competition from other international ports or from ports in their immediate neighbourhood. They are also increasingly being perceived as a one of the key enablers in the logistics value chain that can now be controlled and modulated to yield improvements in efficiency of ocean transport logistics. 1.4 Economic Liberalization and Port Sector Reforms The state monopoly over port-related assets and has continued for nearly five decades of post-independence history of India. It is only in the last ten years that government policy on port has allowed the private sector investment participation in the port sector. Economic liberalization has been interpreted to suggest that government should gradually substitute its direct involvement in port as operator with increasing privatisation of port assets and related services to encourage fresh investments and tone up the service efficiency of ports. One of the major reasons for allowing private sector entry into the port sector has been the failure of the public ports to meet the growing efficiency-related demands of the port users. The capacity growth in the port sector too has been tardy, due to paucity of public investment resources. Besides, operational inefficiencies in handling of cargo, poor inland connectivity of ports to cargo hinterlands by rail and road networks have also been among key bottlenecks to growth of the port sector. Text Box 1.1 Generic Development of Ports The origin and development of ports date back to 2000-4000 BC, when natural harbors were found to be inadequate to needs of mariners and led to construction of a number of artificial or semi-artificial ports. Built initially in a very primitive way, they were subsequently, improvised with new scientific methods of improvement and cumulative technical skills. In the medieval period, many coastal cities were actually developed around ports. As sea trade grew, traders who owned their cargo ships, moored the ships to the banks in front of their buildings, where goods were stored and traded. Since the advent of the Industrial Revolution, the great expansion of industrial activities brought enormous increases in the trade at the major ports with sea-trade networks rapidly extending to Asia, Africa and America. Against this background, ship owners became independent from being traders leading to independent development of ports services such as cargo handling, mooring line handling, water supply, lighterage, and warehousing were provided to ships and cargos on common user basis under public ownership. At the turn of last century, governments to better manage port facilities created a number of public port authorities. As ports increasingly evolved as part of an integrated transport system, the port terminal operations have become dependent on large-scale commercial investments and ownership and operations of port assets have come under the sway of market forces and private sector participation. Following reforms introduced in India since early nineties, the core sector industries including the Indian port sector have begun to witness a new phase of revival and growth. The government, which has all along played a major role in the development of the port assets and other facilities, now under its reforms initiative, has begun to selectively open up the sector to private sector participation and investment. The government has also come up with the policy to establish autonomous corporate entities in place of existing port trusts to manage public port assets and services, doing away with the existing port trusts in a phased manner.
  • 7. Introduction 9 Text Box 1.2 Logistics Costs in India – A Drag on Competitiveness World Freight payments, as a percentage of total import value (cif), stood at 6.21% in 2000 as per UNCTAD. For developed countries, it stood at 5.21% and for developing countries it stood at 8.83%. For India, freight payments as a percentage of total import value stood at 10.32% (1997) and estimated to be around 11.4% in 2000. As per UNCTAD, such variation could be explained by differences in trade and shipping patterns, particularly in the liner sector, where the growing importance of feeder operations tend to place those countries not covered by mainline services at a disadvantage. They also reflect insufficient infrastructure facilities, low productivity of ter minal equipment, and poor management practises in cargo handling. Nevertheless, these figures reflect the higher logistics costs in India, which are a drag on our export competitiveness. The following table reflects the per tonne handling costs in major ports in India.   Port Per tonne handling costs (Rs.) 1995-96 2001-02 %age increase Kolkata + Haldia 125.6 229.4 83% Paradip 76.5 95.1 24% Visakhapatanam 44.7 51.3 15% Chennai 49.5 85.3 72% Tuticorin 30.4 45.4 49% Cochin 71.0 129.2 82% New Mangalore 45.3 61.7 36% Mormugao 35.2 57.9 64% Mumbai 92.1 195.5 112% JNPT 168.3 99.0 -41% Kandla 21.9 28.4 30% All Ports 63.4 95.1 50% Source : Indian Ports Association, Ministry of Shipping The path-breaking policy of allowing private sector participation in the port sector was announced in 1996 and has resulted in the setting up of India’s first-ever private sector managed International Container Transhipment Terminal at Nhava Sheva, by P&O Ports (Australia). This private sector container terminal has not only been a business success from the point of view of the port operator (the NSICT terminal is set to cross a traffic of 1 million TEUs in the ongoing fourth year of operation) but has also signalled a virtual revolution in India’s container trade by trail-blazing the trend of consistent high growth in national container traffic movement. Arguably, the port reform process in India has to be viewed against the backdrop a radical changes worldwide, in terms of the trends in cargo delivery and handling by ports. While ports in India, as much elsewhere, have been conventionally designed mainly for handling bulk and break bulk cargoes, the trend in global sea trade in the last four decades has taken a decisive shift towards containerised mode of cargo delivery. Though, India has been somewhat a late-comer to the reign of containerised cargo trade, the growing integration of the Indian economy with the global market has made it imperative for the Indian port sector to bring about a major shift in its perspective to cater to the new demands of international trade. 1.5 Ports and Globalisation Globalisation of the world economy has brought about tremendous increase in trading of merchandise goods across the world, leading to what has been called the “borderless society”. Coupled with pursuit of competitive manufacturing practices, which is leading to worldwide relocation of industrial manufacturing, the production centres of nearly all industries have been rapidly shifting their bases beyond their conventional national boundaries. This has brought about important shifts in the global trade flows and led to several international ports getting interlocked in a common market for oceanic cargoes. As globalisation further unfolds its impact, the world trade and in particular, sea borne trade is certain not only to continue to grow but bring in several new players, who will most certainly rewrite the rules of the game in maritime trade. Against this backdrop, ports in many countries, including in India are increasingly confronted with pressing need for expanding their facilities and cargo handling productivity. Continued growth of sea borne trade, particularly rapid growth of container traffic, is forcing port authorities to develop their facilities and capacities without further delay. Secondly, the need for port expansion and modernization is driven by increasing deployment of large oil tankers (ULCCs & VLCCs) and other mega-container ships (up to a capacity of 8,000 and
  • 8. India Port Report 10 more), which require deep draft facilities and sophisticated cargo equipment for handling containers. The port authorities are also under pressure to improve productivity of port services, and reduce handling charges, from vessel operators and shippers, who are themselves operating in a highly competitive market. Text Box 1.3 What does the Global Port Sector looks like? • There are more than 2,000 ports around the world, from single berth locations handling a few hundreds tonnes a year to multi-purpose facilities handling up to 300 million tons a year. • More than 80 percent of trade with origins or destinations in developing countries, in tonnage, is through seas. • Total world port traffic in 2001 reached around 11.93 billion tonnes. After an average of 3% annual growth rate since 1990s, port traffic contracted for the first time in 15 years in 2001. World container port traffic has however, continued to expand at a rate of 15.4 per cent over the previous year, reaching 225.3 million TEUs. The ports of developing countries handled 94.2 million TEUs, or 42 per cent of the total container traffic. • World port traffic is made of 45% of liquid bulks (mainly oil, petroleum products, and chemicals), for 23% of dry bulks (coal, iron ore, grain, and phosphate), and for 32% of general cargo, including container cargo. • World total freight payment as a proportion of total import value is reckoned at 6.2 per cent in 2000. The freight factor was 5.2 per cent for developed market-economy countries and 8.8 per cent for developing countries. For India, the figure is around 12%, showing inefficiencies in the logistics chain. What are the general trends in maritime and logistics sub-sectors? • A 1997 world review of the top 100 container ports shows that 88 out of 100 conform to the Landlord Port model, in which the Port Authority retains ultimate property rights over port land and fulfils all regulatory functions, while commercial operations are carried out by private operators. • Total world maritime traffic may vary according to dry bulk trade tendencies, but is expected to grow by 4% or 5% annually between 1998 and 2010. • Private sector involvement in operations and investment in infrastructure has been growing significantly since 1990. It is estimated that by end-1998 around 100 port concessions contracts signed worldwide (most in containers terminals, with grain, coal and liquid bulk facilities accounting for the rest), for a total estimated private investment amount of US$ 6.3 billions. However, non-specialized general cargo facilities have difficulties attracting private infrastructure financing. • Traffic concentration on large intermodal platforms and shipping alliances translate into fewer ports handling a more important share of world traffic: the first 10 containers ports handled 31% of the world traffic in 1980, and more than 40% today. Simultaneously, the growth of transshipment activities complements the development of hub ports: container transshipment is believed to make 20% of total maritime container traffic and is growing. • Port and logistics operations are more and more carried out by a limited number of international operators, specializing in dedicated market segments, and by a few large shipping lines expanding their maritime networks into inland operations to offer integrated transport services. • Seaports, from the simple physical sea/land interface they once used to be, have successively turned into commerce and industrial centers, then into logistics and distribution platforms, and are now becoming intermodal nodes in international supply chains networks, the efficiency of which now drives trade competitiveness. Source : World Bank, UNCTAD and UNESCAP
  • 9. Introduction 11 1.6 Key Drivers of Port Business Ports the world over, including in India are increasingly drawn into the vortex of a rapidly changing business environment in the international maritime trade. There are essentially three fundamental forces driving the business of ports. Global Trade Several of the major ports in India have been established in the era of dominance of bulk and break bulk trade that dominated the decade of sixties and seventies and need to readapt themselves to new global trade patterns. The emerging global trade is witnessing a dramatic increase in the containerised mode of cargo delivery and demand substantial build-up of box handling capacity at the Indian ports and improvement of logistics efficiencies in port operations. While several international ports like Hong Kong, Singapore, Port Klang, Colombo etc. have successfully adapted themselves to international transhipment of container trade, the Indian port sector will have to find ways to capitalize on opportunities for growth in India’s own container trade. A substantial scope however exists for absolute growth in Indian port’s traffic volumes as also logistical re-organization of existing patterns of port-to-hinterland linkages formed in the past. Technology Changes Seaports across the world are witnessing rapid changes in the cargo handling technology and tools. The trend in global shipping has tended to increasingly favour deployment of large-sized and faster vessels, requiring deeper drafts at ports and highly efficient modes of cargo discharge to minimize detention time. Absorbing these technology changes in the operations of Indian ports not only demand large infusion of capital but also demand new structures of operational and business management. Deep draft berths and sophisticated container handling terminals are also needed to attract mainline vessels to call on Indian ports. Technology-related changes elsewhere in the world have substantially brought down the costs of sea transportation and improved efficiencies, and made it imperative to take a relook at existing structures of ownership of port assets and bring about necessary changes in the institutional and operational environment of ports. Table 1.6 Overview of the Global Port Sector Goods loaded (million tonnes) Goods unloaded Oil Total world traffic Oil Oil Crude Products Dry Total all Crude Products Dry Total all Crude Products Dry Cargo goods Cargo goods Cargo Total 1970 1,109 232 1,162 2,504 1,101 298 1,131 2,529 2,210 530 2,293 5,033 1980 1,527 344 1,833 3,704 1,530 326 1,823 3,679 3,057 670 3,656 7,383 1990 1,287 468 2,253 4,008 1,315 466 2,365 4,146 2,602 934 4,618 8,154 1997 1,627 527 2,785 4,952 1,625 522 2,890 5,037 3,252 1,049 5,675 9,989 1998 1,569 503 3,526 5,598 1,533 540 3,670 5,743 3,102 1,043 7,196 11,341 1999 1,564 493 3,612 5,668 1,541 547 3,741 5,829 3,105 1,040 7,353 11,497 2000 1,636 478 3,775 5,890 1,679 559 3,925 6,163 3,315 1,037 7,700 12,053 2001 1,649 479 3,704 5,832 1,675 558 3,874 6,107 3,324 1,037 7,578 11,939 Source : UNCTAD
  • 10. India Port Report 12 Table 1.7 Growth of Merchandise Trade by Geographical Region 1999-2001 (annual % change) Countries/Regions  Developed Economiesa 1999 2000 Imports Exports Imports 2001 Exports Imports Exports 7.6 4.8 9.6 9.9 0.3 na 11.2 5.8 11.3 9.9 -3.8 -5.0   North America   Europian Union (15) 9.5 4.4 10.9 10.1 0.3 1.1   Japan 9.5 2.1 10.9 9.2 0.3 -5.0 Developing Economiesa 4.4 7.0 15.4 15.7 0.8 0.5   Africa -0.9 5.0 5.4 7.3 4.6 2.5   Latin America -1.5 7.1 11.1 10.3 0.5 2.7   Middle Eastb 1.3 1.1 14.6 14.0 na na   Asia 9.0 6.6 15.4 16.2 -1.9 -3.7   Economies in transitionb -8.5 -2.0 14.0 17.9 14.7 8.0   China 15.2 9.6 33.1 28.3 11.3 5.0 6.1 5.0 11.3 11.9 0.9 -1.5 Worlda c   Source : UNCTAD a - Excludes significant double counting. b - Includes Israel. c - Includes Japan, China, Hong Kong, Taiwan and developing countries in the Pacific. Institutional Dynamics The structure of ownership and management in the Indian port sector has been characterized by overwhelming presence of public sector, while private sector presence is still at an early stage. Overall, the domestic port services market in India is in a precompetitive phase. In the private port sector, key players include international players like P&O Ports (Australia), overseas public port authorities like Dubai Port Authority (DPA) and the Port of Singapore Authority (PSA) and few domestic port developers like the Adani (Mundra) and Sea King (Pipavav). While regulatory reforms in the port sector have enabled considerable scope for reworking the institutional arrangements in the port sector, aggressive second-generation regulatory reforms, backed by necessary legal and fiscal changes is still impending. The demand-supply dynamics of sea cargo in India still favour substantial growth of port handling capacity though this may not necessarily hold true for all port locations.
  • 11. Introduction 13 Text Box 1.4 Historical Legacy of India’s Maritime Trade Prior to discovery of the Trans-Atlantic and East-West trade routes to America and the Indian-subcontinent, Indian merchants from ancient Indian port cities like Surat, Cochin, and, Chennai have been known to be sailing on their merchant ships across Bay of Bengal to distant lands like Java, Sumatra in the Far East and across the Arabian Sea to Persia and East Africa actively trading in spices, silk, and other exotic commodities. Ports of Bharuch, Khambat, and Diu in The Gulf of Kutch and Gulf of Cambay have been famous as bustling centres of maritime trade and commerce in the medieval period. The sea trade was undertaken using locally built ships, which successfully navigated their way to distant lands and brought back ivory, gold, and diamonds in barter. Old Ports & Sea Routes of Medieval India India’s famed riches have inspired many pioneering sea expeditions by western seafarers (including Vasco da Gama and Marco Polo), which eventually led to discovery of America and East West trade routes. India’s golden age of maritime trade however, were short-lived as it came under increasing domestic political and economic instability caused by internecine wars and feuds among princely kingdoms that ruled different parts of India. The weakening of the political and economic fabric brought about erosion of traditional overseas trade and eventually led to colonization of India. A strong merchant fleet and military control over coastline of India became Britain’s principal means to colonize India. Three hundred years of British rule, starting with establishment of East India Company in 1600 AD witnessed both positive and negative consequences for the Indian maritime industry sector. Importantly, the British colonialism brought India in the ambit of global trade in the wake of industrial revolution, though the terms of trade were highly weighed against India’s national economic interests. The industrial revolution in Europe had brought about revolutionary changes in the shipping as in any other fields. The size of ships used in the overseas trade grew larger and larger and conventional wooden hull of the ship was soon replaced steel and the sail was replaced by steam and diesel driven propulsion. These far-reaching technological developments resulted in the establishment of modern ports like Mumbai, Kolkata and Chennai, which not only catered to colonial trade but also acted as the centres of British colonial administration. The British merchant ships laden with cotton bales left Mumbai harbour and came back with textiles manufactured by the Manchester Mills, which were dumped into the Indian market at cheap rates. In the post-independence period, a strong undercurrent of shipping nationalism thus, sought to give major strategic boost to the development of ports and encourage growth of a strong national merchant fleet through policies of cargo support for Indian flagged vessels, especially to Shipping Corporation of India (SCI), cabotage protection for coastal shipping and state canalisation of exports and imports through agencies like Indian Oil Corporation (IOC), State Trading Corporation (STC) and Minerals & Metals Trading Corporation (MMTC) etc. to achieve economic self-reliance and provide necessary economies of scale in development of basic infrastructure for India’s external trade. Considering, India’s import dependence on food grains, petroleum and capital goods, concomitant with the policy of the government to undertake core sector industry development (including shipping and shipyards) in the public sector, the government chose to actively intervene in the development of maritime sector and thereby try to meet the expectations of national security and economic well-being.
  • 12. India Port Report 14 Map 1.2 Old Ports & Sea Routes of Medievel India
  • 13. Introduction 15 Annexure 1.1 Top World Ports Total Cargo Volume- 2000 Rank Container Traffic- 2001 Port Country Port Country 1 Singapore Singapore 325,591 1 Hong Kong China 18,000 2 Rotterdam Netherlands 319,969 2 Singapore Singapore 15,520 3 South Louisiana U.S.A. 197,680 3 Busan South Korea 7,907 4 Shanghai China 186,287 4 Kaohsiung Taiwan 7,540 5 Hong Kong China 174,642 5 Shanghai China 6,334 6 Houston U.S.A. 173,770 6 Rotterdam Netherlands 5,945 7 Chiba Japan 169,043 7 Los Angeles U.S.A. 5,184 8 Nagoya Japan 153,370 8 Shezhen China 5,076 9 Ulsan South Korea 151,067 9 Hamburg Germany 4,689 10 Kwangyang South Korea 139,476 10 Long Beach U.S.A. 4,463 11 Antwerp Belgium 130,531 11 Antwerp Belgium 4,218 12 New York/ New Jersey U.S.A. 125,885 12 Port Klang Malaysia 3,700 13 Inchon South Korea 120,398 13 Dubai U.A.E. 3,502 14 Busan South Korea 117,229 14 New York U.S.A. 3,180 15 Yokohama Japan 116,994 15 Bremerhaven Great Britain 2,896 16 Kaohsiung Taiwan 115,287 16 Felixtowe Great Britain 2,800 17 Guangzhou China 101,521 17 Manila Philippines 2,796 18 Quinhuangdao China 97,430 18 Tokyo Japan 2,770 19 Ningbo China 96,601 19 Quingdao China 2,640 20 Marseilles France 94,097 20 Gioia Tauro Italy 2,488 21 Osaka Japan 92,948 21 Yokohama Japan 2,400 22 Richards Bay South Africa 91,519 22 Laem Chabang Thiland 2,337 23 Kitakyushu Japan 87,346 23 Tanjung Priok Indonesia 2,222 24 Quingdao China 86,360 24 Algeciras Spain 2,152 25 Hamburg Germany 85,863 25 Kobe Japan 2,100 26 Dalian China 85,053 26 Tanjung Pelepas Indonesia 2,050 27 Kobe Japan 84,640 27 Nagoya Japan 1,890 28 Tokyo Japan 84,257 28 San Juan U.S.A. 1,830 29 New Orleans U.S.A. 82,400 29 Keelung Taiwan 1,816 30 Dampier Australia 81,446 30 Colombo Sri Lanka 1,727 Source: Containerisation International, March 2002 000 Tonnes Rank 000 TEUs
  • 14. 16 Annexure 1.2 World Seaborne Trade (million tonnes) Iron ore Coal Grain* Coking Baux./ Alum Phos. Rock Minor Container Other Bulk Dry Total Dry Crude Oil Oil Products Total Oil Steam GasTrade Grand Total LPG LNG 321 144 132 213 44 46 561 160 536 2,157 984 415 1,400 22 37 3,616 1986 311 141 134 187 42 45 555 173 540 2,128 1,030 401 1,431 22 37 3,619 1987 319 145 148 211 46 45 575 192 517 2,198 977 379 1,357 24 41 3,619 1988 346 155 158 216 49 47 603 211 532 2,317 1,086 417 1,503 23 44 3,887 1989 362 153 161 220 55 44 614 231 560 2,401 1,198 480 1,679 26 47 4,153 1990 347 155 182 215 55 37 607 246 606 2,449 1,155 448 1,603 28 53 4,133 1991 358 160 205 218 53 31 606 268 628 2,527 1,161 416 1,577 30 56 4,191 1992 337 154 214 224 48 30 618 292 644 2,561 1,245 422 1,666 32 59 4,317 1993 352 154 212 223 51 27 626 322 657 2,623 1,354 452 1,806 33 61 4,523 1994 380 155 217 207 49 29 660 357 653 2,707 1,375 447 1,821 33 64 4,625 1995 402 159 245 216 52 30 702 389 668 2,863 1,400 461 1,861 34 68 4,825 1996 392 164 257 219 54 31 699 430 691 2,936 1,469 497 1,966 35 75 5,012 1997 430 170 271 229 55 32 711 470 725 3,093 1,550 500 2,050 37 81 5,261 1998 423 168 279 226 55 31 689 503 761 3,137 1,544 491 2,035 35 82 5,290 1999 403 166 296 247 54 31 683 559 743 3,182 1,590 517 2,107 40 91 5,420 2000 452 172 327 264 54 28 704 622 748 3,370 1,667 503 2,169 39 100 5,679 2001 458 171 368 264 54 27 701 630 785 3,456 1,661 533 2,194 38 105 5,793 2002+ 468 169 385 269 54 26 704 669 797 3,541 1,640 5,000 2,141 40 109 5,831 + Estimated Source : The Clarkson Shipping Review and Outlook India Port Report 1985
  • 15. Introduction 17 Annexure 1.3 Top Asian Container Ports 2001 World Rank Rank in Asia 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 TEUS 1 2 3 4 5 8 12 13 17 18 19 22 23 24 26 27 28 29 31 32 33 39 44 46 47 49 50 55 56 58 67 71 72 83 89 95 96 108 112 115 116 121 123 127 130 17,900 15,520 8,073 7,541 6,340 5,076 3,760 3,502 2,700 2,640 2,536 2,304 2,296 2,222 2,049 2,010 2,010 1,872 1,816 1,730 1,727 1,503 1,290 1,210 1,209 1,190 1,188 1,100 1,090 1,069 900 1,278 698 546 527 490 486 418 393 380 378 358 352 342 321 Hong Kong Singapore Busan Kaohsiung Shanghai Shenzhen Port Klang Dubai Yantian Qingdao Tokyo Yokohama Manila Tanjung Priok Tanjung Pelepas Kobe Tianjin Nagoya Keelung Guangzhou Colombo Osaka Xiamen Ningbo Dalian Jawaharlal Nehru Salalaha Taichung Khor Fakkan Bangkok Chiwan Tanjung Perak Gwangyang Zhongshan Hakata Dammam Chittagong Fuzhou New Port Fujairah Aden Ulsan Chennai Tomakomai Mumbai Source : Containerization International 000s TEUs 1996 World Rank TEUS 1991 World Rank TEUS 1 2 5 3 18 13,460 12,944 4,725 5,063 1,930 2 1 5 3 38 6,162 6,354 2,694 3,913 576 26 14 88 42 12 10 17 25 1,409 2,247 354 810 2,311 2,334 1,972 1,422 33 18 608 1,255 89 12 10 23 30 184 1,784 1,796 1,001 737 15 45 24 11 120 27 34 2,229 800 1,469 2,320 244 1,356 988 6 2,635 25 8 129 32 40 1,001 2,005 116 669 541 97 93 339 51 53 29 695 655 1,233 173 80 61 209 341 71 256 101 103 115 309 307 264 109 62 556 45 477 128 121 69 227 241 518 133 11 63 110 1,784 324 59 152 343