1. SHIPPING20 CARGOTALK JULY 2015
India-Bangladesh coastal shipping pact
This Coastal Shipping agreement
between India and Bangladesh,
inked on June 6, 2015, has opened
new gateways for trade between the
two countries. Bangladesh is India’s
largest trading partner in South
East Asia and the volume of
trade is increasing every year.
Jaideep Ghosh, Partner and Head
of Transport & Logistics, KPMG
India says, “The bilateral trade
between India and Bangladesh was
valued at $6.9 billion for 2014-15.
Out of this, India's exports to
Bangladesh were $6.2 billion, while
imports from Bangladesh were in
the range of $700 million.”
Presently, cargo vessels ply
through Colombo, Singapore, Klang
ports. Ghosh says, “Value for trade
between India and Bangladesh
grew by approximately five per
cent year-on-year in 2014. Growth
in trade between the nations is
expected to double in the next three
to four years.”
In the current cargo transporta-
tion, the movement of large vessels
between the ports is not cost-effec-
tive. Even the Exim trade between
India and Bangladesh is carried out
through land.India exports its goods
to Bangladesh via Petrapole -
Benapole border and vice versa.The
influx leads to a nearly week-long
congestion.As trucks have to wait at
the portal point, costs increase.
Though nothing prohibits a ship com-
ing from Chittagong to
Vishakhapatnam, but the cost is
high. Captain Kharbanda, General
Manager, MSI Shipping Services elu-
cidates, “A container from Mumbai or
Chennai first goes to Singapore or
Colombo and then comes to
Chittagong or Mongla port. On this
route, the shipping cost of a contain-
er is $1,000-$1,400 and it takes 20-
30 days.Through the coastal belt, it
will cost just around $400 and would
not take more than six or seven
days.” Ghosh puts forward, “The
usage of River Sea Vessels (RSVs),
a lower standard of vessel to keep a
check on shipping costs, has been
agreed by both the countries.”
The cost of Exim cargo will also
come down due to lower manning
standards and lower vessel
specifications. Though it is difficult
to give an estimate, there would
be some percentage of intermodal
shift due to more cargo being
transported by water, as water trans-
port costs less. Rajeev Singh,
Director General, Indian Chamber of
Commerce says, “More than 80 per
cent of the total trade happens
through land route, less than 20 per
cent of the total trade happens
through coastal movements.With the
new agreement, around 30-35 per
cent of trade from roadways would
now shift to waterways.” Also the
cargo moving to North East through
the Siliguri Border, popularly known
as Chicken’s Neck, would be trans-
ported via coastal route.
On the kind of cargo transport-
ed, Singh elaborates, “Cement, clink-
er and fly ash in large volumes would
travel;Indian vehicles and machiner-
ies trade with Bangladesh would now
opt for waterways over road trans-
port.Indian cotton, sugar and cereals
might also prefer coastal movement.
Then residue, wastes of food indus-
try, animal fodder, iron and steel, min-
eral fuels, oils, distillation products
would also find sea movement
convenient.Bangladesh might opt for
coastal movement while exporting
fish, crustaceans, molluscs, aquatic
invertebrates, textile fibres, paper
yarn, woven fabric, worn clothing,
edible fruit, nuts, peel of citrus fruit,
melons, articles of apparel, acces-
sories, not knit or crochet.”
Captain Som S Mishra,
General Manager, Seaways
Shipping & Logistics explains, “We
expect a lot of container and bulk
cargo such as fertilisers, iron ore,
coal to move. Bangladesh has a
burgeoning steel industry which
will source its raw material from
India. We expect these steel mills
to send their finished products
to India.With power projects happen-
ing in Bangladesh, cargo will have
to eventually move from India
to Bangladesh.”
When asked whether the
government had any plans for
enhancing the list of cargo
earmarked for modal shift along
with subsidy umbrella, sources
stated that the government will
create and enable routes to
Bangladesh. It is for the private
sector to take this forward.
Geographically, eastern ports
which have a deeper draft will
experience more cargo movement as
big vessels can come over there
for example, Kolkata has low draft,
so big ships cannot come there.
Ships can come to Paradip,
Vishakhapatnam, Chennai and other
private ports too, thus facilitating
seamless cargo movement.
CT BUREAU
The historic coastal agreement signed by Prime Minister Narendra Modi and Prime Minister of Bangladesh
Sheikh Hasina is bound to enhance connectivity and transport of goods to the Northeastern region of the country
via the Chittagong and Mongla Ports of Bangladesh.
Jaideep Ghosh
Partner and Head of Transport & Logistics
KPMG India
Captain I Kharbanda
General Manager
MSI Shipping Services
Rajeev Singh
Director General
Indian Chamber of Commerce
Capt Som Sekhar Mishra
General Manager
Seaways Shipping & Logistics