COASTAL SHIPPING: LESSONS LEARNT SO FAR

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Coastal shipping is a cost-effective and ecofriendly option for moving cargo. Only bottlenecks that remain to be eased are availability of return cargo and higher transit time

There is lot of interest in coastal shipping but still the service has not been able to realise its true potential, remarked Capt Ashok Kumar Shrivastava, Founder & CEO, Sheel Shipping Synergy, moderator of the last session of the event, as he triggered the discussion on what ails coastal shipping and how its potential can be unleashed. Expressing confidence in coastal shipping, the session moderator said it will definitely happen and it is only a matter of time before the full potential in coastal shipping is realised, provided all the stakeholders come together to make it work. Steel is already moving from the east coast to different parts of the country and other commodities such as coal and agri-products can also be moved through coastal shipping.

Cement and clinker is already moving through coastal route, he revealed.

Ro-Ro is another important category in coastal movement. Many car makers such as Maruti and Hyundai are already exploring the potential. Anand Venkateswaran, Senior General Manager, Hyundai Motor India Ltd, gave an account of coastal Ro-Ro shipping. Hyundai plant near Chennai exports cars to almost 92 countries and has been the number one exporter of passenger vehicles consistently for the past 13 years. In 2015, 96 per cent of cars were moved by road and remaining 4 per cent by rail. In 2016, the share of road movement remained at 96 per cent, but the share of rail movement declined to 3 per cent and the remaining 1 per cent was through coastal shipping.

The pilot Ro-Ro shipment of Hyundai cars was done in February 2016 and full-fledged coastal movement of cars started in September 2016. The company has worked with various ports including Chennai, Ennore, Kandla, Kolkata and Haldia. On the east coast Ro-Ro movement of cars in bulk is only possible from Chennai to Kolkata. But the draft issues in using Kolkata Port had prevented Hyundai from using coastal service on the east coast. To ensure enough cargo for liners, Hyundai has also teamed up with other OEMs.

While Hyundai car production is located in South, Gujarat and Maharashtra are two states with high demand. Trucks carrying cars from Chennai to these states have to return empty as there is no return cargo. So there was a lot of empty running of trucks from west to south and north, which increased the logistics cost. Coming to rail transport, the government offers only 13 rakes which is insufficient for moving cars. When compared to movement by road, the cost breaks even for rail freight at 2,250 km. For moving cars from south to west the distance is below 2,000 km, so it is not feasible to use train. Rail logistics is suitable for moving cars to north-east (Guwahati and beyond areas) where it is cost and time efficient. So, the best option will be Ro-Ro shipping.

Initially, Hyundai tried moving cars by Ro-Ro from Chennai and Ennore to Pipavav but it was not economical as wharfage and vessel charges were high. So Hyundai moved to Kandla Port where it is able to use government concessions as well. Cars are moved from Ennore to Kandla, reaching Gujarat and NCR. 10,000 cars have been moved in the past four months. A major challenge in coastal shipping is load availability in return voyage.

Capt Henry Khin Maung, Chairman, Mahanadi Maritime Services and Aung Htoo, DGM, Myanma Five Star Line welcomed India to be part of Myanmar’s growth story. Detailing on the previous disconnect between Myanmar and India Capt Henry said, for the past 25 years the military government in Myanmar had been pro-China and so Indian traders were not offered a fair chance to invest and compete with Chinese counterparts in Myanmar projects, but with the new government in place Myanmar is opening up its economy and inviting India to invest in the country. By March 31 a small port on Kaladan river will be operational, taking India’s initiative of coastal shipping a step forward, informed Capt Henry. “Myanmar shipping sector is evolving and Indian participation is vital to this sector’s development.”

“Movement of steel by coastal shipping has become a necessity today,” revealed B Biswas, GM Materials Management, RINL. There are two reasons for it: one is almost all steel plants in the country are going for capacity expansion. RINL with current capacity of 4 million tonnes will upgrade to 7 million tonnes in the coming years. Currently most of the cargo is carried by railways. At present India produces 60 million tonnes of steel which will increase to 120 million tonnes in next few years. Railways alone cannot handle this huge volume and hence there is room for coastal shipping to carry this cargo. The logistics cost for steel is huge (15 per cent of the total cost), this can be brought down through coastal shipping. RINL currently needs 90 rakes per month for taking its cargo across the country. With production going up there will be demand for double the number of rakes. So, a better option will be coastal shipping and RINL is already moving 2.5 lakh tonnes of cargo by sea route.

When we talk of coastal shipping, it has to connect to inland waterways to cover the last leg of the cargo transit for reaching the hinterland. But Indian rivers are seasonal and it is difficult to maintain a uniform draft throughout the length of the river. Elaborating on this aspect, Cdr Prashant Kumar Srivastava, Chief of Hydrographic, IWAI said, unlike the seaports that have a small geographic area, rivers run through different states. For instance, Ganga runs through three different states. So maintaining a uniform LAD is a challenge so the entire length of the river is divided into different stretches based on LAD variation. This is the reason why IWAI has roped in the German company to design ships with a flat bottom that can float in a lesser draft of 2.5 metres.

As the discussion on coastal shipping continued, Ahamedul K Chowdhury, CEO, Pangaon Inland Container Terminal presented a detailed account of Indo-Bangla coastal shipping. Coastal shipping is a relatively new concept in Bangladesh. There are sufficient imports (about $6.1 billion) coming from India into Bangladesh, but exports from Bangladesh to India are only $462 million. India is the largest exporter of raw cotton to Bangladesh. Lack of return cargo is a major constraint for growth of coastal shipping. On the Bangladesh side, to make coastal shipping attractive tariffs have been reduced at Pangaon Terminal and discounts are being offered for cargo moving to Chittagong via Pangaon. Shipping a container from India to Chittagong costs $80 per teu, but shipping to Pangaon costs only $20 per teu and operational savings will be 62 per cent.

Sajan B Nair, Secretary General, Federation of Indian Coir Export Association, presented the case of coir industry in Kerala. The coir industry in Kerala imports jute from Kolkata and it takes 3-4 days by road to bring jute from Kolkata to Kerala where it is processed to produce mats and other floor coverings. Recently the coir industry in Kerala has explored that jute can also be transported in containers and Shreyas Shipping is providing the coastal service for moving jute to Kerala. The main constraints in this process are the jute industry in Kolkata is highly disorganised, the transit time is long (15-20 days) by coastal shipping, but it is slightly cheaper than road. In the current scenario of coir production and exports in Kerala, 2000 teu containers can easily be exported in a year, provided the transit time is brought down. The US is a huge market for jute products which Kerala can explore.

A positive sign is that coastal shipping is increasing on the east coast and Sravan Shipping is providing a dedicated fortnightly service connecting Kolkata, Vizag and transshipping to Cochin via Krishnapatnam, informed Sravan Kumar, Director, Sravan Shipping. A lot of rice is being exported to Cochin and tiles are being brought to Gujarat via Mundra, Rajasthan marbles are being shipped from Mundra to Vizag. The bottleneck in coastal shipping is poor last-mile connectivity and multiple handling which pushes the cost and time for moving the cargo to destination.