Financial Daily from THE HINDU group of publications
Monday, Jul 07, 2003
Congestion at NSICT Seeds `contained' in unhealthy competition?
Uncleared containers choke the NSICT terminal at JN Port in Mumbai... Things are easing up now, but the NSICT and the JN Port still blame each other for the mess that caused much hardship to shippers. Shashi Ashiwal
THERE is no gainsaying the fact that healthy competition between the public and private sector has been a time-tested potion for ramping up a country's economy through better productivity and infusion of new technologies.
But if this competition were to turn unhealthy, the result could be bitter, especially for the consumers.
This is best seen in the congestion that has been choking the Nhava Sheva International Container Terminal (NSICT), India's first privately operated container terminal, at Jawaharlal Nehru Port (JN Port), for the last few weeks, affecting port operations and financially bruising the exporters, importers and the shipping lines.
Though the congestion at the terminal which had peaked in early June when, at one time, more than 17,000 containers had piled up at the yard has eased a bit owing to several measures undertaken by the authorities, the escalating yard inventory continues to hinder smooth port operations.
Even the NSICT's move to keep the gates closed two times for two days "had not been able to bring down the yard congestion to its normal level."
In a recent move, the terminal operator had had to take the drastic step of imposing stiff restrictions on opening of the export and import gates at the yard to slow the flow of fresh consignments.
Several factors have led to such a situation, but one thing that emerged out of the overflowing mess appeared to be that an unhealthy competition between the public and private sector could lead to such unseemly situations.
For the congestion has bought the NSICIT, operated by P&O Ports India Ltd, and the JN Port on a collision course, with each blaming the other for the situation.
While the NSICT has openly held JN Port responsible, stating that "the bureaucracy and port officials, who do not have the vision to plan ahead, should be held accountable (for the congestion)", trade circles close to the port feel that if the private operator had better planning strategies, the congestion could have been obviated.
Whatever the case, trade was affected, with the consignments of many exporters and importers stuck at the terminal for days. "This had to happen. The end result was that the trade was affected, for in this business time means money and delay means loss," an exporter said.
What actually led to the congestion was the surge in imports by almost 30 per cent in May in the wake of the SARS fear in China and Iraq and ports there working at lower efficiency.
To make matters worse, cargo evacuation had been tardy during the month, with Concor not being able to provide even the bare minimum number of trains, let alone deploying additional rakes to clear the additional volume.
Analysts feel that the commercial terms between the JN Port and the NSICT was flawed from the start, aggravated by inadequate planning, especially regarding cargo evacuation operations.
The NSICT was designed to handle six lakh TEUs in the 16th year of operation, but, due to its higher productivity levels and focussed marketing, its traffic rose from 3.43 lakh TEUs in the first year of operation (1999-2000) to 9.43 lakh TEUs in 2001-02 and almost 1.3 million TEUs last fiscal against the 7.28 lakh TEUs handled by the JN Port.
However, the space allocation as per the commercial terms is one-third of the total available space for NSICT and two-third for JN Port.
Mr Jimmy Sarbh, chairman-and-managing director of NSICT, points out: "The percentage of ICD cargo at NSICT is much higher than that of JN Port.
"The allocation of space on trains moving out of JN port should be in proportion of ICD volumes.
"Since the space was not allocated proportionately (with throughput handled), the build-up of backlog of ICD containers at NSICT was only a natural consequence. Even after numerous representations we have made (to the port authorities), we had received no response."
But a section of shipping analysts argue that NSICT should have seen such a situation emerging and should have taken concrete steps accordingly so as to avoid the congestion by having a back-up plan.
Says Mr S. L. R. Narsimham, secretary, Western India Shippers' Association: "It is clearly a case of biting off more than one can chew."
Here, the NSICT points out that it had a back-up plan, envisaging opening of the bulk gates for access to the four-lane empty road leading out of the terminal.
"In fact, we have been requesting this for months now, but JN Port authorities have not acceded. In the interest of the trade, they should facilitate smooth operations more so because this is unnecessarily increasing cost of Indian containers which are competing internationally," says Mr Sarbh.
It is true that the NSICT, powered by better cargo handling equipment, has outperformed its landlord in productivity, although it was born almost a decade after the latter.
Analysts feel that this should set the trend of healthy intra-port competition, instead of flagging off an unhealthy race, in which the players resort to unfair tactics that would boomerang on the trade.
This is particularly relevant now, with the JN Port in the process of selecting a terminal operator for the proposed Rs 900-crore third container terminal ten parties, including some major foreign players such as the Port of Singapore Authority, CSX, Maersk, West Port Malaysia and French Shipping Lines, are in the race, after P&O was barred from participating in the bid by the port authorities on the ground that if the company were to bag the project, it could lead to a monopoly situation.
"I hope that the port authorities take adequate care to ensure that the third terminal is given enough back-up space and also that the new terminal operator does better planning in regard to cargo evacuation to avoid a NSICIT kind of congestion," a senior shipping agent pointed out.
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