Financial Daily from THE HINDU group of publications
Monday, Feb 27, 2006
Industry & Economy - Infrastructure
Columns - On the move
Concor eyes Paradip, Dhamra ports
But will there be enough boxes?
To Concor, the reports were significant. After all, Paradip has always been a bulk cargo handling port and Dhamra too is supposed to do the same. But the CEO of Dhamra Port Company (DPC), a joint venture between Tata Steel and L&T, was recently quoted as saying that the Master Plan for the port presupposed construction of four container berths with state-of-the-art handling facilities, most probably in partnership with a global major and the tie-up could be finalised even before the completion of the first phase work if the market so warranted.
In the first phase, the port proposed to construct two berths for handling dry bulk cargo and one for finished steel.
NOT A NEW PLAN
Paradip port's plan to start container operation in a big way is not new. A couple of years ago, the Paradip Port Trust (PPT) had initiated a move to tie up with Concor to make available to the Railway subsidiary a separate berth for container operations. The move had to be abandoned as the Shipping Ministry favoured open bidding instead of a negotiated deal.
Only recently did the new PPT chairman express his desire to revive the earlier scheme for starting container operation in a big way. At present the port does handle containers but only in small volumes.
The Concor team visited the site of Dhamra port and held discussion with the DPC CEO. It also met the senior PPT officials. What transpired at these meetings is not known but one thing seemed certain: The team could not be too sure of the cargo inducement needed for launching full-fledged container terminals, at least immediately. That is not surprising. The Railways too is planning to make the proposed eastern freight corridor suitable for handling bulk traffic only, leaving the proposed western corridor almost entirely for container traffic.
Concor's anxiety over cargo inducement is understandable. Its operation in the east spreads over a number of States where it runs seven terminals with two more due to come up shortly. Yet, the throughput in the entire region leaves much to be desired.
Concor's assessment of the containerised cargo potential in Orissa will perhaps be clear once a proper marketing survey is done. It is possible that the authorities of both Dhamra and Paradip ports eyeing the new steel plants coming up in the State.
To evacuate the output of these plants, a large number of boxes will be needed, for both exports and the domestic market. It is equally possible that these ports plan to look beyond Orissa to have a slice of the Far East-bound traffic emanating from the North. Right now almost all of this cargo goes to the west coast ports badly hit by congestion and other problems.
Or they may still target a portion of the traffic now handled by Kolkata port (including Haldia) at one end and the Visakhapatnam port's container terminal on the other. Will the ports on the east coast then vie with one other to attract traffic from the same hinterland, as in Europe?
After all, containerised cargo being high value traffic can go to any port depending on the transport cost, the transit time and the smoothness in handling facility such that there is no delay in evacuation of the cargo out of the port. All these presuppose proper connectivity to the ports and efficient operation with successful participation of all agencies in the chain, also including freight forwarders, cargo handling agents and others.
FEEICIENCY, THE KEY
What will set one port apart from the other is the efficiency level. Dhamra being a private port, it is presumed, will function efficiently. But Dhamra will also have to compete with another private port being set up in Orissa at Gopalpur as well as the container terminal already functioning fairly well at Visakhapatnam. If the PPT decides to involve a private firm in the construction and operation of the proposed terminal, then the competition will only become intense.
By far the most important issue is of shipping service. The world container services are controlled by a few major operators.
One may set up a state-of-the-art container terminal, ensure competitive transport cost, achieve reasonably good transit time, offer efficient port services and still find shipping lines reluctant to offer sailings from the terminal.
Needed, therefore, is adequate two-way traffic. No shipping line will for long reposition the empties at extra cost. Also, the major container operators have their own preferences on the ports they call and this regard is not necessarily determined by cargo inducement. It is almost like the service offered by a public bus. The majority of the passengers may be coming from bylanes but the bus will run only on the main road.
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