The Hindu Business Line : Port and hinterland development should happen in tandem

If India is serious about attracting line-haul vessel calls rather than seeing most of its Europe and US cargo routed via ports in Sri Lanka and Singapore, it should make vessel port call costs more competitive.

India should accelerate its port development, coordinate inland infrastructure development with port growth and relax Indian flag vessel cabotage laws, said Mr Kenneth Glenn, Senior Vice-President, South Asia, APL Co Pte Ltd, the container arm of Neptune Orient Line Ltd.

There has been some improvement in the overall port situation in India. More capacity, better productivity and improved management have all been noted.

Container volumes grew 20 per cent in India in 2005 (the country handled over 5 million TEUs) but the fastest growth was in the inbound cargoes from the East Asian market, he said.

However, China is far ahead of India in the shipping sector. China has world-class port infrastructure and, if anything, the gap between the two countries in terms of maritime capabilities is widening, he told Business Line in an e-mail response.

Modify cabotage laws

Mr Glenn said that current cabotage laws require any cargo loaded and discharged between Indian ports to be handled only by an Indian flag vessel unless a time-consuming, expensive and temporary guarantee is in place. The process to allow non-Indian flag vessels to transport cargo between ports should be streamlined, made less expensive and allowed for longer durations so proper capital cost considerations can be taken, he said.

For using an average 3,000 TEU vessel, the cost of a port call in India is 20-25 per cent higher than at a major Chinese port, and over 300 per cent higher than at Colombo, he said.

India should reduce its port operational and vessel call costs, still among the highest in the world. If India is serious about attracting "line-haul" vessel calls rather than seeing most of its Europe and US cargo routed via ports in Sri Lanka and Singapore, it should demonstrate its seriousness by making vessel port call costs more competitive, he said.

Second box terminal

Mr Glenn felt that a second container terminal in Chennai does not make sense. Instead, Ennore should have one. Chennai port is located in a busy area of the city. Road access is a nightmare, resulting in lost time, money and productivity. On the other hand, if a container terminal were built at Ennore, it would have the potential to rapidly become the country's second largest port, after Jawaharlal Nehru Port. It may be recalled that the Chennai Port Trust plans a second container terminal inside the Chennai port to meet the increasing traffic, and provide an alternative to the trade. The present private terminal, operated by Chennai Container Terminal Limited (CCTL), handled 7 lakh TEUs (6.18 lakh TEUs last year) in 2005.

The throughput in the next couple of years could touch 10 lakh TEUs, and the private terminal will be choked by then, according to the port trust.

According to Mr Glenn, Kochi has shown improvement under DP Worlds' management, but is going to have a hard time attracting cargoes due to draft restrictions, competition from other ports and a labour situation many are wary of.

APL's plans

Based out of Mumbai, Mr Glenn's responsibilities include the NOL Group operations in Sri Lanka, Bangladesh and Nepal. APL has been in India since 1973, and brought the very first container into the country. A global transportation and logistics company engaged in shipping and related services, it carries about 2 million containers annually.

In India, APL handled about 3 lakh TEUs in 2005, and will handle about 3.50 lakh TEUs in and out of India in 2006, said Mr Glenn.

APL also plans to increase the vessel capacity on its major services this year. This includes Europe, Trans-Pacific and Far East services. APL will upsize three of its India services this year connecting Europe, the US and the Far East, he said.