• Investment World
• eWorld
• Brand Line
• Mentor
• Life
• Brand Quest
• The New Manager
• BL Club
• Smartbuy
• Books
• Gallery

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Foreign Exchange

• Rates
  
  

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources
• In Focus

Group Sites

• The Hindu
• The Hindu ePaper
• Business Line
• Business Line ePaper
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

S. K. SHAHI, CMD, SKS LOGISTICS LTD

The Government is expected to shortly announce a new policy for development of coastal shipping in India. Despite its huge potential, costal shipping accounts for less than 10 per cent of the country's total local cargo movement. Mr S. K. Shahi, Chairman and Managing Director, SKS Logistics Ltd, who has been in the coastal shipping business for 25 years, talks about the untapped potential in the sector.

Do you see any new cargo potential in coastal shipping?

Yes, there is plenty. We recently did a study on transportation of cars. At present, cars are moved from the manufacturing centre to dealers across the country by road or by railways.

There are car manufacturing hubs in Tamil Nadu and Maharashtra. Cars from these centres can be shipped from Chennai and Mumbai ports to various locations with in the country. Carrying vehicles by sea on specialised vessels is cost-effective, safe and eco-friendly.

We have worked out the cost between Chennai and Mumbai and found that a car-carrier carrying 450 cars by sea works out cheaper by 20-25 per cent compared to moving them by road or railways. From Chennai to Kolkata it is cheaper by about 30 per cent.

Worldwide, car carriers are considered a safe mode of transportation. Chances of accidents and damage to the vehicles are less.

In countries such as Korea, Japan and Malaysia, cars are routinely transported by sea. In India we produce 2-3 million cars annually, but are yet to exploit this low-cost and safe mode of moving vehicles within the country.

Tractors and other vehicles can also be carried by specialised vessels.

Any other potential cargo?

Fertiliser is another cargo that can be moved by coastal ships. Currently, a small quantity is carried by ships, though the bulk of it is moved by railways.

We have been carrying, cement, steel, petroleum products and general cargo. But there is a great potential to increase the volume.

Why is the coastal cargo potential not fully exploited?

Today costal shipping operators in India are facing several problems.

Due to various factors, the seamless movement of cargo from the origin to the destination is difficult, resulting in delayed delivery and higher operational costs.

First, there is no proper connectivity between the hinterland and the ports.

Most ports do not have dedicated berths for coastal vessels. They have to wait for berths and also undergo customs examinations.

We at the Costal Conference (an association of coastal shipping operators) had suggested to the government that every major port should have a dedicated berth, de-linked from the main berths, for coastal vessels. The coastal vessels should be allowed to load and unload cargo without any Customs examination, as in the case of road transport, where trucks can load and unload goods without any checking.

Please comment on the lack of repair facilities

Most ports in the country do not have adequate ship repair facilities. Ships have to wait a long time for dry-docking.

This increases their downtime and thereby the operating cost. Every port must mark certain areas for repair facilities for costal vessels.

This facility can be developed either by the port itself or through a joint venture with the costal operators.

On finance for costal vessels

The cost of building a ship at Indian yards is 25 per cent higher than in Chinese or South Korean yards.

Besides, bank credit for acquiring ships is expensive in India. Around 30 per cent of our earning goes to servicing of debt.

In view of the advantage of coastal shipping and for its development, the government should work out a mechanism to make funds available at lower interest rates for acquiring ships for coastal operations.

On taxes

Coastal ships are expected to call at a large number of ports for loading and unloading goods to enable people to trade along the coasts. Now, at every port, the vessels have to pay service tax.

The road transporters have an advantage — they pay at one go. A truck carrying goods from Mumbai to Kolkata, for instance, pays 25 per cent of the freight at one time. But a coastal vessel has to pay service taxes at every port it calls at.

This is a major problem. Therefore, there should be a system of one-time payment of tax for costal ships.

On carbon credit

Manufactures using costal shipping for movement of raw materials and finished goods should be given carbon credits. This will encourage them to use the eco-friendly mode of transportation.

What do you feel about the move to relax cabotage rules for certain ports?

The government should continue with the Cabotage policy. However, if it finds there is demand for ships at certain ports that Indian shipowners are unable to meet, then the government may relax the cabotage rules for a limited period.

Domestic shipowners should be allowed to acquire the required type of ships. The period of relaxation should be specified clearly. There should be no blanket relaxation for any port.

More Stories on : Shipping/Ports | Interview

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Copyright © 2010, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line