Traffic Assessment for a Greenfield Port Development

Background Premier Infra Limited, one of the largest infrastructure development firms in the country, wished to extend its presence to the ports sector. It had identified a site having a potential opportunity for port development. As part of the overall design and master planning process, the company now needed to understand the key thrust areas it should focus on - essentially identify the key traffic generators and their potential sources.

Execution A team of highly experienced ports and shipping professionals with knowledge of project financing was engaged in the study.

Plan

The study encompassed identifying the port hinterland and the key commodities, and assessing the overall traffic potential for the port in the short, medium, and long term. For the traffic study, a detailed analysis was undertaken for various commodities, including container traffic, dry bulk and break bulk cargoes. CRISIL Advisory utilized a suitable methodology for each commodity group and commodities.

As an example, CRISIL Advisory deployed the Traffic Distribution Model (TDM), a tool which quantifies the relative advantages offered by various competing ports for bulk and break-bulk cargo. The TDM analysis considers the location of the individual commodity-consuming/producing plants/units from each of the competing ports, compares the port charges and efficiencies, and also evaluates the commodity-wise shipping trends and location of ports on the international shipping routes.

Activity Roadmap To start with, the region surrounding the port was scanned to locate the primary, secondary and tertiary port hinterlands. Using a combination of the existing traffic trend and future potential, ten commodity categories most likely to contribute traffic were identified. For each of the identified commodities, a bottom-up study was conducted -- this involved identifying all the existing and upcoming key consuming/producing plants/units in the hinterland, forecasting demand from each of these individual units, and aggregating to arrive at the potential of the overall catchment area. From the available catchment area, the potential for the port was then evaluated using the TDM.

The potential assessment considered myriad factors affecting the flow of cargo such as the influence of various stakeholders (intermediaries, users, etc.) on the choice of port in terms of volumes controlled by them and key decision parameters adopted by them.

Value Proposition Using a combination of incisive insights and threadbare research and analysis, the traffic potential for the port was ascertained. Probabilistic measures were employed to understand the various sensitivities. By undertaking an analysis of the logistics value chain so as to identify the key players who influence port choice, CRISIL Advisory provided Premier Infra the valuable information on potential players to target and how to leverage its strengths so as to make itself more attractive.

CRISIL Advisory would be pleased to answer any query related to this case study. For any query/ information, please contact us at transport@crisil.com