Port Sector: Issues &

Challenges

Overview: Indias Port

Sector
Indias seaborne trade
95% by volume & 67% by value
Length of the coastline 7,517 km
- 9 maritime States & 5 UTs ( including 2 island groups)

Parallel competing port management & legal Systems

- 12 under Major Ports Act, 1963
- 1 (Ennore) under Company Act
- 184 Non-major ports

Port legislation & Structure

- Indian Ports Act, 1908 allows Maritime States to set up their own
port systems
- Major Port trust Act, 1963, regulates 12 major ports.

Major Ports fall under operational & financial control of M/O

shipping & subject to tariff regulation by Law
Minor ports: under State Maritime Boards & free from
formal tariff regulation

Growth Dynamics: Indias Port

Sector
Growth dynamics of cargo traffic (2000-2011)

Overall annual growth (major & non-major) 9.2%

Major ports (7.3%) & Non major ports (13.7%)
As a consequence share of non major ports in cargo handled
rose from 24% in 2000-01 to 36% in 2010-11
Capacity utilisation around 90% at Major ports
Highest annual growth in container traffic (15%)
Containerisation at about 2/3 rd of general cargo compared to
global levels 80% plus.
Container traffic has grown, but is uneven in pace, demand
centred in North West Hinterland (60%)
Indian ports have low draft, makes access of large bulk vessels
problematic. Entails higher unit shipping cost for low value
items.
Leads to higher turnaround time & small parcel size.

Major & Minor Ports: Share in Cargo Traffic

(In Million Tonnes)

PORTS

1990-91

2000-01

2005-06

2010-11(P)

Major

151.67
(92.2)

281.13
(76.3)

423.57
(73.2)

569.92
(64.4)

Non- Major

12.78
(7.8)

87.37
(23.7)

155.42
(26.8)

314.55
(35.6)

368.50
(100.0)

578.99
(100.0)

884.47
(100.0)

All Ports

164.45
(100.0)

Figures in Brackets indicate percentage to total

World Top 10 Cargo Ports

Port

2008 (Million Tonnes)

2009 (Million Tonnes)

1.Shanghai (PRC)

582.0

590.0

2Zhoushan/Ningbo (PRC)

520.1

570.0

3.Singapore

515.4

472.3

4.Rotterdam

421.1

387.0

5.Tianjin (PRC)

355.9

380.0

6.Guangzhou (PRC)

344.3

375.0

7.Qingdao (PRC)

300.3

315.5

8.Qinhuangdao (PRC)

252.2

243.8

9..Hongkong (PRC)

259.4

243.0

10..Busan (S.Korea))

241.7

226.2

India (total)

744.0 (2008-09)

884.5 (2010-11)

Major Ports

530.8 (2008-09)

569.9 (2010-11)

72.2 (2008-09)

81.9 (2010-11)

Kandla

Source:For S.No.s 1-10, Port of Rotterdam ,Statistics,2010

Port

World Top 10 Container

Ports
2008 (Million TEUs)

2009 (Million TEUs)

1. Singapore

29.92

25.87

2.Shanghai (PRC)

27.98

25.00

3.Hong Kong (PRC)

24.49

20.90

4.Shenzen (PRC)

21.40

18.25

5.Busan (S.Korea)

13.45

11.98

6.Guangzhou (PRC)

11.00

11.19

7.Dubai Ports (UAE)

11.83

11.12

8.Zhoushan / Ningbo (PRC)

11.23

10.50

9.Qingdao (PRC)

10.32

10.26

10.Rotterdam (Netherlands)

10.78

9.74

Major Ports

6.59 (2008-09)

7.54 (2010-11)

JNPT

3.95(2008-09)

4.27 (2010-11)

India

Source:For S.No.s 1-10, Port of Rotterdam Authority, May 2010.

Efficiency of Container Terminals at

Major Ports:2009-10
Performance Indicators of select
container terminals
Port/Termi
nal
Moves/Hr
25
Tuticorin

TEU/Mtr.
1187

TEU per
Employee
3008

Dwell
Time
(Days)
2.6

TRT (Day)
0.8

Chennai

27

1286

2797

2.0

1.1

JNPCT
JNPT NSICT
JNPT GTICT

15

1142

829

2.0

2.0

24

2553

3563

2.5

1.6

30

2462

3265

2.9

1.1

Cochin

16

536

579

6.4

1.4

Impact of External Factors-Dwell

Time

Parameter

India

Singapore

Denmark

Automation

Few processes
automated

All custom procedures

processed on line via
trade net; 90% within
10% minutes of
submission

All customs
declaration filed &
processed
electronically

Single
Window

No single window
concept in use

Single window facility via

trade net with links to 34
agencies; unique
registration no. required

Single window
service single unique
registration number
required

Examinatio
n

Risk management
system (RMS) in
operation; 50% still
physically examined

Mainly post audit controls

and use of non intrusive
technology for
examination

3 tier RMS & only 2

to 5% goods
physically examined

Help desk

No single help desk

exist

Outsourced call centre

24*7

Outsourced call
centre 24*7

Duty
structure

Reduced levels but Single low duty rate, GST

multiple rates with not paid on input for
exemptions makes exports
export
promotion
cumbersome
& Transaction Cost in Exports,
Source: Based
on Task Force on
Commercecomplicated
and Industry

Single low duty rate,

duty refund on inputs
used in exports
2011, M/o

Moving Containers: Distribution of

costs
The cost of moving a container fall into five major
categories and the distribution of costs (as
percentage of total costs) of moving containers is
as follows:
- inland transport (25%)
- the ship/ocean freight costs (23%)
- ports and terminals (21%), including
stevedoring
- the containers (18%), including maintenance
- other costs, including container repositioning
(13%)

Costs & Procedures in Foreign

Trade
India China

Malay
sia

Kore
a

Singap
ore

Documents for Export

(Numbers)

Time to export (Days)

17

21

18

20

24

14

Cost to export *

945

500

450

742

456

Cost to import*

960

545

450

742

439

Document to import
(Numbers))
Time to import (Days)

* US $ per container. Source: Doing Business 2010, IFC

Port Management Models

Port Type

Infrastruct
ure

Super
structure

Stevedori
ng labour

Other
functions

Service port
(Major
Indian Ports

Public

Public

Public

Mainly
public

Tool port
(France,som
e African
nations)

Public

Public

Private

Mainly
public

Landlord
port
(Antwerp,Ro
tterdam,Sin
gapore etc

Public

Private

Private

Mainly
private

Private port
(UK,New
Zealand)

Private

Private

Private

Mainly
private

Issues in Port Sector

Why are vessel related charges higher at Indian Ports.
What makes high turnaround time and pre berthing detention at
Indian Ports
- lower levels of technology & lack of coordination amongst
stakeholders

How to make Indian Port sector vibrant?

Change in institutional structure(Trusts versus Corporatized
entity)
Does ownership matter ?
All Ports in Europe (except in the UK),Dubai, Singapore etc
owned by the State

Synergy with trade and industrial policy (SEZs and FTZs).

Are port related charges villain of the piece?
No, port related charges account for around 10-15% of total
logistics cost.
High inland transit costs, connectivity constraints influence
cargo
flows/costs.

Issues: Port Sector

Captive versus common carrier terminals

Inter port and intra port competition

Inter port competition constrained by hinterland economic activity, connectivity &

inland transit costs
Intra port competition can serve to mitigate the pricing power
Intra port competition may be ineffective in situations where ownership is
concentrated

Financing of port infrastructure

Land acquisition and environmental clearance
long gestation period for green field port projects (15 years)
Scale of operations at Indian Ports
Fragmented and small compared to China
Combined throughput at Major Indian Ports barely matches that of
Shanghai alone.
Draft limitation restricts access of large vessels to Indian Ports resulting
in:
More number of ship calls leading to congestion
Higher demand for berthing

Port System Efficiency is the Key

Intangible Factors
Hinterland
Level of Economic Activity
Road/Rail Network
Material Access
Feeder Services

Management practices
Customer satisfaction
Personnel quality & motivation

Port Performance - Sum

of parts!
Efficiency improvements
should target the entire sphere
of activities and result in
increased competitiveness

Technology
Port Equipments
Software applications
IT based custom & security
Communication system

Physical Features of Port

Master Plan & port capacity
Level of congestion
Ability to handle large ships
Geographical location

Terminal Efficiency
Crane productivity
Yard equipment planning
& productivity
Gate productivity
Equipment Utilization
No. of berths
Port Charges