Although the concept of green ports is emerging as a necessary infrastructure solution for ports worldwide, India has to first step up its levels of cargo handling efficiency and logistics connectivity with the hinterland before it can match international standards in the 'greening' processes. Jitendra Abhani and Hanika Jethani explain why improvements to existing systems is more fundamental to efficiency for Indian ports than to leapfrog to green technology, equipment and processes.
The Indian economy saw a phenomenal growth from 2004 to 2008 when the annual GDP growth rate ranged of 8-9 per cent. Capacity expansion at ports helped the economy to sustain this level of growth. However, the recent slowdown in the economy (to around 5 per cent) combined with regulations on mining, etc, has impacted the traffic being handled at various ports. The overall growth in traffic has slowed down.
In view of the increasing competition, improving efficiency of operations can effectively increase the hinterland that can be targeted. An efficiently operated port can attract users from farther distances as the savings from gains in efficiency offsets the last mile transportation cost to/from the port. Some industries [names withheld by authors] located in southern Gujarat that preferred Jawaharlal Nehru Port Trust (JNPT) for their container import/export earlier have over the past few years shifted to Mundra Port which is located at around double the distance as compared to JNPT. Mundra Port could attract this traffic by offering higher liner availability and better turnaround time despite having higher tariff.
Operational factors in efficiency
Port infrastructure in India suffers deficiencies on several parameters, which can be categorised into two major heads: (i) Physical/direct operation factors and (ii) Procedural/indirect operation factors. A comparative analysis reveals that efficiency from direct operation factors is lagging far behind that of leading international ports.
Because of draft restrictions, some of the ports cannot allow the direct berthing of gearless vessels, ie, Panamax and Post-Panamax vessels. Difference in freight for Handymax and Panamax/Post-Panamax vessels, range between $2 and $7 per tonne of cargo, which may translate into freight saving to the trade in the range of Rs 0.60-2.10 crore for a Panamax vessel with 75,000 DWT. The impact on logistics spends for the industry on this front is estimated to be upwards of Rs 7,000 crore per annum.
Evacuation of port traffic and port connectivity are the other areas where India lags behind ports in developed countries. Indian ports face the problem of limited storage space coupled with regulated low storage charges, ultimately affecting the ports' overall efficiency. Evacuation efficiency is also hurt by constrained rail connectivity as well as limited rake availability. All these deficiencies get translated into financial losses and greater turnaround time.
Apart from efficiency driven by quality of physical infrastructure, efficiency is also a function of systems and processes for documentation, duty payment, customs clearance, support activities like cargo inspection, testing and laboratory activities, etc. If these activities, though small and requiring low investment, are performed inefficiently, they may have big bearing on the overall port efficiency. Hence, deficiencies of partial implementation of IT systems and services, and creating robust structure for all such support activities is also as important as creating high investment infrastructure like dredging, equipment, berths, etc.
Possible improvement initiatives
To increase and improve the efficiency of Indian ports, especially the major ports, the following measures are important:
Increase in draft: The 12th Five Year Plan envisages a minimum draft of 14 m at all major ports and 17 m depending on viability of attracting bigger size vessels. While this helps berthing of larger vessels, it can also improve cargo handling rate and reduce berth idling time.
Improvements in evacuation of cargo: Improvement of rail-road connectivity and improving rake availability may not only improve the evacuation but also unlock/improve the capacities of cargo handling equipment.
Optimising efficiency of storage facilities: Better evacuation facilities can unlock huge storage space. Further, development of modern storage systems can reduce the cost by reducing wastage and spillage. For example, food grain storage can be done with steel silos which is a more efficient and cost-effective option. Mundra Port is an example, where the dry bulk cargo is stored in the form of wind row where the material is arranged in an elongated pile, reducing space required for storage. Storage facilities should be priced appropriately discouraging the storage within port facilities. This should be considered as a part of overall tariff reforms in major port sector of India.
Increased mechanisation: Investment in right set of equipment can help efficient handling of cargo. In case of bulk cargo, it will ensure complete discharge of material with minimum wastage/spillage. Some of the major ports in India have started planning/acting on this front. The case in point is Kandla Port in Gujarat, where there is a floating crane mechanism to handle container vessels in mid-stream in order to attract mother vessels and to load-offload the vessels in mid-stream reducing waiting time of vessels and also decreasing the cost of handling. Improvement in systems and processes: Automated and integrated port management systems can help faster handling and increase efficiency. This includes Electronic Data Interchange (EDI) networking and Electronic payment systems that can reduce human intervention and overall turnaround time.
Most of the advanced ports have adopted the electronic port clearance system of some form or the other to improve efficiency of operations. European ports have implemented the SafeSeaNet (SSN) system to increase safety of shipping and improve security, facilitating information exchanges between port, state authorities and other relevant government agencies. In Poland, ports have implemented a single-window electronic port-clearance systems called PortNET, which can handle most of the documents related to ship and consignment clearance. Ports in Singapore and Malaysia have implemented planning systems for improving efficiency: For example, Container Terminal Management System, Synchronous Planning and Real-time Control System, Smart Rail System etc. A few of these may be evaluated by Indian ports for improving efficiency.
Improvements in operating procedures
Issues in operating procedures generally affect cargo receiving/evacuation process at the port. Thus, huge investments of efficient cargo handling and equipment will go in vain if ports are lagging on the cargo evacuation/receiving side. Investing in IT systems and services and re-engineering the operating procedures and creating ancillary facilities like laboratories, etc would let the big investment produce results.
The authors with the Transport Division, Feedback Infrastructure. Views are personal.