It´s a shame that both coastal shipping and inland waterways have lagged the growth in both roads and railways. The good news is water transport may be finally getting its due.
In early February 2016, Link Shipping and its partner Symex Maritime Singapore, whom Link Shipping represents in India, created history by pioneering the first movement of cars on a special category Pure-Car-Truck-Carrier (PCTC) vessel, the IDM Symex. For the first time, 800 Hyundai cars were moved on the coastal route. While Hyundai Motor India now has the distinction of becoming the first to take the lead to go green and reduce its carbon footprint via water transport, others are not too far behind.
Binu Joshua Thomas, Director, Link Shipping South, says that in the first week of April, the IDM Symex will transport five Daimler trucks, about 750-800 more Hyundai cars and 100 Nissan cars. ´Though Daimler has 150 trucks per month, they will start with five to see how it goes. Ford will also give us some cars but we are in negotiation stages now and the numbers haven´t been finalised yet´, Thomas told Infrastructure Today. Return cargo has always been a challenge on the coastal routes but the shipper hopes to tie down Indian heavy vehicles major Ashok Leyland who want to transport their buses down to Colombo in Sri Lanka from their plant in Gujarat. From Colombo, the vessel will come back to Indian shores in Chennai for the same trip all over again.
The plans may sound exciting but the calculations involved are detailed and explains why water transport has not picked up yet in a big way. For instance, if it takes nine days to reach the Gujarat coast from Chennai compared to eight days via road transport, Daimler´s dealers will need to calculate the interest cost for an extra day on each truck which is priced between Rs.50-60 lakh. ´I have given Daimler a very interesting solution on how to enter Chennai port without needing to queue up which they are happy with and are now evaluating. As ship owners, our responsibilities are from the ramp right up to the destination ramp´, says Joshua.
Although the company did not receive the rebate of Rs.3,000 per car that it was expecting for the first Hyundai shipment, as per the Scheme for Incentivising Modal Shift of Cargo (SIMSC) that was notified in 2015, Link Shipping South continues to look to tie up more customers and is currently the only shipping company that has finalised business with the auto-makers. ´There will be teething troubles but there is no point lamenting on any of those aspects. The need of the hour is for us to present innovative solutions to customers who definitely see the benefits of water transport´, says Joshua.
However, tying down car and bike makers to long-term contracts is not an easy task. Captain Kiran Kamat, MD, Link Shipping, cites the government´s flip-flop policy on taxation as one of the central issues. ´If a car or bike maker has made an estimate of selling 5,000 vehicles based on certain tax structures and the buying ability of people, the changes in taxation will obviously impact those estimates´.
For the last six months, Link Shipping had also been plying the Maria India, another special category PCTC vessel between the Mangalore and Hazira ports, transporting 150 trucks laden with cargo, both ways, every four days. However, an agitated Kamat has now diverted the vessel for exports to ´earn some decent money´. The problem arose when he was asked to pay service tax despite the final receiver of the goods also already paying service tax. ´This is double taxation and a complete anomaly. I don´t know where to go to sort this out,´ says Kamat. He adds, ´We will bring her back for coastal eventually as exports are not regular. The idea is this time we will have some cars also. That is the intention´.
Meanwhile, sources say the ministry is seriously considering a reduction in port charges. Chennai port has taken the lead in reducing the wharfage charges for cars and trucks and has also proposed an increase in the discount in port charges from 40 per cent to 60 per cent. This is expected to be announced later in March once the board approves. Chennai Port is also planning to develop a dedicated coastal berth with large storage space for trucks and cars. This is projected to be ready in about a year.
On the west coast at India´s first private port, APM Terminals Pipavav, which received the aforementioned shipment of Hyundai cars, has a capacity to handle about 250,000 cars per year, as well as four-five million tonne of dry bulk cargo and two million tonne of liquid cargo. It is currently in the middle of an expansion primarily to increase container handling to 1.35 million TEUs a year. The port commenced the RoRo business in August 2015 and has so far been exporting the vehicles. ´We also have surplus land-side and waterside which can be developed further based on the business requirements´, says Keld Pedersen, MD, APM Terminals Pipavav. The port caters to bulk shipments of cement and also bauxite that are regularly sent to other locations in India. Moreover, says Pedersen, ´Pipavav Rail Corporation, in which we have 38.8 per cent stake, has developed 269 km of rail track from the port to Surendranagar which connects further to Indian Railways; thus connecting the port to the inland container depot network and dedicated freight corridor´.
Sources say many auto-makers (both two and four-wheeler companies) are actively looking at exploring water transport. Maruti is also reportedly looking at the option on the Ganges, i.e. the first National Waterway (NW1). ´We are talking with Maruti for the waterway route. We are going to do a trial run for their cars from Varanasi to Haldia. We are going to move it shortly. We have done some pilots´, says Amitabh Verma, Chairman, Inland Waterways Authority of India.
Even as companies continue to explore the coastal route, there´s a reason that coastal shipping currently contributes just about 6 per cent to the total freight movement in the country. Also, of this 6 per cent, most of it is in containers and the movement of bulk cargo is miniscule. Headwinds range from issues of taxation (for Indian shipping companies) that increase their costs - Swachh Bharat tax, service tax, value-added tax (VAT), higher wage costs (due to income tax), duty on spare parts - as well as involvement of customs even for coastal cargo (Bill of Entry, etc.), idling costs (for lack of berthing) and lack of a nominated area for coastal shipments. Also, says Captain Sunil Thapar, CEO, Shipping Services, Allcargo Shipping Company, ´With respect to the port tariffs - which is supposed to be 40 per cent of what is applicable to foreign vessels - they have now made it 40 per cent of the dollar denominated tariff. That increases our tariffs to the extent of depreciation in rupee´. Multiple handling charges, too, is an expensive affair. Although water transport has the lowest transportation cost, it also has the highest handling costs. Therefore, both coastal and inland water systems fail to attract traffic due to the local and terminal costs which erode the cost benefits of water transport to a large extent. The recent decrease in diesel prices has also made road and rail transport that much more competitive. Moreover, it is not always easy to get cargo for the return trip. Considering the Indian peninsula has most of its production centres in the hinterland in the north, securing cargo for the trip up the coastline is not always assured. A balance also needs to be struck in the shipments between India´s east and west coasts.
Last but not least, last-mile connectivity needs improvement as costs become unviable if customers are more than 100 km away from the port or river. ´If the distance is over 100 km, the land-leg side of the cost then kicks in and it all adds up to quite a bit,´ says Thapar. He adds, ´Unless most of these issues are resolved, especially the two-way movements of cargo, coastal shipping will always remain a struggling business´.
Inland Water Transport
For the beleaguered Inland Waterways Authority of India (IWAI), the step in the Union Budget 2016-17, to allow the Authority to raise Rs.800 crore by way of tax-free bonds is a shot in the arm. However, Manish Agarwal, Partner and Leader, Infrastructure, PwC India, says, ´The amount of Rs.800 cr budgeted for ports and inland waterways appears below the potential of these sectors. Inland waterways will need significant public investments initially, until it reaches a more mature stage´.
Scant focus on water transport and inadequate fund allocations over the last many decades has ensured that domestic water transport in India is still in its infancy. Today, the Ganges (NW 1) carries about 3 mt while the Brahmaputra (NW2) carries about 2 mt. ´Since 1986 till 2015, we have spent a miniscule `1,117 crore on waterways,´ says Verma. He adds, ´The Railways spends $17 billion a year while expenditure on roads is about $12 billion. If this is a 100 m race, they are already about 40 m ahead, and they continue to receive more funds. You can´t expect all the cargo to shift onto waterways just overnight´.
Verma has a point. The inland water systems of Europe and China have been developed over many decades in a phased manner. The Indian government has made a start by identifying priority corridors and it is now necessary to link India´s seaports to its inland water systems for connecting India´s large hinterland. On the inland waterways themselves, cargo handling remains a problem. Other countries have developed push-towing techniques but this has not been used in India due to the fact the industry is scattered among a large number of small operators. Industry insiders say such small, local operators flex their muscles in order to secure cargo handling contracts along the waterway routes. They are not updated about modernized techniques and their efficiencies remain low, characterised mostly by manual labour. Moreover, suitable terminal jetties with the required facilities are yet to be developed.
National Waterways (NW)
However, IWAI has initiated and already completed a number of projects. About 11 terminals have already been constructed on NW 3, the smallest of the five NWs which is largely made up of the coastal backwaters of the Arabian Sea and confined to the state of Kerala. The waterway is directly linked to Cochin Port and therefore, can offer a cost-effective solution for foreign trade. ´Two thousand plus house boats and fishing boats are moving there; liquid ammonia is moving; some industrial cargo also moves on the waterway. A million tonne is moving there. We are almost complete with the development of NW 3´, says Verma.
Captain Pavan Sood, Joint MD, IMS Group, who did the dredging for IWAI on NW 3, says the task was a challenging one. ´Every 10 m or so that we moved, there would be some fisherman´s net. Second, they would also ask us for the sand that we were removing. What Kerala has finally done now is a very wise thing by giving a license to dredge. Now, you can take out the sand for which the government takes a royalty´.
IMS also began work earlier this January onward on NW 1. The company has a three-year contract which can be extended to five years, to dredge a stretch from Bhagalpur to Simaria. Sood says, ´We are taking it down to two and a half meters depth so that barges can move. Our job is to move from shoal to shoal, get the draft to where it is supposed to be and then move. Our job is with two sets of dredgers, to ensure that waterways are kept open for navigation´.
With a fleet size of four dredgers, IMS plans to focus on the opportunities in the inland waterways in the near future. In the coming year, Sood says the company could double its fleet and focus on the smaller water bodies such as rivers, lakes, dams and fishing harbours.
On NW 4, which runs from Kakinada to Pondicherry, is about 1,088 km long and runs into three states, IWAI has already identified and done a hydrographic survey. ´We are waiting for the land deal report from the Andhra government. Then, we shall float our tender for dredging in the Krishna River up to Kakinada so that we can start some movement shortly. The state government has shown a lot of interest´, says Verma. Declared as a NW in 2008, NW 4 offers connectivity to intermediate ports like Kakinada, Machilipatnam, Krishnapatnam and major ports like Chennai and Ennore. It also serves cities like Chennai, Visakhapatnam and Vijayawada, among others. NW 4 has the potential to supplement road and rail transport by serving high transport demand corridors.
The NW 5, which runs from Dhamra port and Paradip port to Talcher, is a very commercially viable stretch, says Verma. This waterway connects areas richly endowed with natural reserves on one end to the two major ports at the other end. By developing the Hijili tidal waterway systems, IWT can offer connectivity up to Haldia, extending services all the way up to Allahabad on NW1, up to Sadiya in Assam on NW2 and up to Lakhimpur (also in Assam) on NW6 (proposed). This corridor can move coal and other ores to their respective plants. At present, coal and iron ore moves by both road and rail to the ports for transport to other parts of India. IWAI has appointed Feedback Infrastructure and the French electricity generation firm Compagnie Nationale du Rhone (CNR) as the project development consultants. ´They are working to see if there is a possibility of a public private partnership (PPP)´, reveals Verma. He adds that Indian conglomerate Tata´s has assured some cargo movement and that dredging has started at Padnipal. ´Land acquisition was a problem so we negotiated with the farmers and leased land. A temporary terminal is under construction there. We have floated a tender and 12 parties globally have shown interest for preparing the techno-economic feasibility report for NW 5. We feel the World Bank would be willing to fund it, finally´, says Verma.
Due to the highly alluvial nature of the Ganges (NW1) and the Brahmaputra (NW2), dredging and bandalling need to be carried out every year post monsoon on shoals to maintain the targeted least available depth. Both waterways are partially developed and a number of projects are ongoing on both these systems. To be able to utilise the full potential the two waterways systems offer, what is required is ´at least 3 m least available depth (LAD) round the year. This will ensure that barges of about two and a half meter draft can move; that means they can carry about a thousand tonnes to three thousand tonnes of cargo. This will be economically viable to carry. If the vessels are smaller, the economics will not work out. We do understand the challenges of maintaining this kind of depth round the year across the river.
Therefore, we are also looking at the right kind of barge designs,´ says Verma. In fact, IWAI has even floated a tender inviting a consultant to recommend designs of container vessels of optimum size, length, width, depth and height and which can carry large capacities in 2.5 m of available depth. ´We will either do draft maintenance or we´ll do ship design which ensure their movement. We are trying it out from all possible angles,´ says Verma.
The `4,200 crore World Bank project ongoing on NW1 envisages six fixed terminals, with construction expected to begin on four of those by April. Simultaneously, Verma is busy tying up business and expects more cargo to shift gradually on to NW1. ´Then, we also have the assured depth contracts that we are now giving out. So, there will be dredging and then river training´, he says. Moreover, Verma is looking to identify opportunities to start ferry services (such as in Kolkata and Patna) as well as row-rope facilities for both passenger and cargo. ´For instance, on the Mahatma Gandhi-Setu bridge, 16-wheelers are not allowed and they have to offload and move on to smaller trucks which increases their cost. Here, we can start RoRo facilities on appropriate barges. We are trying to identify more such RoRo sites on NW1´, reveals Verma.
On NW2 (Brahmaputra), IWAI has given an order of `52 crore for constructing a barge repair facility, considering the absence of such a facility in north-east India and the fact all repairs have to take place only in Kolkata. This facility is projected to be completed in about two years.
A permanent terminal in Dhubri is almost 60 per cent complete. IWAI has also taken some barges from the Assam government which they have repaired and are using to do pilot runs between Dhubri and Hatsingimari. IWAI will start a terminal at Hatsingimari later as it is currently implementing flood protection measures after erosion of a piece of land it had acquired.
India is at a stage that requires increasing movement of cargo, whether building materials, coal, iron & steel, timber, fertiliser and many other commodities best suited for water transport. A big river vessel or a push barge can easily replace at least a few hundred trucks. Smaller vessels can replace a few dozen trucks. This will de-congest our roads and ease the problems of traffic pollution and accidents. The development of a sustainable, eco-friendly water transport system is a long-term affair. The experience of both China and Europe show the importance of seaports for IWT and it is commendable that the Sagar Mala project addresses the issue comprehensively.
Perhaps, it has been easy to develop NW 3 because it is the smallest of the waterways. No doubt, development was also helped by the fact Kerala is a tourist state. However, what is noteworthy is the state has also shown itself to be tourist-friendly. Certainly, the north-eastern states can take a leaf out of the book and develop NW2 not just for trade and transport but also for tourists.
Perhaps, it is apt Sood of IMS should have the last word as he points to the fact that Kerala has signposts on its waterways just like in Venice and other waterways of the great cities of Europe and elsewhere in the world. ´That´s how it should be in India on all our waterways´, he says.
Advantages of using IWT
Energy Efficiency: 1 horse power can move about 150 kg on road, 500 kg by rail and 4,000 kg by IWT
Fuel efficiency: 1 litre fuel can move 24 tonne km (TKM) by road, 85 TKM by rail and 105 TKM by IWT
High single unit carrying capacity: 1 barge = 15 rail wagons = 60 trucks
Environment friendly: Low air and noise pollution
No need for land acquisition
Suitable for bulk cargo - coal, ores, fly-ash, building materials, cement and over dimensional cargo
Less capital intensive vis-a-vis other competing models