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The case of Bombay ports
Pier Paolo Floreani
1. 2. Introduction ...................................................................................... 5 The Indian port system ....................................................................... 6 2.1 Government initiatives ............................................................... 8 2.2 Opportunities and foreign investestments ..................................... 9 3. 4. Mumbai’s Port ................................................................................. 11 The Jawharlal Nehru Port................................................................... 13 4.1 Facilities ................................................................................. 14 4.2 Labour.................................................................................... 15 4.3 Performances .......................................................................... 15 5. 6. 7. 8. Expansion projects of port system....................................................... 17 More reforms to assure development................................................... 17 Interview to Mr Ravi Budhiraja, JNPT President ..................................... 19 Leading Companies in the sector and services provided.......................... 23 8.1 Costs and Shipping Timings........................................................ 25 8.2 Italian companies working in the sector........................................ 26 Appendix..................................................................................................27 Bibliography ............................................................................................ 30
and houses important financial institutions and has attracted migrants from all over India because of the immense business opportunities. 2. with an estimated population of about 18 million (as of 2006). 1. By some measures. is the capital of the state of Maharashtra. and the most populous city of India. including the Bombay Stock Exchange. off the west coast of Maharashtra. also known in English as Bombay. Picture 1: Mumbai’s map with both port areas (Mumbai port on the left side and JNPT on the right). it is the largest city in the world and along with its neighbouring suburbs. it forms the world's fifth most populous metropolitan area with a population of about 22 million. and the relatively high standard of living.1. Mumbai is the commercial and entertainment capital of India. the Reserve Bank of 5 . Picture 2: a view of the city. Introduction Mumbai. The city has a deep natural harbour and the port handles over half of India's passenger traffic and a significant amount of cargo. A number of Indian financial institutions have headquarters in downtown. making the city a potpourri of various communities and cultures. Mumbai is located on Salsette Island.
The Indian port system Shipping is a crucial cog in the transport system and it constitutes the optimal low-cost option for transportation bulk and cargo. Most of India's major television and satellite networks are headquartered in Mumbai. healthcare and information technology. as well as its major publishing houses. The centre of the Hindi movie industry. The port and shipping industry too employs many residents. mechanics and other such blue collar professions. who primarily earn their livelihood as hawkers. This accounts for almost 76 per cent while the remaining 24 per cent is handled by the minor ports. They handle almost 90 per cent of India’s total foreign trade. considerable private investment has started flowing into the Indian port sector. The entertainment industry is the other major employer in Mumbai. Many foreign banks and financial institutions also have branches in this area. During the recent years. India currently has 12 major ports and 184 minor /intermediate ports spread across the vast coastline of 7517 kms. The management and development of the major ports in the country are controlled by the central government through respective port trusts. Mumbai also has a large unskilled and semi-skilled labour population. Bollywood. taxi drivers. on the other hand minor ports are controlled by state governments. A number of existing facilities have been taken over by private players and many new facilities have also been set up at existing ports.India. along with its largest studios and movie production houses. Godrej and Reliance etc). 2. Mumbai owed its prosperity largely to textile mills and the seaport.5 million tonnes in 1992 to over 288 million tonnes in 2001-02. Liquid and dry bulk cargo constitutes 6 . Mumbai’s status as the state capital means that state and federal government employees make up a large percentage of the city's workforce. and numerous conglomerates (the Tata Group. directly or indirectly. Up until the 1980s. in this contest it is relevant the fact that almost 90% of India’s trade volume (70% in terms of value) is moved by sea. Two new ports (Mundra and Pipavav in Gujarat) have also been constructed in the private sector. diamond polishing. but the local economy has since been diversified to include engineering. the Mint. is also located in Mumbai. the National Stock Exchange of India. The total cargo volume handled by major ports has increased from around 157.
The other major ports were developed later with the newest facility being Ennore port. These ports are regulated under the Major Port Trusts Act (of 1963) and when the act was passed there were only six major ports (Kolkata. the country is ranked only 17th out of the 37 maritime nations and the overall share of Indian ships in global trade is around 16 per cent.3% in 2005-06) and cargo traffic has risen to 10. some specialised container terminals and several cargo berths. Visakhapatnam and Mumbai). The port of Nehru in Mumbai is the leader in 7 . These two facilities entailed an investment of around US$ 394 million. However.about 83 per cent of the total volume of traffic handled. Kandla. The current handling capacity of the major ports in the country is around 344 million tonnes.15 % over the last five years. 1950-2006 450 400 350 300 250 200 150 100 50 0 195051 196061 197071 198081 199091 200001 200405 200506 Major ports Non-major ports Font: Indian Infrastructure India is strategically placed to become a major maritime nation due to its long coastline that flanks important global shipping routes. Chennai. This has been achieved through construction of a new port at Ennore and a mechanised coal handling facility at Paradip. Container and general cargo comprise the remaining. Cargo at major and non-major ports. Cochin. The major terminals have shown a respectable rate of traffic growth (10. The major ports tipically offer a combination of dedicated bulk terminals.
18.66 POL. Lubricants) has been the dominant commodity carried through the ports and contributed 33. 14.57 Font: Indian Infrastructure 2. Other Cargo. These are expected to result in technological upgrades and overall improvement of performance levels. controlling 55-60 per cent of container traffic in the country and the other prominent container operations are based in Chennai. Tuticorin and Cochin.1 Government initiatives The government has studied various strategies adopted by ports world-wide to address similar issues facing ports in India. taking into account the commercialization.3 Fertiliser. 33.99 Fertiliser Coal Container. Oil. 8 .88 Coal. the following commodity is the iron with 18. measures to strengthen the regulatory structures of major ports have also been initiated.this segment. 16.6 Container Iron ore POL Other Cargo Iron ore. 2.66% as shown in the chart below. of a corporate structure for the existing ports.57 per cent to the total cargo in 2005-06. POL (Petroleum. 13. the privatization and the modernisation of the major existing ports. These pertain to tariff rationalisation and the establishment in a phased manner.
Most of the Indian cargo is transhipped through hub ports like Colombo. Investors in inland waterways and inland ports are also entitled to these incentives. The private sector is allowed to set up captive facilities and the government is offering various fiscal incentives to the investors. Maritime states have also formulated their port development plans through private investment as well as by user agencies. techno-economic pre-feasibility studies have been carried out and guidelines formulated. for example. Further. it is proposed to develop an International Container Transhipment Terminal at Cochin Port on BOT basis. operation and maintenance.The government has also announced a series of measures to promote foreign investment in the port sector and put down some guidelines for private/foreign participation that allows the formation of joint ventures or foreign collaboration for setting up port facilities. industrialisation and development of infrastructure facilities like roads and railways linking the hinterland. the government is planning to set up two hub ports. Suitable sites have been identified. An Integrated port development strategy comprises creation of port facilities. is now responsible for determining and revising tariffs on major ports. Singapore and Salalah. an independent authority. a 10-year tax holiday in the port development. 2. The government has announced guidelines for revised bidding and bid evaluation process. This results in an increase in the freight of Indian cargo. one each on the east and west coasts at Chennai and Jawaharlal Nehru Port at Mumbai. The Tariff Authority for Major Ports (TAMP). To resolve this problem.2 Opportunities and foreign investments Currently Indian ports cater mainly to transhipment and coastal movement. 100 percent foreign investment is permitted for construction and maintenance of ports and harbours and in projects providing support services to water transport. The existing legal framework is being amended to facilitate changes consistent with structural reorganisation of major ports. 9 .
10 . P&O received the first container terminal (at Jawaharlal Nehru Port) in the country to be offered to private participation. berths and storage facilities.Growth of Indian shipping tonnage (as on Dec. P&O (Peninsular & Oriental) Ports of Australia and Port of Singapore Authority International (PSA International) are among the largest investors in the port sector within India. Recently some bids are being invited for development and operation of container terminals at Kandla. Two ports have been set up through private participation. International Sea Ports Limited (ISPL) and the Shell-Essar consortium have invested/are in the process of investing in the port sector within India.33 billion in over 42 projects within a decade. 31. the construction and operation of terminals. private sector investment in major ports may exceed US$ 2. A number of foreign companies like Peninsular and Oriental (P&O) Ports of Australia. Cochin and Mumbai. To be noted that the Australian company holds 95 per cent equity in the project. conversion of bulk terminal into container terminal at Jawaharlal Nehru Port and for bulk and liquid cargo terminals/jetties at Ennore port. and finally in the captive facilities for port based industries. PSA-Sical Terminals Limited. A number of private companies have already set up port facilities in the country. According to government estimates. The project is called the Nava Sheva International Container Terminal and the terminal started operations in 1999. 2005) 9000000 8000000 7000000 6000000 (GRT) 5000000 4000000 3000000 2000000 1000000 0 1990 2000 2001 2002 2003 2004 2005 Source: Shipping Ministry Coastal Overseas Total Major investment opportunities exist in the leasing out assets of existing ports.
11 . 3. it’s loosing its importance in favour of the new and more functional Nehru port. a port consulting American company. 2002). P&O handled 3. Also the Cornell Group. after the creation of Suez Channel in 1869. The Australian company is in the process of investing in the new container terminal at Mundra Port in Gujarat. Prince and Victoria were built beside the natural disposition of the islands. the city became the world's chief cotton trading market. Moreover.3% of the Indian total) employing 30% of India’s workers in the sector. which will have great improvement margins even for the short term. transforming Bombay into one of the largest seaports on the Arabian Sea. when the docks of Indira.2002. The city became in a few years the second largest in India following Calcutta and it grew along with the port activities even after the end of the British colonisation. In the 90s Mumbai’s old port realised a 30. The Mumbai port The historical origins of the port of Mumbai have their roots on the British empire era. First mainline vessel called at Chennai Port after a gap of 18 years and sailed on 16. recently declared that this port will slow down more and more as the development of Nehru port is attracting private and public investments.P&O is also operating and managing the Chennai container terminal and the company will invest US$ 100 million in the first five years.50.6. situated in the south part of the city.97 million tonnes traffic (12. Bombay’s port has more than 130 years of history and even if it has a primary role in the region’s economy. resulting in a boom in the economy and subsequently enhancing the city's stature. All this means a growing interest demonstrated by international investors towards the Indian port system.930 TEUs (upto October. which had started up a new trade way between Far East and Europe. Nowadays. The construction finished in 1891 and since the beginning the port and the city constituted a point of reference for all the commercial activities of western India. Since the commencement of their operation in September 2001.
the powerful trade unions always seemed to be against those policies. 12 .000 in varios materials and goods) are currently working for the port and this high number is determined by the poor infrastructure system. therefore the productivity is low and even whether the Mumbai Port Trust struggled in the past to introduce new machineries to increase it. often running into police controls. which is located near Mumbai’s downtown. The trucks that have to reach the port have in many cases to go through the caotic traffic of the city.In the map above: the entrance channel to Mumbai port. Difficult is also the situation related to the labour: about 32.000 employed in liquid materials transportation and 30.000 workers (of whom 2.5m to 10m and the ships can take even 5 days to enter an operative berth. The Mumbai’s port is runned by the Mumbai Port Trust and is located in the southern part of the city and its limits actually are related to its long history. The entrance channel and berths depth varies from 6.
the Mumbai port was proving to be structurally inadequate to meet the requirements of modern cargo handling. Jawaharlal Nehru Port Trust (JNPT) occupies a place of prominence. the JNPT was developed as an independent port on its own right and it became the country’s largest container port. JNPT is the second youngest and one of the most modern major ports of the country.97 croreswere obtained as loans from various funding agencies.109 crores ($ 200 million). Being one of the oldest ports in India. In the image above: a view of JNPT port. with the World Bank being one of the major contributors.4. Although JNPT was initially being planned as a “satellite port” to Mumbai under the Mumbai Port Trust. as well as labor problems. including overmanning. the Port was simply incapable of handling the expanding volume of modern cargo directed to the west coast and there was an urgent need for a new port in the Mumbai region. which eventually led to the birth of JNPT in 1989. As a result. 956. congestion of roads and railways through the Mumbai city linking the port to its hinterland. were among the major problems ailing the Mumbai Port in the prereform days. Shallowness of the channel. Jawharlal Nehru Port Among the 12 major Indian ports. Commissioned in 1989 and located within the Mumbai harbor on the west coast of India. 1. eventually however. it was initially planned to be a “satellite port” to the Mumbai Port with the purpose of decongesting traffic at the latter. The port was completed at a cost of Rs. presently handling about 60% of 13 . Certified an ISO 9002 port. out of which Rs.
with a separate terminal dedicated to each type of cargo. JNPT has also been a pioneer in running its day-to-day operations with the help of information technology (IT). In fact. The port also has the most advanced Electronic Data Interchange (EDI). JNPT enjoyed better communication through intensive use of IT.India’s container cargo. including Electronic Data Interchange (EDI) and vessel traffic management system (VTMS). Nasik and Ahmedabad. JNPT is also characterized by highly automated and round-theclock operations and has demonstrated enough potential and capacity to develop as India’s first major hub port. Equipped with one of the most modern cargo handling facilities among major Indian ports. In particular. 4. the container terminal of 680 meter quay length (three berths) was designed and equipped to handle large container vessels. and the other for handling dry bulk cargo. JNPT was equipped with modern container and bulk handling facilities. shallow draft berth and multipurpose berths. JNPT enjoys very good road and rail linkages with its hinterland as well as important business centers like Thane. which facilitated faster clearance of cargo from the port. with 8 container freight stations. The 14 . Moreover.1 Facilities At the time of its inception. the port users and the customs. Nasik and Ahmedabad.584 hectares with enough back-up area ideally suited for developing additional facilities for future maritime requirements of the country. compared to most other major Indian ports. The port also enjoyed road connections with 23 inland container depots (ICDs) as well as with the Konkan. Better connectivity of JNPT with its hinterland. which facilitate excellent portindustry interface. Right from its inception. The land area in possession of the JNPT measures 2. JNPT started operating with two dedicated terminals. one for handling import and export of containerized cargo. a recent study by the International Association for Ports and Harbor (IAPH) based on throughput data in 2002 has ranked JNPT as the 29th largest container port in the world. which ensured unhindered and efficient interaction between the port. JNPT was also provided with adequate liquid cargo berth. Central and Western railway systems. it has made ample use of the container tracking and management system as well as the vessel traffic management system (VTMS). was ensured by close proximity to National Highways 4B and 17 and other state highways that directly link JNPT to Thane.
Moreover. 4. its performance can at best be described as modest. In 199596. there had been a change in the mindset of the government and the policy makers and there was less pressure on public sector units. there was not any clause in the Dock Workers Act (1948) that stipulated any minimum number of laborers the port had to employ. Unlike some of the other major ports in India. average turnaround time of ships at JNPT (9. JNPT was different from most of its sister ports right from the beginning and enjoyed distinct advantages. storage. Note that the formation of a DLB was left to the discretion of individual port trusts. Thus. JNPT did not have a Dock Labor Board for recruitment of its workforce.2 Labour JNPT was also fortunate to have a relatively young and educated workforce and did not have to carry the baggage of huge labor supply (resulting in massive overstaffing) like Mumbai or Kolkata Ports or problems of militant and unreasonable trade union activities.3 Performances In terms of port productivity. it seemed to have performed well towards the end of the 1990s with respect to other Indian ports. to employ labor in excess of requirement just to fulfill social objective of employment generation. including shore handling. In some areas. Both of these points worked in favor of the JNPT authority and helped them avoid the problems of overstaffing which plagued the older ports by being cautious on this issue right from the beginning. delivery etc. Moreover. although the existing pool of labor in any port enjoyed complete job security under the provisions of this Act. at JNPT were the lowest among all major Indian ports.03 days) was among 15 . however. JNPT presented a mixed picture. also accounted for about 33% of the same. but railways. It may be noted that terminal charges. since selective liberalization of the various sectors had already been initiated in the Indian economy from the mid 1980s. on the whole.primary mode of container cargo movement was through road. it is quite apparent that on several accounts. 4. operating through the Container Corporation of India (CONCOR). especially the new ones. whereas in certain others.
At Singapore. which handled an average of 38 and 69 containers per hour respectively during the same period. it became 0. substantially lower than that in Kandla. It should be noted that some other Indian ports.209 tonnes) and stabilized at that level in the next two years (See Chart 5). it has consistently recorded an operating surplus despite some fluctuation in 1996-97.987 tonnes) to 1997-98 (6. JNPT’s financial performance was quite impressive. It is notable that JNPT’s rank among the 12 major ports with regard to ASBO improved from 10th in 1996-97 to just 6th in 1998-99. a cut above the levels achieved by JNPT (1. By 1998-99.96 in 199899. the percentage of idle time at berth to total time at JNPT also exhibited a downward trend. improving from a net operating surplus of Rs. even the very modern container facilities at JNPT handled at most 10 containers per hour (of vessel at berth). The bottomline is that JNPT clearly enjoyed an edge over other Indian ports with respect to both infrastructure and performance and was perhaps the obvious candidate for the reforms experimentation. however.8% in 1998-99. as it could not escape certain inherent shortcomings of the Indian port sector in general. JNPT failed to achieve the standards of the other efficient ports of the world. Mumbai and Chennai. in 1992. It should be noted that there was a substantial gap between JNPT (9. Average pre-berthing time at JNPT was 2. particularly for container ships. reflecting no distinct advantage enjoyed by JNPT in this context in the prereforms period. 7. the average turnaround time was only six to eight hours.the higher ones in India.8%) and Mormugaon (20%). For instance. especially with respect to other major Indian ports (except Kolkata-Haldia). it did suffer from some of the drawbacks inherent in the 16 . which probably increased to 11 or 12 containers per hour in 1994 but still fell far short of comparable ports in East Asia. like Mumbai. It was the third lowest among major Indian ports in 1995-96 (24. Ever since 1990-91.38%) but declined to 9. JNPT compared favorably relative to other major ports in India even in the pre-reform days.09 crores in 1990-91 to Rs.13 crores in 2002-03.1 days in 1996-97. It experienced a massive expansion in average ship berth output from 1996-97 (2. JNPT’s performance was not at par with the best in India. However. but somewhat higher than the rest. were running losses. Likewise. On all these counts. With respect to average ship berth output.96 days) in 199899. the lowest among all major ports. the lowest among all major ports. again lowest among all major ports.83 days. However. namely Bangkok and Singapore. but it progressively declined to 1. the best performer among the remaining ports in terms of this parameter. 228. despite comparing by and large favorably vis-à-vis other Indian ports.
6. The winner will manage the operations at the actual container terminal at Ballard Estate’s berth until the new terminal will be ready. The main bay and the access channels will be improved and made deeper. especially in terms of capacity that prevented it from achieving world standards of port efficiency and performance. 5. DP World and MOL. No doubt. The second phase will finish in 2014 and bring another 1000m to the terminal. The third terminal is expected to be finished later in 2006 and will add 1.Indian port sector in the pre-reforms era. but clearly. it has always been under the 17 . Evergreen. it failed to reach its full potential commensurate with growing volumes of container cargo. This project will be completed in two phases and will improve the depth of the channels along the berth from the actual 12. and the project should be finished by the beginning of 2008. More reforms to assure development Although the implementation and management of the reforms have been carried out by the Port Trust. Among those participants are Hutchinson Port Holdings. SCI (Shipping Corporation of India) and Maersk India have demonstrated great interest for a fourth terminal and the first phase of the project will be operating in 2009 or in 2010. Nerhu Port Trust has selected 11 technical and financial participants for the tender which purpose is to realise a container terminal near the coast. The facilities will dispose of two berths near the coast and ready to receive ships with 600 to 900 TEU capacity. At the same time. probably in 2009.5 million TEU to 7 million TEU. also another container terminal will be realised and this will increase the port capacity from 2. there was a natural growth of traffic at JNPT and its performance also showed an upward trend.5 m to 15m.3 million TEU to the port’s capacity. to be noted that each phase will improve port’s capacity by 1. Development project of JNPT The Indian government has recently approved an RS 8 billion project ($175 dollars) to develop the facilities of Nehru port.5 m TEU. The aim is to attract more cargo ships and to make Mumbai as a regional hub. implying the construction of 700m-long berth.
1956. but this requires legislative action for amendment of the Major Port Trust Act of 1963. The existing policy guidelines for private participation indicate that the major port trusts can decide the facilities and operations where they would like to invite private initiative. Corporatisation of ports. more spontaneous in suggesting pro-active and bold steps towards executing reform management. corporatisation and privatization of ports may not be easy reforms to implement in India. ministerial control. and probably more valueadditive steps. The involvement of the Ministry creates an additional level of decision-making. which may not always facilitate the larger interests of port trusts. However. can be thought of as constituting a first step towards privatization of the same. the port trusts are functionally dependent upon their controlling ministry (the erstwhile Ministry of Surface Transport and the current Ministry of Shipping) for approval of expenditure beyond a particular limit (Rs 100 crore) and also for other significant decisions. The quality and outcome of further reforms at JNPT and other Indian ports will therefore depend upon the extent to which ministerial control continues to prevail over ports. Corporatisation can be looked upon as a possible solution to this problem of restricted autonomy that characterizes port administration in India. Corporatisation of Indian ports will certainly increase their ability to muster resources from the market. which is pending in the Parliament. perhaps. and not put a complete end to. Even corporate ports might continue to face ministerial and bureaucratic interferences as long as they remain public sector corporations. Survival in a competitive environment demands quick and effective decisionmaking. De-linking of the ministry from port trusts in the context of key decisionmaking can therefore help the latter in taking quicker. free from red-tapism and bureaucratic hassles. However. Due to a prominent presence of core civil servants at the helm of affairs at the Port Trust. as far as increasing their efficiency and productivity are concerned. Interestingly. which would result in complete removal of ministerial control and bureaucratic hurdles that obstruct port operations. essentially. under the Major Port Trust Act of 1963. This has often acted as a major stumbling block in effective and efficient reform management – design as well as implementation. the technical personnel at the senior management level at JNPT are. But corporatisation can only be a means to reduce. especially if one 18 . To that extent.clutches of bureaucratic control from the Government of India (Ministry of Shipping). Port trusts may be transformed into companies under the Indian Companies Act. there is always a tendency to exercise considerable caution in implementing aggressive reforms. the ports will become less dependent on budgetary support.
decisions to corporatise major ports are bound to have long-term implications for dock labor. Since port sector reforms involve a pronounced labor component. who have close ties with trade unions. these amendments are yet to be effected. it does not have any quasi-judicial mandate for settling disputes unlike the Telecom Regulatory Authority of India (TRAI) or the Securities Exchange Board of India (SEBI). In an interview with Business Line. is yet to be passed. Interview to Mr Ravi Budhiraja. Several important legislations. This is probably one of the reasons why the Major Port Trust Act (1963) Amendment Bill. which is expected to facilitate corporatisation of major ports including JNPT. The presence of a regulator will set out a road map for determining optimaltariffs in various port services and shall be instrumental for augmenting competition in the sector. coupled with efforts to introduce privatization. in the form of parliamentarians. it is mentionable in this context. have been proposed for amendment in order to remove the existing rigidities in the labor market and put in place a flexible exit policy for the organized sector. that even after corporatisation. JNPT Chairman. where there is no social security for organized labor in the eventuality of their loss of jobs. However. However.takes into account labor interests and the clout that labor lobbies enjoy in the country. right now. is confident that infrastructure bottlenecks would be ironed out and the port would emerge as one of the world's leading container ports in the future. especially with regard to tariffs. is fulfilling this obligation only partially by fixing tariff ceilings. The group has significant representation in the Indian legislature as well. like the Industrial Disputes Act (1947) and the Contract Labor Act (1970). he dwells at length on the prospects and challenges before the port. Excerpts: 19 . This is an issue that deserves careful attention especially in a country like India. since the financial difficulties of most major ports may constrain them from offering attractive retirement packages. which is one of the strongest and most secure lobbies in the organized sector of the Indian economy. JNPT chairman Mr Ravi Budhiraja. However. Regulations Greater autonomy for ports. The TAMP. 7. decisions pertaining to retrenchments and lay-offs may not be easy to implement immediately. must be accompanied with a good regulatory framework. An ex-post analysis of India’s economic reform experience reveals that there have hardly been any labor market reforms in the country.
84 mt in 2002-03. of which the JNPT terminal handled 13. a letter of acceptance was issued to Gateway Terminals India Pvt Ltd 20 .10 crore. JNPT Let us start with JNPT's performance in the last fiscal.35 crore (. Chairman.37 crore).8 mt. sugar. having an estimated capacity of 1.5 per cent in 2005-06. The other cargoes handled by the port include fertiliser. with a growth rate of 5. How does it compare with the previous year? In 2004-05. How is work on the third container terminal progressing? After obtaining the approval of the Ministry of Shipping in June 2004. against 31. JNPT will be playing a major role in container traffic handling in the country. the total container handling capacity will increase substantially. With the commissioning of the third container terminal in April 2006. the port achieved a throughput of 32.18 mt in 2003-04 and 26.81 million tonnes. The total container traffic during the year was 28. which is attributed to the increase in traffic. There was a slight increase in the operating expenditure at Rs 257.Mr Ravi Budhiraja. steel coil. the operating income touched Rs 601.3 million TEUs. How did the port do on the financial front? It was a good year for us. During the year.9 mt and the NSICT (Nhava Sheva International Container Terminal) handled 14. compared with Rs 579. How do you see the trend in container traffic flow in the current fiscal? JNPCT along with NSICT has targeted a throughput of 2.60 crore in the previous year. The net surplus was at an all-time high of Rs 246. iron and wood pulp.76 crore (Rs 203.7 mt.06 crore).45 million TEUs. Rs 234.
The works are in different stages of execution.5 million TEUs and is likely to be operational by 2010-11.3 million TEUs. Congestion has been a problem at JNPT during the last two years.m will be ready before this monsoon.000 m for handling containers. What is the status of the project? It has been estimated that the port would be required to handle container traffic to the tune of 6. additional buffer yard for containers. a joint venture between Maersk and Concor.8 million TEUs by 2015-16.000 sq. the port is planning to develop a fourth container terminal as an extension of the BPCL jetty and a chemical terminal on build. Some of the works like developing a five-hectare parking area and additional buffer yard of 14. They achieved financial closure within the stipulated time and commenced execution of site works such as. 21 . transfer basis. The first phase involves construction of 700 m of container quay line along with conversion of existing 300 m of liquid cargo berth into container berth so as to develop a quay length of 1. and providing separate corridor for passenger vehicles. GTI is expected to complete construction and commence operations within the stipulated 24 months. When fully operational. The estimated container handling capacity of the terminal will be 1. demolition of sheds for constructing a stack yard for the containers reclamation works and jetty modification works. the terminal will have capacity to handle about 1.(GTI). will the problem not get worse? What steps have the port initiated to solve it? JNPT has initiated action to ease traffic congestion by developing parking areas. With the commissioning of the third and fourth terminals. To handle the traffic after re-development of bulk terminal into a container terminal. It also includes reclamation of 200 hectares of land and development of 100 hectares of land for yards. All other works are scheduled to be completed within 18 months. We are in the process of preparing a feasibility report for the development of the fourth terminal and marine chemical terminal through Consulting Engineering Services (India) Pvt Ltd. widening of roads. The report is expected by October. All efforts are being made to ease traffic congestion in forthcoming monsoon. operate. The licence agreement for the project was signed in August 2004. JNPT has proposed a fourth terminal. CES has submitted the inception report and is preparing the feasibility report.
The port has plans to widen the existing roads from four lanes to six lanes to handle the increasing traffic. The cost of this project is about Rs 800 crore. The estimated cost of the work is Rs 147 crore. The approximate length of the rail line is 1.700 crore.400 km and may be taken up by the Railways at a cost of Rs 5.400 TEUs. The average number of rakes needed by JNPT to avoid congestion is 12-13 a day. a special purpose vehicle (SPV) was formed between JNPT. Has the supply position improved? The average number of rakes supplied by Concor is 9-10 a day. which also include development of parking areas at various locations. Their report will be ready by the month-end. Dedicated goods rail corridor is proposed for faster movement of cargo from the port to Delhi. This will add stacking capacity by 2.000 TEU container vessels using tidal window was approved by the Public Investment Board in March.4B is almost completed and it will be ready by this month-end. to improve the road connectivity by widening existing 2 lanes to 4 lanes. The yard will be put into operation by December 2005. It is likely that the project will be commenced in April 2006 and completed within 27 months. Further.6 hectares is being developed for stacking containers behind the shallow water berth at a cost of Rs 9 crore. What are the other developmental projects the port will be taking up in the future? About 3. We are also augmenting the capacity for handling ICD containers by modernising the existing ICD facilities along the railway line No 6 and 8 by constructing pavements and by procuring 22 . It was decided at the meeting that JNPT might take up this project by raising loans from the market or through its internal resources or combination of both. How do you propose to fund the channel-deepening project? A proposal to carry out deepening and widening of main harbour channel and JNP channel to handle 6. NHAI and CIDCO. Four-laning of NH . Though Concor has agreed to provide 70 per cent dedicated rakes and 30 per cent mixed rakes for JNPCT and NSICT. Inadequate supply of rakes by Concor has been one of the factors contributing to the congestion problem. they have been giving about 54 per cent dedicated rakes and 46 per cent mixed rakes. we have engaged the services of RITES. To study the rail facilities at the port and difficulties faced in handling of incoming and outgoing ICD traffic.
Companies operating in the sector and services provided There are about one hundred companies operating at Mumbai and JNPT ports and the services provided are customised to all the business activities. An additional buffer yard is also being developed at a cost of Rs 2 crore. Varun Shipping Company (VSC) and Essar Shipping Limited (ESL) also control significant market share. Most shipping companies posted impressive results in 2005-06 and the Indian fleet comprised 704 vessels with a combined tonnage of 8. 8. but private companies such as Great Eastern Shipping Company (GE Shipping). Mercator Lines Limited (MLL). Anyway the time to get the major destinations in Europe is approximately 1215 days without considering eventual ports of coal. clearing services and destination distance.3 million gross registered tonnage (GRT) on October 2005. This implies a vast arrange of tariffs. Market share of Indian shipping companies as on December.two RMGCs. To be added is the fact that the imposition of a tonnage tax regime has helped to attract foreign direct investment and new players. which will add an additional stacking capacity of 900 TEUs. 31 2005 9% 24% 5% 5% 2% Mercator Lines Essar Shipping Varun Shipping Surendra Overseas 21% 34% Great Eastern Shipping Shipping Corporation of India Others 23 . The government-owned giant Shipping Corporation of India (SCI) dominates the shipping sector. which depend on insurance costs.
48t 895$ 40’ Steel Dry Cargo Container Length Width Height Weight Price* 12. Moreover. On the other hand.05m 2. comprising about 34 per cent of the total Indian tonnage. ammonia and dry bulk.Source: Ministry of Shipping SCI is India’s premier shipping line. it signed a contract with STX Shipbuilding Company Limited in Korea for the construction of two product tankers. GE is also carving a niche for itself in the international offshore services market. liquefied petroleum gas (LPG). As on December 2005. phosphoric acid. It offers services in all shipping areas such as liner and passenger services. a Mumbai-based barging and cargo handling company.19m 2. In March 2006.59m 30.48t 1495$ 24 . Sample of basic tariffs for container type Mumbai-Genoa 20’ Steel Dry Cargo Container Length Width Height Weight Price* 6. 8. insurance fees and distance from the port. SCI owned a fleet of 84 vessels. therefore duration and costs of transport vary on the type of material carried.43m 2.43m 2. tanker and offshore services. ESL (Essar Shipping Limited) was the first company to operate in the quality-conscious markets of the US and Europe and is involved in the transportation of crude and bulk cargo and controls almost 14 per cent of India’s shipping fleet.59m 30. feeder services. in the case the producers are not able to provide themselves to carry the goods out to port terminals. GE Shipping is the country’s largest private sector shipping and offshore services provider. It is involved in the transportation of crude oil and petroleum products. coastal services. The shipping division provides marine bulk transportation services and operates two main businesses: dry bulk carriers and tankers. in December 2005 GE Shipping acquired a 26 per cent stake in United Shippers Limited.1 Costs and shipping timings Shipping is managed by the main companies depending on corporate’s necessities.
Concerning the timings. then proceeding to the Meditarranean through Suez Channel (as the map below shows). to carry out a container from Mumbai to the major European ports it takes about 12-15 days. Transportation costs per container can vary from about 900-1000$. In the map we can find an example of some routes (going in red. return in blu) from the Indian subcontinent to the main European ports. that tariffs vary in a significant manner depending on various factors concerning logistics. ISE ETA ETD T/S TIME COLOMBO SUN TUE 0 NHAVA SUEZ PORT PORT SUEZ BARCELONA FELIXSTOWE ROTTERDAM HAMBURG GENOA COLOMBO SHEVA CANAL SAID SAID CANAL THU SAT 2 SAT SUN 11 SUN MON 13 FRI FRI 18 WED WED 23 THU FRI 24 SAT SUN 26 SAT SUN 33 THU THU 38 THU FRI 39 SUN TUE 49 To be considered are also the atmosphering conditions at the moment of the transport. 25 . custome charges at the arrival and considering the goods ready to be loaded at terminal. Nhave Sheva is one of the terminals of JNPT port. but the medium timings are respected in most cases. Below: a schedule representing the timings to get major European ports. that can increase the duration to 25-26 days. custom tariffs and quantity of goods to be carried out. Gioia Tauro.* Including normal insurance costs. Taranto. Major Italian ports (Genoa. It is to be considered. mainly by the main companies which dispose of fleet of affidability. considering the route Mumbai-Genoa and can grow up to 2500-3000$ in the case the goods need particular containers for their transportation (for example flammable goods). though. Napoli. excluding intermediate ports of station. The major routes are those which pass through the Arabic Sea and the Red Sea.
operates in the sector of freight forwarding and is actually quoted among the first 10 companies. It has its presence through its offices and desks in Italy. France. Mr Sheraz Malegamwalla. Germany. Italia Marittima Spa and Rina Group. 26 . Since the beginning of its activities. Canada and various countries of South East Asia. a multinational Italian company with the main branch in Scandicci (Firenze). Italia Marittima is the new name of Lloyd Triestino di Navigazione (from March. North America and the other countries of South-East Asia. as for example Raymonds. the company has always looked at Asia as a destination with great potentiality. Delhi and Pune. Savino Del Bene. 8. Actually in India has about 18 regional offices and provides transportation services to Europe. 1st 2006) and this new name represents the aim to be a true flag carrier for Italy. Birla and Graziano Trasmissioni. provides a long experience in the sector of certification of company management systems regarding the shipping and logistics. United States. Brasil.2 The Italian presence Main companies operating in the port sector in India are Savino Del Bene Spa. Australia. as tells us the CEO of Mumbai’s branch. Bangalore. It is one of the oldest companies in the sector worldwide and his main office is based in Trieste (Italy). the activities of the company begun in 1998 and since some years it has instaurated a partnership programme also with other companies or Italian joint ventures. The company was born in 1836 as a branch of Austrian Lloyd of insurance when the Austro-Hungaric Empire was in held. as resulting from IATA’s classification. Regional offices of Savino Del Bene are based in Mumbai. as an International Certification Institute. Chennai. In India. Finally Rina Group.Venezia and Trieste) have direct links (also daily in the case of GenoaMumbai) with the main Indian terminals.
27 . Therefore Rina Group provides consultancy and classification services covering all maritime corporates world. from ships construction to cargo shipping carriers.The actual globalised markets has made very important the certification process as an instrument to give visibility and transparency to the internal policies of the companies.
The process of phased corporatisation has been initiated for the major ports. w. ports and harbours. 1 April 2002 under section 80-IA of IT Act.APPENDIX Table 1: Policy initiatives in Ports sector • • • • • • • • FDI (Foreign Direct Investment) up to 51% is allowed on automatic basis in support services like operation and maintenance of piers and loading and discharging of vessels.e. Inputs and concessional import duty allowed with liberalised trade policy. better management practices. Source: Ministry of Shipping 28 .f. minor ports and other companies to attract new technology. An independent Tariff Authority for major ports set up to fix and revise ceiling tariff. inland port and inland waterways. implementation of development schemes and creation of optimal port infrastructure. Up to 100% FDI under automatic route is permitted in projects for vehicular tunnels. Major ports have been permitted to form joint ventures with foreign ports. Ten year tax holiday that may be availed in a block of fifteen years for infrastructure facility relating to port. The BOT model will generally be used for private sector participation with the assets reverting back to the port after the concession period.
500 3.00 2.000 Source: Ministry of Shipping 29 .50 8.Table 2: Major projects being offered for Private Sector Participation Port 1 Project Capacity (Millions Tonnes) 5.830 30.000 9.00 2.000 3.00 Project Cost (Millions Rupees) 6.000 2 3 4 5 6 7 8 9 10 11 12 Cochin Development of an international container transhipment terminal Cochin International bunkering Terminal JNPT Marine chemical terminal JNPT Redevelopment of an existing bulk terminal into a container terminal Bombay Construction of new off-shore two berths container terminal Paradip Paradip construction of a berth for clean cargo Kandla Development and operation container terminal Ennore Construction of an alongside jetty for very large crude carrier for import crude Ennore Construction of an iron ore berth (including equipment) Ennore Construction of a berth for liquefied natural gas Ennore Construction of a coal berth of users other than TNEB Ennore Construction of jetty for POL products/chemicals and oil products 7.00 1.000 9.500 2.000 2.50 12.000 3.00 3.36 9.000 1.53 1.00 14.580 1.00 9.00 2.
Ennore Kandla April 2004 to Mar 2005 Vis-a-Vis April 2003.Table 3: Bombay ports performances in relation to the other Indian ports (Million Tonnes) Port Kolkata Haldia Paradip Vishakhapatnam Chennai Tuticorin Cochin New Mangalore Mormugao Mumbai J.to Mar 2004 Year 2004-2005 2003-2004 2004-2005 2003-2004 2004-2005 2003-2004 2004-2005 2003-2004 2004-2005 2003-2004 2004-2005 2003-2004 2004-2005 2003-2004 2004-2005 2003-2004 2004-2005 2003-2004 2004-2005 2003-2004 2004-2005 2003-2004 2004-2005 2003-2004 2004-2005 2003-2004 2004-2005 2003-2004 Import 3418 3107 25007 22676 8438 6705 21290 19306 24620 20302 12060 10184 11045 11119 15512 13045 5631 4468 17651 16469 15693 13412 8960 9277 31384 31080 200709 181150 Export 1742 1077 11205 9890 21666 18606 24915 21369 19186 16408 3751 3494 3050 2453 18379 13624 25028 23406 11912 10861 15217 15099 520 0 9538 10308 166109 146595 Transhipment 4785 4509 0 1 0 0 3942 7061 0 0 0 0 0 0 0 4 0 0 5562 2665 1899 2679 0 0 619 135 16807 17054 Total 9945 8693 36212 32567 30104 25311 50147 47736 43806 36710 15811 13678 14095 13572 33891 26673 30659 27874 35125 29995 32809 31190 9480 9277 41541 41523 383625 344799 Grand Totals Source: Indian Ports Association.T.P.N. 30 .
Table 4: JNPT performance since his construction (Million Tonnes) Source: Jawaharlal Nehru Port Trust 31 .
it 32 .informare.gov.mumbaiporttrust.in www.in www.Bibliography Indian Infrastructure Financial Times The Times of India The Hindu www.nic.jnport.mumbaicustoms.in www.nic.jawaharcustoms.gov.com www.indiabusiness.in www.com www.thehindubusinessonline.ipa.com www.
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