05-12-2019

Govt. of India

Sagarmala Programme
Improving Logistics Management
through Coastal Shipping
04th December 2019
1

Context – Facts & Figures

GDP and Merchandise Trade

• India’s Gross Domestic Product (GDP) in 2018 was US $2.7 Tn

• India’s Merchandise trade was ~30.7% of the GDP in 2018 which

amounted to US $ 828.1 Bn

• 95% of India’s foreign merchandise trade is through ports amounting to

~US $787 Bn

However, India’s use of waterways for domestic transport of goods

is lesser than other comparable economies

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GDP and Modal Share of Waterways

Japan, 34%,
$4.97Tn PRC, 24%,
Italy, 28%, $2.07Tn $13.61Tn

Bangladesh, 16%,
$0.27Tn Brazil, 17%, $1.87Tn Germany, 11%, $4Tn

UK, 11%, $2.83Tn

Thailand, 12%, Canada, 7%, France, 9%, $2.78Tn

$0.5Tn $1.71Tn India, 6%, $2.73Tn USA, 12%, $20.49Tn

Country, Coastal Shipping as % of Modal Share, GDP

Size of bubble indicated Size of the economy

• Waterways are the most economical means of transport

• Lower use of waterways in India leads to higher logistics costs

High Logistics Cost in India - Extent

Comparison of Logistics Costs with Developed Economies

14%

11% 12%
8% 9%

Germany USA Japan France & Korea India

0.5% decrease in logistics cost leads to 2% increase in trade and 40%

increase in the range of products that are exported out of a country

Source: India Transport Report – Moving India to 2032, World Bank panel study 2007
https://economictimes.indiatimes.com/industry/transportation/shipping-/-transport/how-new-govt-division-plans-to-reduce-indias-logistics-cost-to-
less-than-10-of-gdp/articleshow/62395133.cms?from=mdr

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Coastal Shipping Benefits & Challenges

Benefits Transportation Cost
• Coastal Shipping is more economical than Rs/Ton-Km
~2.5
Road and Rail
• Coastal shipping also has a lower
environmental impact than Road and Rail ~1.3
Challenges ~1.06
• Distance Travelled and Time taken is
generally higher in case of coastal
shipping yet overall cost is lower Road Rail Waterways

• Modal shift to waterways will reduce cost of transportation as well as

environmental impact of logistics
• India can Utilize its 7500 Km Long Coastline for Economic Growth
Source: IPA, Sagarmala NPP

Growth of Coastal Shipping – Historical Trend

Cargo
120.0
handled at
105.0 Non-Major
94.5 Ports
83.2 45.8
80.1
MTPA

75.1 77.1 75.0 40.8 Cargo

33.4
26.6 27.0 handled at
26.6 27.5 23.3 Major Ports

64.3 74.2
51.6 53.5 56.2 61.1 Total
48.5 49.6
Coastal
Shipping
Volume
2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19

Coastal Cargo growing at a CAGR of 11.3% since 2015-16

Source: Indian Ports Association (IPA), Transport Research Wing (TRW)

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Coastal Shipping – Cargo Growth Potential

25 337.8
98.8

10
22
42
140
52 120
4 0
10
24
30

Coal POL Cement Steel Other Short Sea Total

2018-19 2025 Projection

Fertilizers have significant potential ~3 MTPA through Coastal Shipping and

another ~4 MTPA through Inland Waterways
Source: IPA, TRW, Coastal Shipping Study

MoS Initiatives to Promote Coastal Shipping

• Cabotage Relaxation for foreign flag vessels to transport fertilizers, agricultural products
Policy
and EXIM containers for transshipment in India on coastal routes under section 406 and
Initiatives
407 of the Merchant Shipping Act
• Cabotage Relaxation for special vessel such as RO-RO, RO-pax, ODC etc
• Priority berthing for coastal vessels at ports
• Discounts of minimum 40% on Vessel and Cargo Related Charges to vessels carrying
coastal cargo at Major Ports

• Grant-in-aid assistance to develop berths and associated infrastructure including dredging,

Infrastructure
Break-water creation, mechanization under the coastal berth scheme
Creation
• 39 projects (Rs. 1569 Cr) have been sanctioned for total financial assistance of Rs. 636.76
Cr. Under the Sagarmala Programme

Coastal • A study has being conducted in association with the Asian Development Bank to develop a long term
Shipping perspective plan for coastal shipping in India
Study • Origin Destination pairs of commodities that have potential for coastal shipping movement have been
studied

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Enhancing connectivity to the North East Region

Indo – Bangladesh
The Siliguri Corridor consists of
Protocol Route narrow tortuous roads with limited
capacity for cargo transport
NW-2
Siliguri
Corridor
Silghat
NW1 and Indo-Bangladesh Protocol
Pandu
Dhubri
Route can provide – alternate route,
Chilmari
additional capacity and lower cost
Sirajganj
Dhulian
Sultanganj
Karimganj
Ashuganj
NW-16 option for cargo transport to the
Rajshahi Muktarpur Badarpur
Maia
Aricha Ghorasal North East Region
Pangaon Narayanganj
Tribeni Daudkandi Sonamura
Gumti river

MoS working for Addition of ports of
NW-1
Mongla
Khulna
call to improve connectivity and
Kolkata IBP Route
Kolaghat
Existing ports of call
Agreed ports of call
dredging to improve perineal
Haldia NW-97 Agreed extended ports of call
New/ Extended routes
availability of route
Use of Inland Waterways expected to increase accessibility of the North East
Region
Source: IWAI

Snapshot of Fertilizer Manufacturing in India

State-wise production of fertilizer in India
• India is the third largest
producer and consumer of
fertilizer in the world
• Production of fertilizers in
India ~36.9 MT*
• Import of fertilizers in India
~15.4 MT*

• 12.6 MTof urea and complex

fertilizers production happens
near a coast

Source: *All Data for 2017-18 as reported by FAI and Dept. of Fertilizers

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Distribution of Fertilizers Manufactured in India

Gujarat, Odisha, Tamil

Nadu are key
originating states

Destination
States
Shown on
Map

There is a potential for transporting 7MT of fertilizers via coastal shipping and Inland
Waterways
Source: Coastal Shipping Study, Indian Railways traffic data

Distribution of Imported Fertilizer in India

Fertilizer Import in India Potential for transport of Imported Fertilizer
Approximately 15.4 MT of • Imported fertilizers are imported in bulk at select
finished fertilizers were nominated / designated ports,
imported by India in 2017- • A fertilizer marketing organization is identified and
18. the organization dispatches the fertilizer to a
designated consumption centre by rail
Imported fertilizers are
majorly handled at: • Such fertilizers can potentially be transported by
use of coastal shipping especially since they are
• Mundra (23%)
imported and dispatched from a large Exim port.
• Kandla (19%)
• Furthermore, transport of fertilizer in bulk form via
• Kakinada (14%)
coastal shipping and inland waterways would
• Vishakhapatnam (9%) lead to realization of additional cost savings
Source: Fertilizer Stat Book, Dept. of Fertilizer, FAI,

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Initiatives to Promote Coastal Shipping of Fertilizers

Extending NBS policy for P & K Relaxation of Licensing rule for
fertilizer and UFS policy for urea to carriage of Fertilizers on Foreign
coastal and inland waterways: Flag Vessels

• Government has extended the • According to the DGS order, a

freight subsidy under NBS policy to
coastal and inland waterways.
• For coastal/inland water movement,
subsidy provided is equal to notional
railway freight from plant/port up to
nearest rail head of delivery points
• Subject to the quantity of coasting
• Cost of costal/inland waterway
movement includes the first and last
mile cost by rail/road
foreign flag vessel is now not
required to obtain a license from
the DGS for engaging in coastal
trade of India for carriage of
fertilizers by sea
trade of fertilizers contributing to at
least 50% of the total cargo loaded
at the Indian port

Initiatives to Promote Coastal Shipping of Fertilizers

Online Subsidy Reimbursement

The Department of Fertilizer has now allowed the movement of fertilizer

subsidy to be reimbursed on the coastal route as has been the case for
the road and rail linkage

The Integrated Fertilizer Management System (IFMS) is to be used for

this purpose

This measure would enable fertilizer companies to get reimbursement of

their subsidy claims using the coastal route on the online platform.

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Challenges in Coastal Shipping of Fertilizers

Fertilizer Coastal Shipping and Inland Waterways can be considered by

Manufacturers fertilizer marketing companies as means of transport in addition
to traditional means such as Rail and Road

Policy & Multi-modal operators can be recognized through necessary

Industry policy interventions and suitable ecosystem must be developed
so that a single operator can provide end-to-end multi-modal
logistics solution and also generate a single document/ invoice
for user

Challenges in Coastal Shipping of Fertilizers

Small parcel sizes lead to higher cost for movement of dedicated vessels
Coastal Shipping Volume for various
destinations on east coast and west
coast
• A 10,000 DWT ship can load
approximately 350 TEU
• The requirement at various
destinations is significantly less
• The cost/ton of transporting fertilizers
is ~25% higher if a ship is only 50%
loaded and ~60% higher if a ship is
only 30% loaded
• Use of Traditional Wooden Vessels
can be explored to distribute fertilizers
in coastal regions over short distances

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Future Outlook

Projects undertaken

Pursuing amendments to policies to make them more inclusive for coastal shipping

Working with Fertilizer Manufactures to initiate pilot movements to promote coastal

shipping of fertilizers

Promoting coastal shipping of imported fertilizer

Thank You