“ COASTAL SHIPPING IN INDIA- COST AND REVENUE, CARGO POTENTIAL, INFRASTRUCTURE FACILITIES, GOVERNMENT REGULATIONS – A PERSPECTIVE ” A THESIS SUBMITTED IN PARTIAL- FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION IN SHIPPING AND LOGISTICS MANAGEMENT BY KARTHIKEYAN R (MBA / 0238/ 08) DEPARTMENT OF MANAGEMENT STUDIES
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“ COASTAL SHIPPING IN INDIA- COST AND REVENUE, CARGO POTENTIAL,
INFRASTRUCTURE FACILITIES, GOVERNMENT REGULATIONS
– A PERSPECTIVE ”
A THESIS SUBMITTED
IN PARTIAL- FULFILLMENT OF THE REQUIREMENT
FOR THE AWARD OF THE DEGREE
OF
MASTER OF BUSINESS ADMINISTRATION
IN
SHIPPING AND LOGISTICS MANAGEMENT
BY
KARTHIKEYAN R
(MBA / 0238/ 08)
DEPARTMENT OF MANAGEMENT STUDIES
AMET UNIVERSITY
KANATHUR – 603112, CHENNNAI
DECLARATION CERTIFICATE
This is to certify that the work presented in the dissertation entitled “COASTAL SHIPPING
IN INDIA- COST AND REVENUE, CARGO POTENTIAL, INFRASTRUCTURE
FACILITIES, GOVERNMENT REGULATIONS - A PERSPECTIVE” in partial
fulfillment of the requirement for the award of Degree of Master in Business Administration, in
shipping and logistics Management from AMET UNIVERSITY, Kanathur, Chennai is an
authentic work carried out Under my supervision.
To the best of my knowledge, the content of this dissertation does not form a basis for the award
of any previous Degree to anyone else.
Date (Mr. J.P.THIAGARAJAN)
(Project Guide)
Department of Management Studies
AMET, UNIVERSITY CHENNAI
(MR.J.P. THIAGARAJAN) (MR.N.SRINIVASAN)
Head of the Department Dean
Department of Management Studies Dept of Management Studies
AMET UNIVERSITY AMET UNIVERSITY
CHENNAI CHENNAI
CERTFICATE OF APPROVAL
The foregoing dissertation entitled, “COASTAL SHIPPING IN INDIA- COST AND
REVENUE,CARGO POTENTIAL, INFRASTRUCTURE FACILITIES, GOVERNMENT
REGULATIONS - A PERSPECTIVE” is hereby approved as a creditable study of research
topic and has been presented in a satisfactory manner to warrant its acceptance as prerequisite to
the degree for which it was submitted.
It is understood that by this approval, the undersigned do not necessarily endorse any
Conclusion drawn or opinion expressed therein, but approve the dissertation for the purpose for
which it is submitted.
(Internal Examiner) (External Examiner)
Head of the Department
Department of Management Studies
ACKNOWLEDGEMENT
I would like to express my gratitude to our respected Chairman Mr. J.
Ramchandran and our Vice Chancellor Capt. S. Bharadwaj for their kind
encouragement.
I am immensely thankful to my respected guide Mr. J.P.Thiagarajan for his
guidance, support and encouragement rendered to me throughout the course of
study. I also wish to address special thanks to Mr. N.Srinivasan, Dean
Management Studies and Mr. J.P.Thiagarajan Head of Department Management
Studies, AMET University who have been a constant source of inspiration and
Motivation.
My special thanks and admiration should be submitted to MR. JEBAKUMAR
general manager (APL Tuticorin), without his help this study could not be
completed in time. I am grateful for the time he spent with me and the valid
information he shared with me.
I would also like to thank everyone who took their time and contributed to this
study by sharing their knowledge during their work.
CONTENTS
SR. NO PARTICULARS PAGE NO
I ABSTRACT 1
II INTRODUCTION TO COASTAL SHIPPING 2-3
III RESEARCH METHODOLOGY
A. RESEARCH OBJECTIVES
B. RESEARCH DESIGN
C. SOURCES OF DATA
D. LIMITATIONS OF THE STUDY
4-7
COST AND REVENUE
IV COST
A. CAPITAL EXPENDITURE – CAPEX
B. DAILY COSTS
C. TYPICAL ARRANGEMENTS OF COSTS
D. TECHNICAL COSTS
E. SUPPLIES COSTS
F. INSURANCE COSTS
G. IMPORT DUTIES
H. TAXATION
9- 23
I. SERVICE TAX
J. ADMINISTRATION COSTS
K. VOYAGE COSTS
V REVENUE 24
VI CARGO POTENTIAL FOR COASTAL SHIPPING IN INDIA
A. COMMODITY MOVED BY COASTAL SHIPPING
B. CARGO PROFILE
C. MAGNITUDE OF POL MOVEMENT BY COASTAL
SHIPPING
D. LIQUEFIED NATURAL GAS (LNG)
E. COAL
F. CONTAINER TRAFFIC
G. COMMODITY ANALYSIS
25-49
VII INFRASTRUCTURE FACILITIES
A. BERTH
B. CARGO HANDLING EQUIPMENTS
C. INLAND CONNECTIVITY
I. ROAD
II. RAILWAYS
III. INLAND WATERWAYS
D. STORAGE FACILITIES
50-93
VIII GOVERNMENT G\REGULATIONS
A. GOVERNMENT POLICIES REGARDING COASTAL
SHIPPING
B. GOVERNMENT REGLATIONS
I. VESSEL CONVERSION
II. MANNING REGULATIONS
III. INDIAN REGISTER OF SHIPS
IV. CLASSIFICATION SOCIETIES
V. CABOTAGE LAW
94-112
IX FINDINGS 113
X SUGGESTIONS 114-117
XI CONCLUSION 118-119
XII BIBLIOGRAPHY 120
TABLES AND FIGURES
TABLES
Table 1: Responsibility for ordering
Table 2: Cost of Coastal and Bonded Bunkers
Table 3: Vessel charges
Table 4: Berth hire charges
Table 5: Rate of Shifting Charges
Table 6: Rate for supply of water to shipping
Table 7: Cargo profile
Table 8: Origin - Destination Pairs of POL Products Coastal Movement
Table 9: Origin - Destination Pairs of Crude Oil Coastal Movement
Table 10: Details of Crude Oil Pipelines Operating in India
Table 11: Estimated Demand for POL Products
Table 12: Coastal Shipping Tonnage as on 31st December 2008
Table 13: Coastal Tonnage as on 31-Dec-2009
Table 14: Traffic Estimates by Coastal shipping in million tonnes
Table 15: Census of Cargo Handling Equipment
Table 16: Container Handling Facilities
Table 17: Fertilizer Handling Facilities
Table 18: Iron Ore Handling Facilities
Table 19: Liquid Bulk Handling Facilities
Table 20: Road Networks
Table 21: Road Lanes
Table 22: Storage Facilities in major ports in India
Table 23: Existing Warehousing Capacity
FIGURES
Figure 1: Inland waterways in India
Figure 2: National Waterway 1
Figure 3: IWT terminal at Patna, NW-1
Figure 4: National Waterway 2
Figure 5: IWT terminal at Pandu, NW-2
Figure 6: National Waterway 3
Figure 7: National Waterway 4
Figure 8: National Waterway 5
I. ABSTRACT
Coastal shipping is an extremely economical, environmentally friendly, gainful and energy
proficient mode of transport, especially for bulk transport, and has the potential to carry a large
part of the traffic currently being served by rail and road. The development of coastal shipping
has been low despite the fact that the entire coastal trade is reserved for Indian vessels. Low
productivity at major ports, paucity of ship repairs services and the relative under development
of minor ports affect coastal shipping operations adversely. Further, ship owners are reluctant to
acquire dedicated coastal vessels due to various impediments such as complex customs
procedures, time-consuming port clearance, high manning scales etc.
In order to make the sector more effective, there is a need to create adequate infrastructure
facilities, simplify customs procedures and provide the necessary fiscal incentives for the
development of the sector. It would also necessary to synchronize the development of minor
ports with the needs of coastal shipping. It should therefore be accorded a status at par with other
domestic modes of transport, especially with regard to customs and other procedures etc., which
are hampering it from realizing its full potential. To encourage coastal shipping, measure has
already been taken to grant priority berthing to coastal ships without priority berthing charges. It
has also been decided to exempt coastal shipping and sailing vessels from the payment of light
dues.
Coastal shipping involves no investment in line haul capacity except in navigational aids and
appropriate terminal facilities. Considering the vast coastline and severe congestion faced by the
land modes of transport, coastal shipping offers an effective alternative with increased energy
efficiency and lower costs.
II. INTRODUCTION TO COASTAL SHIPPING
What is coastal shipping?
“The movement of cargo by sea between ports in India. Not including the non-contiguous island
trades”.
India has a coastline of 7500 km comprising of 13 major ports, 187 non major ports and around
14,500 km of navigable Waterways which needs connectivity. The connectivity can only be
possible if Coastal Shipping is vibrant and there are enough number of Ships to cater to the needs
of the Indian Coast. Coastal Shipping should be granted infrastructure status so that applicable
benefits accorded to infrastructure industries to be extended to Coastal Shipping. Implementation
of the Centrally Sponsored Scheme (CSS) proposed by the Government for Coastal Shipping &
Port infrastructural development may be expedited. Initially, under the CSS the development of
seven Minor (non-major) ports has been proposed at an estimated total cost of around Rs.1,500
crore for which a grant-in-aid of Rs.500 crore (33%) would be provided by the Central
Government through Government Budgetary Support with the remaining 67% to be contributed
by the respective State Governments. States with non-functional ports to expedite development
of such ports and Central Government to approve/provide requisite funds for basic infrastructure
development. Also, draft of Minor Ports to be increased to minimum metres. Create Dry Docks
& Ship Repair Yards at existing / new Non-Major Ports to accommodate smaller coastal vessels
by providing draft of around 4 to 5 metres. Needs allocation of requisite land and water frontage
exclusively ear-marked for this purpose. Enhanced / adequate connectivity for ports with Rail
/Road transport. All Non-Major Ports to be also adequately connected to highways with four
lane. The connectivity can only be possible if Coastal Shipping / IWT is vibrant and there are
enough number of Ships to cater to the needs of the Indian Coast.
Coastal Shipping can ease traffic congestions and arrest loss of human lives caused due to
accidents, which occur quite frequently in road transport mode. Annual losses due to road
accidents in the country are reported to be in the range of Rs.200 – Rs.300 billion and the cost on
account of accidents Rs.100 billion, together aggregating to Rs.300 – Rs.400 billion annually.
The human life lost on the Indian roads is in excess of one lakh and thousands of people get
seriously injured due to road accidents.
Besides, Coastal shipping has comparatively lower emissions of harmful chemicals such as
carbon dioxide compared to road / rail transport thereby considerably reducing pollution related
ecological and health hazards and the consequential socio-economic costs. It has been observed
that the Cargo vessels between 2000 to 8000 DWT cause 21 gms per ton km of Carbon dioxide
emissions while heavy trucks cause 50 gms per ton – km of carbon dioxide emissions.
Inspite of having so many advantages for moving Cargo by Coastal Vessels / IWT Vessels, we
see hardly any improvement in number of Ships being constructed or being used for Indian
Coast. The Coastal Shipping / IWT Owner faces numerous problems right from the time of
building the Vessel, taking loan from the Financial Institutions, getting various permissions to
run the vessels from government bodies, the high Tariff from Indian Port which makes Coastal
Shipping non viable and not to speak on the frequent checks on the Vessels by Port State
controls.
The land route, particularly along the Chennai and Vishakapatnam on the East Coast, is parallel
to the coast, thereby providing the potential for diversion of rail / road cargo to the sea route. For
this, there is a need to develop coastal shipping as a part of a multimodal transport system, by
connecting the minor ports with the hinterland in a cost-effective manner. The level of facilities
for cargo handling at these ports would depend on the extent of traffic. Even without equipment,
the ports could still be served by vessels with appropriate equipment.
RESEARCH METHODOLOGY
III. RESEARCH METHODOLOGY
Research is an art of scientific investigation. The advanced Learner’s Dictionary of current
English lays down the meaning of research as “A careful investigation or inquiry specially
through search for new facts in any branch of knowledge”. Research is an academic activity and
as such the term should be used in a technical sense. According to Cliffor Woody Research
comprises defining and redefining problems, Formulating hypothesis of suggested solutions;
collecting, organizing and evaluating data, making deductions and reaching conclusions; and at
last carefully testing the conclusions to determine whether they fit the formulating hypothesis.
A. RESEARCH OBJECTIVES
To understand the overall process of Coastal Shipping
To identify the cost and revenue of the Coastal Shipping
To analyze the cargo potential of the Coastal Shipping in India
To identify the coastal shipping efficiency with the help of improved infrastructure
facilities.
To understand the government regulations in India for coastal shipping.
B. RESEARCH DESIGN
“A research design is the arrangement for the collection and analysis of data in a manner that
aims to combine relevance to the research purpose with economy in procedure”.
In fact, the research design is the conceptual structure within which research is conducted; it
constitutes the blue print for the collection, measurement and analysis of data.
a. Type of research
Type of research is exploratory. The objective of the exploratory research is the development of
hypothesis rather than their testing.
C. SOURCES OF DATA
Sources of data can be classified into two types. They are
Primary data
Secondary data
a. Primary data
The primary data are those, which are collected afresh and for the first time, and thus happen to
be original in character. In this research primary data is collected through
Personal interviews
b. Secondary data
Secondary data means data that are readily available i.e., they refer to the data, which have
already been collected and analyzed by someone else. In this research secondary data is mainly
collected through
Reports prepared by research scholars
Public records and statistics
Reports and publications journals
Books, Magazines and newspapers
Internet
D. LIMITATIONS OF THE STUDY
There were certain limitations to the research that the researcher has forced:-
Companies do not ready to share their information
Lack of sufficient data
The Time was the major constraint for the researcher in collecting the data.
COST AND REVENUE
IV.COST
A. CAPITAL EXPENDITURE – CAPEX
Funds used by a company to acquire or upgrade physical assets such as property, industrial
buildings or equipment. This type of outlay is made by companies to maintain or increase
the scope of their operations. These expenditures can include everything from repairing a roof to
building a brand new factory. The amount of capital expenditures a company is likely to have
depends on the industry it occupies. Some of the most capital intensive industries include
Shipping , oil, telecom and utilities.
In terms of accounting, an expense is considered to be a capital expenditure when the asset is
a newly purchased capital asset or an investment that improves the useful life of an existing
capital asset. If an expense is a capital expenditure, it needs to be capitalized; this requires the
company to spread the cost of the expenditure over the useful life of the asset. If, however, the
expense is one that maintains the asset at its current condition, the cost is deducted fully in the
year of the expense.
Capital expenditure are capitalized as assets( investment ) , depreciated over economic life of a
vessel. Only annual depreciation is charged to profit. Depreciation is an accounting entry and
does not involve any cash flow. Thus , the measurement of profit excludes some cash-flows such
as capital expenditure and includes no-cash items such as depreciation.
B. DAILY COSTS
Crew Costs
The term crew is used to describe all who sail in ships and where further definition is required ,
the terms “officers” and “rating” are used. The word voyage is used in the former sense as with
the often heard expression “he signed on for the voyage”. The costs of the crew with only two
principal exceptions: “ victualling “ , which is contained in the supplies of costs, and the costs of
insuring the crew , contained in the insurance costs.
Crew costs are based on three related factors:
The manning scale prescribed for the ship
The nationality or nationalities of the crew
The conditions of service
C. TYPICAL ARRANGEMENTS OF COSTS
Wages
Basic Pay
Overtime
Special work payments
Leave Pay
Bonuses
Social security
Superannuation
Crew overlap
Travel
Rail , Road , Ship and Air fares
Accommodation and meals
Travel subsistence
Baggage costs
Other costs
Medical examination
Medical treatment
Union payments
Manning agent’s fees
Cadet training
Levies
Training costs
Standby pay
Recruitment
D. TECHNICAL COSTS
The technical departments costs cover all costs associated with the maintenance and repair of the
ship to the state required by the owners. Generally , this means keeping the ship fully operational
for the maximum number of days possible in the year, but it can also cover lay up, modification
and the sale or purchase of the ship. If operational the level of maintenance and repair must
conform to statutory and classification standards , but beyond this the level of maintenance and
repair depends upon the company policy at that time. The economies of the shipping industry are
all too often reflected in the level of repairs , maintenance and appearance as more or less money
is available. Insufficient maintenance can be a short-sighted policy as the incidence of
breakdowns will inevitably increase, but when cash is in short supply long-sight usually suffers
from shortage also.
Technical costs are ,
The costs of labour, skills , expertise
Parts & Materials
Tools and Equipment
E. SUPPLIES COSTS
The term “supplies” covers all consumable stores including victualling ,i.e. food. It also covers
semi-consumable items such as crockery , linen, soft furnishing , cooking utensils and hammers.
Again the cost centres are grouped as much for convenience and functions as for magnitude of
costs. Items of common usage such as paint , are now supplied to the ship bulk and the
arrangement of the costs of such item into second category groups reflects the ship department
which has responsibility for ordering for the ship as a whole. Thus paint is included in “Marine
Stores” and normally ordered by the 1st mate for all departments in consultation with the chief
engineer and chief steward , the only exception being dry dock paints which are usually arranged
by the shore staff. The chief engineer orders all lubricating oils and greases and the chief steward
does likewise with all cleaning materials.
COST GROUP RESPONSIBILITY FOR ORDERING
Marine stores :
Paints
Ropes & wires
Fresh Water
1st Mate
Engine Stores:
Greases
Packing
Lubricating oils
Chief Engineer
Steward Stores:
Cleaning materials
Stationery
Linen
Cutlery
Laundry and soft furnishing
Victualling
Recreational
Clothing
Handling Charges
Bar and Canteen
Chief Steward
Table 1: Responsibility for ordering
F. INSURANCE COSTS
The costs of marine, war and liability insurance as they apply to the running costs of ships. The
insurance department of some shipping companies often lies outside the sphere of the ship
manager , primarily because the nature of its work is both legal and financial and because
decisions as to the amount of risk the company should take are usually made at a corporate level
in view of the magnitude of the sums involved. Wherever the responsibility lies, the costs of the
insurance are usually included in the running costs of the ship. Once the insurance and the ship
management departments is essential, to ensure that whenever possible risks are avoided and that
underwriters are promptly put on notice of possible claims and that legitimate claims under the
policies are properly progressed.
Ship insurance is arranged to provide the ship owner with:
Protection against physical loss or damage
Protection against liability to third parties
Protection against loss or interruption of earnings
Hull and Machinery insurance
Just as the comprehensive coverage in auto insurance protects the insured individuals against
physical damage to their cars, so does hull and machinery insurance provide physical damage
protection for the ships or vessels and the machinery which is part of them. Since the soundness
and normal operation of the hull and machinery of a ship is key to the safe transportation and
delivery of any cargo or freight, it is highly advisable that ship owners purchase hull and
machinery insurance.
Characteristics of Hull and Machinery Insurance
Hull and machinery insurance is a type of ocean marine insurance, which protects the
insured vessel or fleet against physical damage caused by a peril of the sea or other
covered perils while the vessel is in transit over water.
Although the most commonly insured vessels are those operating in the ocean or the sea,
hull and machinery insurance can cover vessels that work in any kind of waterway, such
as tugboats, barges, floating machinery, and even oil rigs which operate in coastal areas.
Hull and machinery insurance policies can be written to cover a single vessel or the
whole fleet of a ship owner.
A deductible specified in the policy declarations is payable in the event of a hull and
machinery insurance claim.
A very important provision of hull and machinery insurance is the running down clause, also
referred to as "the collision liability" provision. Just as its name suggests, it protects the owner of
the craft against legal liability which may arise out of the owner's vessel colliding with another
ship and damaging its property or cargo. It is very important to note that the collision liability
clause does not apply to legal liability arising out of bodily injury or death, or property damage
to fixed installations such as piers. If you wish to get insurance against this kind of liability, you
will need to purchase a protection and indemnity coverage.
Protection and indemnity insurance
Protection and indemnity insurance, commonly known as P&I, is a club with similarity to a
marine insurance against third party liabilities and expenses arising from owning ships or
operating ships as principals.
G. IMPORT DUTIES
Coastal ships, unlike oceangoing vessels, have to pay duties on bunker oil. Bunker fuel oil for a
coastal vessel is estimated to cost about 28% more than for an oceangoing vessel and around
36% for high flash high speed diesel.2 On the other hand, the diesel used in road transport is
subsidized. Import duties on capital goods and spares also cast a burden on coastal vessels,
which depend heavily on imported spares. Only if the ships are repaired at ship repair units
registered with Director General Shipping, the imported spares are not subject to taxes. Given
that coastal shipping is much more environment-friendly and fuel-efficient than any other mode
of transport, there is a case for providing tax concessions both for fuels and spares.
Bunkers
Coastal ship owners are required to pay duty on oil bunkers unlike foreign going vessels. This
results in significant increase in the cost of operations of these vessels, furthermore, when a
foreign going vessel is converted into a coastal vessel it entails assessment of duties payable on
bunkers remaining on board. This exercise is highly cumbersome and leads to further delays.
Analysis shows that while FO bunkers for coastal vessels cost 27.55 percent more than foreign
going vessels and in the case of HFHSD bunkers cost rises to 36.35 percent.
Rs. PER
MILLION
TONNES
COASTAL
BONDED
DIFFERENCE DIFFERENCE.
%
FO 15848.01 12268.24 3579.77 27.55%
HFHSD 24806.20 18192.61 6613.59 36.35%
Table 2: Cost of Coastal and Bonded Bunkers
This factor by itself does not put the coastal shipping at a disadvantage vis-to-vis road or rail, as
fuel consumed by these modes is also dutiable. The cost of diesel to the road transport operator
for example is more or less the same as it is for the coastal operator. Nevertheless there is a
strong case for duty exemption here because it is relatively more efficient and environment
friendly. At any rate, this mode of transport in initial stages will require such props to translate
its potential into reality.
Spares
Capital goods and Spares imported by shipping companies for their coastal vessels are dutiable
as per the prevailing customs tariff. Imported as well as Indian made coastal vessels are heavily
dependent on foreign made spares. The duty on imported spares however significantly increases
the burden on coastal ship-owners. Ironically, while tax relief is available to the coastal ship-
owner on spares imported for repairing his vessel through a ship repair unit registered with the
DG Shipping and also fitted by the same unit on board; tax is leviable for spares imported other
than through this channel. The ship repair unit also charges a fee for its services typically up to
10 percent. All this effectively adds to a burden of around 15 percent of the landed cost of
the spares estimated at around 3 percent of the total cost of operation.
Here to the burden on duty of import of spares merits review especially for coastal vessels
at least built overseas.
H. TAXATION
Corporate Tax. Till recently, Indian shipping companies had to pay corporation tax at 36.75% or
the minimum alternate tax at 7.5%. The industry also enjoyed benefits under Section 33 AC of
Income Tax Act in which amounts transferred to a reserve specified under this section were not
considered as a part of book profits. In the Union Budget 2004-5 tonnage tax has been adopted.
Shipping companies with oceangoing vessels have the option of choosing between corporate tax
and tonnage tax, but not coastal shipping companies. This would act as a further disincentive for
investment in coastal tonnage; oceangoing vessels are also not entitled to tonnage tax on coastal
movement. Tonnage tax should also be extended to coastal fleet. Personal Income Tax. Indian
seafarers employed on foreign vessels or Indian vessels which ply outside Indian territorial
waters for more than 183 days in a year are entitled to nonresident status and pay no taxes. This
does not apply to officers and seafarers on coastal ships.
Personal taxation
An Indian seafarer who is employed on a foreign vessels for 183 days or more in a year is
entitled to non-resident status as per Section 6 of the Income Tax Act, 1961 and therefore
eligible for income tax exemption.
The CBDT has however held that an Indian seafarer who is employed on foreign-going Indian
vessels will be entitled to such status only if he spends 183 days or more outside Indian territorial
waters.
In other words this means the amount of time spent at Indian ports or in Indian territorial waters
will be reckoned as spent in India, neutralizing the claim of such a person for non-resident status.
Therefore a seafarer employed on Indian coastal vessels is not entitled to count the period on
towards non-resident status and the exemption from tax is not available to him.
I. SERVICE TAX
Coastal shipping / Inland Waterways compared to foreign going has great disadvantage in
running their vessels between various ports within the country. Ships pay Service tax at each and
every port for the same cargo. For example if Container “A” moves from Bombay to Goa, then
service tax is liable in Mumbai and when the Container is discharged in Goa, again the Port
levies Service Tax at the time of discharging Cargo. We have to pay service tax twice.
J. ADMINISTRATION COSTS
Administration or “Overheads” are the names given to the costs of providing a base or central
point from which the shipping company is run or administered. The function of the shipping
company’s administration is split into two distinct but related parts: the corporate , which directs
the company as a whole and makes long term plans, and the ship management and operations
which deal with the day to day management of costs. The cost of administration are usually
allocated separately to corporate management, ship operations and ship management unless the
company is very small when they may be considered as one cost.
The prime functions of ship management administration are:
Ship support
Record keeping
Accounting
Communications
The cost centres of administration can be grouped as follows:
Staff
Travel
Entertainment
Occupancy
Communications
Printing and Stationary
Professional charges
Other charges
Depreciation and Amortisation
K. VOYAGE COSTS
Bunkers:
This is one of the major cost in operating a vessel. Bunker has to take from any port to complete
the intended voyage. It may be that there remains on board the vessel at the commencement of
the proposed voyage sufficient bunkers to reach the final discharge port . If this is the case , the
estimator has merely to enter the total fuel-oil and diesel-oil required for the voyage .
Fuel-oil for main engine
Diesel-oil for ship’s auxiliaries
Port dues & charges
Port charges are generally divided into three broad categories, general tariffs, facility tariffs and
service tariffs, each of which are subdivided into a series of individual charges.
Table 3: Vessel charges
Rate of Port Dues for vessels calling at the Port:-
• A coastal vessel, which after paying 50% of the Port Dues as per provisions prescribed at
3 above, re-enters the port within the period of exemption of 30 days with cargo or
passengers or in ballast shall be charged the difference viz., 50% of the Port Dues
previously conceded.
• A coastal vessel, which, after paying 75% of Port Dues as per provisions prescribed at 4
above, re-enters the port within the period of exemption of 30 days with cargo or
passengers or in ballast, shall be charged the difference, viz., 25% of the Port Dues
previously conceded.
(a) Conservancy and port dues
It is common to establish a charge to recover the cost incurred in providing the facilities and
services which are necessary to ensure the safe navigation of vessels within the area under the
port's jurisdiction. It may include dredging, the provision of breakwaters, training walls,
navigational aids and harbour surveillance facilities, but usually excludes the costs of providing
pilot and tow services which are charged by separate tariffs.
Conservancy is a port charge which is levied for the utilization of general nautical facilities in the
approaches to the port (i.e., outside the port area), whereas port dues are levied for the services or
utilization of facilities within the port, including channels, vessel traffic service, emergency fire
services, breakwaters, pollution control and marine security. Port dues on ships are based on the
type and size of the vessels. The charging units would be the carrying capacity of the vessel
measured in gross registered tonnage (GRT), net registered tonnage (NRT) and deadweight
tonnage (DWT) or some combination of length, beam and draft, and the unit of differentiation
should be the type of the vessel.
(b) Wharfage
Wharfage is normally a cargo-related charge to recover the costs associated with the provision of
the basic infrastructure and superstructure of the port to facilitate the movement of cargo from
shipside to hinterland and vice versa. It includes the costs of providing roadways, railways,
quays, parking areas, transit shed facilities, police surveillance etc. Similar to port dues,
wharfage is charged by freight ton, metric ton, cubic metres or TEU, and its differentiation unit
is the type of cargo.
(c) Berth hire (dock or berth due)
This is a charge, normally related to the ship, to recover the costs associated with the berthing of
the vessel and for the use of the berth for a stated period of time. It may include expenditure on
the provision, maintenance and operation of docks, maintenance of dredged depths alongside and
in the dock basin, fendering, provision of quays and facilities provided on the quay apron. The
charging unit of the berth due is meter-hours, computed as the length of the vessel multiplied by
the hours that the vessel is at the berth. The unit of differentiation distinguishes among the berths
by their characteristics, such as alongside depth, back-up area and cargo handling capacities.
Table 4: Berth hire charges
(d) Transit storage
This is the charge to recover the costs of the storage of goods in transit sheds or areas. The
temporary storage rates are usually set to minimize cargo dwell time and maximize throughput.
The charging unit is the amount of storage occupied multiplied by the period of storage
measured in days. The storage can be differentiated based on the dwell time so as to charge
higher rates for an extended period of storage. Separate tariffs can also be used to distinguish
between open and closed storage and among different types of cargoes.
(e) Pilotage
Pilotage arises in two areas: the seaway gaining access to the river estuary and the port area
itself. In many instances, the pilot service is compulsory. The pilotage may be based on the GRT
of the vessel or a charge per ship. In general, as the cost of providing pilot service does not vary
for different sizes of vessels, it is appropriate to charge pilotage simply based on the vessel's port
call. However, it can be differentiated by the location where the pilotage starts and ends.
(f) Towage
This service is usually optional. Occasionally, the towage tariff is included in another charge
such as pilotage. Towage is usually based either on the characteristics of the ship or the tugs
performing the operation. Towing costs increase with the size of the tugboat used and the time of
use. Therefore, the common practice is to charge a towage per hour and to differentiate based on
the size of the tugboat used. However, in some cases it is charged as a fixed rate irrespective of
the time taken for the operation and differentiated by the vessel's type and size.
(g) Mooring/unmooring (berthing/unberthing)
This is a specific tariff applied for berthing/unberthing and mooring operations. This tariff is
charged simply by the vessel movement, but can be differentiated by the vessel's size measured
in GRT, NRT or some combination of length, beam, and draft
(h) Stevedoring
Stevedoring costs should be directly related to the costs involved in handling commodities.
Stevedoring companies in many ports are characterized by the high level of variable costs, for
example, labour and a comparatively low level of fixed costs such as mobile plant, buildings.
Therefore, in stevedoring operations the marginal costs and average costs may be identical.
The stevedoring charge is usually levied per freight ton, metric ton, cubic metres or TEU of
cargoes. Stevedoring firms often reserve the right to calculate the charge on the volume or
weight of the cargoes. It is common for all cargoes to be divided into groups according to various
criteria and a uniform rate applied to each group.
(i) Warehousing
In most ports, there is a free period during which no charge is made for storage. Warehousing
charges apply to goods that need to remain longer in the port and are, therefore, transported to
special premises reserved for that purpose.
After the free period has expired, the tariff usually takes account of the length of stay of the
goods in the storage place. In some cases, this charge per unit of time, usually the day, remains
constant, regardless of how long cargo remains in storage after the given free period. However,
in many cases, the charge per unit of time increases with the length of time spent in storage in
order to discourage any abusive lengthy storage. This charge can be differentiated by type of
storage, such as open, closed or frozen storage and by different types of cargo.
(j) Other tariffs
In addition to these specific tariffs, some ports levy other tariffs for services to the ship or to the
cargo.
These services may include fuel, water and electricity supply, labour supply, rent of equipment
and cargo processing, such as weighing, marking and repacking.
Table 5: Rate of Shifting Charges
Table 6: Rate for supply of water to shipping
k) Transshipment Charges:
The Coastal Vessels, which brings cargo from minor ports to major ports for transshipment or to
export, the ports charge wharfage twice. That means when the Cargo is discharged by Coastal
Vessels, wharfage is applicable and when the same Cargo is again loaded for final destination,
Port levies wharfage again. Hence we suggest that every Major / Minor Port must have
Transshipment charges for all Cargo and not only for Containers which are existing in some of
the Ports.
L) Commissions
It is customary to express the remuneration for the brokers time and efforts in negotiating and
arranging the contract as a certain percentage of the money earned by the ship owner. In marine
insurance , the broker is generally paid a commission by the underwriter although the assured is
the brokers client and the services are for the client.
V. REVENUE
Revenue can be classified into two methods based on the operation ,
In Voyage charter “Freight”
This means the price payable to the carrier for carrying cargo in a good condition and delivery to
the owner of an interest in the cargo. The word refers to many other issues related to chartering,
such as “freight taxes”, “freight prepaid”, etc. The payment for the consecutive voyages or
contracts of affreightment. Even in the liner trades the price is called “freight” although here the
list of freight rates are termed a “Tariff”.
In Time charter “Hire”
In a time charter the charterer is obliged to pay hire for the vessel in the agreed manner. The
charter hire per calendar month can be based on the vessels total deadweight carrying capacity.
This is the deadweight capacity on the vessel’s summer loadline, irrespective whether the ship
may be loaded down to her winter or summer loadline at the time of fixture on time charter. The
quantity of cargo carried has no bearing whether upon the charter hire. It is entirely up to the
charterers to provide full cargo in order to utilize the vessel’s cargo carrying capacity to a
/maximum extent. Hire can be also paid at a fixed sum per day of hire.
CARGO POTENTIAL
VI. CARGO POTENTIAL FOR COASTAL SHIPPING IN INDIA
A. COMMODITY MOVED BY COASTAL SHIPPING
I. Crude oil
II. Petroleum Oil and Lubricant products (POL)
III. Liquefied Natural Gas (LNG)
IV. Coal
V. Iron ore
VI. Iron and Steel
VII. Cement
VIII. Fertilizers and Fertilizer Raw materials (FRM)
IX. Food Grains
X. Containers
B. CARGO PROFILE
STATE NAME MINERAL MINES
Andhra Pradesh
Asbestos
Coal
Graphite
Iron
Limestone
Manganese
Mica
Silica sand
Arunachal Pradesh Copper
Gold
Dolomite
Graphite
Assam
Assam
Cement & Mortar
Coal
Crude Oil
Gold
Graphite
Limestone
Salt
Bihar Bauxite
Cement & Mortar
Dolomite
Glass Sand
Mica
Salt
Chattisgarh Limestone
Cement Plants
Aluminum
Lead & Silver
Iron ore
Gold
Goa Iron ore
Manganese ore
Bauxite ore
Gujarat Agate
Asbestos
Cement Mortar
Crude oil
Dolomite
Fire Clay
Graphite
Gypsum
Kasolin
Lignite
Limestone
Manganese
Mica
Quartz
Vermiculate
Salt
Silica sand
Ochre
Haryana Coal
Dolomite
Feldspar
Iron ore
Kaolin
Limestone
Quartz
Sulphur
Himachal Pradesh Glass Sand
Limestone
Iron
Copper
Gypsum
Dolomite
Salt
Sulphur
Coal
Gold
Jammu & Kashmir Coal
Glass Sand
Copper
Natural Gas
Bauxite
Chromium
Graphite
Gypsum
Gold
Lignite
Limestone
Manganese
Sapphire
Zinc
Jharkand Mica
Graphite
Manganese
Lead & Silver
Copper
Aluminum
Karnataka Limestone
Gold
Dolomite
Black Granite
Iron ore
Chromites
Bauxite
Pink Granite
Manganese ore
Kerala Glass Sand
Limestone
Iron
Copper
Kaolin
Lignite
Mica
Titanium
Graphite
Madhya Pradesh Coal
Copper
Diamond
Feldspar
Dolomite
Fire Clay
Gold
Iron
Kaolin
Lead & Silver
Limestone
Manganese
Mica
Quartz
Silica Sand
Ochre
Maharastra Bauxite
Limestone
Iron
Copper
Manganese
Dolomite
Silica sand
Coal
Mica
Manipur Chromite
Meghalaya Limestone
Flux & Chemical
Grade lime
Nagaland Limestone
Nickeliferous cromite
Orissa Aluminum
Chromium
Coal
Dolomite
Fire clay
Glass sand
Granite
Iron
Kaolin
Lead & Silver
Manganese
Mica
Silica
Limestone
Rajasthan Feldspar
Dolomite
Copper ore
Bentonita
Asbestos
Lead & Zinc ores
Kaolin
Gypsum
Gem
Abrasive gernet
Fluorspar
Phosphorite
Mica
Phyrophilite
Limestone
Chemical
Tamil Nadu Bauxite
Limestone
Beach sand
Graphite
Manganese
Vermiculite
Lignite
Uttar Pradesh Coal
Diaspore
Dolomite
Glass Sand
Pyrophylite
Limestone
Soap stone
Bauxite
Uttarakhand Limestone
Gypsum
Iron ore
Graphite
Copper
West Bengal Cement & Mortar
Coal
Copper
Iron
Lead & Silver
Lignite
Gold
Kaolin
Limestone
Zinc
Dolomite
Fire clay
Manganese
Quartz
Silica
Table 7: Cargo profile
C. MAGNITUDE OF POL MOVEMENT BY COASTAL SHIPPING
Assuming that the modal share of coastal shipping as 17 percent of overall POL products
movement, it is estimated that the quantity of POL (Coastal movement) to be moved at major
and minor ports together will be around 32.5 million tonnes by 2011-12 . Considering observed
loading and unloading pattern of POL and the location specific plans of industries, future POL
traffic in terms of loading and unloading at major and minor ports is worked out. However most
of the forecast figures are dependent on the business decisions of coast based and hinterland
Nagaland. There are lignite fields at Neyveli in Tamilnadu and Gujarat. A large quantity of the
totalcoal production in the country is produced by various subsidiaries of Coal India Ltd(CIL),
which is the largest supplier of coal in the country. The only other major producer outside of
Coal India Limited is Singareni Collieries Company (SCCL) located in Andhra Pradesh. Sea
transport offers several advantages in terms reduction of costs, decongestion of road & rail
networks, savings on fuel consumption etc, but additional handling at load and discharge ports
lead to longer transit time. The land based transport networks have over 25,000 Origin-
Destination (O-D) pairs between major production and distribution / consumption centers spread
across the country. For the purpose of analysis O-D pairs were selected on the basis of some
criteria like type of cargo, location, proximity to seaports, land leads and sea distances etc.
F. CONTAINER TRAFFIC
The movement of International containers is predominantly laden for containers moving
in to JNPT the only port where majority of transshipment is taking place today. Similarly
the traffic carried from JNPT to other ports is significantly less in terms of volume and
constitutes a large volume of empties. This shows that the decision of a shipping line for
use of an Indian transshipment port is of very complex nature.
Containers continued to be transshipped from Indian ports to foreign ports even when
Coastal service is available for connectivity to the transshipment at JNPT port.
Although main line vessels are calling at Tuticorin and Chennai, no transshipment is
taking place at these two ports for boxes of other Indian ports. Since Chennai is located
on East Coast and Main line services to Far East destinations are operated from Chennai
some movement of containers from/to other Indian ports should have been evident.
Mother vessels continue to use near by foreign hub port like Colombo, UAE for off
loading containers for India instead of over-carrying them to JNPT port where they have
a scheduled port call immediately before or after the foreign hub port.
Mundra, Pipavav, Chennai, Vizag, Tuticorin ports have been developed with private
participation mainly to attract Main Line vessels but the absence of any transshipment
activities at these ports is very conspicuous.
Mother vessel operations, routings, their trading areas and ports of call, are very vital
elements that go in to selection of a transshipment port by a main line.
Share of Coastal Shipping
General cargo volume is expected to reach 160 MTPA by 2011-12. The Consultants assumed
that the containerisation level would attain 55 to 60 percent in the next ten years. Keeping in line
the above explanation and assumption, the container traffic projected will be 5.0 and 7.4 MTEUs
for the above horizon years. Assuming the shares of coastal shipping as coastal shipping 4
percent and 5 percent for the year2011-12, the container traffic is worked out to be 0.4 MTEUs
in the respective year.
Return cargo
Information on the origin and destination details of the coastal cargo was gathered during the
visits to ports from the corresponding port officials and also consulted the published documents
on port statistics. Origin-Destination (O-D) matrices were developed for the year 2002-2003 for
selected commodities using the information collected (presented in chapter 3). From the O-D
matrices, it was evident that return cargo is not available for (major commodities) coastal
movement except for the O-D pair Vishakapatnam- Magdalla. There was a movement of Iron ore
of 3 million tonnes from Vishakapatnam to Magdalla and Iron &Steel was moved from Magdalla
to South and East Coast of India. There is a large quantity of coal movement between Paradip-
Chennai and POL movement between Chennai-Paradip. However, the nature of commodities,
demands different types of vessels. In the present situation, return cargo is available for container
traffic between Gujarat ports-JNPT-Cochin-Tuticorin.
Long land leads at either or both ends (>150 km)
Such O-D pairs that are separated by a long distance but have port location advantage at only one
end were considered to observe the impact of high percentage of land movement in the overall
sea + land transportation
The O-D pairs examined are:
Talcher - Kottayam via Paradip and Kochi ports
Tughlakabad - Bangalore via Kandla and Kochi / NM ports
Tughlakabad - Chennai via Kandla
Bangalore - Trivandrum via New Mangalore and Vizhinjam ports
Jamshedpur - Bangalore via Kolkata and Chennai ports
Mangalore - Udaipur via Kandla port
Bajva (IOC) - Bangalore via Magdalla and Kochi Ports
Sea transport over short sea distances (<1000km)
Such O-D pairs that are located at or near port location but inter-modal transport between them
involve short distances by sea were chosen to examine economic viability
The O-D pairs examined are:
Jamnagar - Mumbai via Sikka port
Tuticorin - Kollam
Visakhapatnam Steel Plant - Chennai via Vizag Port
Sea transport over long sea distances (>1000 km)
With the North- South-East-West corridors and the Golden Quadrilateral coming up on the road
network linking the four major metro cities with linkage to Ports, whether taking the sea route is
a viable option or not becomes a point to ponder especially since three of the four metros are port
cities separated by long sea distances as well. The capital and the land locked metro Delhi has
the biggest container freight station located at Tughlakabad that generates heavy traffic to & fro
hence these O-D pairs plus some other O-D pairs with long sea voyages were considered for
analysis.
The O-D pairs examined are:
Mumbai - Kolkata
Mumbai - Chennai
Tughlakabad - Chennai via Kandla port
Talcher - Kottayam via Paradip & Kochi ports
Tuticorin - Chennai
Bangalore - Trivandrum via New Mangalore and Vizhinjam ports
G. COMMODITY ANALYSIS
Commodities analyzed for estimating their future movements are shown below. The later part of
this chapter deals with a status quo situation of following commodities and the estimates for
future years:
(a) Crude Oil
(b) Petroleum Oil and Lubricant Products (POL)
(c) LNG (Liquefied Natural Gas)
(d) Coal
(e) Iron Ore
(f) Iron & Steel
(g) Cement
(h) Fertilizers and Fertilizer Raw Material (FRM)
(i) Food Grains and
(j) Containers
Origin Port Destination Port
Mumbai Kandla / Chennai / Cochin / Mangalore
Rawa Vizag / Chennai
Table 9: Origin - Destination Pairs of Crude Oil Coastal Movement
PY-03 (Cuddalore) Nagapattinam
Out of total annual production of crude oil of around 32 million tonnes, coastal shipping moves
about 16 million tonnes. As the domestic production of crude is likely to remain around 32
million tonnes in the coming years (based on the Ministry of Petroleum and Natural Gas
estimates) the Consultants do not foresee any significant change in the pattern of coastal
movement offshore. The only competing mode of transport with coastal shipping for crude
movement is pipelines, which directly transport crude from oil fields to refineries. The details of
operating crude oil pipelines in India.
Pipeline Length(km) Capacity (MTPA) Owner
Nahorkatiya – Bauroni 1156 5.5 OIL
Salaya – Mathura 1881 21.0 IOCL
Ankleshwar – Koyali 95 2.0 ONGC
Kalol - Navagam – Koyali 127 2.0 ONGC
Bombay High – Uran 203 15.0 ONGC
Haldia - Barauni 506 4.2 IOCL
Table 10: Details of Crude Oil Pipelines Operating in India
The estimated POL products for the year 2011-12.
Year Demand (MTPA)
2011-12 190
Table 11: Estimated Demand for POL Products
NO OF VESSELS GRT DWT607 959575 998601
Table 12: Coastal shipping tonnage as on 31st December 2008
Coastal tonnage
SR.
NO.
TYPE OF VESSEL NO. OF
VESSEL
G.R.T D.W.T
1 Dry cargo liner 72 121821 179301
2 Tug 212 61392 20658
3 Dry cargo bulk carriers 12 237220 364928
4 Tankers(product carriers) 14 54995 6723
5 Tankers(crude oil carriers) 2 50080 2246
6 Passenger-cum-cargo 30 82912 27232
7 Passenger service 50 16423 1925
8 Ethylene gas carriers 3 8727 6558
9 Ro – Ro 1 956 1386
10 Dredgers 25 113761 72652
11 Offshore supply vessel 106 110737 129876
12 Specialized vessel for offshore
services
37 87492 50183
13 Port trust & Maritime boards 93 45199 15702
Total (vessel) coastal trade 657 991715 1019370
Table 13: Coastal tonnage as on 31-Dec-2009
Summary of commodity wise traffic
The consolidated commodity-wise forecast for the year 2011-2012.
COMMODITY 2001-02 2006-07 2011-12
CRUDE OIL 16.00 16.00 16.00
POL 12.70 25.00 32.50
COAL 15.90 20.00 25.00
IRON ORE 04.66 09.75 13.30
IRON & STEEL 00.28 00.76 01.04
CEMENT 03.16 08.65 13.00
CONTAINER 01.04 02.60 05.20
OTHERS 00.26 00.52 01.04
TOTAL 54.00 83.28 107.08
Table 14: Traffic Estimates by Coastal shipping in million tonnes
INFRASTRUCTURE FACILITIES
VII. INFRASTRUCTURE FACILITIES
A. Berth
B. Cargo handling equipments
C. Inland connectivity
D. Storage facilities
A. BERTH
Is the place beside a pier, quay or wharf where a vessel can be loaded or discharged.
Berth facilities and Proposed berth projects in some of the major ports in India.
Kandla
The port has eleven cargo berths for dry bulk and break bulk cargoes with a total length of 2.268
m. The berths are equipped with electric quay cranes. In addition the port has six oil jetties for
handling POL, LPG and chemicals.
Proposed projects
Container Terminal 1 (restructuring of berths 11 and 12);
Container Terminals 2 and 3 (restructuring berths 7 to 10);
Multi cargo berths 13 to 16;
Mumbai
The Indira dock has 21 berths within a locked basin and five berths along the harbour wall. The
water depth inside the dock is some 9 m. The Victoria dock has 15 berths and 6,7 m water depth.
Prince’s dock has 14 berths and a water depth of only 3,7 m. Crude oil and POL is handled at
four jetties in Jawahar Dweep (Butcher Island). Tankers up to 125.000 dwt can be handled.
Proposed projects
5th oil Berth at Butcher Island
JNPT (Jawaharlal Nehru Port)
The port handling facilities include container terminals, a liquid bulk handling terminal (two
berths) and a shallow water berth for vessels with a maximum length of 165 m, which can handle
breakbulk and containers. The total length of berths is some 3.000 m.
Proposed Projects
Expansion berth towards NSICT
Mormugao
The port has a waterfront of some 2,9 km developed into a number of berths. The main
commodity iron ore is handled at berth 9 with a mechanised ore loading system. The iron ore for
export is transported to the port by barges which are unloaded at the barge berths between berth
9 and 10. The iron ore is transported from the barge berth to a stack yard behind berth 9 with a
conveyor system. Three stackers are used for the purpose. Loading operations include reclaiming
the iron ore with reclaimers, transport via a conveyor system to berth 9 and loading with ship
loaders. The loaders have a capacity of 4.000 tons per hour. The entire operations constitute the
Mechanical Ore Handling Plant (MOHP).
Proposed projects
Integration of berth 8 and 9
New coal berth
Liquid bulk berths
Cruise vessel berth
New Mangalore
The lagoon consists of 14 berths with a total length of some 3.250 m. Berths nos 9 to 13 are
related to liquid bulk with berths 10 and 11 for crude oil. LPG is handled at jetty 9. Berth no 8
(300 m length) is the dedicated berth for KIOCL. Berth 14 is 350 m long and recently
constructed. The berth with the largest water depth (15,1 m) is berth 14. The liquid berths have
permissible drafts up to 14 m.
Proposed Projects
Mechanisation of the new iron ore berth 14
Berth 15 of new Western Dock for handling coal
Restructuring of berth 1 and 2 for container handling
Construction/conversion of berth 13 for handling liquid bulk
Tuticorin
The port has 8 berths with a max permissible draft of 8,6 m to 10,9 m and total quay length of
1.770 for the handling of dry bulk, breakbulk and containers. Containers are handled at a
dedicate container terminal behind berth no 7. Furthermore the port has two shallow water
berths, an oil jetty and two (thermal) coal jetties.
Proposed Projects
Conversion of berth 8 into Container Terminal 8
North Cargo Berth for thermal coal handling
Chennai
The port has 24 berths spread over three docks, i.e. Ambedkar Dock, Jawahar Dock and Bharati
Dock. The Bharati Dock with 1,9 km of quay length provides handling facilities for
POL,containers and iron ore. The iron ore berth can cater for vessels with a draft up to 16,5 m.
Ennore
Two coal berths of each 280 m length with an alongside depth of 15 m are available.
Proposed projects
Upgrading existing Coal berths for handling thermal coal
Visakhapatnam
The port includes two harbours, i.e. the Outer Harbour with 7 berths and the Inner Harbour with
19 berths.
The seven berths in the Outer Harbour include:
Two ore berths
General cargo berth
Proposed projects
Mechanization General Cargo Berth in outer harbour
B. CARGO HANDLING EQUIPMENTS
Census of Cargo Handling Equipment
(In Nos.)
Port Crane Forklift
Truck,Toplift Truck, Reach
Stacker
Tractors
Trailers
Shovel Dozer
&Pay Load
& Excavator
, etc.
LocomotiveMobil
eWhar
fContainer
Quay Yard
Kolkata 14 12 - 3 23 $ 34 67 - 4
Haldia 2 - - 1 7 1 5 12 11
Paradip 4 5 - - 5 1 1 3 7
Vishakapatnam
- 25 - - - - - - 18
Chennai 3 10 7* 24* 29 * * 2 14
Tuticorin - 5 - - 3 - - - 1
Cochin 7 14 2* 4* 47 29 32 - -
New Mangalore
3 3 - - 7 1 1 1 -
Mormugoa 1 - - - 10 - - - 2
Mumbai ## 8 41 2 3 40( @) 15 - - 5
JNPT 2 - 816 *
1764 *
217*
98* 235*
4 ** --
Kandla - 16 - - 9 3 1 2 -
Total: 44 131 35 117 199 524 24 62
Table 15: Census of Cargo Handling Equipment
Note: (**) - 2 Pay Loader, 1 Excavator, 1 JCB. (*) - BOT Operator; ($) 16 FLTS, 2 Medium duty FLTs, 1 Toplift Truck, 2 Reach Stacker(##) - In addtion, Floating Crane - 1 no. (@) - Inclusive of 10 electric forklifts trucks for departmental use.
Container Handling Facilities
PORT NO. OFBERTHS
VESSELSIZE(IN
DWT)
EQUIPMENT(In nos.)
QUAY SIDE
GANTRY
YARD GANTR
YCRANES
TOP LIFTTRUCKS/REAC
HSTRACKERS
TRACTORS
FORKLIFT
TRAILERS
KOLKATA ** 4 21,000 - 3x35.5 T, 1x40 T (RTG)
TLT - 1x35 TRST - 4x45 T*
22x40 T(HIPPO)
2x 6.5 T(Medium
Duty)
19x40 Tand
6x20 T
HALDIA 2 40,000 - 1x30 T 1x35 T 1x10 T 7 5
VISAKHAPATNAM
1(Under BOT
Operator)
1,00,000 RMQC- 2 Nos
2X 355 t (SWL)
RTGC - 2 Nos.
2x45 T
2x10 T
1 x 5 T
16
CHENNAI 4( Under
BOT
20,000TO
45,000
2x40 T
5x60 T#24x40.0 T
2x35 T 3x25 T 2x40 T
On Contract Basis
On Contract Basis
On Contract Basis
Operator)
TUTICORIN 1 47,000 3X 40 t (SWL)
8x35 T(SWL)
12x50 T(SWL)
- 12x50 T(SWL)
COCHIN 3(Under BOT
Operator)
10,000TO
20,000
2x35.5 T 4x35.5 T (RTG)
4x35 T2x50 T
2*40 T
2 - 20 T 20 -30 T
25 35
MUMBAI 4 42,000 2x35.5 T 3x35.5 T (RTG)
2x42 T &2x45 T &* (&- Reach Stracker)
27 47 -
J.N.P.T - JNPCT
- NSICT
- GTIPL
4
2
2
70,000
85,000
85,000
3x35.5 T2x50 T
3x40T(Hired)
8 x 50 T
8 x 61 T
RTGC-12x40 T
-6x40 T(hired)RMGC-1x35.5 T-2x40 T (hired)
29x40 T RTGC 3x40 T RMGC
29x50/61 T RTGC 3x61 T RMGC
2 x45 T (Reach Stackers)
TLT- 2x40 T3x40 T
4x40 T
20104 Hired
50 Owned $100 Hired $
85 $
10(3 to 5T) 78
34 Owned**100 Hired
KANDLA 2
Table 16: Container Handling Facilities
(#) - One Gantry with twin-lifter facility, (*) In addition, 4 nos Reach Stackers of 45 T capacity each have been hired by Port;(**) Two Mobile Harbour Cranes alongwith two Reach Stackers inducted on Own-Operate Maintain Basis were commissioned in March, 2005:($) Tractor-Trailers combined
Fertilizer Handling Facilities
PORT NO. OF BERTHS
SHIP SIZE
(IN DWT)
EQUIPMENT OTHERS
HALDIA* 1 60,000 Grab 2x15 T with Conveyors
Transit Shed- Capacity 30,000 Tonnes. This facility is also used for Coking Coal
PARADIP 2 60,000 Fully mechanised handling system provided by User Agency, M/s Paradip Phosphates Ltd. & M/s IFFCO
VISHAKHAPATNAM 1 35,000 BMH Screw type marine unloader of 400 TPH (owned,
operated and maintained by M/s
Coromandal Fertilizer Ltd)
Mechanical facilities provided by User Agency, M/s. Coromandal Fertilizer Ltd.
COCHIN 1 87,000 Mechanical unloader and conveyors system capacity - 600 TPH
Mechanical system is provided by User Agency, M/s. FACTt Ltd.
FACILITIES FOR STORAGE & TRANSPORT OF LIQUID BULK BY PRIVATE TANKFARM OPERATORS AT JNPT LEASED LAND
1
B&C CHEMICALS
/OTHERS
9.00 19,000
VADINAR3 SBM + 1 ESSAR
JettyPOL CRUDE 30.00 3,00,000
2x1050 MM
SUBMARINE PIPELINE 8 KM
KANDLA
4(OJ-1
toOJ-4)
POL PRODUCTS/
OTHERS
10.00TO
10.70
40,000 TO
56,000
01x02"
2x10 " DIA3X10" DIA
SUBMARINE PIPELINE 8 KM
01x06"
45x08"
09x10"
10x12"
02x14"
09x16"
09x20"
11x24"
1 (M/S IOC Jetty)
(OJ-VI)
POL PRODUCTS
10.10 45,0003x02"1x12"1x22"
3x300 MM DIA
-
1 IFFCO Captive
Jetty(OJ-V)
PHOS ACID &
AMMONIA 9.50 45,000
8x8" 1x12" 1x14"
1X8" DIA2X8" DIA FLEXIBLE HOSES
Table 19: Liquid Bulk Handling Facilities
Note : * - Excludes one mooring in Outer Harbour used for transhipment of Crude & Products. Also excluding three pipe lines at OR 1 or OR 2 used for slops/Ballast
# - Excludes anchorage at Saugor/Sandheads used primarily for transhipment of POL (Crude), where vessels of much higher DWT (including VLCC's) can work; ($) Temporary facility** - Service berth is modified and created for handling oils & safe grade chemicals through pipelines.
C. INLAND CONNECTIVITY
General
As in many other countries, probably the most important transport/logistics challenge facing
India is its infrastructure. While considerable private sector investment is now being directed into
the development, expansion and modernization of Indian ports, the country’s road, rail and
inland waterway systems have suffered from years of neglect and under-investment.
The average cost of freight is relatively high and India’s inadequate transport infrastructure is
holding back economic growth according to Drewry.
The system of distribution containers and containerized cargoes is highly concentrated with most
containers for Delhi and north India being routed through the Mumbai/JNPT port complex. This
route is already one of the busiest domestic freight arteries in the country. With new container
terminal developments in Gujarat and with decent rail connections to and from the ports of
Mundra and Pipapav this situation is changing gradually.
I. ROAD
The most distinct part of India’s physical infrastructure development in recent years is the
development of road network across the country; per sq. km. of surface area in India is now
endowed with one km of roadways. India has one of the largest road networks in the world,
aggregating to 3.34 million km. The country’s road network consists of Expressways, National
Highways, State Highways, Major District Roads, Other District Roads and Village Roads. The
Indian highway network is limited and many of the roads are in poor condition. A World Bank
Report (India’s Transport Sector – 2002) identified in 2002 only some 2% of the national
highway system as being 4 lanes with the remaining 98% being double, single or intermediate. In
the regional network, no state highways were 4 lanes and only 23% comprised 2 lanes. The
backlog of years of under-maintenance is huge. The same report listed that 25% of state and
national highways are congested.
In the latter years capital expenditure on roads has been increasing amongst others for
improvements to the national highway system.
National Highways/Expressways 66590 km
State Highways 128000 km
Major and Other District Roads 470000 km
Rural Roads 2650000 km
Table 20: Road networks
The regulatory environment and the reliance on regional/provincial operating agreements and
licences has resulted in a very fragmented road haulage industry characterised by the presence of
many small companies employing just a few trucks and by a shortage of modern specialised
freight transport equipment.
A number of schemes targeted at improving connections between main ports and the national
highway network are either underway or in a planning stage. The majority of these projects are
being realised through Special Purpose Vehicles (SPV’s) set up between various (government)
agencies.
Single Lane 32%
Double/Intermediate Lane 56%
Four Lane/Six lane/Eight Lane 12%
Table 21: Road lanes
In this respect JNPT formed an SPV with NHAI (National Highway Authority of India) and
CIDCO (City and Industrial Development Corporation of Maharashtra Ltd).
To improve road connectivity at Chennai, the Port Trust formed an SPV with NHAI and the
government of Tamil Nadu – Chennai Ennore Port Road Company Ltd.
One of the largest and most ambitious projects being implemented is the Golden Quadrangle and
North-South and East-West Corridors project, which is being administered by the NHAI. The
project involves the construction of four-lane road links between the four main cities of India
(Delhi, Mumbai, Chennai and Kolkata) with a view to improve speed and raise safety and
security standards for passengers and cargo.
The road network, as on December 2007, comprises 66,590 km of National Highways, 128,000
km of State Highways, 470,000 km of Major District Roads and about 2.65 million km of other
District and Rural Roads. National Highways comprise only about 2 percent of the total length of
roads and carry about 40 percent of the total traffic across the length and breadth of the country.
Out of the total length of National Highways, 32 percent is single lane/intermediate lane, 56
percent is 2-lane standard and the balance of 12 percent is 4-lane standard or more.
The National Highways Development Project (NHDP), the largest highway project ever
undertaken by the country, is being implemented by the National Highway Authority of India
(NHAI). NHDP Phase I & II envisage 4/6 laning of about 14,279 km of National Highways, at a
total estimated cost of Rs.650 million (at 2004 prices). These two phases 109 comprise of
Golden Quadrilateral (GQ), North-South and East-West Corridors, Port Connectivity and other
projects. The Golden Quadrilateral (GQ-5,846 km) connects the four major cities of Delhi,
Mumbai, Chennai and Kolkata. The North-South and East-West Corridors (NS-EW-7,300 km)
connect Srinagar in the North to Kanyakumari in the South, including spur from Salem to Kochi
and Silchar in the East to Porbandar in the West. By November 30, 2006, 6,776 km of national
highways pertaining to NHDP had been completed, the bulk of which (5,475 km) lie on the GQ.
Constraints faced in the timely completion of NHDP include delays in land acquisition, removal
of structures and shifting of utilities, law and order problem in some States, and poor
performance of some contractors. Nearly 93 percent works on GQ have been completed by
November 2006, and the NS and EW corridors are expected to be completed by December 2009.
With the completion of about 93 percent of the GQ, a substantial impact upon the economy is
already visible. At this stage there is a need to focus attention on corridor management and road
safety, and NHAI has already put in place a corridor management policy.
For implementation of NHDP Phases I and II, the main source of finance of NHAI is the fuel
cess. The present rate of cess is Rs. 2 per litre on both petrol and diesel. A part of this cess is
allocated to NHAI to fund the NHDP. This cess is leveraged to borrow additional funds from the
domestic market. Besides, the Government of India has also negotiated various loans from
World Bank (US$ 1,965 million), Asian Development Bank (US$ 1,605 million) and Japan Bank
for 110 International Cooperation (Jap. Yen 32,060 million) for financing various projects under
NHDP. These loans from the multilateral institutions are passed on to NHAI by the Government
partly in the form of grant and partly as loan. NHAI also negotiated a direct loan of US$ 165
million from ADB for one of its projects. The funds provided to NHAI, including its borrowings
from the market, are utilized for meeting project expenditure as well as debt servicing.
II. RAILWAYS
Indian Railways is a vast network. Indian Railways, world’s second largest rail network under a
single management, has been contributing to the development of the country’s industrial and
economic landscape for over 150 years. Of the two main segments of the Indian Railways,
freight and passenger, the freight segment accounts for roughly two-thirds of revenues. The
importance of rail to the Indian transport market is obvious. Good rail connectivity is essential as
large volumes of cargoes move to and from the port hinterlands.
Within the freight segment, bulk traffic accounts for nearly 95 percent, of which more than 44
percent is coal. Improved resource management, inter alia, through increased wagon load, faster
turnaround time and a more rational pricing policy has led to an improvement in the performance
of the railways during the last two years.
Rationalization of classification is aimed at securing eventual elimination of cross-subsidies in
fares and freight, and evolving a more transparent and cost-based tariff regime. This process
necessarily requires increase in freight rates for commodities being transported below cost and
lowering the freight charges for commodities being 118 moved at abnormally high rates. In the
freight segment, the number of commodities in goods tariff has been reduced from 4,000
commodities to 80 main commodity groups in 2005-06, and further to 27 groups in 2006-07. The
total number of classes for charging freight has been reduced from 59 to 17.
The high-density network connecting the four metropolitan cities of Chennai, Delhi, Kolkata and
Mumbai, including its diagonals, popularly called the Golden Quadrilateral has got saturated at
most of the locations. Given the present growth scenario, the Railways expect to carry 95 million
tonnes incremental traffic per year and about 1,100 million tonnes revenue earning freight traffic
by the end of the Eleventh Five Year Plan. This entails large investment for capacity
augmentation.
Currently Mumbai port complex is one of the main rail cargo transfer centres in India.
Congestion is experienced in the region due to lack of track capacity, shortage of rail cars and
capacity limitations in rail cargo depots. Ocean carriers for this reason have been looking for
alternative port gateways in the Northwest part of India as Mundra, Hazira and Pipapav in
Gujarat.
Another disadvantage of the railway system is the multi gauge character which often does not
support through transport and seamless services and the relative high cost. Some progress is
made in conversion of narrow gauge track to broad gauge, however progress is slow.
The provision of rail services is being liberalised with the Indian Government ending the
monopoly of Concor on moving containers by rail.
In 2004-05 rail transport figures indicated that 30% of India’s international container traffic was
moved by rail.
iii. INLAND WATER TRANSPORT
Inland waterways, comprising of rivers, lakes, canals, creeks, backwaters etc, extend to about
14,500 km in the country. However, potential of this important mode of transport has not been
fully exploited so far. Several countries of the world have successfully developed this mode of
transport by giving required importance and attention and now Inland Water Transport (IWT)
has substantial share in inland transport network of those countries.
In India, inadequate infrastructural facilities such as depth and width required for movement of
IWT vessels for round the year operation, terminals for loading and unloading of cargo and
connectivity with road and rail, navigational aids for safe and unhindered navigation during day
and night and dearth of IWT vessels for carriage of cargo and passengers are the constraints
facing the inland waterways sector. To achieve substantial step up in IWT traffic, major thrust is
being given on the creation of infrastructure and at the same time on the augmentation of IWT
fleet primarily by private sector.
With a view to provide
(i) Navigable channel with adequate depth and width to enable navigation of cargo and
passenger vessels of reasonable size,
(ii) Navigational aids for safe and smooth navigation round the clock, and
(iii) Terminals to provide facility for berthing of vessels, loading and unloading of cargo /
passengers and connectivity with road and rail in the inland waterways, IWAI has
prepared an Action Plan for making existing three National Waterways viz. (a)
Allahabad-Haldia stretch (1620 km) of the Ganga-Bhagirathi-Hooghly river system
(NW-1) (b) Sadiya-Dhubri stretch (891 km) of Brahmaputra river (NW-2) and (c)
Kottapuram-Kollam stretch of the West Coast Canal, Champakara Canal and
Udyogmandal Canal (205 km) (NW-3) fully functional by March 2010 subject to
availability of funds. This Action Plan envisages fairway with 3 m/2m/1.5 m depth, a
judicious mix of fixed and floating terminals and round the clock navigational
facilities. Various projects under this Action Plan are under implementation. Detailed
Project Reports (DPR) for the two new NWs are going to be completed soon. Based
on the final draft DPR for NW-4, a consolidated project in PIB format has been
prepared and it is in the process of sanction. For NW-5 also, as soon as the consultant
submits the DPR, similar consolidated project will be prepared for sanction.
Advantages of IWT
Low capital cost
Cost of development of inland waterway has been estimated to be a mere 5-10 percent of
the cost of developing an equivalent 4-lane highway or railway.
Low maintenance cost
Cost of maintenance of inland waterway is placed at 20 percent of that of roads.
Low fuel cost
Inland Water Transport is a highly fuel-efficient mode of transport. This fact is borne out
by the estimate that one litre of fuel can move 24 tonnes km of freight by road, 85 by rail
and 105 by IWT.
Inland Waterways Authority of India (IWAI)
The IWAI was set up on 27th October, 1986, vide Inland Waterways Authority of India Act,
1985, for regulation and development of inland waterways for the purposes of shipping and
navigation. IWAI is primarily responsible for development, maintenance and regulation of
National Waterways.
Earlier, the Government of India declared three waterways as National Waterways. These are (i)
Allahabad-Haldia stretch (1620 km) of the Ganga-Bhagirathi-Hooghly river system (NW-1) (ii)
Sadiya-Dhubri stretch (891 km) of Brahmaputra river (NW-2) and (iii) Kottapuram-Kollam
stretch of the West Coast Canal, Champakara Canal and Udyogmandal Canal (205 km) (NW-3).
IWAI undertakes development and maintenance of IWT related infrastructure facilities on these
waterways.
In November 2008, two more waterways have been notified as National Waterways (NWs) vide
two gazette notifications dated 25.11.2008. These are: (i) the Kakinada- Puducherry stretch of
Canals and the Kaluvelly Tank, Bhadrachalam – Rajahmundry stretch of River Godavari and
Wazirabad – Vijayawada stretch of River Krishna (NW-4- 1095 kms) and (ii) the Talcher-
Dhamra stretch of river Brahmani, Geonkhali- Charbatia stretch of East Coast Canal, Charbatia-
Dhamra stretch of Matai river and Mangalgadi – Paradip stretch of Mahanadi delta rivers (NW-
5-623 kms.)
The financial performance of IWAI has shown significant improvement in recent years. While
the expenditure level of IWAI was about Rs 35.00 cr during the entire 8th Plan it rose to Rs 151
cr during 9th Plan and further to Rs 385 cr during the 10th Plan. During 2007-08 IWAI
expenditure was Rs.79.63 cr.
In 2008-09 the BE for projects of IWAI is Rs. 180 cr and 31.03.2009
In terms of physical performance, the IWAI had prepared an Action Plan in 2006-07 for making
the three National Waterways fully functional. Many projects of this Action Plan have either
been implemented and the rest are under implementation.
Main achievements of IWAI during the past few years include the following:
• The overall cargo movement through IWT went up from 1.63 billion ton km (32.48 million
tons) in 2003-04 to 3.38 btkm (55.82 million tons) in 2008-09.
• For the first time regular cargo movement was established between Haldia and Varanasi.
• Movement of fly ash, clinker and gypsum from Haldia/ Kolkata to Bangladesh
• Regular movement of HSD established between Numaligarh (Assam) and Budge- Budge (West
Bengal) through Bangladesh inland waters.
• Construction of first IWT terminal capable of handling containers at Patna and Pandu
(Guwahati) completed. Container handling cranes for these terminals have also been procured.
• Projects for construction of high level jetties at Patna and Pandu (Guwahati) terminals have
been approved and construction work awarded to CPWD.
• To facilitate mechanical handling at floating terminals, nine floating cranes and four shore
cranes procured for NW-1 & 2.
• Seven permanent cargo handling terminals have been constructed and commissioned in
National Waterway –3 in Kerala
• 24 hrs navigational aids between Tribeni and Farakka in NW-1, between Dhubri to Silghat (440
km) in NW-2 and entire NW-3 provided and maintained.
• Construction of two cutter suction dredging units for NW-1 and four cutter suction dredging
units for NW-2 underway.
• Construction of seven survey vessels for NW-1 and two survey vessels for NW-2 completed.
• Construction of one POL vessel and one Container vessel has been completed and vessels are
in operation.
• Detailed Project Reports (DPR) for these two new NWs are being prepared and likely to be
completed soon.
• Three Shareholders Agreements for setting up of joint venture companies have been signed by
IWAI for acquisition, operation and management of barges on NW-1/NW-2 / Indo Bangladesh
Protocol routes.
Central Inland Water Transport Corporation (CIWTC)
CIWTC was incorporated on 22nd February, 1967, by taking over all the assets of the erstwhile
River Steam Navigation Co. Ltd. (A Sterling Company) and liabilities to the State Bank of India
and Govt. of India under a Scheme of Arrangement, approved by the Calcutta High Court on
03.05.1967.
The Corporation is under the administrative control of the Ministry of Shipping . The registered
office and corporate office of CIWTC are located at Kolkata and various branch offices are
operating at Guwahati, Karimganj, Badarpur, Patna and many other places. The position of
manpower on its payroll as on 01.12.2008 was 424 employees. The corporation is headed by a
full time Chairman – cum – Managing Director.
The principal activity of the Corporation is transportation of cargo by barges through Inland
Waterways in the country and through the routes identified in the Protocol on Inland Water
Transport between India and Bangladesh.
Figure 1: Inland waterways in India
NATIONAL WATERWAY-1
Ganga-Bhagirathi-Hooghly river system from Allahabad to Haldia (1620 kms) - declared as
National Waterway in 1986.
Figure 2: National Waterway 1
Fairway Development: To maintain LAD of 2 m between Haldia and Varanasi and 1.5 m
between Varanasi and Allahabad, RC works i.e. bandalling and dredging were carried out
between Tribeni and Allahabad (1424 Km.). The stretch between Haldia and Tribeni (196 km) is
tidal and the LAD of more than 2 m is maintained naturally therein. During 2007-08, 1020 m of
bandals were erected and maintained in Tribeni-Farakka (364 km), and 15000 m in Farakka-
Allahabad (1060 km) stretches. In addition, 92,000 cubic meter of dredging was also done in
Tribeni-Farakka stretch by deploying one Cutter Suction Dredger (CSD), which is owned by
IWAI. LAD of 2.5 m was maintained between Haldia and Farakka (560 km) round the year.
While LAD of 1.8 to 2 m for 330 days was maintained between Farakka and Patna (460 km)
except at one location just upstream of Farakka lock where regular dredging is required in the
post monsoon season due to excessive siltation in the Farakka barrage pond. 1.5 m LAD
Between Patna and Varanasi (363 km) and 1.2 m between Varanasi-Allahabad was maintained
for about 237 days. During 2007-08, an important project for construction and supply of two
CSD units [a unit comprises one Cutter Suction Dredger (CSD), one Work Boat (WB) and one
Accommodation Boat (AB)] was sanctioned by the Government at a cost of Rs 37.82 cr and
work was also awarded to separate shipbuilders. The construction work was in progress.
Construction of seven survey vessels was also completed during the year and the vessels were
deployed on the waterway.
Terminals:
Fixed terminals at Haldia, Kolkata, Pakur, Farakka and Patna.
Floating terminals at Haldia, Kolkata, Diamond Harbour, Katwa, Tribeni, Shantipur,