Water transport, mainly through inland waterways and coastal shipping, is both cost efficient and sustainable; however India is yet to tap the potential of this most environmentally-friendly mode of transportation. Watan Singh...
India has a vast coastline spread across 7,517 kilometres with three sides open to the sea and blessed with 13 major ports, 187 intermediate ports and around 14,500 kilometres of inland waterways. Major ports in port sector handle a large part of the total cargo traffic in India. But most of the non-major ports are still underdeveloped and only a few developed ones provide all-weather berthing facilities. In last year, only around 61 non-major ports handled cargo traffic. Other prime sectors that play a vital role in the total seaborne cargo movement in India are inland waterways and coastal shipping.
But these important sectors are currently underdeveloped and could be well-utilised to exploit businesses with many features that would benefit the Indian trade and commerce that has seen a steady growth in past. This is one area that requires huge investment and the potential benefits to India’s trade and commerce is significant.
For this, India’s Maritime Agenda 2010-20 is in place with new horizons open to be exploited from fresh opportunities and breaking potential grounds in the maritime sector. This would also include focus on revising several policies, programmes of projects with real-time goals directed specifically to each sector to open up new doors not only for the maritime sector but also for the economy as a whole.
From the global transport industry perspective, water transport moves the major chunk of the overall volume of the world trade. Likewise, in India, 95 percent trade by volume and 70 percent by value are transited via sea and this calls for the need of developing Indian shipping industry in forefront. Therefore, it is very important to increase the tonnage, specialise in various services, develop state-of-the-art infrastructure (ports and inland waterways), facilitate technology, frame trade-oriented policies, have fair regulatory regime with timely monitoring, etc. in order to channelize the overall trade activity of the country. Indian shipping industry is expected to reach tonnage level of 43 million gross tonnage by 2020 including the chartered and owned tonnage. So, how energy efficient is cargo movement through waterways? Latest measurements show that 105 tonnes of cargo can be moved at a distance of one kilometre in one litre of fuel via waterway whereas in same fuel and distance, railways can move about 85 tonnes of cargo and roadways about 24 tonnes which is the least efficient. Water transport, mainly through inland waterways and coastal shipping, enables new possibilities with positive economical growth that is also measured as the most viable, energy efficient, cost-effective, environmental-friendly and faster mode of transportation.
The Inland Waterways Authority of India (IWAI) took the initiative to get a study conducted, also included in the Maritime Agenda, to identify feasibility of having national waterways transport grids on National Waterways and similar at potential locations. Currently, there are five National Waterways. Action plan is set for the development of NW-4 and NW-5 and a new national waterway (NW-6) is proposed. The plan in terms of developing inland waterways is apparent with the recently inked Memorandum of Understanding (MoU) between IWAI and Dedicated Freight Corridor Corporation of India (DFCCIL). The MoU’s sole purpose is to collectively create a state-of-the-art and first-of-its-kind inland waterways terminal interlinking and converging logistics hubs and railway networks at Varanasi and other places on NWs. This would also facilitate development of businesses of this area and its feeder routes. In support of this, Nitin Gadkari, Minister of Shipping and Road Transport & Highways, government of India, is proposing to introduce a bill in the Parliament to develop an additional 101 inland waterways. “The development of these waterways would ease the pressure on road and rail transport and reduce logistics cost to one-fifth when compared to other modes of transport. It would help in bringing down levels of pollution,” said Gadkari.
IWAI and DFCCIL will jointly develop a Dedicated Freight Corridor (DFC) serving as terminal at inspected locations catering to the cargo traffic. The Phase-I of the DFC will see construction of two corridors, namely Eastern DFC navigating cargo movement from Ludhiana, Punjab to Dankuni, West Bengal; and Western DFC extending from Dadari in Delhi NCR to Jawaharlal Nehru Port in Mumbai. NW-1 runs parallel to the Eastern DFC’s Allahabad and Varanasi stretch and thus, this will enhance road, rail and inland waterways connectivity to carry cost effective and efficient cargo movement.
Water transport must be analysed from the standpoint of understanding technical abilities and physical viability, knowing business potential of cargo carriers and agencies, and calculation of important determining factors such as - demand and supply of shipments.
An immediate attention to build up inland waterways network can also be observed by analyzing the existing and potential large demands. Huge demand is of iron ore export from mines in south and north Goa via Mandovi and Zuari rivers, which is here-to-stay with large customers. Also,there is increasing iron ore export from Karnataka and demands from oil refineries in the north east. All these transitions face many difficulties and have not reached their full potential due to the under-developed inland waterways sector.
In the table above it is clear that the cargo movement increased from 696.29 lakh tonnes in 2009-10 to 751.79 lakh tonnes in 2010-11 which is the highest incline in the past six years. Thereafter, cargo volumes slightly fell to 704.79 lakh tonnes in the following year and since then the total volume decreased at a marginal rate, coming down to less than half of 2010-11 in 2013-14. This decrease is mainly due to the high turnaround time, dwell time of Indian ports and also inadequate infrastructure that have taken a toll on transacting activities. Other factors are rigid policies and taxonomies at Indian ports that pose a hindrance for traders and competitors that often get diverted to other low tax or tax free jurisdictions.
According to the ministry of shipping ongoing developments on National Waterways are: capacity augmentation of vavigational infrastructure of NW-1; new wave of terminals; construction of IWT terminal including roll on-roll off (Ro-Ro) facility at Dhubri on NW-2. The scope of coastal shipping sector is widening and it also plays a vital role in shaping up the seaborne trade and channelising surplus exports from the coastline. But this is hampered due to trade restrictions and lack of capacity handling. Indian seaborne trade is expected from some hundreds tonnes to rise to the level of 2,134 million tonnes by the year 2020.
As for the policy regime front of water transport, it was a relief for the traders when Indian government made lenient changes in the cabotage policy in 2012 for easy transhipment of export-import (EXIM) containers to and from the International Container Transhipment Terminal (ICTT) located at Vallarpadam, Cochin. Before this, foreign vessels could not participate in coastal trade (between local ports) in India without obtaining a licence from the Directorate General (DG) of shipping, that is, with a high cost and lengthy procedure. This caused hindrance for mainline foreign vessels to be called at ICTT for transhipment of Indian container traffic which were directed to Port of Colombo and other international ports.
Indian coastal shipping currently makes seven percent of the total domestic cargo that is comparatively lesser than our main competitor China in the Asia Pacific region at about 43 percent, the European Union transports 42 percent, and the US 15 percent. The Indian shipping ministry is attempting to achieve a 10 percent share for coastal shipping alone in the overall multi-modal of transport by 2020. This can be achieved when the cargo shipped via waterways grows at a combined annual growth rate of 23 percent to around 600 million tonnes by 2020 a year.
Another important aspect is the influx of private investment through Public Private Partnership (PPP) programmes in the development of coastal shipping and inland waterways and also to bring in expertise from all the related fields. Major participation in developing national waterways is from the private sector. Under this mode, Jal Marg Vikas’ (NW-1) developing project has already taken off, stretching from Allahabad and Haldia distancing 1,620 km, at a total estimated cost of $700 million (Rs 4,200 crore) of which half of the total cost will be aided by the World Bank.
Modernization of port infrastructure and revising trade policies at ports is the call of the now to enhance the quality of services and facilities and increase cargo handling capacity. Tarrif regimes for ports and terminal operating were altered in past years by Tariff Authority for Major Ports (TAMP) to streamline the framework of rates applicable during port-trade. But these altered rules, especially the three different tariff guidelines provided by TAMP, were not equally benefiting to all major and non-major port operators as each guideline was distinctive for public or private port operations selectively wheras the guidelines should be public-driven.
For mainly boosting coastal shipping, TAMP directed major ports to accord priority berthing at atleast one berth to dry bulk/ general cargo to coastal vessels without payment of priority berthing charges. In view on the current regulations, Shardul J. Thacker, Partner, Mulla & Mulla & Craigie Blunt & Caroe, Mumbai cited an example of the cabinet giving “in-principle” approval for the concept and institutional framework of the Sagarmala Project in March 2015. “The concept note presents a scheme of removing the imbalance in the share of the mode of transport. The emphasis is to increase the present coastal traffic of only seven percent with roads (57 percent) and rails (30 percent), both of which are congested and expensive resulting in 14 percent logistic costs,” explained Thacker.
Kerala government has initiated a scheme to promote use of coastal shipping for cargo generated out of the state. Incentive of Re. 1 per tonne per km was provided along the state’s coastline. Additionally, the shipping ministry has identified containerized cargo and automobiles for coastal and inland waterway transportation through Scheme for Incentivizing Modal Shift of Cargo (SIMSC). The SIMSC is to minimize environmental impact and the cost of congestion on roads and railways and Rs. 300 crores has been allocated for planned period from 1 April 2015 to 31 March 2017. Eligible for this scheme are shippers transporting identified cargo on coastal/inland waterways and barges. Incentives are Re. 1 per tonne per nautical mile up to 1500 nautical miles and Rs 3000 per TEU.
With this, the dim light of hope for the cargo carriers, to get the optimum share from the overall transportation, is gaining strength and getting brighter in wake to gain from different trade-oriented decisions, allowing India shippers to compete with the international standards.
According to consultancy firm KPMG, moving goods via waterways would be much cheaper than road transport, at about 21 percent of the cost, and the railways 42 percent.