Sep 22, 2001|
Container Traffic: Infrastructure hurdles
In an arena of multimodal transportation, containerisation of cargo helps in reducing time to delivery and sustaining handling charges. By eliminating manual re-packing when differing modes of transportation are used, containerisation cuts down on freight and labour costs. Apart from offering significant advantages like timeliness of delivery, reduced damages and pilferage, transport through containerized cargo especially by rail is cost effective means of transportation particularly for medium and long hauls.
Globally, the level of cargo containerisation is around 70% as against 30-35% in India. However, the growth in containerisation has been rapid in recent years, with container traffic growing at a CAGR of 15%, compared to just 7% for non-container traffic. This is reflected by the fresh capacity additions in terms of container handling at Indian ports. Of the total traffic handled at Indian ports, container traffic accounts for around 10% of total traffic. Domestic growth in containerisation could be attributable to progressive liberalization in external trade policy, changing product mix of Exim business and growing acceptance of containerized packing as a standard.
Since the year 1994-95 the total container traffic handled in Indian ports has grown by more than 50% in last five years. The country currently has 1 m TEUís (Twenty foot equivalent units/ 1 standard size container) each of export and import container traffic. The growth of container port traffic is expected to have a relatively better growth rate in the coming years, especially in ports of JNPT (Jawaharlal Nehru Port Trust), Mumbai and Chennai. These ports, which handle about 80% of the business currently, are expected to see most of the container traffic in future. Other important container handling ports are Haldia and Tuticorin.
The perspective plan for Indian Port - Vision 2020, a study ordered by the Union Ministry of Surface Transport and carried out by Rail India Technical and Economic Services (RITES), has projected total marine container traffic of 220 m tonnes by 2020 (28 m tonnes in FY00). Container capacity will see a growth of 100% in next 3-4 years. One of the major areas identified by the report for restructuring of ports has been construction and operation of container terminals.
A major hurdle for the growth of container traffic has been lack of adequate infrastructure. In India productivity in terms of ship turn-round time, waiting time and average ship berthday output has slowly improved over the last decade, but the performance continues to be modest when compared with generally accepted international standard and performance of other Asian ports.
High percentage of non-working time at berth per vessel is one major factor in low performance of Indian Ports. This has discouraged most shipping lines from introducing direct container services. Only one Indian player, viz SCI has a role in container shipping. However, most of the leading global container companies like Maserk-Sealand, NOL-APL and P&O-Nedlloyd offer services to Indian shippers. Again even the container handling costs in India are on an average 70-80% higher than those in Japan and United States despite low labour costs.
Container traffic per day
It is clear from the table above that India loses out to container traffic to neighboring countries primarily due to lack of infrastructure.
To conclude the industry holds huge potential provided the government gives a fillip to infrastructure on a fast track basis.
More Views on News
Jun 14, 2017
Should you subscribe to the IPO of Tejas Networks Ltd?
May 26, 2017
Don't be surprised to come across some Super Investors there!
May 19, 2017
Not all small-cap investors see themselves as traders. Some see themselves as business owners.
Jul 31, 2017
Should you subscribe to the IPO of Securities & Intelligence Services Ltd?
Jul 8, 2017
If Super Investors can wait for the right pitch, so can you.
More Views on News
Aug 7, 2017
The data tells us quite a different story from the one the government is trying to project.
Aug 10, 2017
Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.
Aug 8, 2017
Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...
Aug 12, 2017
The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.
Aug 7, 2017
Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...
Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement. LEGAL DISCLAIMER:
Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here
. The performance data quoted represents past performance and does not guarantee future results.SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: email@example.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407