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Container Traffic: Infrastructure hurdles - Views on News from Equitymaster
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  • 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.

    Container traffic per day
    (In TEUís)
    Mumbai 220
    Chennai 310
    Bangkok 1300
    Columbo 1400
    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.

    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.



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