Role in Enhancing International Trade Competitiveness free essay sample

Indias export import growth has grown around 24 per cent during 2002-07. Its impact on container traffic growth could be higher, since a greater share of trade is moving towards finished goods requiring containerization. Presently, containerized cargo represents about 30% by value of Indias external trade, and this proportion is likely to grow as containerization increasingly penetrates the general cargo trades and increases its share from the current 68 per cent to nearer international levels of around 75-80 per cent [World Bank, 2007]. Considering various growth scenarios and studies, it appears that international trade growth and penetration would result in 21 mTEUs by 2015-16. Looking at the container traffic growth in the past few years, there seems to be scope for hub operations in India, possibly one each on the east and west coast. As per the projections made by a study of the Jawaharlal Nehru Port Trust, 9 mTEUs of the Indian traffic of 21 mTEUs will be hubbed in 2015-16 [JNPT, 2006]. We will write a custom essay sample on Role in Enhancing International Trade Competitiveness or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page If 50 per cent hubbing were to take place in India, then 4. 5 mTEUs will be hubbed in India, implying transhipment handling of 9 mTEUs. This requires port handling capacity of 30 mTEUs, with 9mTEUs as transhipment at hub ports. Further, shipping trends will play an important role in deciding whether the Indian ports have potential for hub operations. Hinterland connectivity is a critical area to ensure a seamless flow of containers and improved port productivity. Currently, 30% of the traffic is expected to move hinterland by rail and the remaining is expected to move entirely by road, mostly to nearby CFSs, and some to the interior Inland Container Depots (ICD) [PC, 2006]. There are also issues with respect to evacuation of containers from ICDs. There is a lot of road based congestion due to insufficient infrastructure. Interfacing with customs is another issue. This paper focuses on issues in marine and port operations, hinterland connectivity, and ICDs; in short, the entire supply chain of container movement for building global trade competitiveness. 1. Introduction India has 12 major and 187 non major ports along its 7517 km coastline. The compounded annual growth rate (CAGR) of container traffic in TEUs for the period 2001-06 was 15. %, which is higher than the worlds average for this period. Given the growing economy and international trade, a lot of future potential is seen in this sector. This however would be contingent on the maritime sector being equipped to take the challenges emerging from (i) large shipping vessels and deeper draft at ports (ii) hub and feeder operations at ports and along the coast respectively (iii) hinterland connectivi ty between port and Inland Container Depot (ICD)/Container Freight Station (CFS) and (iv) terminal development on ports and in the hinterland. Other issues relate to use of Information Technology (IT) and better systems to coordinate with bodies like customs and industrial location policy (especially with respect to Special Economic Zones (SEZs). 2. Objectives i. To understand and map the current and future trends of containerization in India’s international trade. ii. To correlate the growth of containerization with other variables i. e. , growth in International Trade (export-import) and growth in GDP 3. Hypothesis With the current growing economic growth rate of India which is second only to China, there has been consistent increase in foreign trade. In the absence of a hub port in India, a majority of the countrys containers are currently transshipped through other ports i. e. Colombo (just south of India), Singapore (east), Dubai and Salalah (west). Handling these through the Indian transshipment terminal would result in savings of between Rs 6,000 and Rs 16,000 per TEU for the Indian exporter. The reasons for a hub port not evolving in India are * insufficient traffic * cabotage law * insufficient infrastructure including draft requirement for a mainline ship Table 2 gives the container traffic and transshipment at Indian ports. As can be seen, the percentage of transshipment is a very small share of the total traffic, implying that Indian ports are really not providing hub services. Table 2: Container Traffic and Transshipment at Major Ports| Year| Total Container Traffic| Transshipment| | 000 TEUs| Growth (%)| 000 TEUs| %| 2000-01| 2468| 13. 0| 25| 1. 0| 2001-02| 2886| 16. 9| 169| 5. 9| 2002-03| 3366| 16. 6| 187| 5. 6| 2003-04| 3900| 15. 9| 208| 5. 3| 2004-05| 4233| 8. 5| 162| 3. 8| 2005-06| 4613| 9. 0| 181| 3. 9| 2006-07| 5437| 17. 9| | | [IPA, 2006]| Given the above three drivers of container growth, we can get an insight into the breakup of the traffic across various port clusters, as per a World Bank study. Relevant excerpts of this are given in Annexure 1. The ports in the western region (Mumbai and Gujarat) would handle at least 66% container throughputs in the country, followed by the ports in the southern region at 27% and the balance at the eastern region ports. 2) Potential of Container Traffic India handled 649 million tons (mt) (569 mt) of cargo traffic in 2006-07 (2005-06). The total container traffic in 2006-07 (2005-06) was 80. mt (67. 1 mt). In terms of Twenty-foot Equivalent Units (TEUs), it was 6. 0 mTEUs (5. 0 mTEUs) in 2006-07 (2005-06). Growth rate of container traffic is outstripping the national Gross Domestic Product (GDP) growth rate. Table 3 gives the growth trends of national GDP, total port and container traffic. Table 3: Port Traffic| Year| National GDP| Total| Major Ports| Non-Major Ports| Container| | | | | | Major Ports| Total| | US Sb1| Growth2 (%)| mt| Growth| mt| Growth (%)| mt| Growth (%)| mt| 000 TEUs| Share**| 000 TEUs| Growth| 2000-01| 409| 4. 4| 368| 10. | 281| 3. 3| 87| 39. 3| 32| 2468| 11. 5| 2468| 13. 0| 2001-02| 441| 4. 8| 384| 4. 3| 288| 2. 5| 96| 10. 3| 37| 2886| 12. 9| 2886| 16. 9| 2002-03| 467| 3. 8| 419| 9. 1| 314| 9. 0| 105| 9. 4| 44| 3366| 13. 9| 3366| 16. 6| 2003-04| 554| 8. 5| 466| 11. 2| 345| 9. 9| 121| 15. 2| 51| 3900| 14. 8| 3900| 15. 9| 2004-05| 633| 7. 5| 522| 12. 0| 384| 11. 3| 138| 14. 1| 55| 4233| 14. 3| 4502*| 15. 4| 2005-06| 725| 9. 0| 569| 9. 0| 423| 10. 2| 151| 9. 4| 62| 4613| 14. 6| 4998*| 11. 0| 2006-07| 827| 9. 3| 649| 14. 1| 464| 9. 7| 185#| 22. 5| 73| 5437| 15. 8| 5964*| 19. | [CMIE, 2007; IPA, 2006]1At current market prices2At factor cost (constant prices)#132 mt from GMB ports*Includes traffic from Mundra and Pipavav**Share of container traffic wrt total port traffic| 3) Shipping Trends Looking at the current as well as the future shippin g trends that are likely to emerge, it would be the era of large mother vessels, with a minimum of 6000-8000 TEU, and a few as big as 12,000-14,000 TEU. These ships would make only a few calls at mega hub ports to/from where cargo movement would be by transshipment and feedering through the present age ships of 4000 TEU and below. These future generation vessels would require drafts between 13-15. 5 mtrs. These ports would also need the infrastructural facilities like wide berthing, high crane handling capacity, quicker and safe loading and unloading capabilities, and direct shift of containers to the feeder vessels. Table 4, which gives the evolution of container shipping vessels in different periods, clearly indicates that the size of the vessels along with their draft requirement are on the increasing trend. Therefore, the ports should be geared up for deepening their draft for accommodating such types of vessels. Table 4: Evolution of Container Shipping Vessels| Generation| Period| Length (meter)| Draft (meter)| Size (TEU)| Post Suezmax| 2006-| 397| 15. 5| gt;12,000| Suezmax| 2005-06| | 15| 10,000-12,000| Post Panamax Plus| 2000-05| 335| 13-14| 5,000-10,000| Post Panamax| 1988-00| 275-305| 11-13| 4,000-5,000| Panamax class| 1980-88| 250-290| 11-12| 3,000-4,000| Cellular Containership| 1970-80| 215| 10| 1,000-2,500| Converted Cargo Vessel/Tanker| 1956-70| 135-200| lt;9| 500-800| [http://www. solentwaters. co. uk]| 4) Potential Hub Ports in India Given the reality of transshipment and feedering, it is important to focus on few ports on both the coasts with deep draft. The key requirements of a transshipment terminal are its strategic location, potential to reduce total transport cost using hub and spoke arrangement, financial savings in terms of lower land values, less need for dredging and the facility to receive higher-capacity vessels to reduce overall fleet costs. Table 5 shows the container traffic handled at ports (including the non-major ports of Mundra and Pipavav) in 2006-07 and 2005-06. Table 6 provides a comparative analysis of various ports in terms of their physical and efficiency parameters for hub operations. Table 5: Port-wise Container Traffic| | | | 2006-07| 2005-06| S No| Port| Operating Company| Total(000 TEUs)| %| Total(000 TEUs)| %| 1| JNPT| 1. Port2. DP World3. AP Moller/Concor| 3298| 55. 3| 2667| 53. 4| 2| Chennai| 1. DP World2. PSA International/SICAL| 798| 13. 4| 735| 14. 7| 3| Mundra* (MPSEZ)| DP World| 393| 6. 6| 299| 6. 0| 4| Tuticorin| PSA International/SICAL| 377| 6. 3| 321| 6. 4| 5| Kolkata| Port| 240| 4. 0| 203| 4. 1| | Cochin| DP World/Concor| 227| 3. 8| 203| 4. 1| 7| Kandla| ABG| 177| 3. 0| 148| 3. 0| 8| Pipavav*| AP Moller| 135| 2. 3| 86| 1. 7| 9| Mumbai| Port| 128| 2. 1| 156| 3. 1| 10| Haldia| Port| 110| 1. 8| 110| 2. 2| 11| Visakhapatnam| DP World| 50| 0. 8| 47| 0. 9| 12| New Mangalore| Port| 17| 0. 3| 10| 0. 2| 13| Mormugao| Port| 12| 0. 2| 9| 0. 2| 14| Paradip| Port| 2| 0. 0| 4| 0. 1| | Total| | 5964| 100. 0| 4998| 100. 0| [CI Magazine, 2007; Indian Infrastructure, 2007; IPA, 2006] *Non-major and private ports, both under GMB| Table 6: Hub Operation Readiness| Readiness Level| West| South| East| High| JNPT, Mundra, Pipavav| Cochin, Chennai| Visakhapatnam| Medium| Kandla, Mumbai| Tuticorin| | Low| | New Mangalore, Mormugao| Kolkata, Haldia, Paradip| [CRISIL, 2006]| The readiness level is based on the maximum vessel size at berth, high speed equipment, average turnaround time, average pre-berthing time and average parcel size. As per the CRISIL Infrastructure Advisory study, hub ports could be Mundra, Pipavav, JNPT, Cochin, Chennai and Visakhapatnam. About 50% of the containers exported through Indian ports are transshipped at some point prior to reaching their overseas destination. Approximately 30% of containers are transshipped in either Colombo or Singapore/Klang and another 5% in Dubai or Salalah. About 50% of the container traffic is not transshipped and moves on the same vessel to the final destination port. In the case of JNPT, this proportion is above 80%. Of Indian containers transshipped in Singapore/Klang, Chennai and Kolkata account for 68%, while for Colombo the eastern and southern ports account for 87% [World Bank, 2007]. Table 7 gives the share of direct and hub shipments for JNPT and the other ports in the country. Table 7: Direct and Hub Shipments Per cent | JNPT| Other Ports| Total| Share of Container Traffic| 55| 45| 100| Direct| 80| 13| 50| Through Hub| 20| 87| 50| It is useful to note that while 80% of JNPT traffic is direct, 87% of all the other ports is through a hub. Overall, water depths are low in Indian ports compared to those of neighbouring regional hubs. Table 9 gives the draft available in the various ports. In contrast, Colombo, for example, one of the main hubs for transshipping Indian container cargo, has a draft of 15 metres. This is proposed to be increased further to 17 metres and eventually 20 metres. JNPT, the largest container port in the country has a draft of only 12 metres. JNPT currently handles vessels of upto 4000 TEUs compared to 8500 TEUs at Colombo. Despite handling a higher volume of traffic than Colombo (Exhibit 3), JNPT is constrained by its deficient draft from offering cheaper and higher quality services, i. e. higher frequency and lower transit times. Other ports in the region like Singapore, Dubai, Port Klang etc have drafts of at least 15 meter and can accommodate vessels upto 11,000 TEUs. 5) Hinterland Connectivity Hinterland connectivity is probably the most critical area to ensure a seamless flow of containers and improved port productivity. It is an essential part of a world class logistics system that India needs to develop with a strategic focus. JNPT is the most efficient container port in the country and is the preferred port for a majority of the countrys container traffic, presently accounting for about 55% of the total. Table 10 presents the distance, travel time and cost of moving a container from the Delhi area to JNPT and to alternate ports. As shown in the table, even though the Gujarat ports are located a little closer, they take almost twice as long to reach. The east coast ports not only take much longer, but also cost more than twice as much in inland haulage charges. These differences restrict competition, and JNPT therefore enjoys a dominant position on account of both its better overall shipping service offerings and its superior hinterland connectivity. The Gujarat ports on the other hand, continue to lose out to JNPT due to their relatively poor connectivity, despite enjoying a closer proximity to the north-western hinterland which generates a majority of the container traffic. Even cargo destined for China or other south east Asian countries prefers to be routed through JNPT, rather than ports like Chennai on the east coast which though closer to the destination offer poor connectivity to the northern hinterland [World Bank, 2007]. Table 8: Inland Haulage Costs for Delhi Container Traffic to JNPT vs Other Ports| Port| Distance from Delhi (Km)| Rail Transit Time (Hrs)| Haulage Costs(Rs/TEUs)| | | | Rail*| Road| JNPT| 1388| 48| 18750| 32000| Mundra| 1295| 80| 16650| 20000| Pipavav| 1333| 70| 17000| 24000| Visakhapatnam| 1700| 67| 22450| 66000| Chennai| 2100| 90| 30000| 70000| World Bank, 2007]*Excludes terminal charges of roughly 30%| Rail Evacuation Currently, 30% of the JNPT traffic is expected to move hinterland by rail and the remaining moves entirely by road, mostly to nearby CFSs, and some to interior ICDs. Rail capacity is barely sufficient for current demand. As per discussions in CENTRUM 2006, CONCOR monopoly has been a deterrent to quality service. Competition has now been permitted and 15 licenses have been issued, as listed in Table 9. However, many of the licensees have signed up with CONCOR to have access to their wagons and ICDs, as required by the license conditions. This has distorted the competition to an extent. Name of Company Associated with| Category I: Rs 50 Crore (can operate on all routes)| 1. | Adani Logistics| Adani Group| 2. | CWC (own ICD)*| | 3. | CONCOR (own ICD)*| | 4. | Dinesh/ETA| | 5. | Gateway Rail Freight (own ICD)*| Gateway Distriparks| 6. | Hind Terminals and MSC Agency*| Hind Terminals (subsidiary of Sharaf Group, UAE), Mediterranean Shipping Company (Geneva)| 7. | India Infrastructure and Logistics*| APL India (subsidiary of NOL, Singapore), Hindustan Infrastructure Project and Engineering| 8. Container Rail Road Services**| DP World| 9. | Reliance Infrastructure Leasing| Reliance (ADAG)| 10. | SICAL Logistics (own ICD)| | 11. | KRIBHCO| | Category II: Rs 10 Crore (can operate on all routes except JNPT/Mumbai NCR)| 1. | Delhi Assam Roadways| | 2. | Innovative B2B Logistics Solutions*| Bagadiya Shipping and Bothra Brothers| 3. | Boxtrans (India) Logistics Services*| JM Baxi amp; Co| 4. | Pipavav Rail Corporation| | Table 9: List of Players for Rail Container Operation *Out of the 15 licensed operators, seven have started operations **Will start in September, 2007 Presently, for instance, it is estimated that the transport cost of a container from Delhi to Mumbai Port is almost half the total logistics costs of delivering it to a destination in Europe. Inadequate capacities in the hinterland transport modes often lead to higher costs and delays on account of sub-optimal mode choices, circuitous routing and congestion in the hinterland transport links. The Tughlakabad-JNPT (Delhi-Mumbai) line, one of the most highly trafficked corridors in the country is a case in point (Figure 1). With an average line capacity of 50 trains per day, it has been handling over 67 trains per day, operating at a capacity utilization of 135%t, and several sections are being operated at 160% utilization levels. Roughly 40 trains on this corridor are passenger trains, leaving a limited capacity for freight trains, which have a lower priority. Congestion at the railways Tughlakabad ICD near Delhi and on the line itself has resulted in a poor reliability of service, and high value cargo such as containers, which form the majority of the traffic on this corridor, is increasingly shifting to road transport. Presently, less than one-third of the containerized cargo in this corridor is being carried by the Railways. On average, 9,000 loaded trucks move over this corridor everyday, aggregating around 30 mt annually of road freight traffic [World Bank, 2007]. Figure 1: Rail Connectivity Mumbai to North-Western Hinterland [World Bank, 2007] The overall data related to hinterland flows at JNPT in Table 10. JNPT faced an acute congestion in 2004. Since then, a third container terminal has been commissioned, bringing the total throughput capacity to 4 mTEUs. A fourth terminal being considered is likely to double the capacity. This will impose serious constraints on the facilities around the port, unless they are addressed concurrently [Raghuram, 2006]. Table 10: Hinterland Flows at JNPT| Per cent| Import| ICD by Rail| 33. 3| ICD by Road| 4. 0| En Bloc CFS| 59. 7| Green Channel| 3. 0| Export| ICD by Rail| 22. 6| ICD by Road| 7. 5| CFS by Road + Buffer Yard| 26. 5 + 7. 7| Factory Stuffed under Excise Seal RTS| 35. 7| [Chaudhuri, A, 2006] To provide for the rail based evacuation, the Dedicated Freight Corridor Corporation of India Ltd (DFCCIL) has been set up in 2006, with its first phase being the JNPT to Tughlakabad/Dadri and Ludhiana to Son Nagar via Dadri corridors. The western corridor will have container trains as its driving traffic. Road Evacuation To provide for the road based evacuation, while the National Highways Development Programme is providing inter-regional connectivity with some success, not all port based connectivity projects have been successful. Three such project contracts were recently annulled. Beyond just the four laning of highways, expressway connectivity to the ports to service major flows would be essential. The currently envisaged future phases of NHDP do not provide for this. In terms of local road connectivity around ports and ICDs, there is no explicit planning for consequential trailer movements for empty containers and empty trailer movements. Recent studies show that these could be as high as six to seven movements per TEU [Raghuram, 2006]. Similarly, there is no planning for trailer parking, maintenance, facilities for drivers etc. These could lead to avoidable congestion and first/last mile problems. Coastal Shipping and Inland Waterways The potential of coastal shipping and inland waterways is untapped and needs to be developed to lessen the load on the railways and road networks and bring down the costs since cost of cargo movement by sea is significantly less than the cost by road and rail. Feedering from an Indian transshipment port would naturally be a coastal movement. The possibility of a dedicated sea corridor with inter-port connectivity needs to be explored. Integration with coastal and inland water transport for evacuation needs proactive consideration. ICD/CFS Infrastructure Given that ICD/CFS business is open to anybody, there would not be a concern regarding the supply. The concepts of SEZs and Free Trade Warehousing Zones would only further facilitate such infrastructure. The conditions imposed on the private rail container operators reinforce the same direction. However, the following would need intervention. Location and access, giving consideration to distance to manufacturing units, local connectivity with minimum traffic interference * Customs and bonded warehouse * Rail connection to gateway ports * Parking spaces and maintenance facility ) Other Issues Information Technology (IT) While IT use for container logistics would be commercially driven, policy and industry level interventions would be necessary to develop standards, networking and information sharing, and even knowledge products. Technologies such as Radio Frequency Identification Device (RFID) and Global Positioning System (GPS) should be leveraged to achieve effectiveness and efficie ncy. Domestic Traffic While container movement has been primarily viewed in the context of international trade, domestic container movement is slowly picking up and needs focus for development. Most of the domestic container movement is expected to be by rail (Concor). During 2006-07, out of over 2 mTEUs moved by Concor, nearly 0. 4 mTEUs were for the domestic market (Table 11). Table 11: CONCOR TrafficIn TEU Year| International| Domestic| Total| Annual Growth (%)| 1996-97| 424,741| 278,801| 703,542| -| 1997-98| 491,481| 230,238| 721,719| 2. 6| 1998-99| 576,790| 225,156| 801,946| 11. 1| 1999-00| 664,490| 243,329| 907,819| 13. 2| 2000-01| 755,670| 291,304| 1,046,974| 15. 4| 2001-02| 905,058| 326,775| 1,231,833| 17. 7| 2002-03| 1,031,925| 351,238| 1,383,163| 12. 3| 003-04| 1,251,618| 350,501| 1,602,119| 15. 8| 2004-05| 1,376,516| 351,460| 1,727,976| 7. 9| 2005-06| 1,556,714| 373,848| 1,930,562| 11. 7| 2006-07| 1,715,661| 389,605| 2,105,266| 9. 0| [CI Magazine, 2007] This would also create an opportunity for customised containerization. For example, while the standard container does not permit double stacking under electric traction wires, specially designed lower height conta iners for automobiles have permitted double stacking under wire. Opportunities in customized containerization should be leveraged, as specific segment volumes increase. Leasing and Manufacture Availability of containers, wagons, tractor/trailers and cranes as support equipment is critical. India does not have enough manufacturing base for such equipment. China is currently the world leader in this domain. There is big opportunity for India to develop a manufacturing base, not only to cater to our requirement, but also for the export market. In the context of containers, leasing by non-shipping line owners has been leveraged internationally for efficient use of containers. However, the share of the leased fleet has dropped from 50% in 1981 to 40% in 2006 (Exhibit 6). With better IT for container tracking, the leased fleet has utilizations over 90%, with the cost of leasing showing a decreasing trend (Table 12). Table 12: Global Lease Fleet| Year| Fleet Size* (TEU)| Utilization (%)| Per Diem Rate** (US $)| 1966| 5,000| 95. 0| 1. 50| 1970| 120,000| 85. 0| 1. 50| 1974| 465,000| 78. 0| 1. 20| 1978| 1,030,000| 85. 0| 1. 80| 1982| 2,050,000| 80. 0| 1. 85| 1986| 2,315,000| 75. 0| 1. 40| 1990| 2,755,000| 90. 0| 1. 80| 1994| 4,350,000| 87. 0| 1. 35| 1998| 6,190,000| 81. 0| 0. 85| 2002| 8,010,000| 83. 5| 0. 60| 2006| 10,290,000| 92. 0| 0. 70| CI Magazine, 2007]* Year-end**New build 20ft placed on five year term| Location Policy of Industries Including SEZs As part of evolving world class export and import logistics, the government has embarked on the policy of developing SEZs. As on July 31, 2007, 135 SEZs had been notified under the SEZ Act apart from the 19 that were operational prior to the SEZ Act of 2005. Of the 154 SEZs (Table 13), 67 are manufacturi ng driven while the rest are IT and IT enabled services based. Of the 67, 39 are coastal and the rest 28 are away from the coast and would hence require focus on connectivity. Table 13: Location of SEZs | Coastal| Non-Coastal| Total| Manufacturing| 39| 28| 67| IT/ITES| 24| 63| 87| Total| 63| 91| 154| As far as possible, it would be a good idea to locate SEZs near ports. The same would apply for industries, where a focus on appropriate zoning of industrial development to minimize connectivity requirements with planned linkages including by Inland Water Transport would be essential. Gujarat has been proactive in this through a policy of port led industrial development. Regulation It is important to ensure appropriate regulation for the following: Licensing Issues of ensuring sufficient competition, along with capability to deliver with appropriate national security would be key criteria in licensing. There have been debates on private sector monopoly, when Pamp;O Australia won the bids and operated many terminals in the South Asian region. Pamp;O Australia has now been taken over by DP World and the same issue continues. Exhibit 10 provides an insight into the concentration of terminals (62% of throughput in 2006) operated by the top five terminal operating companies. There are guidelines on there being at least two operators in a port and no more than two terminals per operator. These guidelines need to be reviewed and linked with TEU capacity and not number of terminals. Security Security was a matter of concern in the context of Hutchison bidding for Chennai Even DP World had to give up some of its US acquisitions due to perceived security concerns. Operational security at ports including screening of containers has gained significance after 9/11. Port Tariffs While India has a Tariff Authority for Major Ports (TAMP), the question has often been raised as to whether we need the TAMP, and even if so, whether the regulation should be cost based. Recently the PSA International operated container terminal at Tuticorin port resisted the reduction in tariffs imposed by TAMP and consequently reduced their throughput. It would appear that with the number of terminals that India has and is developing, competition is increasing and the market itself can regulate the tariffs. Shipping Line Conferences In the container shipping business (which is a hangover of liner business), cartel like conferences of shipping lines operated in route based markets to control schedules and tariffs. While these were frowned upon, they were ever regulated. Recently, the Competition Commission of India raised the issue that such conferences were anti competitive and that shipping lines should set tariffs and compete independently. Independent of conferences, there is an increasing market concentration in the container shipping business. Table 14 gives a perspective on the concentration of container shipping among the top 20 carriers, which has increased from 38. 8% in 1990 to 72. 7% in 2006. This is reflective of the mergers and acquisitions, which seem to be a rather continuous activity of this business. Table 14: Top 20 Ocean Carriers| | Carrier Traffic (TEU)| Carrier Traffic (TEU)| | 1990| 2006| 1. | Evergreen| 130,916| AP Meller-Maersk [1]| 1,600,012| 2. | Sea-Land Service| 115,367| Mediterranean Shipping Co| 937,145| 3. | Maersk| 94,703| CMA CGM [2]| 597,677| 4. | NYK| 78,148| Evergreen [3]| 539,801| 5. | Mitsui OSK Lines| 70,338| Hapag-Lloyd| 448,840| 6. | APL| 66,380| Cosco| 385,368| 7. | OOCL| 58,117| China Shipping Container Lines| 339,545| 8. | K Line| 55,462| Hanjin Shipping [4]| 328,307| . | Cosco Shanghai| 54,505| APL| 323,319| 10. | Hapag-Lloyd| 53,178| NYK [5]| 313,049| 11. | Hanjin Shipping| 49,621| Mitsui OSK Lines| 284,848| 12. | P amp; O Containers| 49,368| OOCL| 268,502| 13. | Yangming| 46,817| CSAV [6]| 249,885| 14. | Zim Israel Navigation| 44,916| K Line| 241,772| 15. | Nedlloyd Lines| 40,335| Yangming| 223,192| 16. | Baltic Shipping Co| 36,760| Hamburg Sud [7]| 217,018| 17. | Neptune Orient Lines| 35,294| Zim Integrated Shipping Services| 213,795| 18. | ScanDutc h| 32,948| Hyundai Merchant Marine| 153,850| 19. CGM| 29,040| Pacific International Lines [8]| 141,391| 20. | Delmas Vieljeus| 31,204| Wan Hai Lines| 117,767| | Total| 1,173,413| Total| 7,925,083| | Top 20 Share| 38. 8%| Top 20 Share| 72. 7%| [CI Magazine, 2007]1 includes Portlink and Safmarine; 2 includes ANL, Delmas, FAS, MacAndrews, OT Africa Line; 3 includes Hatsu, Italia Marittima; 4 includes Senator Lines; 5 includes TSK; 6 includes CSAV Norasia, Libra, Montemar; 7 includes Alianca, Ybarra; 8 includes Advance Container Line| Customs Customs need to become more process friendly with increased usage of green channel. The data gathered by customs, especially with Electronic Data Interchange, can be used to create much required Origin Destination (OD) data for traffic profiling. Cabotage The cabotage rules of not allowing foreign flag vessels for coastal shipping need to be reviewed. The main trade of is between protection for Indian flags versus more competition and supply. In todays world of liberalization led growth, it would appear that cabotage must be lifted as a matter of long term policy. An attendant measure would be to provide the same concessions to coastal shipping as international shipping. As was voiced in CENTRUM 2006, cabotage should not become a sabotage! Other Areas of Regulation (which are not being elaborated) * Environment and conservation * Safety * Quality of service * Dispute resolution 6. Concluding Issues Based on the above analysis, the following issues need consideration: o Landlord port with privately operated terminals would be the way forward. Existing ports should be empowered for this There should be clear delineation of roles between landlord and operator. This does not exist at JNPT presently (JNPT vs JNPCT) o The public port authority will focus more on landlord function such as long-term planning, infrastructure development, asset management * regulatory function such as maritime safety, environment protection and fair competition, and * co-ordination function such as coordination among governmental agencies, maritime organizations, decision-making authorities and planners of the city, under the commonly shared long- range policy and planning * f acilitation/promotion function such as provision of port EDI, inter-port cooperation and strategic marketing o There is not enough focus on scale of container terminals. This is necessary to drive down costs. o Tendering and bidding should be done in a time definite manner. There should be a flexible framework in place for terminal development by private parties under a landlord port. There are significant beauracratic delays (eg second terminals in Tuticorin and Chennai). Labor is not always in favour and needs to be dealt with. o Global tendering would be essential to get the most competitive supply. Dredging is an example. o Acts governing ports and related activities need to be reviewed and liberalized (MS Act, IP Act, Maritime Trade Practices Act, etc). Training to bring in a supply chain and marketing mind set among executives of all stakeholders in this sector is critical. OD data on port traffic should be systematically gathered and published. IPA should drive this with support from Customs and Concor. EDI based data would help. o Top management stake holding, especially through the civil service, is not compatible with strategizing port deve lopment. Technocrats, with appropriate incentives and accountability should be brought in. The largest increases in container traffic are expected to occur in the western region, with the Mumbai and Gujarat port clusters together requiring capacity additions on the order of 10 mTEUs, from about 4 mTEUs now to over 14 mTEUs by 2015. Of this about 6 mTEUs of capacity is expected to be needed in the Mumbai cluster, and another 4 mTEUs in the Gujarat cluster. The other cluster where a large increase in container traffic is expected is in the Cochin/Tuticorin cluster where an additional 4 mTEUs of capacity will be needed. These three port clusters would then account for 14 mTEUs of the 16 mTEUs of additional capacity needed for container traffic through the year 2015. Achieving this level of capacity increases in the Mumbai, Gujarat and Cochin/Tutitcorin clusters would largely address the container traffic requirements through the year 2015. The 191 mt or 15 mTEUs capacity shortfall for container traffic projected for 2015 would only partially be filled by capacity expansions planned under the NMDP. The NMDP envisages the creation of an additional 11 mTEUs of container handling capacity in the near term. The remainder would need to be developed in the State ports sector primarily through private investments, and some of these are already being planned or under implementation such as at Mundra and Rewas. The investments proposed under the NMDP include large expansions of container handling capacity at Tuticorin, Cochin, JNPT and Mumbai port. This appears to fit well with the strategy of developing container facilities where the demand is greatest (the western and southern ports) and in the southern cluster which has proximity to international shipping routes [World Bank, 2007]. For 30 mTEUs per annum, as per normal international standards of 1000 TEUs per annum per mt of berth length, we need 30 km of berth length. By JNPT standards where demand is continuously available and productivity is high, this could be as low as 15 km. However, providing for a reasonable 70% occupancy, we need 21 km. At 300mts per berth, this translates to 70 berths. Currently we have 27 berths. An additional nine berths have been signed up as stated earlier in this paper. So there is a need for atleast 30 more berths. While this is a target, market forces will drive the actual berth development. The additional investment required could be of the order of US $7. 5 billion based on a 300 mts berth cost of US $250 million (Rs 1000 crore). With JNPT standards, and focusing on Suezmax vessels at hub ports, berth productivity can be doubled and the investment requirements brought down. A detailed cost benefit analysis, keeping in view the costs of accommodating large vessels and benefits of increased productivity including due to hubbing in India needs to be carried out. Indian infrastructure for logistics is poor compared to world class and at best reactive to demand. There is need for continued focus on quality infrastructure development with speed. Commercialization and private involvement through PPP contracts is the key for building global trade competitiveness through containerization. References 1. Chaudhuri, A (2006). De-regulation within the Rail Market, Presentation. 2. CI (2007). Containerization International, 40th Anniversary Issue, 2007. 3. CI (2007a). Containerization International, May, 2007. 4. CMIE (2007). Centre for Monitoring Indian Economy 5. CRISIL (2006). CRISIL Infrastructure Advisory Study. 6. Drewry (2006). Container Shipping Services from Asian Ports, Drewry Maritime Services, New Line, December 2006. 7. i-maritime and IPA (2006). India P ort Sector Strategy Demand and Capacity Assessment Study, Draft Final Presentation, May 08, 2006. . IPA (2006), Major Ports of India, Indian Ports Association, New Delhi. 9. Levinson, Marc (2006). The Box, Princeton University Press, New Jersey. 10. Raghuram, G (2006). A Diagnostic Study of Jawaharlal Nehru Port Trust, Working Paper No 2006-04-09, Indian Institute of Management, Ahmedabad, April 2006 11. World Bank (2007). India: Port Sector Development Possibilities for Accelerating Growth, June 26, 2007. 12. http://en. wikipedia. org 13. http://www. solentwaters. co. uk 14. http://www. public-freight. com