Indian Coastal Shipping – Need of the Hour!

India has a long coastline, spanning 7517 kilometers, forming one of the biggest peninsulas in the world. It is serviced by 12 major ports and 187 notified minor and intermediate ports. These ports account for nearly 90% (by volume) of India’s international trade. Yet, coastal shipping accounts for about only 6 to 7% per cent of the country’s total domestic freight (on a tonne-km basis)

The explosive economic growth as seen in India over the past decade has led to congested roads and over burned railway network. India has 4 million kms of roads, accounting for nearly 60% of the domestic traffic of which the National Highways’, which are 1.7% of the network, carry as much as 40% of the road freight. The Indian Railway network, one of the largest in the world is overburdened and operating at over 100% utilization. While there are numerous projects for up gradation under way, these projects are unlikely to keep pace and meet the future demand.

Coastal shipping is an alternate and most efficient mode of transportation that can help address the challenges faced through use of            and rail. World over use of sea/waterways for transportation is much more prevalent. It is apparent that India has a very significant dependence on road to move cargo. In the case of China and Europe, waterways have a larger share than that of road or rail which is approximately 40 to 41%. There are many inherent advantages of this mode of transportation. Coastal shipping or use of water as a mode of transportation is much safer, more economical and less polluting. Waterways are 50% cheaper than road and about nearly 30% cheaper than rail. The coastal leg, apart from being more fuel efficient, can also carry larger parcel sizes and provides a great opportunity for consolidation of loads.

Looking at the Indian scenario, and to decongest the load on the roads and infrastructure, there is a compelling case for a modal shift of freight from road and rail to waterways. Although water ways is the most efficient, cheaper also viable mode of transport so then, why is it that only about 6% to 7% domestic cargo moves through the coastal mode? There are many reasons that contribute to this low utilization which are stated below:

v  The port marine dues are at a high cost

v  Bunker fuel costs are high and duty is levied 

v  Government taxation for domestic coastal operators is also high and

v  There are customs issues for domestic coastal shipping

There is a definite need to bring in a comprehensive coastal shipping policy. The Ministry of Shipping and Government of India is working on a new policy to promote coastal shipping.

While there is a general shortage of infrastructure for vessel and cargo handling at Indian ports, there is also a need for dedicated infrastructure to handle coastal vessels. There is need to improve operating efficiencies and bring down the overall cost for users. Increasing the draft at many of the minor ports and developing rail and road connectivity are some of steps required. To further augment the connectivity and usage, we need to build terminals and handling facilities on our inland waterways, so that the 14,500 kilometers of river network can be used and connected with the ports.

Expanding the cargo profile, today composition of the domestic cargo is basically dominated by POL, Coal and Iron ore – constituting 90% of all cargo.

The future of the port sector in India, especially for the minor ports hinges a lot on coastal movement and inland waterways. Minor private ports have to play an extremely critical role in the development of coastal shipping. The government needs to encourage PPP (public & private partnership) models for development of infrastructure at ports and rivers to develop connectivity and promote coastal movement.

While the debate on cargo v/s infrastructure has been ongoing, the port developers need to build capacity for attracting domestic cargo and by doing so reduce waiting time and improve operating efficiencies. Thus, coastal shipping will prove beneficial for GDP growth by shifting the transportation mode from land to sea.