Coastal cargo operations in the country have been gaining in importance with more ports gearing up for larger container ship operations. Small coastal ships will be of great advantage for States in the future, with the increased economic activity, congestion of roads and delays at inter-State toll gates. Captain Verghese Kuruvilla, Vice-President of German Express Shipping Agency (India) Pvt Ltd, says that time is right to review the transportation sector for the revival of coastal trade.

Domestic Cargo

At present, the Cabotage Law permits only Indian flag vessels to carry coastal cargo. With increased competition to carry cargo at the minimum cost, it may be worthwhile to facilitate some selected number of foreign flag vessels to come into this field, he said. Coastal shipping, which is considered to be the cheapest mode of transport, accounts for just 7 per cent of the country’s domestic cargo movement, he said.

This is in sharp contrast to the European Union, where its share is as high as 40 per cent. Apart from the poor infrastructure at minor ports, the high vessel and cargo-related charges at major ports are considered the major hurdles in the way of coastal movement of goods. The economic loss due to the congestion and accidents on roads is estimated at Rs 40,000 crore annually, he said, quoting a study conducted by Tata Consultancy Services.

The coastal traffic handled by ports work out to 30 per cent of the total cargo handled. A study conducted a few years ago shows that of the 120 million tonnes (mt) of coastal cargo handled in ports, 88 mt were handled at the major ports and 22 mt by the Gujarat Maritime Board ports. That means only 10 mt of cargo moved through other minor and intermediate ports.

The TCS report pointed out that “even if things stand as such, 4 mt of traffic can be diverted from road and rail to coastal shipping annually, without any increase in transport costs. Further, if certain concessions are extended to coastal shipping, the traffic can easily grow to 10 mt by 2012”.

A comparative analysis between truck and coastal ship movements between Mumbai and Goa has come to the conclusion that for movement of a parcel of 1,000 DWT cargo, a coastal vessel would require just 15.1 per cent of the fuel that would be consumed by road movement. The Government can consider routing its own cargo and also that of its agencies through coastal shipping to the extent possible

India has a coastline of about 7,000 km with 12 major ports and 185 non-major or minor and intermediate ports. During the pre-Independence period, there used to be regular liner shipping services along the Indian coasts and movement of bulk and bagged homogenous cargoes, such as coal, food-grains and POL products in sea-going barges and tankers. The Indian coastal conferences and fixed freight tariff schedule helped the shipping industry to thrive, keeping competition at bay.

According to Capt Kuruvilla, the 12 major ports at the moment are choked with capacity constraints. Perhaps congestion at major ports could be reduced by diverting coastal ships to exclusive ports for trade at much lower costs rather than expanding overall capacity of the major ports, requiring heavy investments as envisaged by the Government.

Evolutionary Changes

A national port sector plan is on the drawing board for expanding the capacity of 12 major ports across the country to one billion tonne cargo handling capacity by 2012. The country’s current port capacity is 450 mt. The port sector is expecting an investment of $20 billion by the end of the Eleventh Plan. With bulk of the expansion to be undertaken on PPP model, it is expected that projects are awarded and completed on time.

Indian shipping and coastal trade come under Merchant Shipping Act-1958, most parts of which still reflect the legacy of British shipping of pre-Independence era. However, evolutionary changes from country crafts to cellular containerships call for corresponding reforms in the Act. Shortage of seafarers at officer level necessitates reconsidering and redefining relevant provisions of the Act.

To improve upon the low performance of coastal trade, Capt Kuruvilla also suggests several initiatives and projects, which include tonnage tax concessions to coastal shipping, development of strategically located minor ports, establishment of road and rail connectivity to these ports, establishment of a coastal shipping development board and setting up of dedicated berths for coastal ships.