To regain its competitive advantage, Kochi Port has to initiate measures for a change in port-related charges and quality of services, warns a study.
The study, titled "Cochin Port-Towards Achieving Competitive Advantage, Need for Strategic Shift," pointed out that competitive advantage could be regained only by creating cost advantage through rationalisation of port charges (both cargo-related and vessel-related), for cargo identified to have high growth potential, as well as boosting the pace of economic development.
The initiatives, if managed strategically, could attract more vessels and higher volumes of cargo to the port and ensure higher revenue, the study said.
The study also cautioned that the port seems to be caught in the vicious circle of stagnation due to higher costs and the circle can be broken only through targeted intervention with respect to port charges, investing in infrastructure, and aggressive marketing.
Besides Kochi being a high-cost port, the disadvantage is compounded by draught constraints, low productivity and poor facilities for value addition. The study also said stevedoring and logistics at Kochi, which are primarily in the private domain, lacked competitive edge due to certain restrictive trade practices and cartelisation in logistics.
Though efforts have been made to overcome the disadvantage of a high cost port through concessions to certain cargo and to certain types of vessels, such efforts have been isolated, it said. The port management had, however, succeeded in eliminating various restrictive trade practices and extortion in the port area.
The cartelisation in logistics had also been weakened by the efforts of the port management. The establishment of Kerala State Headload Workers Welfare Board was a major initiative towards ensuring transparency in port-related operations, it said. Initiatives such as the ICTT and the LNG projects and the proposed cruise terminal have the strategic fit to capitalise on the natural advantages of Kochi, and enable the port to have a unique strategic positioning.
However, despite all the initiatives, the present competitive position of the port was one of crippling disadvantage in terms of cost as well as differentiation. Therefore it was imperative that strategic as well as tactical initiatives were taken to regain competitive advantage, it said.
Traffic trends
On traffic trends between 1990 and 2005, the study revealed that the port had grown at less than 3 per cent per annum since 1995 whereas other major ports had grown at a much faster pace. During 2000-05, Kochi had a CAGR of 1.12 per cent against major ports' CAGR of 8.5 per cent.
The cargo profile of the port for 2002-06 revealed that liquid bulk on average constitute about 73 per cent of the total cargo throughput. Break bulk cargo has not shown any growth trend over the years and has been less than 2 per cent of the total cargo throughput. Containerised cargo has been steadily increasing and accounts for about 17 per cent of the throughput.
The study revealed that Kochi levies, on average, wharfage that is 100-150 per cent higher than the wharfage prevailing at neighbouring ports of Tuticorin, New Mangalore and Chennai and 50-100 per cent higher than the major ports' average.
An analysis of berth hire charges for dry bulk cargo vessels revealed that Kochi is costlier, by 20 per cent, than Tuticorin and 60 per cent costlier than Chennai. The cost disadvantage of port charges was compounded by the poor quality of services at Kochi as the port was lacking in storage area, the most critical resource in dry bulk cargo handling. Koch also had draught constraints for Panamax vessels, which enjoy a significant cost advantage in shipping. Also, the idle time for vessels at Kochi was far higher than that prevailing at other ports.
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