Pipavav port operator in Gujarat, APM Terminals Pipavav, has scaled down its capacity expansion plans for containers by 10 per cent and bulk terminals by 75 per cent, until demand picks up and more capacity is needed.
"We can create capacity if required as all requisite regulatory clearances are in place. We had indicated last year about our plans to go slow on capacity addition for bulk cargo, as there was low visibility, according to Shipping Gazette.
"Moreover, 10 per cent reduction in container capacity is not significant," managing director Prakash Tulsiani told The Hindu daily's Business Line, adding that the company was "cautiously optimistic" on India's economic performance.
The company has not slashed its liquid terminal expansion plans, whose capacity will be created over the next two years.
The company's container handling plans were lowered to 1.35 million TEU a year, against the earlier proposed 1.5 million TEU, while the bulk handling capacity was lowered to four to five million tonnes a year against plans of creating 20-million tonne capacity, reported The Hindu.
With these moves, the firm lowered the capital cost of expansion over the next two years to US$76 million from $199 million.
Maritime analysts say it is important for a port operator to have enough scale when the market revives so that it can offer lower rates to customers.
"The Adanis are expanding nearby ports, such as Mundra and Hazira so they will have to offer lower rates to attract cargo and shipping lines. Also, PSA is expected to add huge capacity in JN Port.
"In this context, Pipavav will face competition from other players for the same hinterland cargo," said director, Mantrana Maritime Advisory, Anand Sharma.
In the first quarter the port operator handled 180,000 TEU, up 16 per cent compared to the same period last year. For the bulk and general cargo division, high levels of coal handling led to an 18 per cent increase in volume.