The Hindu Business Line : Coastal shipping needs better anchorage

To guide the growth of coastal shipping, an institutional mechanism under the Ministry of Shipping must be put in place. Further, an autonomous body should be created at the State level to ensure that the funds are duly used for the development of minor ports.

WITH coastal traffic not growing at the desired rate vis-à-vis the potential available, the shipping industry has asked the Government to consider financing the development of basic infrastructure such ascapital dredging and construction of breakwater and berths for nine major ports, so as to attract more private sector participation.

This, the industry feels, will attract private companies to set up the remaining facilities to make these ports operational.

This industry's plea is based on a recent report on coastal shipping that was submitted to the Government by the Tata Consultancy Services (TCS). The Directorate-General of Shipping has now set up a committee to act on the recommendations of the report, according to sources.

The nine ports identified by TCS that could be taken up for development of coastal shipping include Gopalpur, Cuddalore, Vizhinjam, Karwar, Ratnagiri and Dharamtar. In fact, the study pointed out that these ports could be the forerunner for another programme for development of a second set 15 ports to build a strong network for coastal shipping.

According to estimates, of the 1,515 million tonnes of total domestic cargo movement (including rail and road movement), a little over 120 million tonnes was moved through coastal shipping, which is 7 per cent of the total cargo movement.

In terms of tonnes moved per km, coastal shipping now clocks 63 billion tonnes per km. This, analysts say, is "very low", compared to the European Union where coastal shipping has an enviable 43 per cent modal share in terms of tonnes per km.

The TCS report has pointed out that data for the last decade shows that coastal traffic has been growing annually at around 4.5 per cent at major ports and 20 per cent in minor ports. At this rate, it is expected that coastal traffic may increase from the present 120 million tonnes to 220 million tonnes by the end of the Eleventh Plan period (2012).

Rail and road movement continues to be the dominant mode of cargo movement in India, as a result of which congestion and accidents stymie movement and create a loss of Rs 40,000 crore annually, the report points out. At present the national transport system handles 870 billion tonne km of freight and 2,450 billion passengers per km, with the freight demand expected to increase to 1,800 billion tonne km by 2012.

After examining the scope for diversion of traffic from the rail and road modes to coastal shipping, TCS has estimated that even if things stand as at present, four million tonnes of traffic can be diverted annually to coastal shipping without any increase in transport costs.

The tardy growth of coastal shipping in India has been traced to various factors, primarily the absence of any institutional mechanism to encourage inter-sectoral coordination, high cargo-handling tariffs in ports, poor port-rail connectivity and disproportionately high bunkering costs for coastal vessels.

In the light of this, the report has recommended that to guide the growth and development of coastal shipping, an institutional mechanism with a special cell under the DGS and an Empowered Committee under the Ministry of Shipping be set up.

Further, an autonomous body should be created at the State level to ensure that the funds are rightfully used for the development of minor ports — an MoU between the Shipping Ministry and the respective State Ministries may be signed for transferring of the funds to an Escrow account.

Other recommendations of TCS include waiver of import duty on bunkers and capital equipment/spares to encourage growth of coastal vessels and provision of demand-side incentives to registered multi-modal operators and shippers. To start with, it is been proposed that integration of coastal shipping and inland waterway transport may be promoted at Haldia and Kochi, where the basis infrastructure is in place.