The Hindu Business Line : Huge demand spurt for box berths foreseen

HOW DO Indian container ports compare vis-à-vis the top 30 box ports of the world? The only Indian container port which held the 30th position in 2003, the Jawaharlal Nehru Port in New Mumbai, does not figure in the top 30 list in 2004 despite handling 2.36 million TEUs (twenty foot equivalent unit) registering a growth of 8.62 per cent over 2003. But atthe 31st position, it is still ahead of Salalah in Oman (2.28 million TEUs) and Colombo in Sri Lanka (2.22 million TEUs).

Hong Kong and Singapore have maintained the world's No. 1 and No. 2 positions by handling 21.93 million TEUs and 20.60 million TEUs and registering a growth of 7.3 per cent and 13.8 respectively. The Chinese ports of Shanghai and Shenzhen follow, handling 14.5 million and 13.65 million TEUs respectively and registering a growth of 29 per cent.

Busan in South Korea and Kaohsiung in Taiwan maintained the 5th and 6th positions handling 11.4 million and 9.7 million TEUs respectively. Rotterdam in the Netherlands, Los Angeles in the US and Hamburg in Germany occupied the 7th, 8th and 9th positions respectively. Dubai Ports Authority moved up to the 10th position displacing Antwerp in Belgium with an impressive 24.8 per cent rise to 6.42 million TEUs (source: Containerisation International, London).

The performance figures of the top ten container ports reveal that the first six are from the Asian region. The eight Chinese ports among the top 30 container ports together handled about 70 million TEUs — that is, about 35 per cent of the 196 million TEUs handled by all the top 30 container ports. According to the Korea Maritime Institute, the Chinese container traffic will increase to 130 million TEUs by 2011 and, in all probability, Shanghai will emerge the world's largest container port by that year.

An analysis of the modern trends in containerisation in India reveals that the annual average rate of growth of containerisation for 1990-1999 was 13.7 per cent. In 2000-04 the growth rate worked out to 13.91 per cent. India's container traffic which was 3.90 million TEUs in 2003-2004, is likely to rise to 4.5 million TEUs in 2004-2005 including the traffic handled at the Mundra and Pipavav ports which represent an increase of about 15.38 per cent. The Japan International Consulting Agency (JICA) has assumed a growth rate of 16 per cent and estimated that India's box traffic would reach 10 million TEUs by 2010 with the western region accounting for 70 per cent of the traffic.

Since a 7-8 per cent growth in India's GDP is now considered achievable for the next ten years, a 14 per cent growth in the container traffic annually can be expected for 2005-2015. Based on such assumptions, India's container traffic will rise to 8.66 million TEUs by 2010 and 16.68 million TEUs in 2015.

Does India have enough capacity to handle the projected traffic? The current capacity available at Indian major ports for container traffic is estimated to be around 4 million TEUs. The traffic handled this year exceeded this and this was the main reason why most container terminals experienced congestion. The two additional terminals to be created at the JN Port, the new off-shore terminal being planned in Mumbai, the expansion of the Chennai, Tuticorin and Vishakapatnam terminals, the new terminals to come up at Kandla, Kochi etc, can in the next five years at best add another 4 million TEU capacity. This would suggest that by 2010 while the traffic will reach 8.66 million TEUs while the capacity will be only 8 million TEUs.

One of the conclusions of the latest port sector report 2004 of Drewry Shipping Consultants, London, is that in the Asian, region demand will outstrip supply within five years unless additional projects are brought to fruition. An ESCAP study on port development strategies concludes that to handle the anticipated port container traffic in 2011 the South Asian region alone will require about 40 berths.

The most significant technological development in container shipping is the emergence of large-sized ships. This has two significant effects on international shipping since ship size not only determines the competitive power in the shipping industry but also becomes a major criterion in determining the size of a port. Many analysts believed that once the container ship size reached 10,000 TEUs dis-economies of scale would start operating as two engines would be required to power such huge ships. But with new developments in engine design, single engine vessels of 10,000 TEU and above can now be built.

The Chinese shipping line COSCO has on order with Hyundai Heavy Industries four super-post-Panamax ships of 10,000 TEUs each costing about $127 million to be delivered in 2008. Recent reports suggest that AP Moller-Maersk Odense shipyard in Denmark plans to build eight super-post-panamax ships of 13,000 TEU capacity with the new K-98 engine. Drewry Shipping Consultants have reported that when compared to a 4,000-TEU ship a 10,000-TEU ship results in 37 per cent operating cost savings. A recent ESCAP study has revealed that by 2011 a total of 490 very large container vessels will be in service globally out of which approximately 130 will be of 10,000 TEU and above. It has become increasingly clear now that there are no insurmountable technical barriers to the future increase in size of container ships. Concept designs already exist for ships up to 18,000 TEUs. The limits to grow, if there are any, will be market driven.

These large ships are the key to port development. The new transhipment container terminal at Vallarpadam is designed to accommodate container ships up to 8,000 TEU capacity drawing a draught not exceeding 14.5 m.

By 2010-11 when the Kochi terminal becomes fully operational super-post-Panamax vessels of 8,000-15,000 TEU capacity will have already begun their service on the main shipping routes thereby reducing this terminal's competitive advantage. India will need a mega container transhipment terminal to capture the transhipment business.

For example, 15,000-TEU vessels would require special berths that would permit them to be worked from both sides. In addition, mega hubs need a depth of 18-20 m. In such a scenario, the Kochi container terminal can function as a regional logistics and transhipment hub for vessels up to 8,000 TEUs and Vizhinjam, near Thiruvanathapuram, could be developed as a mega transhipment hub for vessels in the range of 8,000-15,000 TEUs. But this naturally raises a question: Will there be enough traffic volumes to support a regional logistics and transhipment hub in Kochi and a mega transhipment hub at Vizhinjam? Can two transhipment terminals co-exist and function within 200 km of each other? According to a recent ESCAP study, the total volume of containers transshipped within the ESCAP region will increase from 47 million TEUs to 64 million TEUs in 2006, and the share of transhipment in total port volume will rise to 30 per cent in 2011. This study also found scope for nine global scale transhipment ports to come up in the ESCAP region, each handling in excess of three million TEUs of transhipment traffic per year.

The mega transhipment port of Tanjung Pelepas, the 16th largest in the world, handled 4 million TEUs. This port is located just 150 km from the 13th largest port, Port Klang in Malaysia which also handled 5.2 million TEUs. The Chinese port of Ningbo, the 17th largest, is but 200 km away from Shanghai. The new South Korean transhipment port of Gwangyang is a mere 170 km from the 5th largest port of Busan. The scale and the volume of container transhipment traffic in the region should suggest that there is enough room for ports to co-exist and function even in close proximity. The Tanjung Pelepas port, which was hardly known in international shipping in 2000, will transform itself into the largest container port in Malaysia in 2005 weathering the increasingly tough competition from Singapore. Vizhinjam, which offers a draught of 20m, and endowed with a favourable geographical location, natural depth of water, greenfield site and the absence of a regulatory and bureaucratic regime, could be an excellent choice for a mega container transhipment terminal.

(The author, a former Acting Chairman, JN Port, Mumbai and former Chairman Mormugao Port Trust, Goa, is a Visiting Professor at Manipal Academy of Higher Education. Responses may be sent to drjospaul@rediffmail.com)

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Travel agents put Air Deccan's credit card offer on hold

Boosting connectivity in Orissa — Push for Central funding for rail, road projects

`CIAL is now a cash-rich company'

`AAI must be given free hand in modernisation'

Huge demand spurt for box berths foreseen — Ports must race to keep pace

Truck rentals slip on VAT confusion