Logistics

‘Coastal shipping can take a load off the transport sector'

| Updated on: Apr 24, 2011
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Shipping experts are calling for an effective and long-term government policy to help coastal shipping overcome the constraints impeding its growth over the years.

Despite offering many advantages over land-based transport, coastal shipping is still not an integral part of the country's transport infrastructure as it has been largely overlooked, both in terms of policy and by industry.

The challenges facing coastal shipping include lack of concessional finance for acquisition of coastal vessels; high import duties on bunker oil and spares; high manning scales that increases operating costs; incidence of corporate tax for coastal shipping as against tonnage tax for ocean-going vessels; and personal income tax.

Presenting a paper at a recent seminar, Mr C.S. Kartha, General Manager, Bengal Tiger Line, a common feeder service offering container services, said that the absence of an integrated transport policy in India had resulted in uneven distribution of cargo. Coastal shipping is forced to compete on unequal terms even as rail, road and aviation have been beneficiaries of a host of subsidies, credit facilities and so on, he said. Moreover, coastal vessels have to pay additional charges at ports while the trucking sector has no additional expenses.

vital link ignored

He called on the Centre and States as well as trade lobbies in the shipping and allied sectors to support the coastal shipping sector which, in turn, will result in savings on valuable foreign exchange and fuel, minimise loss of lives on roads, cut down pollution and lower the prices of several commodities. He said a suitable legislation was needed to create handling facilities exclusively for coastal cargo, tonnage tax concessions, establishment of a Coastal Shipping Development Board and dedicated berths for coastal ships, and improved road/ rail connectivity between ports.

According to Mr Kartha, the sector has not received adequate attention despite being a major link in the integrated transport infrastructure system vital to the country's economic growth. Currently, the share of coastal cargo in total maritime trade is 7 per cent in India, while it is 15 per cent in the US and 43 per cent in the EU, he said. The country has a 7,500-km coastline, and its coastal trade hinterland comprises 40 districts across five States on the west coast and four on the east coast and Puducherry. The hinterland spread across nearly 3.8 lakh sq km includes Lakshadweep and the Andaman and Nicobar Islands.

CABOTAGE RELAXATION

Currently, coastal cargo comprises 15 per cent of the cargo handled at various ports. The huge potential in this sector remains untapped due to a dearth of operators, largely. “due to the restrictions imposed by the Cabotage Law, which prevents foreign flag vessels operating in this lucrative sector”, Mr Kartha said.

A relaxation of the Cabotage Law will help end the monopoly currently enjoyed by domestic container lines and allow both foreign and Indian shipping lines to compete for cargo movement along the east and west coasts. This, in turn, will promote quality, frequency, reliability and speed of delivery, thereby reducing freight rates substantially.

The establishment of a reliable transport network is essential for infrastructure development. While road and rail connectivity has made some strides in the right direction, the most vital link — namely, the sea and inland waterways — remains untapped despite the proven advantages and economies of scale.

“Shipping is still the cheapest way to move large volumes of cargo over long distances. You do not have to construct a highway. You only need a channel into the sea and once you go out to sea, it is blue water all around. You do not have to maintain anything, apart from the channel,” Mr Kartha said.

Published on April 24, 2011

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