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"Whoever controls the Indian Ocean, dominates Asia. This ocean is the key to the seven seas in the twenty first century, the destiny of the world will be decided in these waters".
- Alfred Thayer Mahan
Economically speaking, water has always been the oldest and most sustainable resource to man. Trade through water can be quality cream uggs australia boot for sale divided into:
? Inland Water Transport (IWT)
? Shipping (Coastal Shipping & Overseas Shipping)
A lot has been said about the concept of coastal shipping and the latent opportunities, which need to be hit upon in this segment.
WHAT IS COASTAL SHIPPING
Coastal shipping is an eco friendly, gainful and energy proficient mode of transport.
WHAT DOES THE DICTIONARY SAY
Coastal shipping is the movement of cargo by sea between ports in India, not including the non-contiguous island trades.
A BACKGROUND
India has been blessed with a long coastline of 7,517 kms. The physical features of the coastal regions of India are a sort of terra incognita. Coastal India is characterised by a combination of deltas. And the Indian ports owe their existence to the projection afforded by the natural bars and spits in the Indian coasts. India's geographical setting has played a vital role in the progress of maritime activity. Infact the Indian waters have been an engine to aid the growth of trade.
Given that in the contemporary global economy, developed as well as emerging economies are emphasizing more and more on the importance of coastal trade and shipping, the answer to why India which today is very much firmly planted in the global business not doing as ‘Romans do' is the pressing need of the hour.
This paper attempts to analyze the role of Coastal shipping in Indian business coupled with its unlimited potential and challenges.
ASSESSING PAST PERFORMANCE
The infrastructure in India has always provided tremendous potential for coastal shipping to take off. In the past, the flow of bulk goods from west coast hinterlands to the east coast hinterlands always followed the coastal route. For instance, coal from Kolkata was carried in bulk on regular basis by coastal vessels to ports around the country right up to Kandla and Bhavnagar! And salt in bulk was carried back to Kolkata either from Kutchh ports or Tuticorin.
In the past, the Karachi - Rangoon stretch vide Colombo was designated as coastal route. The ships carried rice in bulk as well as bags right from Rangoon to Chennai, Tuticorin and across to Kochi and quality cream uggs australia boot for sale even to Kandla and on the return journey salt, cement and clinker were the cargo carried to Kolkota.
Coastal vessels freighted small parcel sizes of general cargo such as spices, tea, coffee, cashew nuts coir and jute, until efficient containerization and equally rapid rail and road systems took over.
This marked the shift of proportionate trading activities towards other modes of transport such as rail and road rather than coastal shipping.
Although cargo is moved between Indian ports not only by dedicated coastal ships but also by
ocean going vessels the growth of coastal fleet tonnage is an indication of the growth of coastal
shipping. From 1992 to 2002, it had been hovering around 0.47 million GT and has increased only marginally to 0.6 million gross tonnes (GT) in 2003.
While the Indian overseas fleet registered 1173% growth in numbers from 1951 to 2003, the coastal fleet inched upwards in the corresponding period to 209%. Oversees fleet grew by 3256% between 1951 to 2003 whereas coastal fleet increased by just 172%.
India's coastal fleet has been hovering around a meagre level of only 0.6 to 0.7 million gross tonnage (GT) during the last five years. Coastal cargo traffic during the period 1995-96 to
1999-00 grew at CARG of 5.41 per cent vis-à-vis the coastal tonnage growth in terms of capacity (GT) at CARG of 0.15 per cent.
Coastal cargo traffic during the period 1993- 2003 grew at a Compounded Annual Growth Rate (CAGR) pf 8.4% vis-à-vis the coastal tonnage growth in terms of capacity (gross tonnage) at CAGR of 2.5%. The total cargo moved by Inland Water Transport (IWT) in 2002 ?03, was about 2 million tones corresponding to just over 1.5 billion tonne kilometer or 0.15 % of the total inland cargo.
Out of the 244 vessels in 2003, as many as 149 were non-cargo carrying vessels reducing the effective cargo carrying fleet to 95 vessels of 0.43 million GRT. Also the coastal fleet is old with as many as 65% of the cargo vessels over 15 years old.
THE PRESENT
The commodities carried by coastal shipping have mainly been bulk and break bulk commodities. The cargo mix has not changed over the years. The cargo currently moved through coastal shipping constitutes Thermal, Crude oil, iron ore, cement and others. Although cargo is moved between Indian ports not only by dedicated coastal ships but also by ocean going vessels the growth of coastal fleet tonnage is an indication of the growth of coastal shipping.
There are 12 major ports and a number of minor and intermediate ports providing tremendous potential for coastal shipping an economical, environment friendly and energy efficient mode of transportation.
Yet, coastal shipping in India has not developed to its fullest potential. This is precisely evident from the recent statistics. The potential for coastal shipping has not been exploited in India, with it accounting for only 7% of domestic cargo movement.
COASTAL SHIPPING VERSUS ROAD AND RAIL TRANSPORTATION
Coastal shipping has inherent advantages over rail and road transport. It is environment friendly, and usually much safer than road transportation.
? Fuel Consumption: Fuel consumption by coastal shipping at 4.83 g m/tkm is just 15% of the consumption by road and 54% of that by rail.
? Emissions: Emissions of carbon dioxide, carbon monoxide, hydrocarbon etc with the exception of SO2 from coastal shipping are much lower than that in rail and road.
? Cost of Carriage: Coastal shipping can handle large parcel sizes easily. Whereas rail and road transport because of their limited capacity and infrastructure cannot handle large quantities of coal, iron ore etc. The cost of carriage of goods, from coast to coast, by coastal shipping (about 21% of cost by road and 42% of cost by rail) works out to be much lower than that by road and rail.
? External costs: Taking in account the external costs arising out of accidents, noise pollution, air pollution, climate change, congestion, infrastructure burden etc., the cost of coastal shipping as a percentage of road and rail transport is much lower. In the EU, the marginal costs of coastal shipping have been estimated at 20.7% and 40.5% of road and rail respectively.
INTER COUNTRY COMPARATIVE ANALYSIS
Transport based on inland waterways (IWT)―rivers, canals, lakes, etc. and also overlapping coastal shipping in tidal rivers―constitutes 20% of the transport sector in Germany and 32% in Bangladesh. In India it has a paltry share of 0.15%.
The total tonnage (originating traffic) moved by coastal shipping in India in 2001- 02 was around 54 million tonnes of which coal accounted for 16.2 mt (30% of total) and petroleum products for 16.4 mt (30% of total). This is in sharp contrast to other countries like China where the coastal cargo traffic handled in 2000 was around 614 million tonnes.
The total coastal traffic at Indian ports in 1999-00 was just around 78 million tonnes (comprising around 31 million tonnes cargo loaded, 5 million tonnes transshipped and 42 million tonnes unloaded), which is abysmally low compared to the coastal cargo movement in other countries in the region.
For instance, in China, coastal cargo even before 1988 touched some 870 million tonnes, followed by Japan with 549 million tonnes, Korea 141 million tonnes and even Indonesia, which is not a developed country, having much higher coastal cargo movement of around 133 million tonnes.
Indicative of this not-too-healthy scenario, India's coastal fleet has been hovering around a meagre level of only 0.6 to 0.7 million gross tonnage (GT) until some years ago. Coastal cargo traffic during the period 1995-96 to 1999-00 grew at CARG of 5.41 percent vis-`-vis the coastal tonnage growth in terms of capacity (GT) at CARG of 0.15 per cent.
Many other countries are making optimal use of coastal shipping as an effective mode of transport. In the EU for instance, coastal shipping has an enviable 43% modal share in tkm and is set to increase further.
WHAT AILS COASTAL SHIPPING GROWTH
With most of the production and consumption centers being land locked and the facility of door-to-door movement that road transport provides, it has taken precedence not only over water transport but also over rail transport.
Over the years, there has been a substantial amount of investment in creating and improving the basic infrastructure for road transport. However, this has not happened in the case of coastal shipping.
A review of the public sector investment in the transport sector since the First Five Year Plan reveals that the average investment in the shipping sector per plan was only 5% as against 51% for railways and 32% for road sector. Even this meagre investment was almost entirely allocated to overseas shipping. In the port sector also, very little investment has been made by the maritime states on the development of minor ports and by the Govt. of India / Major ports on creating earmarked facilities for coastal cargo.
Some of the key reasons for the inadequate share of coastal shipping to the trade activities are:
? Competition provided by rail and road transportation
? Double handling costs involved and
? Lack of active policy
? Cumbersome and lengthy customs procedure
? Non availability of concessional finance the acquisition of coastal vessels
? High import duties on bunker oil and spares
? High manning scales which increase operational costs
? Stringent specifications for construction of vessels leading to higher capital costs
? Incidence of corporate for coastal as against tonnage tax for ocean going vessel and
? Personal income tax, which discourages quality officers from continuity on India coastal vessels.
? Lack of separate berthing facilities at Major ports and inadequate cargo handling facilities at the minor ports
? Absence of institutional mechanism for inter-sector coordination
WHAT CAN COASTAL SHIPPING OFFER
? Tremendous cost-advantages to Indian trade
? Immense benefits of energy savings to the country's economy,
? Boon of a cleaner and greener environment offered to society at large,
? Boost transshipment at Indian ports
? Enhance competitive edge of Indian exports
? Increase port's potential to develop as hub-ports
? Increase revenues and opportunities for generating both direct and in-direct employment.
? Catalyze the development of an efficient and integrated transport and logistics system.
AN ANALYSIS
In spite of the obvious advantages that coastal shipping has over land-based modes in India, it has not grown to become an integral part of the country's transport Infrastructure. Today, Coastal shipping in India is anchored almost where it was decades ago, despite the oft-repeated chant about its potential and the need to develop this mode of transportation. Though more than 30 per cent of the total traffic handled by the Indian ports is routed through the coastal mode, the sector continues to get the short shrift from the Government and the planners.
There is no gainsaying the fact that coastal shipping constitutes an important arm of the transportation system of any country, given its cost and environmental advantages. And this is more so in a country such as India, which has, a 7500 km long coastline, dotted with 13 major and 184 minor and intermediate ports.
A major reason is that coastal shipping has not been receiving the priority it deserves. Though it is a major link in the integrated transport infrastructure system, vital for the country's economic growth, coastal shipping is yet to get the infrastructure status.
On a broad footing, we can say that coastal shipping has the capacity to create a huge number
Many committees have been set up by the Centre in the last few decades to review the challenges and prospects facing the coastal shipping sector in India. But the negligence towards the sector has led to the sector's potential going largely underutilized.
In cases of cargoes like coal and iron ore, large quantities are required to be transported, which cannot be handled by road or rail modes because of their limited capacity and infrastructure. Infact POL and coal cargoes formed about 73 per cent of the coastal cargo handled at the major ports, with Ennore, Paradip, Tuticorin, Cochin and Visakhapatnam ports handling 50 per cent of this traffic. The fact that growth of coastal shipping is not an end in itself but a means to a larger development of the economy itself needs to be emphasized here.
For instance, Indian Railways probably would not be able to supply the 20,000 tonnes of coal required by Tuticorin thermal power plant in such a short span of time as two days. Ships, on the other hand, can handle such large quantities easily
Extending certain concessions in favour of coastal shipping can easily help in the increase of traffic up to 10 million tones by 2012. With the on-going schemes for development of roads such as the Golden Quadrilateral and East-West and North-South corridor projects, it will be relatively easier to connect these ports to the nearest points on the highways.
A possible option could be that the government diverts its own cargo as also that of its agencies to coastal shipping to the extent feasible. Besides measures such as reduction of maritime dues and wharfage on coastal vessels by 50 per cent and providing concessional cargo-related charges for all coastal cargoes will extend the much-needed fillip to this sector.
With on-going schemes for development of roads such as Golden Quadrilateral and East-West and North-South corridor projects, it will be relatively easier to connect these ports to the nearest points on the highways.
Also it can be observed from past trends that foreign ships are benefiting the most from the existing state of the Indian coastal shipping industry.
Ship owners need to move away from their traditional role of being just another link in the supply chain and gear themselves up to provide complete solutions.