India?s container transportation is poised for significant growth spearheaded by rising international trade and increasing investment in ports infrastructure by the government.
Sea traffic carries 95% of India?s exports by volume and 70% in value terms.
Privatisation of port operations and demand from foreign nations for container transportation of commodities is good news for the industry.
A recent analysis of Frost & Sullivan, Strategic Assessment of Containerisation Trends in India, found that container capacity handled for international and domestic traffic stood at 9.1 million TEU (twenty-foot equivalent units) in 2008 and the same is expected to reach 21 million TEUs by 2014.
Indian merchandise export and import has registered a double digit growth of 23% during the year 2007-08. Trade is growing at over 25.3% CAGR over the past 5 years. Since a greater share of trade is moving towards finished goods requiring containerisation, the container traffic in the country is experiencing an impressive growth, the analysis pointed out.
However, the Indian ports infrastructure is far behind world standards. With global and Indian trade growing at 11%-12% per annum, congestion at major ports can depress port performance and impede containerisation growth unless sufficient port capacity is created.
“Further, the absence of a hub port in India has resulted in a significant share of containers leaving an Indian port going through a feeder, with transshipment and mainline movement causing additional delay,” observes an analyst with Frost & Sullivan.
?This results in a delay of 40 hours to 50 hours as containers are transshipped through ports such as Colombo, Singapore (east), Dubai and Salalah (west), he added.
To keep abreast of the growth rate, the Government of India must ratchet up port capacity expansion plans. It is already developing the port infrastructure through PPPs, allowing 100% FDI in construction and maintenance of ports, operations, and other supportive services.
PPPs add value to infrastructure development at ports by being advantageous to the Government, private companies and customers because they have the opportunity to choose from various options while discharging their commodities.
The upcoming Vallarpadam international transshipment terminal and Vizhinjam terminal in Kerala will position India as a transshipment hub, conferring major advantages to Indian exporters in terms of reduction in feeder service cost and faster shipping service if the cargo is routed through Kochi instead of Colombo, Sri Lanka.
“To ensure future growth, India must intensify efforts to strengthen the overall logistics chain by improving port and landside infrastructure and integration,” the analyst noted further. India is clearly emerging into the spotlight as productivity growth is strong and container volumes are slated to witness robust growth in the coming years. Domestic transportation of containers is predominantly undertaken by road transporters and Container Corporation of India (CONCOR).
Eventually, the entry of private rail operators will lead to innovations and competition that will encourage operators to develop customised solutions including new box types for domestic cargo.
Private rail operators and coastal shipping will pick up momentum with the development of minor ports such as Mundra, Pipavav and Vallarpadam, which will be better equipped to handle huge liners.