“ COASTAL SHIPPING IN INDIA- COST AND REVENUE, CARGO POTENTIAL,

INFRASTRUCTURE FACILITIES, GOVERNMENT REGULATIONS

– A PERSPECTIVE ”

A THESIS SUBMITTED

IN PARTIAL- FULFILLMENT OF THE REQUIREMENT

FOR THE AWARD OF THE DEGREE

OF

MASTER OF BUSINESS ADMINISTRATION

IN

SHIPPING AND LOGISTICS MANAGEMENT

BY

KARTHIKEYAN R

(MBA / 0238/ 08)

DEPARTMENT OF MANAGEMENT STUDIES

AMET UNIVERSITY

KANATHUR – 603112, CHENNNAI

DECLARATION CERTIFICATE

This is to certify that the work presented in the dissertation entitled “COASTAL SHIPPING

IN INDIA- COST AND REVENUE, CARGO POTENTIAL, INFRASTRUCTURE

FACILITIES, GOVERNMENT REGULATIONS - A PERSPECTIVE” in partial

fulfillment of the requirement for the award of Degree of Master in Business Administration, in

shipping and logistics Management from AMET UNIVERSITY, Kanathur, Chennai is an

authentic work carried out Under my supervision.

To the best of my knowledge, the content of this dissertation does not form a basis for the award

of any previous Degree to anyone else.

Date (Mr. J.P.THIAGARAJAN)

(Project Guide)

Department of Management Studies

AMET, UNIVERSITY CHENNAI

(MR.J.P. THIAGARAJAN) (MR.N.SRINIVASAN)

Head of the Department Dean

Department of Management Studies Dept of Management Studies

AMET UNIVERSITY AMET UNIVERSITY

CHENNAI CHENNAI

CERTFICATE OF APPROVAL

The foregoing dissertation entitled, “COASTAL SHIPPING IN INDIA- COST AND

REVENUE,CARGO POTENTIAL, INFRASTRUCTURE FACILITIES, GOVERNMENT

REGULATIONS - A PERSPECTIVE” is hereby approved as a creditable study of research

topic and has been presented in a satisfactory manner to warrant its acceptance as prerequisite to

the degree for which it was submitted.

It is understood that by this approval, the undersigned do not necessarily endorse any

Conclusion drawn or opinion expressed therein, but approve the dissertation for the purpose for

which it is submitted.

(Internal Examiner) (External Examiner)

Head of the Department

Department of Management Studies

ACKNOWLEDGEMENT

I would like to express my gratitude to our respected Chairman Mr. J.

Ramchandran and our Vice Chancellor Capt. S. Bharadwaj for their kind

encouragement.

I am immensely thankful to my respected guide Mr. J.P.Thiagarajan for his

guidance, support and encouragement rendered to me throughout the course of

study. I also wish to address special thanks to Mr. N.Srinivasan, Dean

Management Studies and Mr. J.P.Thiagarajan Head of Department Management

Studies, AMET University who have been a constant source of inspiration and

Motivation.

My special thanks and admiration should be submitted to MR. JEBAKUMAR

general manager (APL Tuticorin), without his help this study could not be

completed in time. I am grateful for the time he spent with me and the valid

information he shared with me.

I would also like to thank everyone who took their time and contributed to this

study by sharing their knowledge during their work.

CONTENTS

SR. NO PARTICULARS PAGE NO

I ABSTRACT 1

II INTRODUCTION TO COASTAL SHIPPING 2-3

III RESEARCH METHODOLOGY

A. RESEARCH OBJECTIVES

B. RESEARCH DESIGN

C. SOURCES OF DATA

D. LIMITATIONS OF THE STUDY

4-7

COST AND REVENUE

IV COST

A. CAPITAL EXPENDITURE – CAPEX

B. DAILY COSTS

C. TYPICAL ARRANGEMENTS OF COSTS

D. TECHNICAL COSTS

E. SUPPLIES COSTS

F. INSURANCE COSTS

G. IMPORT DUTIES

H. TAXATION

9- 23

I. SERVICE TAX

J. ADMINISTRATION COSTS

K. VOYAGE COSTS

V REVENUE 24

VI CARGO POTENTIAL FOR COASTAL SHIPPING IN INDIA

A. COMMODITY MOVED BY COASTAL SHIPPING

B. CARGO PROFILE

C. MAGNITUDE OF POL MOVEMENT BY COASTAL

SHIPPING

D. LIQUEFIED NATURAL GAS (LNG)

E. COAL

F. CONTAINER TRAFFIC

G. COMMODITY ANALYSIS

25-49

VII INFRASTRUCTURE FACILITIES

A. BERTH

B. CARGO HANDLING EQUIPMENTS

C. INLAND CONNECTIVITY

I. ROAD

II. RAILWAYS

III. INLAND WATERWAYS

D. STORAGE FACILITIES

50-93

VIII GOVERNMENT G\REGULATIONS

A. GOVERNMENT POLICIES REGARDING COASTAL

SHIPPING

B. GOVERNMENT REGLATIONS

I. VESSEL CONVERSION

II. MANNING REGULATIONS

III. INDIAN REGISTER OF SHIPS

IV. CLASSIFICATION SOCIETIES

V. CABOTAGE LAW

94-112

IX FINDINGS 113

X SUGGESTIONS 114-117

XI CONCLUSION 118-119

XII BIBLIOGRAPHY 120

TABLES AND FIGURES

TABLES

Table 1: Responsibility for ordering

Table 2: Cost of Coastal and Bonded Bunkers

Table 3: Vessel charges

Table 4: Berth hire charges

Table 5: Rate of Shifting Charges

Table 6: Rate for supply of water to shipping

Table 7: Cargo profile

Table 8: Origin - Destination Pairs of POL Products Coastal Movement

Table 9: Origin - Destination Pairs of Crude Oil Coastal Movement

Table 10: Details of Crude Oil Pipelines Operating in India

Table 11: Estimated Demand for POL Products

Table 12: Coastal Shipping Tonnage as on 31st December 2008

Table 13: Coastal Tonnage as on 31-Dec-2009

Table 14: Traffic Estimates by Coastal shipping in million tonnes

Table 15: Census of Cargo Handling Equipment

Table 16: Container Handling Facilities

Table 17: Fertilizer Handling Facilities

Table 18: Iron Ore Handling Facilities

Table 19: Liquid Bulk Handling Facilities

Table 20: Road Networks

Table 21: Road Lanes

Table 22: Storage Facilities in major ports in India

Table 23: Existing Warehousing Capacity

FIGURES

Figure 1: Inland waterways in India

Figure 2: National Waterway 1

Figure 3: IWT terminal at Patna, NW-1

Figure 4: National Waterway 2

Figure 5: IWT terminal at Pandu, NW-2

Figure 6: National Waterway 3

Figure 7: National Waterway 4

Figure 8: National Waterway 5

I. ABSTRACT

Coastal shipping is an extremely economical, environmentally friendly, gainful and energy

proficient mode of transport, especially for bulk transport, and has the potential to carry a large

part of the traffic currently being served by rail and road. The development of coastal shipping

has been low despite the fact that the entire coastal trade is reserved for Indian vessels. Low

productivity at major ports, paucity of ship repairs services and the relative under development

of minor ports affect coastal shipping operations adversely. Further, ship owners are reluctant to

acquire dedicated coastal vessels due to various impediments such as complex customs

procedures, time-consuming port clearance, high manning scales etc.

In order to make the sector more effective, there is a need to create adequate infrastructure

facilities, simplify customs procedures and provide the necessary fiscal incentives for the

development of the sector. It would also necessary to synchronize the development of minor

ports with the needs of coastal shipping. It should therefore be accorded a status at par with other

domestic modes of transport, especially with regard to customs and other procedures etc., which

are hampering it from realizing its full potential. To encourage coastal shipping, measure has

already been taken to grant priority berthing to coastal ships without priority berthing charges. It

has also been decided to exempt coastal shipping and sailing vessels from the payment of light

dues.

Coastal shipping involves no investment in line haul capacity except in navigational aids and

appropriate terminal facilities. Considering the vast coastline and severe congestion faced by the

land modes of transport, coastal shipping offers an effective alternative with increased energy

efficiency and lower costs.

II. INTRODUCTION TO COASTAL SHIPPING

What is coastal shipping?

“The movement of cargo by sea between ports in India. Not including the non-contiguous island

trades”.

India has a coastline of 7500 km comprising of 13 major ports, 187 non major ports and around

14,500 km of navigable Waterways which needs connectivity. The connectivity can only be

possible if Coastal Shipping is vibrant and there are enough number of Ships to cater to the needs

of the Indian Coast. Coastal Shipping should be granted infrastructure status so that applicable

benefits accorded to infrastructure industries to be extended to Coastal Shipping. Implementation

of the Centrally Sponsored Scheme (CSS) proposed by the Government for Coastal Shipping &

Port infrastructural development may be expedited. Initially, under the CSS the development of

seven Minor (non-major) ports has been proposed at an estimated total cost of around Rs.1,500

crore for which a grant-in-aid of Rs.500 crore (33%) would be provided by the Central

Government through Government Budgetary Support with the remaining 67% to be contributed

by the respective State Governments. States with non-functional ports to expedite development

of such ports and Central Government to approve/provide requisite funds for basic infrastructure

development. Also, draft of Minor Ports to be increased to minimum metres. Create Dry Docks

& Ship Repair Yards at existing / new Non-Major Ports to accommodate smaller coastal vessels

by providing draft of around 4 to 5 metres. Needs allocation of requisite land and water frontage

exclusively ear-marked for this purpose. Enhanced / adequate connectivity for ports with Rail

/Road transport. All Non-Major Ports to be also adequately connected to highways with four

lane. The connectivity can only be possible if Coastal Shipping / IWT is vibrant and there are

enough number of Ships to cater to the needs of the Indian Coast.

Coastal Shipping can ease traffic congestions and arrest loss of human lives caused due to

accidents, which occur quite frequently in road transport mode. Annual losses due to road

accidents in the country are reported to be in the range of Rs.200 – Rs.300 billion and the cost on

account of accidents Rs.100 billion, together aggregating to Rs.300 – Rs.400 billion annually.

The human life lost on the Indian roads is in excess of one lakh and thousands of people get

seriously injured due to road accidents.

Besides, Coastal shipping has comparatively lower emissions of harmful chemicals such as

carbon dioxide compared to road / rail transport thereby considerably reducing pollution related

ecological and health hazards and the consequential socio-economic costs. It has been observed

that the Cargo vessels between 2000 to 8000 DWT cause 21 gms per ton km of Carbon dioxide

emissions while heavy trucks cause 50 gms per ton – km of carbon dioxide emissions.

Inspite of having so many advantages for moving Cargo by Coastal Vessels / IWT Vessels, we

see hardly any improvement in number of Ships being constructed or being used for Indian

Coast. The Coastal Shipping / IWT Owner faces numerous problems right from the time of

building the Vessel, taking loan from the Financial Institutions, getting various permissions to

run the vessels from government bodies, the high Tariff from Indian Port which makes Coastal

Shipping non viable and not to speak on the frequent checks on the Vessels by Port State

controls.

The land route, particularly along the Chennai and Vishakapatnam on the East Coast, is parallel

to the coast, thereby providing the potential for diversion of rail / road cargo to the sea route. For

this, there is a need to develop coastal shipping as a part of a multimodal transport system, by

connecting the minor ports with the hinterland in a cost-effective manner. The level of facilities

for cargo handling at these ports would depend on the extent of traffic. Even without equipment,

the ports could still be served by vessels with appropriate equipment.

RESEARCH METHODOLOGY

III. RESEARCH METHODOLOGY

Research is an art of scientific investigation. The advanced Learner’s Dictionary of current

English lays down the meaning of research as “A careful investigation or inquiry specially

through search for new facts in any branch of knowledge”. Research is an academic activity and

as such the term should be used in a technical sense. According to Cliffor Woody Research

comprises defining and redefining problems, Formulating hypothesis of suggested solutions;

collecting, organizing and evaluating data, making deductions and reaching conclusions; and at

last carefully testing the conclusions to determine whether they fit the formulating hypothesis.

A. RESEARCH OBJECTIVES

To understand the overall process of Coastal Shipping

To identify the cost and revenue of the Coastal Shipping

To analyze the cargo potential of the Coastal Shipping in India

To identify the coastal shipping efficiency with the help of improved infrastructure

facilities.

To understand the government regulations in India for coastal shipping.

B. RESEARCH DESIGN

“A research design is the arrangement for the collection and analysis of data in a manner that

aims to combine relevance to the research purpose with economy in procedure”.

In fact, the research design is the conceptual structure within which research is conducted; it

constitutes the blue print for the collection, measurement and analysis of data.

a. Type of research

Type of research is exploratory. The objective of the exploratory research is the development of

hypothesis rather than their testing.

C. SOURCES OF DATA

Sources of data can be classified into two types. They are

Primary data

Secondary data

a. Primary data

The primary data are those, which are collected afresh and for the first time, and thus happen to

be original in character. In this research primary data is collected through

Personal interviews

b. Secondary data

Secondary data means data that are readily available i.e., they refer to the data, which have

already been collected and analyzed by someone else. In this research secondary data is mainly

collected through

Reports prepared by research scholars

Public records and statistics

Reports and publications journals

Books, Magazines and newspapers

Internet

D. LIMITATIONS OF THE STUDY

There were certain limitations to the research that the researcher has forced:-

Companies do not ready to share their information

Lack of sufficient data

The Time was the major constraint for the researcher in collecting the data.

COST AND REVENUE

IV.COST

A. CAPITAL EXPENDITURE – CAPEX

Funds used by a company to acquire or upgrade physical assets such as property, industrial

buildings or equipment. This type of outlay is made by companies to maintain or increase

the scope of their operations. These expenditures can include everything from repairing a roof to

building a brand new factory. The amount of capital expenditures a company is likely to have

depends on the industry it occupies. Some of the most capital intensive industries include

Shipping , oil, telecom and utilities.

In terms of accounting, an expense is considered to be a capital expenditure when the asset is

a newly purchased capital asset or an investment that improves the useful life of an existing

capital asset. If an expense is a capital expenditure, it needs to be capitalized; this requires the

company to spread the cost of the expenditure over the useful life of the asset. If, however, the

expense is one that maintains the asset at its current condition, the cost is deducted fully in the

year of the expense.

Capital expenditure are capitalized as assets( investment ) , depreciated over economic life of a

vessel. Only annual depreciation is charged to profit. Depreciation is an accounting entry and

does not involve any cash flow. Thus , the measurement of profit excludes some cash-flows such

as capital expenditure and includes no-cash items such as depreciation.

B. DAILY COSTS

Crew Costs

The term crew is used to describe all who sail in ships and where further definition is required ,

the terms “officers” and “rating” are used. The word voyage is used in the former sense as with

the often heard expression “he signed on for the voyage”. The costs of the crew with only two

principal exceptions: “ victualling “ , which is contained in the supplies of costs, and the costs of

insuring the crew , contained in the insurance costs.

Crew costs are based on three related factors:

The manning scale prescribed for the ship

The nationality or nationalities of the crew

The conditions of service

C. TYPICAL ARRANGEMENTS OF COSTS

Wages

Basic Pay

Overtime

Special work payments

Leave Pay

Bonuses

Social security

Superannuation

Crew overlap

Travel

Rail , Road , Ship and Air fares

Accommodation and meals

Travel subsistence

Baggage costs

Other costs

Medical examination

Medical treatment

Union payments

Manning agent’s fees

Cadet training

Levies

Training costs

Standby pay

Recruitment

D. TECHNICAL COSTS

The technical departments costs cover all costs associated with the maintenance and repair of the

ship to the state required by the owners. Generally , this means keeping the ship fully operational

for the maximum number of days possible in the year, but it can also cover lay up, modification

and the sale or purchase of the ship. If operational the level of maintenance and repair must

conform to statutory and classification standards , but beyond this the level of maintenance and

repair depends upon the company policy at that time. The economies of the shipping industry are

all too often reflected in the level of repairs , maintenance and appearance as more or less money

is available. Insufficient maintenance can be a short-sighted policy as the incidence of

breakdowns will inevitably increase, but when cash is in short supply long-sight usually suffers

from shortage also.

Technical costs are ,

The costs of labour, skills , expertise

Parts & Materials

Tools and Equipment

E. SUPPLIES COSTS

The term “supplies” covers all consumable stores including victualling ,i.e. food. It also covers

semi-consumable items such as crockery , linen, soft furnishing , cooking utensils and hammers.

Again the cost centres are grouped as much for convenience and functions as for magnitude of

costs. Items of common usage such as paint , are now supplied to the ship bulk and the

arrangement of the costs of such item into second category groups reflects the ship department

which has responsibility for ordering for the ship as a whole. Thus paint is included in “Marine

Stores” and normally ordered by the 1st mate for all departments in consultation with the chief

engineer and chief steward , the only exception being dry dock paints which are usually arranged

by the shore staff. The chief engineer orders all lubricating oils and greases and the chief steward

does likewise with all cleaning materials.

COST GROUP RESPONSIBILITY FOR ORDERING

Marine stores :

Paints

Ropes & wires

Fresh Water

1st Mate

Engine Stores:

Greases

Packing

Lubricating oils

Chief Engineer

Steward Stores:

Cleaning materials

Stationery

Linen

Cutlery

Laundry and soft furnishing

Victualling

Recreational

Clothing

Handling Charges

Bar and Canteen

Chief Steward

Table 1: Responsibility for ordering

F. INSURANCE COSTS

The costs of marine, war and liability insurance as they apply to the running costs of ships. The

insurance department of some shipping companies often lies outside the sphere of the ship

manager , primarily because the nature of its work is both legal and financial and because

decisions as to the amount of risk the company should take are usually made at a corporate level

in view of the magnitude of the sums involved. Wherever the responsibility lies, the costs of the

insurance are usually included in the running costs of the ship. Once the insurance and the ship

management departments is essential, to ensure that whenever possible risks are avoided and that

underwriters are promptly put on notice of possible claims and that legitimate claims under the

policies are properly progressed.

Ship insurance is arranged to provide the ship owner with:

Protection against physical loss or damage

Protection against liability to third parties

Protection against loss or interruption of earnings

Hull and Machinery insurance

Just as the comprehensive coverage in auto insurance protects the insured individuals against

physical damage to their cars, so does hull and machinery insurance provide physical damage

protection for the ships or vessels and the machinery which is part of them. Since the soundness

and normal operation of the hull and machinery of a ship is key to the safe transportation and

delivery of any cargo or freight, it is highly advisable that ship owners purchase hull and

machinery insurance.

Characteristics of Hull and Machinery Insurance

Hull and machinery insurance is a type of ocean marine insurance, which protects the

insured vessel or fleet against physical damage caused by a peril of the sea or other

covered perils while the vessel is in transit over water.

Although the most commonly insured vessels are those operating in the ocean or the sea,

hull and machinery insurance can cover vessels that work in any kind of waterway, such

as tugboats, barges, floating machinery, and even oil rigs which operate in coastal areas.

Hull and machinery insurance policies can be written to cover a single vessel or the

whole fleet of a ship owner.

A deductible specified in the policy declarations is payable in the event of a hull and

machinery insurance claim.

A very important provision of hull and machinery insurance is the running down clause, also

referred to as "the collision liability" provision. Just as its name suggests, it protects the owner of

the craft against legal liability which may arise out of the owner's vessel colliding with another

ship and damaging its property or cargo. It is very important to note that the collision liability

clause does not apply to legal liability arising out of bodily injury or death, or property damage

to fixed installations such as piers. If you wish to get insurance against this kind of liability, you

will need to purchase a protection and indemnity coverage.

Protection and indemnity insurance

Protection and indemnity insurance, commonly known as P&I, is a club with similarity to a

marine insurance against third party liabilities and expenses arising from owning ships or

operating ships as principals.

G. IMPORT DUTIES

Coastal ships, unlike oceangoing vessels, have to pay duties on bunker oil. Bunker fuel oil for a

coastal vessel is estimated to cost about 28% more than for an oceangoing vessel and around

36% for high flash high speed diesel.2 On the other hand, the diesel used in road transport is

subsidized. Import duties on capital goods and spares also cast a burden on coastal vessels,

which depend heavily on imported spares. Only if the ships are repaired at ship repair units

registered with Director General Shipping, the imported spares are not subject to taxes. Given

that coastal shipping is much more environment-friendly and fuel-efficient than any other mode

of transport, there is a case for providing tax concessions both for fuels and spares.

Bunkers

Coastal ship owners are required to pay duty on oil bunkers unlike foreign going vessels. This

results in significant increase in the cost of operations of these vessels, furthermore, when a

foreign going vessel is converted into a coastal vessel it entails assessment of duties payable on

bunkers remaining on board. This exercise is highly cumbersome and leads to further delays.

Analysis shows that while FO bunkers for coastal vessels cost 27.55 percent more than foreign

going vessels and in the case of HFHSD bunkers cost rises to 36.35 percent.

Rs. PER

MILLION

TONNES

COASTAL

BONDED

DIFFERENCE DIFFERENCE.

%

FO 15848.01 12268.24 3579.77 27.55%

HFHSD 24806.20 18192.61 6613.59 36.35%

Table 2: Cost of Coastal and Bonded Bunkers

This factor by itself does not put the coastal shipping at a disadvantage vis-to-vis road or rail, as

fuel consumed by these modes is also dutiable. The cost of diesel to the road transport operator

for example is more or less the same as it is for the coastal operator. Nevertheless there is a

strong case for duty exemption here because it is relatively more efficient and environment

friendly. At any rate, this mode of transport in initial stages will require such props to translate

its potential into reality.

Spares

Capital goods and Spares imported by shipping companies for their coastal vessels are dutiable

as per the prevailing customs tariff. Imported as well as Indian made coastal vessels are heavily

dependent on foreign made spares. The duty on imported spares however significantly increases

the burden on coastal ship-owners. Ironically, while tax relief is available to the coastal ship-

owner on spares imported for repairing his vessel through a ship repair unit registered with the

DG Shipping and also fitted by the same unit on board; tax is leviable for spares imported other

than through this channel. The ship repair unit also charges a fee for its services typically up to

10 percent. All this effectively adds to a burden of around 15 percent of the landed cost of

the spares estimated at around 3 percent of the total cost of operation.

Here to the burden on duty of import of spares merits review especially for coastal vessels

at least built overseas.

H. TAXATION

Corporate Tax. Till recently, Indian shipping companies had to pay corporation tax at 36.75% or

the minimum alternate tax at 7.5%. The industry also enjoyed benefits under Section 33 AC of

Income Tax Act in which amounts transferred to a reserve specified under this section were not

considered as a part of book profits. In the Union Budget 2004-5 tonnage tax has been adopted.

Shipping companies with oceangoing vessels have the option of choosing between corporate tax

and tonnage tax, but not coastal shipping companies. This would act as a further disincentive for

investment in coastal tonnage; oceangoing vessels are also not entitled to tonnage tax on coastal

movement. Tonnage tax should also be extended to coastal fleet. Personal Income Tax. Indian

seafarers employed on foreign vessels or Indian vessels which ply outside Indian territorial

waters for more than 183 days in a year are entitled to nonresident status and pay no taxes. This

does not apply to officers and seafarers on coastal ships.

Personal taxation

An Indian seafarer who is employed on a foreign vessels for 183 days or more in a year is

entitled to non-resident status as per Section 6 of the Income Tax Act, 1961 and therefore

eligible for income tax exemption.

The CBDT has however held that an Indian seafarer who is employed on foreign-going Indian

vessels will be entitled to such status only if he spends 183 days or more outside Indian territorial

waters.

In other words this means the amount of time spent at Indian ports or in Indian territorial waters

will be reckoned as spent in India, neutralizing the claim of such a person for non-resident status.

Therefore a seafarer employed on Indian coastal vessels is not entitled to count the period on

towards non-resident status and the exemption from tax is not available to him.

I. SERVICE TAX

Coastal shipping / Inland Waterways compared to foreign going has great disadvantage in

running their vessels between various ports within the country. Ships pay Service tax at each and

every port for the same cargo. For example if Container “A” moves from Bombay to Goa, then

service tax is liable in Mumbai and when the Container is discharged in Goa, again the Port

levies Service Tax at the time of discharging Cargo. We have to pay service tax twice.

J. ADMINISTRATION COSTS

Administration or “Overheads” are the names given to the costs of providing a base or central

point from which the shipping company is run or administered. The function of the shipping

company’s administration is split into two distinct but related parts: the corporate , which directs

the company as a whole and makes long term plans, and the ship management and operations

which deal with the day to day management of costs. The cost of administration are usually

allocated separately to corporate management, ship operations and ship management unless the

company is very small when they may be considered as one cost.

The prime functions of ship management administration are:

Ship support

Record keeping

Accounting

Communications

The cost centres of administration can be grouped as follows:

Staff

Travel

Entertainment

Occupancy

Communications

Printing and Stationary

Professional charges

Other charges

Depreciation and Amortisation

K. VOYAGE COSTS

Bunkers:

This is one of the major cost in operating a vessel. Bunker has to take from any port to complete

the intended voyage. It may be that there remains on board the vessel at the commencement of

the proposed voyage sufficient bunkers to reach the final discharge port . If this is the case , the

estimator has merely to enter the total fuel-oil and diesel-oil required for the voyage .

Fuel-oil for main engine

Diesel-oil for ship’s auxiliaries

Port dues & charges

Port charges are generally divided into three broad categories, general tariffs, facility tariffs and

service tariffs, each of which are subdivided into a series of individual charges.

Table 3: Vessel charges

Rate of Port Dues for vessels calling at the Port:-

• A coastal vessel, which after paying 50% of the Port Dues as per provisions prescribed at

3 above, re-enters the port within the period of exemption of 30 days with cargo or

passengers or in ballast shall be charged the difference viz., 50% of the Port Dues

previously conceded.

• A coastal vessel, which, after paying 75% of Port Dues as per provisions prescribed at 4

above, re-enters the port within the period of exemption of 30 days with cargo or

passengers or in ballast, shall be charged the difference, viz., 25% of the Port Dues

previously conceded.

(a) Conservancy and port dues

It is common to establish a charge to recover the cost incurred in providing the facilities and

services which are necessary to ensure the safe navigation of vessels within the area under the

port's jurisdiction. It may include dredging, the provision of breakwaters, training walls,

navigational aids and harbour surveillance facilities, but usually excludes the costs of providing

pilot and tow services which are charged by separate tariffs.

Conservancy is a port charge which is levied for the utilization of general nautical facilities in the

approaches to the port (i.e., outside the port area), whereas port dues are levied for the services or

utilization of facilities within the port, including channels, vessel traffic service, emergency fire

services, breakwaters, pollution control and marine security. Port dues on ships are based on the

type and size of the vessels. The charging units would be the carrying capacity of the vessel

measured in gross registered tonnage (GRT), net registered tonnage (NRT) and deadweight

tonnage (DWT) or some combination of length, beam and draft, and the unit of differentiation

should be the type of the vessel.

(b) Wharfage

Wharfage is normally a cargo-related charge to recover the costs associated with the provision of

the basic infrastructure and superstructure of the port to facilitate the movement of cargo from

shipside to hinterland and vice versa. It includes the costs of providing roadways, railways,

quays, parking areas, transit shed facilities, police surveillance etc. Similar to port dues,

wharfage is charged by freight ton, metric ton, cubic metres or TEU, and its differentiation unit

is the type of cargo.

(c) Berth hire (dock or berth due)

This is a charge, normally related to the ship, to recover the costs associated with the berthing of

the vessel and for the use of the berth for a stated period of time. It may include expenditure on

the provision, maintenance and operation of docks, maintenance of dredged depths alongside and

in the dock basin, fendering, provision of quays and facilities provided on the quay apron. The

charging unit of the berth due is meter-hours, computed as the length of the vessel multiplied by

the hours that the vessel is at the berth. The unit of differentiation distinguishes among the berths

by their characteristics, such as alongside depth, back-up area and cargo handling capacities.

Table 4: Berth hire charges

(d) Transit storage

This is the charge to recover the costs of the storage of goods in transit sheds or areas. The

temporary storage rates are usually set to minimize cargo dwell time and maximize throughput.

The charging unit is the amount of storage occupied multiplied by the period of storage

measured in days. The storage can be differentiated based on the dwell time so as to charge

higher rates for an extended period of storage. Separate tariffs can also be used to distinguish

between open and closed storage and among different types of cargoes.

(e) Pilotage

Pilotage arises in two areas: the seaway gaining access to the river estuary and the port area

itself. In many instances, the pilot service is compulsory. The pilotage may be based on the GRT

of the vessel or a charge per ship. In general, as the cost of providing pilot service does not vary

for different sizes of vessels, it is appropriate to charge pilotage simply based on the vessel's port

call. However, it can be differentiated by the location where the pilotage starts and ends.

(f) Towage

This service is usually optional. Occasionally, the towage tariff is included in another charge

such as pilotage. Towage is usually based either on the characteristics of the ship or the tugs

performing the operation. Towing costs increase with the size of the tugboat used and the time of

use. Therefore, the common practice is to charge a towage per hour and to differentiate based on

the size of the tugboat used. However, in some cases it is charged as a fixed rate irrespective of

the time taken for the operation and differentiated by the vessel's type and size.

(g) Mooring/unmooring (berthing/unberthing)

This is a specific tariff applied for berthing/unberthing and mooring operations. This tariff is

charged simply by the vessel movement, but can be differentiated by the vessel's size measured

in GRT, NRT or some combination of length, beam, and draft

(h) Stevedoring

Stevedoring costs should be directly related to the costs involved in handling commodities.

Stevedoring companies in many ports are characterized by the high level of variable costs, for

example, labour and a comparatively low level of fixed costs such as mobile plant, buildings.

Therefore, in stevedoring operations the marginal costs and average costs may be identical.

The stevedoring charge is usually levied per freight ton, metric ton, cubic metres or TEU of

cargoes. Stevedoring firms often reserve the right to calculate the charge on the volume or

weight of the cargoes. It is common for all cargoes to be divided into groups according to various

criteria and a uniform rate applied to each group.

(i) Warehousing

In most ports, there is a free period during which no charge is made for storage. Warehousing

charges apply to goods that need to remain longer in the port and are, therefore, transported to

special premises reserved for that purpose.

After the free period has expired, the tariff usually takes account of the length of stay of the

goods in the storage place. In some cases, this charge per unit of time, usually the day, remains

constant, regardless of how long cargo remains in storage after the given free period. However,

in many cases, the charge per unit of time increases with the length of time spent in storage in

order to discourage any abusive lengthy storage. This charge can be differentiated by type of

storage, such as open, closed or frozen storage and by different types of cargo.

(j) Other tariffs

In addition to these specific tariffs, some ports levy other tariffs for services to the ship or to the

cargo.

These services may include fuel, water and electricity supply, labour supply, rent of equipment

and cargo processing, such as weighing, marking and repacking.

Table 5: Rate of Shifting Charges

Table 6: Rate for supply of water to shipping

k) Transshipment Charges:

The Coastal Vessels, which brings cargo from minor ports to major ports for transshipment or to

export, the ports charge wharfage twice. That means when the Cargo is discharged by Coastal

Vessels, wharfage is applicable and when the same Cargo is again loaded for final destination,

Port levies wharfage again. Hence we suggest that every Major / Minor Port must have

Transshipment charges for all Cargo and not only for Containers which are existing in some of

the Ports.

L) Commissions

It is customary to express the remuneration for the brokers time and efforts in negotiating and

arranging the contract as a certain percentage of the money earned by the ship owner. In marine

insurance , the broker is generally paid a commission by the underwriter although the assured is

the brokers client and the services are for the client.

V. REVENUE

Revenue can be classified into two methods based on the operation ,

In Voyage charter “Freight”

This means the price payable to the carrier for carrying cargo in a good condition and delivery to

the owner of an interest in the cargo. The word refers to many other issues related to chartering,

such as “freight taxes”, “freight prepaid”, etc. The payment for the consecutive voyages or

contracts of affreightment. Even in the liner trades the price is called “freight” although here the

list of freight rates are termed a “Tariff”.

In Time charter “Hire”

In a time charter the charterer is obliged to pay hire for the vessel in the agreed manner. The

charter hire per calendar month can be based on the vessels total deadweight carrying capacity.

This is the deadweight capacity on the vessel’s summer loadline, irrespective whether the ship

may be loaded down to her winter or summer loadline at the time of fixture on time charter. The

quantity of cargo carried has no bearing whether upon the charter hire. It is entirely up to the

charterers to provide full cargo in order to utilize the vessel’s cargo carrying capacity to a

/maximum extent. Hire can be also paid at a fixed sum per day of hire.

CARGO POTENTIAL

VI. CARGO POTENTIAL FOR COASTAL SHIPPING IN INDIA

A. COMMODITY MOVED BY COASTAL SHIPPING

I. Crude oil

II. Petroleum Oil and Lubricant products (POL)

III. Liquefied Natural Gas (LNG)

IV. Coal

V. Iron ore

VI. Iron and Steel

VII. Cement

VIII. Fertilizers and Fertilizer Raw materials (FRM)

IX. Food Grains

X. Containers

B. CARGO PROFILE

STATE NAME MINERAL MINES

Andhra Pradesh

Asbestos

Coal

Graphite

Iron

Limestone

Manganese

Mica

Silica sand

Arunachal Pradesh Copper

Gold

Dolomite

Graphite

Assam

Assam

Cement & Mortar

Coal

Crude Oil

Gold

Graphite

Limestone

Salt

Bihar Bauxite

Cement & Mortar

Dolomite

Glass Sand

Mica

Salt

Chattisgarh Limestone

Cement Plants

Aluminum

Lead & Silver

Iron ore

Gold

Goa Iron ore

Manganese ore

Bauxite ore

Gujarat Agate

Asbestos

Cement Mortar

Crude oil

Dolomite

Fire Clay

Graphite

Gypsum

Kasolin

Lignite

Limestone

Manganese

Mica

Quartz

Vermiculate

Salt

Silica sand

Ochre

Haryana Coal

Dolomite

Feldspar

Iron ore

Kaolin

Limestone

Quartz

Sulphur

Himachal Pradesh Glass Sand

Limestone

Iron

Copper

Gypsum

Dolomite

Salt

Sulphur

Coal

Gold

Jammu & Kashmir Coal

Glass Sand

Copper

Natural Gas

Bauxite

Chromium

Graphite

Gypsum

Gold

Lignite

Limestone

Manganese

Sapphire

Zinc

Jharkand Mica

Graphite

Manganese

Lead & Silver

Copper

Aluminum

Karnataka Limestone

Gold

Dolomite

Black Granite

Iron ore

Chromites

Bauxite

Pink Granite

Manganese ore

Kerala Glass Sand

Limestone

Iron

Copper

Kaolin

Lignite

Mica

Titanium

Graphite

Madhya Pradesh Coal

Copper

Diamond

Feldspar

Dolomite

Fire Clay

Gold

Iron

Kaolin

Lead & Silver

Limestone

Manganese

Mica

Quartz

Silica Sand

Ochre

Maharastra Bauxite

Limestone

Iron

Copper

Manganese

Dolomite

Silica sand

Coal

Mica

Manipur Chromite

Meghalaya Limestone

Flux & Chemical

Grade lime

Nagaland Limestone

Nickeliferous cromite

Orissa Aluminum

Chromium

Coal

Dolomite

Fire clay

Glass sand

Granite

Iron

Kaolin

Lead & Silver

Manganese

Mica

Silica

Limestone

Rajasthan Feldspar

Dolomite

Copper ore

Bentonita

Asbestos

Lead & Zinc ores

Kaolin

Gypsum

Gem

Abrasive gernet

Fluorspar

Phosphorite

Mica

Phyrophilite

Limestone

Chemical

Tamil Nadu Bauxite

Limestone

Beach sand

Graphite

Manganese

Vermiculite

Lignite

Uttar Pradesh Coal

Diaspore

Dolomite

Glass Sand

Pyrophylite

Limestone

Soap stone

Bauxite

Uttarakhand Limestone

Gypsum

Iron ore

Graphite

Copper

West Bengal Cement & Mortar

Coal

Copper

Iron

Lead & Silver

Lignite

Gold

Kaolin

Limestone

Zinc

Dolomite

Fire clay

Manganese

Quartz

Silica

Table 7: Cargo profile

C. MAGNITUDE OF POL MOVEMENT BY COASTAL SHIPPING

Assuming that the modal share of coastal shipping as 17 percent of overall POL products

movement, it is estimated that the quantity of POL (Coastal movement) to be moved at major

and minor ports together will be around 32.5 million tonnes by 2011-12 . Considering observed

loading and unloading pattern of POL and the location specific plans of industries, future POL

traffic in terms of loading and unloading at major and minor ports is worked out. However most

of the forecast figures are dependent on the business decisions of coast based and hinterland

industries to which these ports serve.

Petroleum Oil and Lubricants (POL products)

Petroleum products comprise petrol, diesel, ethane, LPG, aviation gasoline, motor gasoline, jet

fuels, kerosene, heavy fuel oil, naptha, white spirit, lubricants, bitumen, paraffin waxes,

petroleum coke and other products like coal tar etc. While usage of oil and gas as primary

sources of energy is well below the world percentages in India, it is second primary energy

source after coal however.

The lead players in the crude oil refining are Indian Oil Corporation (IOC - 32 percent), Reliance

Petroleum Limited (RPL - 25 percent), Hindusthan Petroleum Corporation Limited (HPCL - 12

percent) and Bharat Petroleum Corporation Limited (BPCL – 8 percent) with combined share of

77 percent. Other refineries are located at Kochi, Mangalore, Chennai, Bongaigaon and

Numaligarh. Recently ONGC also entered into refining sector by acquiring the Mangalore

Refinery (MRPL).

ORIGIN DESTINATION ORIGIN DESTINATION

Kandla Vizag Bedi Tuticorin

Cochin Vizag

Mormugao Hazira Sikka

Mangalore Ranpar

Sikka Kandla Mumbai Kandla

Chennai Sikka

Mormugao NMPT Kandla

Haldia Cochin Kandla

Mumbai Mormugao

Paradip Haldia Chennai

Vizag Paradip

Dahej Vizag

Kakinada Port Blair

Chennai Haldia Mumbai

Vizag Haldia Kolkata

Paradip Haldia Tuticorin

Table 8: Origin - Destination Pairs of POL Products Coastal Movement

D. LIQUEFIED NATURAL GAS (LNG)

Natural gas is the world’s third largest source of primary energy following coal and oil. Since

early 1970s, known reserves of natural gas have been increasing steadily, at the rate of five per

cent per annum. Similarly, the number of countries with known reserves has also increased from

around 40 in 1960 to about 85 today. Natural gas is considered to be the most environment

friendly fuel and also expected to last longer than crude oil. Because of these reasons natural gas

(LNG) is now preferred over other traditional feedstock such as coal or liquid fuel. More than

four-fifths of world production is consumed locally while the rest is traded internationally.

Transportation is an essential aspect of gas business, since reserves are often quite distant from

the main markets. Pipelines transport is most preferred mode of transport for gas and there is a

well-developed network in the former USSR, Europe, and North America. LNG use in India

shows that out of total consumption around 37 percent is used for power generation followed by

36 percent in fertilisers sector in India. Other sectors like steel and manufacturing industries,

transport etc. also make use of LNG.

Production

Exploration and Reserves

India's natural gas reserves are currently estimated at 22.9 trillion cubic feet (tcf). The area

northwest of Mumbai in the Arabian Sea, 110-200 kilometers off the coast, is India's major

natural gas producing region housing the Bombay High, Heera, Panna, South Bassein, Neelam,

Bombay L-II, and Bombay L-III fields. The region is also rich in crude oil. There are additional

gas off the East Coast, in the Bay of Bengal, which includes the Krishna-Godavari and Kaveri

Basins. The Krishna-Godavari Basin houses the Rawa Field while the Kaveri Basin contains the

PY-1, PY-3, and KH-3 fields. There was a major increase in the production of natural gas in the

late seventies with the development of the Bombay High fields and again in the late eighties

when the South Bassein field in the Western Offshore started production. Most of production of

gas comes from the Western offshore fields. Assam, Andhra Pradesh and Gujarat are other major

producers of gas. Smaller quantities of gas are produced in Tripura, Tamil Nadu and Rajasthan.

60 percent of natural gas is produced along with crude oil as associated gas while the rest is

produced as free gas. The South Bassein and Tapti fields in the Western Offshore and the gas

fields in Tripura and Andhra Pradesh (Krishna-Godavari Basin) are main producers of free gas.

Oil & Natural Gas Corporation Limited (ONGC) and Oil India Limited (OIL) are main producer

companies of gas.

Production and Consumption of LNG in India

Consumption

India's natural gas consumption is currently met entirely through domestic production. However,

demand for natural gas likely to outstrip production. India will have to begin importing natural

gas within a few years to supply new gas-fired power plants. India's consumption of natural gas

has increased faster than any other fuel in recent years and now accounts for around 7 percent of

the country's energy demand. Natural gas in India has nearly doubled during the last decade.

Existing Modal Share in Transport and Movement Pattern

Gas produced in the western offshore fields of Bombay High, is brought to Uran (Maharashtra)

and partly moved to Hazira (Gujarat). Gas brought to Uran is utilised in and around Mumbai.

Gas brought to Hazira is partly utilised at Hazira and rest is fed into the Hazira-Bijaipur-

Jagdhishpur (HBJ) pipeline, which passes through Gujarat, Madhya Pradesh, Rajasthan, U.P.,

Delhi and Haryana. The gas produced in Gujarat, Assam, etc; is utilised within the concerned

states. While the proposals for import of gas through pipeline from Oman and Iran have not

moved forward for technical & geo-political reasons, it was considered that importing Liquefied

Natural Gas (LNG) for Southern India as well as other coastal locations would be a viable

alternative however.

Estimation of Production and Consumption

The production of natural gas in the country is expected to level off in near future. As per

Hydrocarbon Vision - 2025 India will require 231 million standard cubic metre per

day(MMSCMD).

Recent Finds in India

Some of the recent finds in natural gas sector having potential for yield are listed below:

On Eastcoast, Krishna - Godavari Basin by Reliance Petroleum Ltd. (reserves - around 7

Tcf)

ONGC has discovered rich gas reserves estimated to contain 30 to 50 billion cubic metres

in the Daman offshore field north of the prime Mumbai high field. ONGC anticipates a

yield of 3 to 4 million cubic metres of gas per day when the field goes onstream.

Cairns Energy reported finds in late 2002 offshore from Andhra Pradesh as well as in

Gujarat (reserves - around 2 Tcf)

Import of Natural Gas

Gas imports involves costs for liquefying the gas at the supplier's end and re-vaporising it at the

receiver’s end. India can import gas from Qatar and other Persian Gulf countries, Indonesia and

even from relatively distant places such as Nigeria and Australia in the form of Liquefied Natural

Gas (LNG). Further, it has to be delivered inland at various points by Indian pipelines. India is

currently considering several LNG projects, which are heavily capital-intensive. The proposed

LNG terminals are along the coastline of India.

Locations of Proposed LNG Import Terminals in India

Future LNG Projects Impacting Coastal Shipping

LNG import terminals are planned at Jamnagar, Dahej, Hazira, Pipavav, Trombay, Dabhol,

Mangalore, Kochi, Ennore, Kakinada, Gopalpur, and Paradeep. However, after The Indian

government has decided not to extend sovereign payment guarantees to power projects, it has

resulted in several companies cancelling or delaying LNG projects.

The import terminal at Dahej (by Petronet) currently is under construction, and isexpected to

start its operations in late 2003. The Dahej terminal has advantages over some of the other

proposed projects because of the existing HBJ pipeline network.

The Cochin import terminal by Petronet is expected to commence by 2007. The

advantage of setting up the terminal here is that the NTPC could make available LNG to

other prospective buyers in and around Kochi such as FACT apart from providing natural

gas as feedstock to the Kayamkulum power station.

Shell also has begun construction of its LNG import terminal at Hazira in Gujarat, and

has contracted for LNG supplies from Oman. The facility is scheduled to begin operation

in 2005. Like the Petronet Dahej terminal, it is to be linked into existing natural gas

pipelines.

The Dabhol LNG terminal was nearly complete. The construction was halted in June

2001, and it is likely to be completed by another firm but no definite timeframe is known.

No definite timeframe for completion is available for the LNG import terminal projects at

Pipavav, Trombay, Ennore and Kakinada.

Along with LNG imports by sea, imports of natural gas by pipeline will also play an important

role eventually in meeting India's natural gas needs. One possibility would supply India with

natural gas from Iran's huge South Pars field via a pipeline, either subsea or through Pakistan.

Another possible import route would link the natural gas reserves of Bangladesh into the Indian

gas grid. Current proven reserves of natural gas in Bangladesh are at least 14 Tcf. The new

natural gas reserves discovered off Andhra Pradesh in 2002 could compete with imports from

Bangladesh, thus increasing the pressure to reach a decision in the near future.

E. COAL

Coal is the world’s most widely distributed fossil fuel and is the most important source of energy

for electricity generation in India. Electricity is one of the most vital infrastructure inputs for

growth and around two third of the coal in the country is consumed for generation of electricity.

The prediction of coal consumption estimated upto 1,40,000 MW by 2009-10. Other major

industries like steel, cement, fertilizers, chemicals and paper products and several medium and

small-scale industries are also dependent on coal for processing and their energy requirements.

Production

India is the third largest coal producer in the world, after the USA and China. Local coal

production of around 320 MTPA is growing at around 5 percent per annum. Though there are

several coal mines distributed across India as depicted in Figure 4.7 the major coal-fields are

located in North-Eastern States, West Bengal, Bihar, Jharkhand, Madhya Pradesh, Chattisgarh,

Uttar Pradesh, Maharashtra, Orissa, Andhra Pradesh, Assam, Arunachal Pradesh, Meghalaya and

Nagaland. There are lignite fields at Neyveli in Tamilnadu and Gujarat. A large quantity of the

totalcoal production in the country is produced by various subsidiaries of Coal India Ltd(CIL),

which is the largest supplier of coal in the country. The only other major producer outside of

Coal India Limited is Singareni Collieries Company (SCCL) located in Andhra Pradesh. Sea

transport offers several advantages in terms reduction of costs, decongestion of road & rail

networks, savings on fuel consumption etc, but additional handling at load and discharge ports

lead to longer transit time. The land based transport networks have over 25,000 Origin-

Destination (O-D) pairs between major production and distribution / consumption centers spread

across the country. For the purpose of analysis O-D pairs were selected on the basis of some

criteria like type of cargo, location, proximity to seaports, land leads and sea distances etc.

F. CONTAINER TRAFFIC

The movement of International containers is predominantly laden for containers moving

in to JNPT the only port where majority of transshipment is taking place today. Similarly

the traffic carried from JNPT to other ports is significantly less in terms of volume and

constitutes a large volume of empties. This shows that the decision of a shipping line for

use of an Indian transshipment port is of very complex nature.

Containers continued to be transshipped from Indian ports to foreign ports even when

Coastal service is available for connectivity to the transshipment at JNPT port.

Although main line vessels are calling at Tuticorin and Chennai, no transshipment is

taking place at these two ports for boxes of other Indian ports. Since Chennai is located

on East Coast and Main line services to Far East destinations are operated from Chennai

some movement of containers from/to other Indian ports should have been evident.

Mother vessels continue to use near by foreign hub port like Colombo, UAE for off

loading containers for India instead of over-carrying them to JNPT port where they have

a scheduled port call immediately before or after the foreign hub port.

Mundra, Pipavav, Chennai, Vizag, Tuticorin ports have been developed with private

participation mainly to attract Main Line vessels but the absence of any transshipment

activities at these ports is very conspicuous.

Mother vessel operations, routings, their trading areas and ports of call, are very vital

elements that go in to selection of a transshipment port by a main line.

Share of Coastal Shipping

General cargo volume is expected to reach 160 MTPA by 2011-12. The Consultants assumed

that the containerisation level would attain 55 to 60 percent in the next ten years. Keeping in line

the above explanation and assumption, the container traffic projected will be 5.0 and 7.4 MTEUs

for the above horizon years. Assuming the shares of coastal shipping as coastal shipping 4

percent and 5 percent for the year2011-12, the container traffic is worked out to be 0.4 MTEUs

in the respective year.

Return cargo

Information on the origin and destination details of the coastal cargo was gathered during the

visits to ports from the corresponding port officials and also consulted the published documents

on port statistics. Origin-Destination (O-D) matrices were developed for the year 2002-2003 for

selected commodities using the information collected (presented in chapter 3). From the O-D

matrices, it was evident that return cargo is not available for (major commodities) coastal

movement except for the O-D pair Vishakapatnam- Magdalla. There was a movement of Iron ore

of 3 million tonnes from Vishakapatnam to Magdalla and Iron &Steel was moved from Magdalla

to South and East Coast of India. There is a large quantity of coal movement between Paradip-

Chennai and POL movement between Chennai-Paradip. However, the nature of commodities,

demands different types of vessels. In the present situation, return cargo is available for container

traffic between Gujarat ports-JNPT-Cochin-Tuticorin.

Long land leads at either or both ends (>150 km)

Such O-D pairs that are separated by a long distance but have port location advantage at only one

end were considered to observe the impact of high percentage of land movement in the overall

sea + land transportation

The O-D pairs examined are:

Talcher - Kottayam via Paradip and Kochi ports

Tughlakabad - Bangalore via Kandla and Kochi / NM ports

Tughlakabad - Chennai via Kandla

Bangalore - Trivandrum via New Mangalore and Vizhinjam ports

Jamshedpur - Bangalore via Kolkata and Chennai ports

Mangalore - Udaipur via Kandla port

Bajva (IOC) - Bangalore via Magdalla and Kochi Ports

Sea transport over short sea distances (<1000km)

Such O-D pairs that are located at or near port location but inter-modal transport between them

involve short distances by sea were chosen to examine economic viability

The O-D pairs examined are:

 Jamnagar - Mumbai via Sikka port

 Tuticorin - Kollam

 Visakhapatnam Steel Plant - Chennai via Vizag Port

Sea transport over long sea distances (>1000 km)

With the North- South-East-West corridors and the Golden Quadrilateral coming up on the road

network linking the four major metro cities with linkage to Ports, whether taking the sea route is

a viable option or not becomes a point to ponder especially since three of the four metros are port

cities separated by long sea distances as well. The capital and the land locked metro Delhi has

the biggest container freight station located at Tughlakabad that generates heavy traffic to & fro

hence these O-D pairs plus some other O-D pairs with long sea voyages were considered for

analysis.

The O-D pairs examined are:

Mumbai - Kolkata

Mumbai - Chennai

Tughlakabad - Chennai via Kandla port

Talcher - Kottayam via Paradip & Kochi ports

Tuticorin - Chennai

Bangalore - Trivandrum via New Mangalore and Vizhinjam ports

G. COMMODITY ANALYSIS

Commodities analyzed for estimating their future movements are shown below. The later part of

this chapter deals with a status quo situation of following commodities and the estimates for

future years:

(a) Crude Oil

(b) Petroleum Oil and Lubricant Products (POL)

(c) LNG (Liquefied Natural Gas)

(d) Coal

(e) Iron Ore

(f) Iron & Steel

(g) Cement

(h) Fertilizers and Fertilizer Raw Material (FRM)

(i) Food Grains and

(j) Containers

Origin Port Destination Port

Mumbai Kandla / Chennai / Cochin / Mangalore

Rawa Vizag / Chennai

Table 9: Origin - Destination Pairs of Crude Oil Coastal Movement

PY-03 (Cuddalore) Nagapattinam

Out of total annual production of crude oil of around 32 million tonnes, coastal shipping moves

about 16 million tonnes. As the domestic production of crude is likely to remain around 32

million tonnes in the coming years (based on the Ministry of Petroleum and Natural Gas

estimates) the Consultants do not foresee any significant change in the pattern of coastal

movement offshore. The only competing mode of transport with coastal shipping for crude

movement is pipelines, which directly transport crude from oil fields to refineries. The details of

operating crude oil pipelines in India.

Pipeline Length(km) Capacity (MTPA) Owner

Nahorkatiya – Bauroni 1156 5.5 OIL

Salaya – Mathura 1881 21.0 IOCL

Ankleshwar – Koyali 95 2.0 ONGC

Kalol - Navagam – Koyali 127 2.0 ONGC

Bombay High – Uran 203 15.0 ONGC

Haldia - Barauni 506 4.2 IOCL

Table 10: Details of Crude Oil Pipelines Operating in India

The estimated POL products for the year 2011-12.

Year Demand (MTPA)

2011-12 190

Table 11: Estimated Demand for POL Products

NO OF VESSELS GRT DWT607 959575 998601

Table 12: Coastal shipping tonnage as on 31st December 2008

Coastal tonnage

SR.

NO.

TYPE OF VESSEL NO. OF

VESSEL

G.R.T D.W.T

1 Dry cargo liner 72 121821 179301

2 Tug 212 61392 20658

3 Dry cargo bulk carriers 12 237220 364928

4 Tankers(product carriers) 14 54995 6723

5 Tankers(crude oil carriers) 2 50080 2246

6 Passenger-cum-cargo 30 82912 27232

7 Passenger service 50 16423 1925

8 Ethylene gas carriers 3 8727 6558

9 Ro – Ro 1 956 1386

10 Dredgers 25 113761 72652

11 Offshore supply vessel 106 110737 129876

12 Specialized vessel for offshore

services

37 87492 50183

13 Port trust & Maritime boards 93 45199 15702

Total (vessel) coastal trade 657 991715 1019370

Table 13: Coastal tonnage as on 31-Dec-2009

Summary of commodity wise traffic

The consolidated commodity-wise forecast for the year 2011-2012.

COMMODITY 2001-02 2006-07 2011-12

CRUDE OIL 16.00 16.00 16.00

POL 12.70 25.00 32.50

COAL 15.90 20.00 25.00

IRON ORE 04.66 09.75 13.30

IRON & STEEL 00.28 00.76 01.04

CEMENT 03.16 08.65 13.00

CONTAINER 01.04 02.60 05.20

OTHERS 00.26 00.52 01.04

TOTAL 54.00 83.28 107.08

Table 14: Traffic Estimates by Coastal shipping in million tonnes

INFRASTRUCTURE FACILITIES

VII. INFRASTRUCTURE FACILITIES

A. Berth

B. Cargo handling equipments

C. Inland connectivity

D. Storage facilities

A. BERTH

Is the place beside a pier, quay or wharf where a vessel can be loaded or discharged.

Berth facilities and Proposed berth projects in some of the major ports in India.

Kandla

The port has eleven cargo berths for dry bulk and break bulk cargoes with a total length of 2.268

m. The berths are equipped with electric quay cranes. In addition the port has six oil jetties for

handling POL, LPG and chemicals.

Proposed projects

Container Terminal 1 (restructuring of berths 11 and 12);

Container Terminals 2 and 3 (restructuring berths 7 to 10);

Multi cargo berths 13 to 16;

Mumbai

The Indira dock has 21 berths within a locked basin and five berths along the harbour wall. The

water depth inside the dock is some 9 m. The Victoria dock has 15 berths and 6,7 m water depth.

Prince’s dock has 14 berths and a water depth of only 3,7 m. Crude oil and POL is handled at

four jetties in Jawahar Dweep (Butcher Island). Tankers up to 125.000 dwt can be handled.

Proposed projects

5th oil Berth at Butcher Island

JNPT (Jawaharlal Nehru Port)

The port handling facilities include container terminals, a liquid bulk handling terminal (two

berths) and a shallow water berth for vessels with a maximum length of 165 m, which can handle

breakbulk and containers. The total length of berths is some 3.000 m.

Proposed Projects

Expansion berth towards NSICT

Mormugao

The port has a waterfront of some 2,9 km developed into a number of berths. The main

commodity iron ore is handled at berth 9 with a mechanised ore loading system. The iron ore for

export is transported to the port by barges which are unloaded at the barge berths between berth

9 and 10. The iron ore is transported from the barge berth to a stack yard behind berth 9 with a

conveyor system. Three stackers are used for the purpose. Loading operations include reclaiming

the iron ore with reclaimers, transport via a conveyor system to berth 9 and loading with ship

loaders. The loaders have a capacity of 4.000 tons per hour. The entire operations constitute the

Mechanical Ore Handling Plant (MOHP).

Proposed projects

Integration of berth 8 and 9

New coal berth

Liquid bulk berths

Cruise vessel berth

New Mangalore

The lagoon consists of 14 berths with a total length of some 3.250 m. Berths nos 9 to 13 are

related to liquid bulk with berths 10 and 11 for crude oil. LPG is handled at jetty 9. Berth no 8

(300 m length) is the dedicated berth for KIOCL. Berth 14 is 350 m long and recently

constructed. The berth with the largest water depth (15,1 m) is berth 14. The liquid berths have

permissible drafts up to 14 m.

Proposed Projects

Mechanisation of the new iron ore berth 14

Berth 15 of new Western Dock for handling coal

Restructuring of berth 1 and 2 for container handling

Construction/conversion of berth 13 for handling liquid bulk

Tuticorin

The port has 8 berths with a max permissible draft of 8,6 m to 10,9 m and total quay length of

1.770 for the handling of dry bulk, breakbulk and containers. Containers are handled at a

dedicate container terminal behind berth no 7. Furthermore the port has two shallow water

berths, an oil jetty and two (thermal) coal jetties.

Proposed Projects

Conversion of berth 8 into Container Terminal 8

North Cargo Berth for thermal coal handling

Chennai

The port has 24 berths spread over three docks, i.e. Ambedkar Dock, Jawahar Dock and Bharati

Dock. The Bharati Dock with 1,9 km of quay length provides handling facilities for

POL,containers and iron ore. The iron ore berth can cater for vessels with a draft up to 16,5 m.

Ennore

Two coal berths of each 280 m length with an alongside depth of 15 m are available.

Proposed projects

Upgrading existing Coal berths for handling thermal coal

Visakhapatnam

The port includes two harbours, i.e. the Outer Harbour with 7 berths and the Inner Harbour with

19 berths.

The seven berths in the Outer Harbour include:

Two ore berths

General cargo berth

Proposed projects

Mechanization General Cargo Berth in outer harbour

B. CARGO HANDLING EQUIPMENTS

Census of Cargo Handling Equipment

(In Nos.)

Port Crane Forklift

Truck,Toplift Truck, Reach

Stacker

Tractors

Trailers

Shovel Dozer

&Pay Load

& Excavator

, etc.

LocomotiveMobil

eWhar

fContainer

Quay Yard

Kolkata 14 12 - 3 23 $ 34 67 - 4

Haldia 2 - - 1 7 1 5 12 11

Paradip 4 5 - - 5 1 1 3 7

Vishakapatnam

- 25 - - - - - - 18

Chennai 3 10 7* 24* 29 * * 2 14

Tuticorin - 5 - - 3 - - - 1

Cochin 7 14 2* 4* 47 29 32 - -

New Mangalore

3 3 - - 7 1 1 1 -

Mormugoa 1 - - - 10 - - - 2

Mumbai ## 8 41 2 3 40( @) 15 - - 5

JNPT 2 - 816 *

1764 *

217*

98* 235*

4 ** --

Kandla - 16 - - 9 3 1 2 -

Total: 44 131 35 117 199 524 24 62

Table 15: Census of Cargo Handling Equipment

Note: (**) - 2 Pay Loader, 1 Excavator, 1 JCB. (*) - BOT Operator; ($) 16 FLTS, 2 Medium duty FLTs, 1 Toplift Truck, 2 Reach Stacker(##) - In addtion, Floating Crane - 1 no. (@) - Inclusive of 10 electric forklifts trucks for departmental use.

Container Handling Facilities

PORT NO. OFBERTHS

VESSELSIZE(IN

DWT)

EQUIPMENT(In nos.)

QUAY SIDE

GANTRY

YARD GANTR

YCRANES

TOP LIFTTRUCKS/REAC

HSTRACKERS

TRACTORS

FORKLIFT

TRAILERS

KOLKATA ** 4 21,000 - 3x35.5 T, 1x40 T (RTG)

TLT - 1x35 TRST - 4x45 T*

22x40 T(HIPPO)

2x 6.5 T(Medium

Duty)

19x40 Tand

6x20 T

HALDIA 2 40,000 - 1x30 T 1x35 T 1x10 T 7 5

VISAKHAPATNAM

1(Under BOT

Operator)

1,00,000 RMQC- 2 Nos

2X 355 t (SWL)

 

RTGC - 2 Nos.

2x45 T

2x10 T

1 x 5 T

 

16

CHENNAI 4( Under

BOT

20,000TO

45,000

2x40 T

5x60 T#24x40.0 T

2x35 T 3x25 T  2x40 T 

On Contract Basis

On Contract Basis

On Contract Basis

Operator)  

TUTICORIN 1 47,000 3X 40 t (SWL)

8x35 T(SWL)  

12x50 T(SWL)

- 12x50 T(SWL)

COCHIN 3(Under BOT

Operator)

10,000TO

20,000

2x35.5 T 4x35.5 T (RTG)

4x35 T2x50 T

2*40 T

2 - 20 T 20 -30 T

25 35

MUMBAI 4 42,000 2x35.5 T 3x35.5 T (RTG)

2x42 T &2x45 T &* (&- Reach Stracker)

27 47   -

J.N.P.T - JNPCT

 

- NSICT

 

- GTIPL

4

2

 

2

70,000

85,000

85,000

3x35.5 T2x50 T

3x40T(Hired)

8 x 50 T

8 x 61 T

RTGC-12x40 T

-6x40 T(hired)RMGC-1x35.5 T-2x40 T (hired)

29x40 T RTGC 3x40 T RMGC

29x50/61 T RTGC 3x61 T RMGC

2 x45 T (Reach Stackers)

TLT- 2x40 T3x40 T

4x40 T

20104 Hired

50 Owned $100 Hired $

85 $

10(3 to 5T) 78

34 Owned**100 Hired

 

 

KANDLA 2             

Table 16: Container Handling Facilities

(#) - One Gantry with twin-lifter facility, (*) In addition, 4 nos Reach Stackers of 45 T capacity each have been hired by Port;(**) Two Mobile Harbour Cranes alongwith two Reach Stackers inducted on Own-Operate Maintain Basis were commissioned in March, 2005:($) Tractor-Trailers combined

Fertilizer Handling Facilities

PORT NO. OF BERTHS

SHIP SIZE

(IN DWT)

EQUIPMENT OTHERS

HALDIA* 1 60,000 Grab 2x15 T with Conveyors

Transit Shed- Capacity 30,000 Tonnes. This facility is also used for Coking Coal

PARADIP 2 60,000   Fully mechanised handling system provided by User Agency, M/s Paradip Phosphates Ltd. & M/s IFFCO

VISHAKHAPATNAM 1 35,000   BMH Screw type marine unloader of 400 TPH (owned,

operated and maintained by M/s

Coromandal Fertilizer Ltd)

Mechanical facilities provided by User Agency, M/s. Coromandal Fertilizer Ltd.

COCHIN 1 87,000 Mechanical unloader and conveyors system capacity - 600 TPH

Mechanical system is provided by User Agency, M/s. FACTt Ltd.

Table 17: Fertilizer Handling Facilities

(*) Not exclusively for fertilizer handling.

Iron Ore Handling Facilities

PORT   NO.OF

BERTHS

VESSELSIZE(IN

DWT)

WAGON

TIPPLERS

BARGEUNLOA

DER

EQUIPMENT SHIPLOADER

STACK   

YARDCAPACITY

(IN 000

OTHERS 

STACKER

RECLAIMER

TONN

HALDIA 165,000-70,000

2x720 TPH

 - 1500 TPH

1250 TPH

2x3000 TPH

535  

PARADIP 160,000-75,000

2x1000 TPH

 - 2x2500

TPH2x1500

TPH1x3000 TPH

1000 -

VISAKHAPATNAM

1 1,50,000

Twin

100T lifting capacity & 27 tips per

hr.

Third Tippler

120T lifting capacity & 30 tips per

hr.

-2x2700

TPH each

3x4000 TPH each

1x8000 TPH

1200 -

ENNORE

Temporary Barag

e loading Jetty

40,000-65,000

- -

Temporary

conveyor

system with barge

loading arrangement to load@ 800TP

H

Temporary

conveyor system with barge

loading arrangem

ent to load@

800TPH

- 200

Temporary facility created

and operated

by MMTC

CHENNAI 1 1,50,0002x2000

TPH-

2x2000 TPH

2x4000 TPH

2x4000 TPH

600 -

NEW MANGALO

RE1 60,000 - - -

2x3500 TPH

1x6000 TPH

550 -

MORMUGAO

12,75,000(335 LOA

-GRAB

UNLOA3x3250

TPH2x4000

TPH2x4000 TPH

10004

TRANSHI

PART LOADING UPTO PERMISSIBLE DRAFT of 13.00 MTS)

DER 8x500 TPH

PPERS OWNED

AND OPERATE

D BY PRIVATE PARTIES

-

CONTINOUS

UNLOADER

1x1250 TPH

- -   - -

LOADING RATE

10,000 TO 15,000

TONNES PER DAY

Table 18: Iron Ore Handling Facilities

 

Liquid Bulk Handling Facilities

PORT 

NO. OF BERTH

SCARGO

TYPE

DESIGNED/

ACTUAL DEPTH

(IN MTS)

VESSEL SIZE

(IN DWT)

PIPELINE

DETAILS(NO.xDIA

)

MARINE ARMS

 

OTHERS

KOLKATA (#) 7 #POL

PRODUCTS/OTHERS

7.00UPTO38,000

         - -          -

HALDIA 3CRUDE/ POL PRODUCTS/

OTHERS

8.50 -10.00

89,000 TO

1,50,000

4x14"

5 at HOJ II2 at HOJ I

2 at HOJ III

 

        -

2x8"

5x20"

1x30

2x24"

2x4"

1x6"

1x12"

1x32", 1x 48"

PARADIP 2POL

PRODUCTS14 65,000

1x600 MM FLEXIBLE HOSE

200 MM     -1x400 MM

1x200 MM

VISAKHAPATNA 1 CRUDE 17.00 1,50,000 1x900 MM 3 - 400 SUBMARINE

M 

MM 

 

 

 

PIPELINE JETTY TO SHORE

2*POL PRODUCTS/OTHERS

9.75 50,000

3x600 MM

EQUIPPED WITH BOOSTER PUMPS

1x400 MM

7x350 MM

3x300 MM

3x200 MM

1 LPG 13.00 50,000 1x350 MM

4 Other Liquids 10.06 - 10.21 45,000

2x400 MM

3x200 MM

1x250 MM

3x300 MM

ENNORE 1 $POL PRODUCTS

15.0015,000-50,000

1x 600MM 1 - 300 MM TEMPORARY FACILITY CREART 

CHENNAI 2CRUDE/POL PRODUCTS/OTHERS

16.00 1,40,000

1x 762 MM

2x 350 MM

1x 500 MM

7 - 300 MM

3 - 400 MM

 

  -

 

TUTICORIN 1POL PRODUCTS/OTHERS

11.9 65,000

2x500 MM

2 -300 MM   -

1x450 MM

1x404 MM

1x350 MM

2x250 MM

2x200 MM

1x100 MM

COCHIN

1 CRUDE 10.7 25,000 2x750 MM

4 - 300 MM

SUBMARINE PIPELINE JETTY TO

SHORE2

POL PRODUCTS/OTHERS

9.14 1,15,0002x400 MM

2x320 MM

NEW MANGALORE

3

 

CRUDE/ POL PRODUCTS

POL PRODUCTS/LPG

14.00

10.50

1,20,000

45,000

1x900 MM6 - 200 MM (2000TPH CAPACITY EACH)

     -

1x500 MM

1x450 MM

2x300 MM

1POL PRODUCTS

12.00 30,000

5x400 MM 2 FLEXIBLE

HOSE200 MM

FOR LPG

4x300 MM

2x200 MM

1x250 MM

MORMUGAO 1 POL 12.50 40,000 1x250 MM   -      -

PRODUCTS/OTHERS

1x450 MM

1x850 MM

1x600 MM

MUMBAI

4CRUDE/ POL PRODUCTS

10.97 TO

14.30

48,000TO

1,25,000

1X42" 5x12" DIA at 4JD;

5x12' DIA at 3JD;

3 x12'DIA at 2JD;

5x12" DIA at 1JD

SUBMARINE PIPELINE 5.1 KM FROM ISLAND TO SHORE

1X36"

3X30"

1X8"

2

POL PRODUCTS /CHEMICALS

/OTHERS

7.50To

12.00

35,000 & 47,000

3x200 MM

1x12"2x10"3x8"

1x600 MM

7x300 MM

1x350 MM

J.N.P.T. (**)

1POL

PRODUCTS12.00

85,000 Displacemen

t3x200 MM

1x250 MM4x300 MM3x400 MM

2x450 MM2x600 MM

    4x8" DIA

FACILITIES FOR STORAGE & TRANSPORT OF LIQUID BULK BY PRIVATE TANKFARM OPERATORS AT JNPT LEASED LAND

1

B&C CHEMICALS

/OTHERS

9.00 19,000

VADINAR3 SBM + 1 ESSAR

JettyPOL CRUDE 30.00 3,00,000

2x1050 MM

    SUBMARINE PIPELINE 8 KM

KANDLA

4(OJ-1

toOJ-4)

POL PRODUCTS/

OTHERS

10.00TO

10.70

40,000 TO

56,000

01x02"

2x10 " DIA3X10" DIA

SUBMARINE PIPELINE 8 KM

01x06"

45x08"

09x10"

10x12"

02x14"

09x16"

09x20"

11x24"

1 (M/S IOC Jetty)

(OJ-VI)

POL PRODUCTS 

10.10    45,0003x02"1x12"1x22"

3x300 MM DIA

-

1 IFFCO Captive

Jetty(OJ-V)

     PHOS ACID &

AMMONIA 9.50      45,000

8x8" 1x12" 1x14"

      

   1X8" DIA2X8" DIA FLEXIBLE HOSES

Table 19: Liquid Bulk Handling Facilities

Note : * - Excludes one mooring in Outer Harbour used for transhipment of Crude & Products. Also excluding three pipe lines at OR 1 or OR 2 used for slops/Ballast

# - Excludes anchorage at Saugor/Sandheads used primarily for transhipment of POL (Crude), where vessels of much higher DWT (including VLCC's) can work; ($) Temporary facility** - Service berth is modified and created for handling oils & safe grade chemicals through pipelines.

 

C. INLAND CONNECTIVITY

General

As in many other countries, probably the most important transport/logistics challenge facing

India is its infrastructure. While considerable private sector investment is now being directed into

the development, expansion and modernization of Indian ports, the country’s road, rail and

inland waterway systems have suffered from years of neglect and under-investment.

The average cost of freight is relatively high and India’s inadequate transport infrastructure is

holding back economic growth according to Drewry.

The system of distribution containers and containerized cargoes is highly concentrated with most

containers for Delhi and north India being routed through the Mumbai/JNPT port complex. This

route is already one of the busiest domestic freight arteries in the country. With new container

terminal developments in Gujarat and with decent rail connections to and from the ports of

Mundra and Pipapav this situation is changing gradually.

I. ROAD

The most distinct part of India’s physical infrastructure development in recent years is the

development of road network across the country; per sq. km. of surface area in India is now

endowed with one km of roadways. India has one of the largest road networks in the world,

aggregating to 3.34 million km. The country’s road network consists of Expressways, National

Highways, State Highways, Major District Roads, Other District Roads and Village Roads. The

Indian highway network is limited and many of the roads are in poor condition. A World Bank

Report (India’s Transport Sector – 2002) identified in 2002 only some 2% of the national

highway system as being 4 lanes with the remaining 98% being double, single or intermediate. In

the regional network, no state highways were 4 lanes and only 23% comprised 2 lanes. The

backlog of years of under-maintenance is huge. The same report listed that 25% of state and

national highways are congested.

In the latter years capital expenditure on roads has been increasing amongst others for

improvements to the national highway system.

National Highways/Expressways 66590 km

State Highways 128000 km

Major and Other District Roads 470000 km

Rural Roads 2650000 km

Table 20: Road networks

The regulatory environment and the reliance on regional/provincial operating agreements and

licences has resulted in a very fragmented road haulage industry characterised by the presence of

many small companies employing just a few trucks and by a shortage of modern specialised

freight transport equipment.

A number of schemes targeted at improving connections between main ports and the national

highway network are either underway or in a planning stage. The majority of these projects are

being realised through Special Purpose Vehicles (SPV’s) set up between various (government)

agencies.

Single Lane 32%

Double/Intermediate Lane 56%

Four Lane/Six lane/Eight Lane 12%

Table 21: Road lanes

In this respect JNPT formed an SPV with NHAI (National Highway Authority of India) and

CIDCO (City and Industrial Development Corporation of Maharashtra Ltd).

To improve road connectivity at Chennai, the Port Trust formed an SPV with NHAI and the

government of Tamil Nadu – Chennai Ennore Port Road Company Ltd.

One of the largest and most ambitious projects being implemented is the Golden Quadrangle and

North-South and East-West Corridors project, which is being administered by the NHAI. The

project involves the construction of four-lane road links between the four main cities of India

(Delhi, Mumbai, Chennai and Kolkata) with a view to improve speed and raise safety and

security standards for passengers and cargo.

The road network, as on December 2007, comprises 66,590 km of National Highways, 128,000

km of State Highways, 470,000 km of Major District Roads and about 2.65 million km of other

District and Rural Roads. National Highways comprise only about 2 percent of the total length of

roads and carry about 40 percent of the total traffic across the length and breadth of the country.

Out of the total length of National Highways, 32 percent is single lane/intermediate lane, 56

percent is 2-lane standard and the balance of 12 percent is 4-lane standard or more.

The National Highways Development Project (NHDP), the largest highway project ever

undertaken by the country, is being implemented by the National Highway Authority of India

(NHAI). NHDP Phase I & II envisage 4/6 laning of about 14,279 km of National Highways, at a

total estimated cost of Rs.650 million (at 2004 prices). These two phases 109 comprise of

Golden Quadrilateral (GQ), North-South and East-West Corridors, Port Connectivity and other

projects. The Golden Quadrilateral (GQ-5,846 km) connects the four major cities of Delhi,

Mumbai, Chennai and Kolkata. The North-South and East-West Corridors (NS-EW-7,300 km)

connect Srinagar in the North to Kanyakumari in the South, including spur from Salem to Kochi

and Silchar in the East to Porbandar in the West. By November 30, 2006, 6,776 km of national

highways pertaining to NHDP had been completed, the bulk of which (5,475 km) lie on the GQ.

Constraints faced in the timely completion of NHDP include delays in land acquisition, removal

of structures and shifting of utilities, law and order problem in some States, and poor

performance of some contractors. Nearly 93 percent works on GQ have been completed by

November 2006, and the NS and EW corridors are expected to be completed by December 2009.

With the completion of about 93 percent of the GQ, a substantial impact upon the economy is

already visible. At this stage there is a need to focus attention on corridor management and road

safety, and NHAI has already put in place a corridor management policy.

For implementation of NHDP Phases I and II, the main source of finance of NHAI is the fuel

cess. The present rate of cess is Rs. 2 per litre on both petrol and diesel. A part of this cess is

allocated to NHAI to fund the NHDP. This cess is leveraged to borrow additional funds from the

domestic market. Besides, the Government of India has also negotiated various loans from

World Bank (US$ 1,965 million), Asian Development Bank (US$ 1,605 million) and Japan Bank

for 110 International Cooperation (Jap. Yen 32,060 million) for financing various projects under

NHDP. These loans from the multilateral institutions are passed on to NHAI by the Government

partly in the form of grant and partly as loan. NHAI also negotiated a direct loan of US$ 165

million from ADB for one of its projects. The funds provided to NHAI, including its borrowings

from the market, are utilized for meeting project expenditure as well as debt servicing.

II. RAILWAYS

Indian Railways is a vast network. Indian Railways, world’s second largest rail network under a

single management, has been contributing to the development of the country’s industrial and

economic landscape for over 150 years. Of the two main segments of the Indian Railways,

freight and passenger, the freight segment accounts for roughly two-thirds of revenues. The

importance of rail to the Indian transport market is obvious. Good rail connectivity is essential as

large volumes of cargoes move to and from the port hinterlands.

Within the freight segment, bulk traffic accounts for nearly 95 percent, of which more than 44

percent is coal. Improved resource management, inter alia, through increased wagon load, faster

turnaround time and a more rational pricing policy has led to an improvement in the performance

of the railways during the last two years.

Rationalization of classification is aimed at securing eventual elimination of cross-subsidies in

fares and freight, and evolving a more transparent and cost-based tariff regime. This process

necessarily requires increase in freight rates for commodities being transported below cost and

lowering the freight charges for commodities being 118 moved at abnormally high rates. In the

freight segment, the number of commodities in goods tariff has been reduced from 4,000

commodities to 80 main commodity groups in 2005-06, and further to 27 groups in 2006-07. The

total number of classes for charging freight has been reduced from 59 to 17.

The high-density network connecting the four metropolitan cities of Chennai, Delhi, Kolkata and

Mumbai, including its diagonals, popularly called the Golden Quadrilateral has got saturated at

most of the locations. Given the present growth scenario, the Railways expect to carry 95 million

tonnes incremental traffic per year and about 1,100 million tonnes revenue earning freight traffic

by the end of the Eleventh Five Year Plan. This entails large investment for capacity

augmentation.

Currently Mumbai port complex is one of the main rail cargo transfer centres in India.

Congestion is experienced in the region due to lack of track capacity, shortage of rail cars and

capacity limitations in rail cargo depots. Ocean carriers for this reason have been looking for

alternative port gateways in the Northwest part of India as Mundra, Hazira and Pipapav in

Gujarat.

Another disadvantage of the railway system is the multi gauge character which often does not

support through transport and seamless services and the relative high cost. Some progress is

made in conversion of narrow gauge track to broad gauge, however progress is slow.

The provision of rail services is being liberalised with the Indian Government ending the

monopoly of Concor on moving containers by rail.

In 2004-05 rail transport figures indicated that 30% of India’s international container traffic was

moved by rail.

iii. INLAND WATER TRANSPORT

Inland waterways, comprising of rivers, lakes, canals, creeks, backwaters etc, extend to about

14,500 km in the country. However, potential of this important mode of transport has not been

fully exploited so far. Several countries of the world have successfully developed this mode of

transport by giving required importance and attention and now Inland Water Transport (IWT)

has substantial share in inland transport network of those countries.

In India, inadequate infrastructural facilities such as depth and width required for movement of

IWT vessels for round the year operation, terminals for loading and unloading of cargo and

connectivity with road and rail, navigational aids for safe and unhindered navigation during day

and night and dearth of IWT vessels for carriage of cargo and passengers are the constraints

facing the inland waterways sector. To achieve substantial step up in IWT traffic, major thrust is

being given on the creation of infrastructure and at the same time on the augmentation of IWT

fleet primarily by private sector.

With a view to provide

(i) Navigable channel with adequate depth and width to enable navigation of cargo and

passenger vessels of reasonable size,

(ii) Navigational aids for safe and smooth navigation round the clock, and

(iii) Terminals to provide facility for berthing of vessels, loading and unloading of cargo /

passengers and connectivity with road and rail in the inland waterways, IWAI has

prepared an Action Plan for making existing three National Waterways viz. (a)

Allahabad-Haldia stretch (1620 km) of the Ganga-Bhagirathi-Hooghly river system

(NW-1) (b) Sadiya-Dhubri stretch (891 km) of Brahmaputra river (NW-2) and (c)

Kottapuram-Kollam stretch of the West Coast Canal, Champakara Canal and

Udyogmandal Canal (205 km) (NW-3) fully functional by March 2010 subject to

availability of funds. This Action Plan envisages fairway with 3 m/2m/1.5 m depth, a

judicious mix of fixed and floating terminals and round the clock navigational

facilities. Various projects under this Action Plan are under implementation. Detailed

Project Reports (DPR) for the two new NWs are going to be completed soon. Based

on the final draft DPR for NW-4, a consolidated project in PIB format has been

prepared and it is in the process of sanction. For NW-5 also, as soon as the consultant

submits the DPR, similar consolidated project will be prepared for sanction.

Advantages of IWT

Low capital cost

Cost of development of inland waterway has been estimated to be a mere 5-10 percent of

the cost of developing an equivalent 4-lane highway or railway.

Low maintenance cost

Cost of maintenance of inland waterway is placed at 20 percent of that of roads.

Low fuel cost

Inland Water Transport is a highly fuel-efficient mode of transport. This fact is borne out

by the estimate that one litre of fuel can move 24 tonnes km of freight by road, 85 by rail

and 105 by IWT.

Inland Waterways Authority of India (IWAI)

The IWAI was set up on 27th October, 1986, vide Inland Waterways Authority of India Act,

1985, for regulation and development of inland waterways for the purposes of shipping and

navigation. IWAI is primarily responsible for development, maintenance and regulation of

National Waterways.

Earlier, the Government of India declared three waterways as National Waterways. These are (i)

Allahabad-Haldia stretch (1620 km) of the Ganga-Bhagirathi-Hooghly river system (NW-1) (ii)

Sadiya-Dhubri stretch (891 km) of Brahmaputra river (NW-2) and (iii) Kottapuram-Kollam

stretch of the West Coast Canal, Champakara Canal and Udyogmandal Canal (205 km) (NW-3).

IWAI undertakes development and maintenance of IWT related infrastructure facilities on these

waterways.

In November 2008, two more waterways have been notified as National Waterways (NWs) vide

two gazette notifications dated 25.11.2008. These are: (i) the Kakinada- Puducherry stretch of

Canals and the Kaluvelly Tank, Bhadrachalam – Rajahmundry stretch of River Godavari and

Wazirabad – Vijayawada stretch of River Krishna (NW-4- 1095 kms) and (ii) the Talcher-

Dhamra stretch of river Brahmani, Geonkhali- Charbatia stretch of East Coast Canal, Charbatia-

Dhamra stretch of Matai river and Mangalgadi – Paradip stretch of Mahanadi delta rivers (NW-

5-623 kms.)

The financial performance of IWAI has shown significant improvement in recent years. While

the expenditure level of IWAI was about Rs 35.00 cr during the entire 8th Plan it rose to Rs 151

cr during 9th Plan and further to Rs 385 cr during the 10th Plan. During 2007-08 IWAI

expenditure was Rs.79.63 cr.

In 2008-09 the BE for projects of IWAI is Rs. 180 cr and 31.03.2009

In terms of physical performance, the IWAI had prepared an Action Plan in 2006-07 for making

the three National Waterways fully functional. Many projects of this Action Plan have either

been implemented and the rest are under implementation.

Main achievements of IWAI during the past few years include the following:

• The overall cargo movement through IWT went up from 1.63 billion ton km (32.48 million

tons) in 2003-04 to 3.38 btkm (55.82 million tons) in 2008-09.

• For the first time regular cargo movement was established between Haldia and Varanasi.

• Movement of fly ash, clinker and gypsum from Haldia/ Kolkata to Bangladesh

• Regular movement of HSD established between Numaligarh (Assam) and Budge- Budge (West

Bengal) through Bangladesh inland waters.

• Construction of first IWT terminal capable of handling containers at Patna and Pandu

(Guwahati) completed. Container handling cranes for these terminals have also been procured.

• Projects for construction of high level jetties at Patna and Pandu (Guwahati) terminals have

been approved and construction work awarded to CPWD.

• To facilitate mechanical handling at floating terminals, nine floating cranes and four shore

cranes procured for NW-1 & 2.

• Seven permanent cargo handling terminals have been constructed and commissioned in

National Waterway –3 in Kerala

• 24 hrs navigational aids between Tribeni and Farakka in NW-1, between Dhubri to Silghat (440

km) in NW-2 and entire NW-3 provided and maintained.

• Construction of two cutter suction dredging units for NW-1 and four cutter suction dredging

units for NW-2 underway.

• Construction of seven survey vessels for NW-1 and two survey vessels for NW-2 completed.

• Construction of one POL vessel and one Container vessel has been completed and vessels are

in operation.

• Detailed Project Reports (DPR) for these two new NWs are being prepared and likely to be

completed soon.

• Three Shareholders Agreements for setting up of joint venture companies have been signed by

IWAI for acquisition, operation and management of barges on NW-1/NW-2 / Indo Bangladesh

Protocol routes.

Central Inland Water Transport Corporation (CIWTC)

CIWTC was incorporated on 22nd February, 1967, by taking over all the assets of the erstwhile

River Steam Navigation Co. Ltd. (A Sterling Company) and liabilities to the State Bank of India

and Govt. of India under a Scheme of Arrangement, approved by the Calcutta High Court on

03.05.1967.

The Corporation is under the administrative control of the Ministry of Shipping . The registered

office and corporate office of CIWTC are located at Kolkata and various branch offices are

operating at Guwahati, Karimganj, Badarpur, Patna and many other places. The position of

manpower on its payroll as on 01.12.2008 was 424 employees. The corporation is headed by a

full time Chairman – cum – Managing Director.

The principal activity of the Corporation is transportation of cargo by barges through Inland

Waterways in the country and through the routes identified in the Protocol on Inland Water

Transport between India and Bangladesh.

Figure 1: Inland waterways in India

NATIONAL WATERWAY-1

Ganga-Bhagirathi-Hooghly river system from Allahabad to Haldia (1620 kms) - declared as

National Waterway in 1986.

Figure 2: National Waterway 1

Fairway Development: To maintain LAD of 2 m between Haldia and Varanasi and 1.5 m

between Varanasi and Allahabad, RC works i.e. bandalling and dredging were carried out

between Tribeni and Allahabad (1424 Km.). The stretch between Haldia and Tribeni (196 km) is

tidal and the LAD of more than 2 m is maintained naturally therein. During 2007-08, 1020 m of

bandals were erected and maintained in Tribeni-Farakka (364 km), and 15000 m in Farakka-

Allahabad (1060 km) stretches. In addition, 92,000 cubic meter of dredging was also done in

Tribeni-Farakka stretch by deploying one Cutter Suction Dredger (CSD), which is owned by

IWAI. LAD of 2.5 m was maintained between Haldia and Farakka (560 km) round the year.

While LAD of 1.8 to 2 m for 330 days was maintained between Farakka and Patna (460 km)

except at one location just upstream of Farakka lock where regular dredging is required in the

post monsoon season due to excessive siltation in the Farakka barrage pond. 1.5 m LAD

Between Patna and Varanasi (363 km) and 1.2 m between Varanasi-Allahabad was maintained

for about 237 days. During 2007-08, an important project for construction and supply of two

CSD units [a unit comprises one Cutter Suction Dredger (CSD), one Work Boat (WB) and one

Accommodation Boat (AB)] was sanctioned by the Government at a cost of Rs 37.82 cr and

work was also awarded to separate shipbuilders. The construction work was in progress.

Construction of seven survey vessels was also completed during the year and the vessels were

deployed on the waterway.

Terminals:

Fixed terminals at Haldia, Kolkata, Pakur, Farakka and Patna.

Floating terminals at Haldia, Kolkata, Diamond Harbour, Katwa, Tribeni, Shantipur,

Behrampur, Jangipur, Farakka, Rajmahal, Sahibganj, Manihari, Bhagalpur, Semaria, Doriganj,

Ballia/Buxer , Ghazipur/Kaithi, Varanasi, Chunar and Allahabad.

Construction of low-level jetty of fixed terminal (capable of handling containers) at Patna which

was completed during last year was formally taken over by IWAI. For construction of high-level

jetty of this terminal, CPWD completed the design and tendering process progressed. Based on

tendered rates CPWD increased the cost from Rs. 13.73 cr to Rs 29.14 Cr due to which Revised

Cost estimate (RCE) was prepared and submitted to the Department of Shipping (DoS) for

sanction. Simultaneously, Government of Bihar was requested for acquiring 1 acre of land to be

handed over to IWAI for this high level jetty. For permanent terminal at GR jetty, and floating

terminal at Allahabad, IWAI had entrusted the work to CPWD on deposit basis and

design/tendering etc was progressed by them. For construction of permanent terminal at

Varanasi, M/s. MECON were requested to take up the construction work on turn key basis. For a

permanent terminal at Haldia also, alternative sites were inspected and it was decided in

principle that its construction and management may be taken up on PPP mode possibly under

Project Development Organisation/Project Development Committee (PDO/PDC) mechanism,

IWAI has with M/s. IL&FS - IDC. Floating terminals exist at Haldia, Kolkata, Rajmahal,

Sahibganj, Manihari, Bhagalpur, Semaria, Patna, Ballia, Kaithy, Varanasi, Chunar and

Allahabad. These terminals were maintained and used for transportation of cargo. For

construction and supply of six terminal pontoons for upgrading floating pontoons at Haldia,

Diamond harbour, Kolkata, Shantipur, Katwa and Farakka tendering was carried out which had

to be repeated due to inadequate response.

Figure 3: IWT terminal at Patna, NW-1

Navigational Aids: Channel marks for day navigation were erected and maintained between

Tribeni and Allahabad round the year. Besides, fortnightly thalweg surveys were carried out,

river notices issued and pilotage provided to the cargo vessels. Night navigation aids were also

maintained between Tribeni and Farakka (364 km). For providing state of art 24 hrs navigation

aids in the entire waterway, a Committee under the chairmanship of Director General Light

Houses & Lightships (DGLL) had suggested a combination of lights mounted on buoys/country

boats, trestle towers and DGPS stations. For this, tenders for DGPS instruments, trestle towers,

buoys and lights etc were invited. Action to take over land for setting up of DGPS stations at

Shantipur, Bhagalpur, Patna and Varanasi were initiated.

NATIONAL WATERWAY -2

The Brahmaputra river from Sadiya to Dhubri (891 kms) - declared as National Waterway in

1988.

Figure 4: National Waterway 2

Fairway Development: To maintain LAD of 2 m between Dhubri and Dibrugarh (768 km) and

1.5 m between Dibrugarh and Sadiya (123 Km), RC works i.e. bandalling and dredging were

carried out. During 2007-08, 21,900 m of bandals were erected and maintained in the entire

waterway. In addition, 71,000 m3 of dredging was also done by deploying one CSD and one

Hydraulic Surface Dredger (HSD) which are owned by IWAI. Least Available Depth (LAD) of

2.0 m was maintained between Dhubri and Dibrugarh and 1.5 m between Dibrugarh and Sadiya

round the year. During 2007-08, an important project for construction and supply of four CSD

units was sanctioned by the Government at a cost of Rs 75.64 cr and work was also awarded to

separate shipbuilders. The construction work was in progress. Construction of two survey vessels

was also completed during the year and the vessels were deployed on waterway.

Terminals:

Low level fixed terminal at Pandu. Floating terminals at Dhubri, Jogighopa, Tejpur, Silghat,

Jamuguri, Neamati & Dibrugarh.

Construction of low level jetty of fixed terminal (capable of handling container) at Pandu

progressed and by the end of 2007-08, it was nearly completed. For construction of high-level

jetty of this terminal, CPWD completed the design and tendering process progressed. Based on

tendered rates, CPWD increased the cost from Rs 17.70 Cr to Rs 24.58 Cr due to which RCE

was prepared and submitted to the DoS for sanction. Floating terminals exist at Dhubri,

Jogighopa, Pandu, Tezpur, Silghat, Jamuguri, Neamati and Dibrugarh. These terminals were

maintained and used for transportation of cargo. For construction and supply of 3 terminal

pontoons for upgrading floating pontoons at Tezpur, Neamati and Dibrugarh tendering was

carried out which had to be repeated due to inadequate response. Under the PDO/PDC

mechanism project for developing coal handling terminal at Jogighopa under PPP mode was

taken up and the team of IL&FS-IDC inspected the site and collected relevant data to formulate

the project.

Figure 5: IWT terminal at Pandu, NW-2

Navigational Aids: Channel marks for day navigation were erected and maintained in entire

waterway. Night navigation aids were also maintained between Dhubri and Pandu (255 km).

Besides, fortnightly thalweg surveys were carried out, river notices issued and pilotage provided

to cargo vessels. For providing state of art 24 hrs navigation aids in the entire waterway, a

Committee under the chairmanship of DGLL, had suggested a combination of lights mounted on

buoys/country boats, trestle towers and DGPS stations. For this, tenders for DGPS instruments,

trestle towers, buoys and lights were invited. Action to take over land for setting up of DGPS

stations at Jogighopa, Tejpur and Dibrugarh were initiated.

NATIONAL WATERWAY -3

The West Coast Canal from Kollam to Kottapuram along with Champakara and Udyogmandal

canals (205 kms) - declared as National Waterway in 1993.

Figure 6: National Waterway 3

Fairway Development: Fairway development works including maintenance dredging, and 24

hrs navigational aids are taken up on year to year basis. Accordingly, these works were taken up

during 2007-08 also. Moreover, bank protection works in some stretches were completed during

the year and for taking up more such works in critical areas the tenders were invited. Capital

dredging for widening and deepening of canal between Kochi and Kollam was started in first

phase during 1997-98. In Kochi - Kottapuram stretch, capital dredging was started in 2nd phase

during September 2002. Work in Kochi-Allapuzha sector was completed and in Kochi-

Kottapuram sector barring 4.83 Km dredging was completed in the entire stretch of 30 km. But

in the remaining reaches, it got delayed due to various problems such as disposal of dredged

material, fishing nets, local issues leading to contractual problems etc. Out of entire length of 205

km of the waterway, the total shoal length has been estimated as 87.16 km out of which 59.75

km has so far been dredged and 27.41 km remains to be dredged. The total quantity which was to

be dredged for deepening the entire shoal length was worked out as 40.33 lakh m3 out of which

23.98 lakh m3 has been dredged and 16.35 lakh m3 remains to be dredged.

For completion of this capital dredging (which also includes widening of the narrow sections

which necessitates removal of boulders, coconut trees, old bank protection etc), tenders were

floated during the year to cover entire scope of balance works and based on the tendered rates of

various items, revised cost estimate was prepared at a cost of Rs 89.74 Cr and after its approval

by IWAI Board, it was submitted to DoS for Government sanction which was awaited.

Terminals:

Fixed terminals at Aluva, Viakom, KayamKulam, Kottapuram, Maradu, Chratala,

Trikkunnapuzha, Kollam and Alappuzha.

Terminals at seven locations namely Kottapuram, Aluva, Maradu, Viakom, Taneermukham

(Chertala), Trikkunnapuzha and Kayamkulam have already been provided and under PDO/PDC

mechanism the PDO was entrusted the work of formulating a project for operation and

maintenance of these terminals as a PPP project. The PDO had made a field visit and collected

relevant data and they were in the process of formulating the project. Construction of 8th

terminal at Kollam was entrusted to CPWD on deposit basis and the same was in progress. For

providing facilities for mechanical handling at these terminals, 8 mobile cranes and 8 fork lifts

were procured while procurement of 8 platform trucks for these terminals was in progress.

Navigational Aids: Project for providing and maintaining 24 hrs navigational aids by way of

buoys and lights had been completed during the year and now the entire waterway has the

facility for 24 hrs navigation.

SALIENT FEATURES OF NATIONAL WATERWAY NO. 4 - GODAVARI & KRISHNA

RIVERS & CANALS BETWEEN KAKINADA AND PUDUCHERRY (NW-4)

Declared as National Waterway 4 (NW 4) on 25.11.2008

Detailed Project Report (DPR) prepared by M/s. WAPCOS

Total Length - 1027 km.

River portion (328 km),

Irrigation canals (302 km)

Salt water canals (397 km)

Estimated Cost (at 2009 prices) - Rs 1515 Cr

Phase - 1 - Rs. 609 crore

Development of stretch comprising of Godavari & Krishna rivers, and Kakinada & Eluru

canals, which has maximum cargo potential, at an estimated cost of Rs.390 Crore & land

acquisition for remaining stretch at an estimated cost of Rs.219 crore

Phase - 2 - Rs .906 crore

Development of North & South Buckingham Canal, Commamur canal & Kaluvelly Tank

at an estimated cost of Rs.906 crore

Period of Completion - 7 years

Land Acquisition

in Tamil Nadu - 300 Ha

in Andhra Pradesh -1380 Ha

in Puducherry - 27 Ha

Estimated cost of land acquisition - Rs. 391 Crore

Details of dredging:

in canals - 20 million cum at an estimated cost of Rs. 333 Crore

Potential Cargo - 11 million tonnes per annum

Coal on Godavari river,

cement on Krishna river

rice in both Krishna and Godavari

EIRR

Phase - I 34.63%

Entire waterway 16.12%

Figure 7: National Waterway 4

SALIENT FEATURES OF NATIONAL WATERWAY NO. 5 - BRAHMANI RIVER &

MAHANADI DELTA SYSTEM ALONG WITH EAST COAST CANAL (NW-5)

Declared as National Waterway 5 (NW 5) on 25.11.2008

Detailed Project Report (DPR) prepared by M/s. WAPCOS

Length - 588 km.

River portion (371 km)

Canal portion (217 km)

Estimated Cost (at 2009 prices)

(i) Cost for development of River portion Rs. 2230 cr (Barrages- 1843 cr)

(ii) Cost of development of canal portion Rs. 1979 cr (Dredging- 1273 cr)

(iii) Total Cost Rs. 4209 crore

Period of Completion - 7 years

Land Acquisition:

in West Bengal - 846 Ha

in Orissa - 1172 Ha required

Estimated cost of land acquisition - Rs. 176 Crore

Details of dredging

River portion - 10.07 million cum

Canal portion - 44.77 million cum

Barrages

To maintain LAD of 2 m in the Brahmani river all through the year, 5 barrages with height equal

to the highest flood level are proposed to be constructed at every 26 km between Talcher and

Jokadia. Each barrage will have a navigational lock to allow passage of two 500 tonne vessels at

a time.

Cargo potential

Coal from Talcher to Dhamra and Paradip ports is the most important potential cargo for this

waterway. Immediately after the development of the waterway, it is estimated in the DPR that

about 11 million tonne of cargo can be transported per year which can go up to 23 million tonne

in next 15 years or so.

EIRR

River portion 31.77%

Canal portion 12.75%

Rive and canal together 23.75%

Figure 8: National Waterway 5

D. STORAGE FACILITIES

Storage facilities in major ports in India

(IN SQ. METRES)

SL.

NO.TYPE OF STORAGE PORT

PRIVATE AND

USER

AGENCIES

TOTAL

KOLKATA           

1. Covered Area         

   (a) Transit Shed 134722 - 134722

   (b) Warehouse 10794 - 10794

  (c) Container Freight Station 9000 - 9000

2. Open Area 174465   -  174465

3.Liquid Cargo (Tank forms,

etc)- 654078 KL 654078 KL

    TOTAL : 328981 654078 KL328981 +

654078 KL

      HALDIA

1. Covered Area        

    (a) Transit Shed 25040* - 25040

    (b)Warehouse - - -

2.    Open Area 892840 ** - 892840

3.Liquid Cargo (Tank forms,

etc)- -

TOTAL : 917880 - 917880

      PARADIP   

1. Covered Area - - -

  (a) Transit Shed 16100 - 16100

  (b)Warehouse 7700 12300 20000

2. Open Area 1500000 - 1500000

3.Liquid Cargo (Tank forms,

etc)- 532000 532000

       TOTAL : 1523800 544300 2068100

   VISHAKHAPATNAM  

1. Covered Area        

   (a) Transit Shed 30525 - 30525

  (b)Storage Shed 29909 615929 tonnes28909 +615929

tonnes

  (C)Warehouse 1048366230 tonnes +

(100-125) TEUs

10483 + 66230 tonnes

+ (100-125) TEUs

   (d) Sylos - 81500 tonnes 81500 tonnes

2. Open Area 1243380114884 tonnes and

309356 Sq mtrs

1243380 + 114884

tonnes & 309356 Sq.

mtrs.

3.Liquid Cargo (Tank forms,

etc)  

1216648 Tonnes +

121437 KL

1216648 Tonnes +

121437 KL

    TOTAL : 13142972095191 tonnes +

309356 Sq.

mtrs.121437 KL

1314297+ 2095191

tonnes + 309356 Sq.

mtrs. + 121437 KL +

(100-125) TEUs

    ENNORE    

1. Open Area 42000 42000

  TOTAL : 42000 - 42000

    CHENNAI    

1. Covered Area

  (a) Transit Shed 42350 - 42350

  (b)Warehouse 39960 33062 73022

  (c)Others - 19897 19897

2. Open Area 636275 585330 1221605

3.Liquid Cargo (Tank forms,

etc)- 141601 (KLs) 141601 (KLs)

   TOTAL 718585638289 +

141601(KLs)

1356874 +

141601(KLs)

   TUTICORN

1. Covered Area        

    (a) Transit Shed 10800 - 10800

   (b)Warehouse 20550 459000 479550

2. Open Area 533000 - 533000

3.Liquid Cargo (Tank forms,

etc)- 146810* 146810

    TOTAL 564350 605810 1170160

    COCHIN  

1. Covered Area                

  a) Transit Shed 13234         13234

  (b)Warehouse 14489 - 14489

  (c) Container freight Station - - -

2. Open Area Also Available - Also Available

3.Liquid Cargo (Tank forms,

etc)1340 125400 (Tonnes) 126740

    TOTAL 29063 125400 Tonnes 154463 Tonnes

    NEW MANGALORE

1. Covered Area       

  a) Transit Shed & Overflow

Shed23634 - 23634

  (b)Warehouse 6980 15330 22310

2. Open Area 60357 - 60357

3.Liquid Cargo (Tank forms,

etc)-

221800 (KL))

48500 (Tonnes)

221800 (KL)  

48500(Tonnes)

  TOTAL 91151

15330 +

221800 (KL) +

48500(Tonnes)

106481 +

221800 (KL) +

48500(Tonnes)

  MORMUGAO

1. Covered Area           

   a) Transit Shed 8250 - 8250

  (b)Warehouse 18832 14480 33312

2. Open Area 405389 - 405389

3.Liquid Cargo (Tank forms,

etc)-

253506 (KLs)+

15000 (t)

253506 (KLs)+

15000 (t)

  TOTAL 432471

14480 +

253506 (KLs)+

15000 (t)

446951+

253506 (KLs)+

15000 (t)

  MUMBAI

1. Covered Area    

    a) Transit Shed 122971 - 122971

(b)Warehouse 121357 - 121357

   (c) CFS Sheds 66534 - 66534

2. Open Area309787 + 8534

Ground Slots-

309787 + 8534

Ground Slots

3.Liquid Cargo (Tank forms,

etc)

771 to 10224

(KLs) (8 nos.)

Total: 39,571kls

Approx

139 tanks; 487000

Tonnes (Approx.)

39,571 kls

487000 Tonnes

     TOTAL

620649 + 

8534 (Slots)

+39,571 kls

139 tanks;

487000 Tonnes

(Approx.)

620649 +

8534(Slots) +

39571 (KLs) +

487000 Tonnes

     J.N.P.T.  

1. Covered Area                

   a) Shed (6 Nos) - - -

   (b)Warehouse/CFS for

container215000# 1872158 ## 2087158

2.

Open Area( Bulk Storage

Area)

Open Area (Container)

618014 804600 1422614

3.Liquid Cargo (Tank forms,

etc) Storage Capacity-

391841 MT 

118 Tanks :

629990 MT

391841 MT 

118 Tanks : 629990

MT

  TOTAL 833014 3068599 3901613

   KANDLA

1.

 

Covered Area      

a) Transit Shed 5856 - 5856

(b)Warehouse/Godowns/CFS

Sheds/Bulk Storage/Bagging

Plant, etc

113223 7560 120783

2. Open Area 1394394 - 1070660

3.Liquid Cargo (Tank forms,

etc)- 2126108 KLS 2126108 KLS

  TOTAL 15134737560 +

2126108 KLS

1521033 +

2126108 KLS

Table 21: Storage facilities in major ports in India

(*) Includes Transit Shed Leased to the port users inside the dock; (**) Includes open storage

area leased to the port users inside the dock

(#) JNP CFS (Outside, but in Port's Land); (##) Private CFS (Outside Port Area)

Storage spaces

Existing warehousing capacity

Name of Port Warehousing capacity

Kolkata 1,55,000 Sq. m

Paradip 23,771 Sq. m

Visakhapatnam 65,326 Sq. m

Chennai 45,766 Sq. m

Mumbai 1,78,457 Sq. m

Jawaharlal Nehru JNPT has no warehousing facility inside the

port area. Warehousing facility is available at

all container fright stations (CFS’s) in and

around on JN port. At present 22 CFS’s are

operational in and around JN Port having

capacity of 1.5 million TEUs per annum.

Tuticorin 1,07,104 Sq. m.

Cochin 64,000 Sq. m

New Mangalore 21,000 tonnes

Mormugao 35,348 Sq. m

Kandla 1,44,000 Sq. m

Ennore Nil

Table 22: Existing warehousing capacity

Current warehousing infrastructure in respect of Paradeep, Chennai, Mumbai, Jawaharlal

Nehru, Visakhapatnam, Tuticorin, Cochin, New Mangalore & Mormugao Ports is able to

meet the requirements. Current warehousing infrastructure in respect of Kolkata and

Kandla ports is not able to meet the requirement and needs to have more warehousing

facilities.

In Ennore Port the nature of cargo handled at present and projected to be handled during

the next 5 years does not require warehousing infrastructure to be developed in Ennore.

In Kolkata port possibility of expanding the warehouse facility in the vicinity of the dock

is being explored in consultation with customs authority. At Haldia Dock Complex

(HDC) warehousing capacity is able to meet the cargo being presently handled. However,

keeping the increased requirement of storage area action has already been initiated for

creation of additional storage area. Kandla port is regularly constructing new godowns

and open plots to meet the cargo storage requirements. At some ports Container Freight

Station’s (CFS’s) to cater the future need of exim traffic are being developed.

 

GOVERNMENT REGULATIONS

A. GOVERNMENT POLICIES REGARDING COASTAL SHIPPING

In India coastal shipping comes under the purview of the Directorate General of Shipping (DG

Shipping).It frames the and implement the policies regarding coastal shipping as well as the

construction specifications of coastal vessels, Cabotage law, taxation, etc.

Cabotage law in most countries reserves the movement of coastal trade to their own flag vessels.

Policies measures involve crewing restrictions, ownership restrictions, provision for domestic

fleet subsidy, reflagging restrictions, etc. In India , the Merchant Shipping Act bars foreign

bottoms from carrying cargo between Indian ports; exceptions are made if no suitable Indian

vessel is available. The market of shipping industry being highly volatile, such protection creates

a certain degree of stability for the Indian bottoms. Action plan for the development of coastal

shipping in already on the anvil with the central government. With a view to promote coastal

shipping and sailing vessel industry, the home trade vessels and sailing vessels have been

exempted from the payment of lighthouse dues under the provisions of the Lighthouse Act,1927.

a) Indian merchant shipping act 1958

The terms “Admirality law” or “Maritime Law” or “Merchant Shipping Law” are generally

regarded as more or less synonymous and could only be distinguished on the basis of the

emphasis given to one or the other aspects of the merchant shipping. The Law of the sea (a part

of public international law dealing with uses of seas) is sometimes confused with practice,

Admirality and maritime Law are for most purposes virtually synonymous.

Maritime law comprises the most important part of private international law that deals with the

shipping industry. Its long history and separate international traditions, as well as its link with a

single industry, make it distinct from other branches of law. Its rules and practices deal with such

matters as marine insurance, carriage of goods by sea, chartering, mariner’s rights, collision,

salvage and limitation of liability. However, public and private international law overlap in such

matters as pollution caused by ships, sea Lanes, maritime communications, safety of life at sea

and also on questions of jurisdiction over ships at sea.

Customer rules, usages, conventions and principles of international property and natural justice,

as have been accepted or recognized by the nations of the world, constitute, as it were, the

general International Law governing any particular subject of inter-state relationship weather

maritime or otherwise. In determining, therefore, the national law applicable to shipping of a

particular state, it is necessary to ascertain the international conventions which have been duly

ratified by it and also the bilateral treaties which that country has negotiated and ratified. There

are in addition the executive pronouncements or Presidential Proclamations which in the case of

India have been made to define the limits of territorial waters and this must also be regarded as a

part of the municipal Law of the land.

The municipal legislation which regulates the shipping industry, has one respect or the other be

connected with merchant shipping. However, some of the more important ancillary statutes are

mentioned below:

1. The Customs Act, 1962

As Customs and sanitary regulations govern both passenger and cargo traffic by

sea transport, the relevance of this statute to merchant shipping operations is obvious.

2. Acts relating to Ports

a) The Bombay Port Trust Act, 1879

b) The Calcutta Port Trust Act, 1890

c) The Madras Port Trust Act, 1905

d) The Indian Ports Act, 1908 (applies to all ports)

e) The Major Port Trusts Act, 1963 (applies to all major ports other than

Bombay, Calcutta and Madras). Since every merchant ship enters inland

harbour waters and has to comply with the port regulations, it is necessary

that every owners and master of a vessel must be conversant with the port

regulations.

3. The Indian Lighthouse Act, 1927

As lighthouses guide merchant shipping, there is no doubt that enactments on this

subject would come under the category of ancillary statutes concerning merchant

shipping.

The aforesaid enumeration of statutes is confined to the more important ones

which deal with merchant shipping. The lesser enactments have not been mentioned here.

The intention is to give an indication of the vastness of the Statute Law which regulates

merchant shipping and constitutes its legal regime.

Before Independence, India had hardly any definite shipping policy. On 15 th

August 1950, the Government of India declared its national shipping policy and in

February, 1958, a draft Bill on merchant Shipping Act, 1958 was enacted. The merchant

Shipping Act, 1958 applied to all the ships registered in India or which are required to be

registered in India. Every Indian ship, unless it is a ship which does not exceed fifteen

tons net and it is employed solely in navigation on the coasts, of India, is required to be

registered under the 1958 Act.

The Director General of Shipping is required to implement the Merchant Shipping

Act, and oversee registration of ships, issue trading licence for ship routes, conduct

survey work, implement manning provisions, hold examinations for officers, and crew

ensure seaworthiness of vessels and ensure compliance of employment norms for crew

and officers.

B. GOVERNMENT REGLATIONS

i. Vessel conversion

ii. Manning regulations

iii. Indian register of shipping

iv. Classification society

v. Cabotage law

i. VESSEL CONVERSION

The ship owner wants to convert his vessel from the Foreign in to Coastal Vessel, he has to

follow some procedures, as follows;

Inform to the respective agents

Ship registry

From where the ship has came

Covering letter (Foreign-to-Coastal)

Produce the licence copies

Send the letter to the Customs of the particular port

Boarding Officer (will seal the provisions)

Bunker duties

Duty {NRT-Net Register Tonnage (per tonnes – Rs.8.00}

(Note: It will take at least one day)

Customs Procedures

Cumbersome customs procedures have since long been impeding the growth of coastal shipping.

Our examination of the current situation reveals however that through the notifications of on

07.10.97 and P.N.190/97 dated 20.10.97, coastal ships have been exempted from the provisions

of Section 92, 94, 97 and 98 (1) of the Customs Act, 1962.

This means that coastal ships no longer have to file a bill of coastal goods at load ports, bill of

entry at discharge ports or obtain written permission before leaving a port. Given this customs

procedure can no longer be said to border on rigidity.

ii. MANNING REGULATIONS

Employment of seamen on Indian ships

There are two types of employment offered to Indian seamen on board Indian vessels, that is,

1. Permanent employment by a Company;

2. Registration at the Seamen’s Employment Office (S.E.O)

The former, for example, Machinists, Fitters, Head Waiters, Butlers, Chief Stewards, Carpenters,

Etc. (generally called Petty Officers) are employed directly by the Company concerned and are

issued a Continuous certificate of Discharge (C.D.C) by the Shipping Master and identity Card

by the S.E.O. (Nowadays Passports are made for this category). They are subject to and

governed by:

i. The Merchant Shipping Act, 1958

ii. Articles of Agreement; and

iii. Terms of conditions signed between the employees and the employers.

The ratings belonging to the second category are either borne on the Company Roster or on the

general Roster, are registered with the S.E.O. and are issued a C.D.C. by the shipping Master,

and a Registration Book by the S.EO.

The registered ratings who are employed through S.E.O. are subject to and protected by:

i. The Merchant Shipping Act, 1958;

ii. Articles of Agreement;

iii. Seamen’s Employment Office Rules, 1954;

iv. Decisions of the Seamen’s Employment Board, and

v. Terms and conditions of service as agreed to at National Maritime Board,

which is a bipartite organization of ship-owners and seafarers.

Under Section 3(12) of the M.S.Act, 1958 a “seamen” means every person (except a

Master, pilot or apprentice) employed or engaged as a member of the crew of a ship.

Manning scales

There are no fixed manning scales for Indian ships, however, the strength of crew for each

individual ship is mutually decided between the Owner and the concerned Seafarers’ Union.

Under Section 88 of Merchant Shipping Act, 1958 the Central Government has authorized the

National Maritime Board to enter into an agreement with the Seafarers’ Union and make rules

for the classification of seamen into different categories and for the minimum manning scale of

seamen of such categories for different ships.

The N.M.B. Agreements are for home-trade, foreign-going and general purpose crews. For the

purpose of defining “equivalent ratings” in conventionally manned ships in relation to GP crews

the following shall apply:

G.P Ratings Conventional Ratings

CPO (GP) : Deck and engine Serangs

Machinist I (GP)

CPO Fitter (G) : Fitter

GP Fitter

Machinist II (GP) : Assistant Fitter

P.O.I. (GP) : Tindal, Deck Maintenance Hand, Pump man

P.O.II (GP) : Deck Tindal, Engine Tindal, Assistant Pump man

G.P I : Seaman/Helmsman, Desk Cassab, Engine Cassab,

Donkey man, Donkey Greaser

GP II : Seaman I, E.R. Rating I

GP III : Seaman II, E.R. Rating II

GP Chief Steward : Chief Steward, Steward

GP Cook I : Chief Cook and Baker

GP Chief Cook : Chief Cook and Baker

GP Cook II : 2nd Cook

GP Crew Cook : Deck, Engine Room and Catering

GP Bhandary : Bhandaries, Crew Cook

GP Cook III : 3rd Cook

GP General Steward : General Steward, GS/Utility

GP Scullion : Galley and Pantry Scullion

GP JUS : Junior Utility Steward

GP Laundryman : Laundryman

Repeated pleas over the year for lowering of manning scales standards for coastal ships Vis-to -

Vis foreign going vessels have not been heeded. The point made in support of this argument was

that coastal ships spent must less time at sea unlike foreign going vessels, they do not undertake

deep sea voyages and officers on board these vessel do not need the same level of training and

sophistication as for officers for foreign going vessels calling at different ports in various

countries.

The 1978 & 1995 STCW conventions permitted special concessions to ships plying within near

coastal areas, which were to be defined precisely by the maritime administrations. Since India

did not act upon it on the engine side particularly, no concession became available for vessels

trading along or near the coast. Since the manning scales were statutorily fixed (Section 76 of the

MS Act) no alteration was possible without the amendment of this provision. The 2002

amendment of Merchant Shipping Act however vested the powers to prescribe manning scales in

the Central Government. In exercise of thus manning scales for near coastal vessels (NCV)

plying between India, Bangladesh, Sri Lanka, Myanmar, and Maldives have been made less

stringent.

Since no separate scales for coastal vessels plying exclusively between Indian ports have

however been prescribed and these vessels too have to comply with NCV scales. Some segments

of the industry have however been demanding that the manning scales for the coastal vessels

should be much less stringent than for NCVs.

The Consultants however feel that existing NCV scales prescribed for coastal vessels between

Indian ports should not be relaxed further in the interest of safety.

iii. INDIAN REGISTER OF SHIPPING

History

Recognising the necessity for a leading maritime nation such as India to have it's own

classification society, the Government of India constituted a Steering Committee (known as

Mudaliar Committee) whose recommendation for formation of an Indian classification society

was accepted by the Government of India in 1974. Thus, in 25 th March 1975, Indian Register of

Shipping was established as a public limited company under section 25 of the Indian Companies

Act, 1956 with no share capital, no shareholders and distributing no dividends and seeking to

promote the objects for which it was established which include:

To provide faithful and accurate classification and record of mercantile shipping classed

with IRS

To establish standards and formulate rules for the construction and maintenance of ships,

amphibious installation, marine equipment and industrial and general engineering

equipment.

To approve designs of, to survey and to issue reports on land installations, machinery,

materials and apparatus of all kinds.

To aid and develop the merchant marine industry of India

To evaluate, assess and certify quality management systems in industries and to carry out

pre-registration audits and certification audits for quality management systems.

Within a short span of its inception, IRS has already established itself as an international ship

classification society and is in many ways on par with leading ship classification societies of the

world, which have been in existence for over a hundred years. It's highly skilled and motivated

technical personnel, which continue to be it's main source of strength, coupled with it's enviable

safety record, allows IRS to enjoy the confidence of the entire marine fraternity - ship owners,

ship builders, underwriters, government, industries allied to shipping, et al. It's reputation for

efficient, prompt service of the highest order based on it's technical, financial and moral integrity

has in fact made common the acronym "IRS" by which the organisation is recognised today -

Integrity, Reliability & Safety.

Within 24 years of its inception, IRS has many significant achievements to its credit, some of

which include:

Associate Membership of the elite International Association of Classification Societies

(IACS), which comprises a dozen members, who are the most advanced ship

classification societies of the world.

95% of the Indian fleet is already classed with IRS.

IRS is the sole authority for final assignment of Loadline on behalf of the Government of

India.

Indian Register Quality Systems (IRQS), a department of IRS, established as a

certification body for Quality Management Systems to ISO 9000/equivalent standards,

was the first Indian organisation to be accredited by Raad voor Accreditatie (RvA),

Holland.

IRS is also in full compliance with Quality Systems Certification Scheme (QSCS) of

IACS and is also recognised by the United States Coast Guard in terms of IMO

Regulation 739 (18) as a "recognised organisation".

Overview

With the advancement of technology, an industrial plant of today may be provided with complex

pressure systems, equipment and controls to handle hazardous material and heavy loads.

This advancement has been accompanied by an increased public awareness about the effects of

the failure of any part of an industrial plant on environmental and personnel safety.

Consequently, now there are more statutory controls and liability laws affecting industrial plants

and their working. There is now more emphasis being placed on independent design appraisal

and inspection during manufacture including pre service inspection and in service inspection.

This is where the services of third party inspection agencies become vital.

IRS began offering third party inspection and certification services to the general engineering

industry, beginning in the eighties. Today, the IRS certificate has become synonymous with

compliance with the code of construction, and with the agreed technical specifications. While

providing third party inspection or certification services, IRS follows the principles of

impartiality, confidentiality and a uniform interpretation and application of codes and standards.

This is backed by actions such as close involvement with the project to avoid unnecessary

delays; issue of progress reports, if required, and certification on completion of the project.

IRS has offered, and can offer, third party inspection or certification to industries involved in

general engineering, chemicals, petrochemicals, electrical power generation and transmission,

pipelines for transportation of petroleum products, and cross-country pipeline projects.

Inspection has been carried out for equipment such as pressure vessels; lifting gears; piping

systems; forging; castings; and rolled products; mechanical equipment like engines, gear boxes

and couplings; storage tanks; electrical machinery, cables, and switch gear.

Other projects include in-service inspection; evaluation and audits of safety systems; and general

structures.

In carrying out inspection services for industry, no project is too small or too large. IRS services

are tailored to meet individual requirements. With offices situated all over the country, IRS can

respond to a client's needs with prompt and efficient service at a very competitive cost.

IRS surveyors can also be placed at the work site during construction and installation of large

plants, for example in the chemical or petrochemical industry. They can provide in-service

inspection during the maintenance of large plants to ensure that activities proceed according to

contractual specifications and quality system requirements.

IRS field surveyors are supported by a highly qualified team at the Head Office. They are given

full technical support and are qualified to carry out professional design appraisals of plans for

compliance with accepted industry code, rules, regulations etc. general engineering practice and

the owner's own technical specifications.

IRS is actively involved in the development of codes and standards. IRS representatives

participate in technical committees and working groups set up by the Bureau of Indian Standards

(BIS) and other institutions which evolve codes and standards.

Technical committee

A Technical Committee has been constituted to consider the formulation and updating of the

rules for classification, surveys, building of ships, their machinery and equipment for adoption

by IRS.

The Technical Committee comprises of highly qualified technical personnel of various

disciplines in the marine field representing the shipbuilders, engine builders, various learned

bodies. Research Institutions, organisations, departments associated with shipping. The

Technical Committee can co-opt to the main body other members of high technical and

managerial position in shipbuilding, engineering, naval architecture, marine insurance, steel-

making etc.

Classification sub-committee

Another important organ of IRS is the Sub-committee of Classification comprising of various

members nominated from among the members of the Committee of Management, so chosen as

to represent the interest of Shipowners, Underwriters, Shipbuilders, Ship repairers, etc. This

Classification Sub-Committee deals with various aspects of Classification of Ships and since

various groups interests are represented the decisions arrived at by it reflects a balanced and fair

view in keeping with the best traditions of established Ship-Classification Societies.

Agreements with other societies

IRS has entered into dual-class agreements with six established foreign classification societies

which enable surveys to be conducted in all foreign ports of the world on ships classed with IRS.

All surveys in India are carried out by the Exclusive Surveyors of IRS. The Societies with whom

such agreements have been signed are;

American Bureau of Shipping (ABS), New York

Bureau Veritas (BV), Paris

Det Norske Veritas (DnV), Oslo

Germanischer Lloyd(GL), Hamburg

Lloyd’s Register of Shipping(LRS), London

Nippon Kaiji Kyokai(NKK), Tokyo

These agreements also provide for exchange of technical information and training of IRS

Surveyors as and when required. These agreements are also helping IRS to earn substantial

amount of foreign exchange because a ship classed with IRS or intended to be classed with IRS

is surveyed abroad by these Societies.

IRS also has reciprocal agreements with Polish Register of Shipping and Romanian Register of

Shipping Which enable Indian ships to be surveyed in Poland and Romania by these societies

whereas in India ships classed with these societies are surveyed by IRS when they are in Indian

ports. IRS has been carrying out such surveys on Romanian, Polish and other such ships in all

the Indian ports.

Staffing

It is a well-known fact that the success of a Classification Society which is a service

organisation, depends primarily upon the performance and competence of its staff which is its

main asset.

Recognising this principle, the committee has bestowed great care in their selection of the staff

members with a view to ensuring that highest standards of technical as well as moral integrity are

consistently maintained.

The Committee has steadily built up a cadre of technical and non-technical staff to serve at the

Head office and other and other offices. Since this is the time that a classification society is

having its head office in India, considerable thought and great care has been bestowed on

selection of highly qualified and experienced technical personnel of right caliber who not only

will undertake surveys on ships but will also provide the necessary head office back-up such as

formulation and updating of Rules in keeping with the rapid technological advancements,

scrutiny of survey reports, maintenance and retrieval of records pertaining failures, defects

technical information and data etc.

Training

The success of any Classification Society depends upon the integrity, high technical ability of its

staff and the efficient surveying service it can provide to its clients. This simply means that a

Classification Society must have on its rolls services of exclusive technical staff of the very

highest caliber. Further, if the technical staffs are to keep pace with the rapid rate at which the

technology is advancing, a comprehensive programme of continuous training for such technical

staff is essential. Bearing in mind these factors, IRS has set down following:

To provide efficient initial training for all new entrants so that they become effective members of

the staff. This training is being imparted under the guidance of the Principal Surveyor and other

Senior Surveyors prior to stationing new entrants at outports. Such training is imparted in two

ways:

“on the job” training in survey work and ‘in-house’ theoretical and practical training

some specialized subjects such as Advanced courses in ship-building, Naval Architecture,

engineering, welding, metallurgy, strength of materials, Non-destructive Testing (dye-

Penetrant, Magnetic Particle, Radiography, ultrasonic’s, Eddy-current etc.), use of Glass

Reinforced plastics, Classification Survey procedures, statutory survey procedures, etc.

Special Training courses in India and Abroad on subjects ranging from Radiography,

Ultrasonic, NDT, Welding, Quality Assurance System and certificate, Risk Analysis,

Diving, etc.

iv. CLASSIFICATION SOCIETIES

While many hazards of the sea can only be guarded against by the skill and courage of those who

man the ships, a great deal depends upon the structural fitness and reliability of the

machinery/equipment on the ship. It was to fulfill the demand for independent technical opinion

on the fitness of ship by the commercial and business interests connected with the operations of

the ships that Classification Societies came into existence.

It is not surprising that the Underwriters whose involvement in a venture is relatively more

should have taken the initiative to first classify ships according to whether, from the

construction, maintenance and manning points of view, they constituted good or bad risks. It was

not long before the shipowners themselves recognising the advantages inherent in complying

with accepted standards joining hands with the Underwriters in the creation of a system of ship

classification based on defined technical standards. From such a beginning were created reliable

organisations for the inspection and maintenance of character of merchant ship. These

organisations are normally known as Ship Classification Societies.

A ship Classification Society is a service organisations which is highly technical in nature and

completely independent in character. Normally, it is collectively managed by those whom it

serves such as shipowners, underwriters, shipbuilders etc. It has no profit motive and aspires

only to enough income for self-support, self perpetuation and growth.

v. CABOTAGE LAW

This word’s origin is French – caboter – means sail along the coast.

Cabotage Law of any country specifies usage of only country’s own vessels in its coast.

India has also applied this law to its coastal operation

Under the Cabotage law the movement of coastal trade of the country is to be reserved for its

own flag vessels. The impact of such reservations is significant where the country has along

coastline and domestic trade is robust.

India's Cabotage regulations, which restrict the operation of foreign vessels in Indian waters, are

provided under the Merchant Shipping Act, 1958 (MSA).

A new shipping policy was initiated in 1990-91 to promote Indian shipping, with the objective

of:

(i) reducing dependence on foreign shipping services;

(ii) safeguarding imports of essential supplies for India's economy;

(iii) reserving 100% coastal trade for Indian flag-bearing ships;

(iv) ensuring adequate shipping services to meet India's requirements for coastal trade, and

(v) improving the balance of payments position through import substitution and export of

shipping services

Though Indian flag-bearing vessels must be owned only by Indian entities, foreign entities are

permitted to invest up to 100% in Indian ship-owning and ship-operating companies, thus

enabling foreign investors to obtain the privileges granted to Indian shipping companies. Since

foreign investors can acquire shareholdings in Indian companies owning ships which fly the

Indian flag, 100% overseas debt/equity financing will enable 100% control by foreign operators

of Indian coastal trading companies.

• International competition can integrate domestic and international services through

different patterns and improve technical efficiency

• It may lower freight rates in the process.

• At the same time, relaxation or repeal of Cabotage laws could be a threat to domestic

tonnage as it will open the door for foreign flag vessels to carry coastal cargoes.

The current trend is for foreign companies to acquire Indian subsidiaries of shipping companies,

which buy Indian flag-bearing vessels. Such acquisitions are funded by the foreign holding

company or the ships are transferred to the Indian subsidiary on the credit sale.

Indian regulations require Indian ships and foreign ships chartered by Indian Ship owners to

acquire trading licenses from the director-general of shipping (DG) before proceeding to sea.

Control is exerted over Indian ships by a licensing system which envisages that Indian ships or

ships chartered by Indian citizens/companies are not permitted to be taken to sea from a port or

place in India except with a license granted by the DG, and by issuing executive orders

restraining the movement of ships. The DG may revoke or modify any license granted, subject to

the licensee being given an opportunity to represent against such revocation or modification of

the license.

Although by law a vessel owned by a foreign company may operate in India under a license

granted by the DG, in practical terms, attaining a license is difficult inasmuch as the foreign

company must establish that no Indian flag-bearing vessel is available which meets the

specifications of the foreign vessel seeking the license. Moreover, the license is usually for a

year or two and would have to be renewed, with similar conditions.

Sections 406 & 407 of the Merchant Shipping Act, 1958 provide that a vessel is to be licensed by

the DG shipping if it is to engage in coasting trade of India. In practice, foreign flag vessels are

permitted to carry coastal cargo only if suitable Indian tonnage is not available.

Cabotage provisions in other countries vary in the extent of protection they provide to the

national flag. The most stringent provisions are perhaps those in the Jones Act of the USA,

which reserve domestic cargoes for vessel owned, built, flagged and manned in the USA. No

Waivers are allowed. In the European Union, Regulation (EEC) 3577/92 has thrown upon the

domestic sea-borne trade of any member state to all member states, but not to others. Australia

permits foreign flag vessels to carry its coastal cargo if no suitable Australian ship is available.

At the other end of the spectrum, New Zealand repealed its Cabotage laws in 1994 and opened

its domestic sea-borne trade to international competition. International competition can integrate

domestic and international services through complex voyage patterns including a coastal leg,

improving technical efficiency and lowering freight rates in the process. At the same time,

relaxation or repeal of Cabotage laws could be a threat to domestic tonnage as it will open the

door for foreign flag vessels to carry coastal cargoes. This issue was discussed extensively at the

Stakeholders.

IX. FINDINGS

Lack of policy measures to promote coastal shipping is another reason why it accounts for only

7% of domestic cargo movement. The average public sector investment in shipping in the five-

year plans was only 5% (almost entirely allocated to overseas shipping) as against 51% for

railways and 32% for the road sector. Maritime states and the Government of India have invested

scantily to develop minor ports to create earmarked facilities for coastal cargo. Other factors that

have slowed down the growth of coastal shipping are:

Cumbersome customs procedures

Nonavailability of concessional finance to acquire coastal vessels

High import duties on bunker oil and spares

High tariffs in major ports

High manning scales which increase operational costs

Stringent specifications relating to construction of vessels, leading to higher capital costs

Incidence of corporate tax for coastal as against tonnage tax for oceangoing vessels and

personal income tax which discourages quality officers from continuing on Indian coastal

vessels

Non availability of concessional finance for acquisition of vessels.

Rigid conditions for dry docking coastal vessels in foreign yards.

Absence of special Coastal Shipping legislation

Lack of separate berthing facilities at major ports and inadequate cargo handling facilities

at minor ports.

X. SUGGESTIONS

A. DEDICATED BERTH

On the operator front, lack of dedicated berths for coastal ships at various Indian ports. Providing

the dedicated berth for the coastal shipping.

B. DUTIES

Duty exemption on fuel bunkers can be considered for coastal shipping in initial stages.

C. CARGO HANDLING

Slow handling of the cargo at port and undue port delays inflict heavy losses on shipping.Given

the inherent advantages of coastal shipping, there is an urgent requirement to promote the growth

of this sector.

D. PORT AND HINTERLAND CONNECTIVITY

Port and Hinterland Connectivity are essential components of the logistic chain and integral for

the development of Port Sector. Hence, a synergetic policy to be formulated for which it is

essential that all the Maritime States prepare consolidated proposals in this regard.

E. CENTRALLY SPONSORED SCHEME FOR IWT

The significance of the scheme was emphasized by the Maritime States and it was recommended

that the continuance of the scheme be taken up with the Planning Commission.

F. CONCESSIONAL TAX REGIME

Concrete proposals to be sent by the Maritime States for putting in place a conducive tax regime

for encouraging investment in port development and associated infrastructure.

G. CABOTAGE LAW

Cabotage law in most countries reserves the movement of coastal trade to their own flag vessels.

Policy measures involve crewing restrictions, ownership restrictions, provision for domestic fleet

subsidy, reflagging restrictions, etc.

To promote greater coastal shipping, India's government has also relaxed the cabotage

laws for container ships and lash barges, provided greater freedom to time-charter Indian

ships to foreign shipowners and reduced the controls on freight.

The development of coastal shipping in India has been measured. Ship owners are

reluctant to acquire dedicated coastal vessels due to impediments such as complex

customs procedures, time-consuming port clearances, high manning scales at par with

overseas shipping and poor port infrastructure.

At the same time, an excessive relaxation of cabotage regulations could threaten domestic

tonnage insomuch as it would open the door for foreign flag-bearing vessels to carry

coastal cargoes and enter a market generally closed by most countries.

H. PORTS: ONE BERTH RESERVED IN EVERY PORT FOR COASTAL VESSELS.

There is a big congestion in Indian Ports and due to congestion the ship-owners looses revenue

whenever ships get delayed in getting berth. Each and every port in India should ensure one

berth for coastal ships on priority basis and if they do not have coastal vessels on the berth the

same could be used for other vessels.

I. WHARFAGE

The loading and unloading of cargo in the ports is very costly and it requires special attention.

The Wharfage should be reduced to 10% of the Tariff being charged for foreign going vessels.

For the development of Coastal Shipping, separate tariff to be formulated, so that all

Major/Minor Ports will be cost effective and user friendly.

J. TRANSSHIPMENT CHARGES

The Coastal Vessels, which brings cargo from minor ports to major ports for transshipment or to

export, the ports charge wharfage twice. That means when the Cargo is discharged by Coastal

Vessels, wharfage is applicable and when the same Cargo is again loaded for final destination,

Port levies wharfage again. Hence we suggest that every Major / Minor Port must have

Transshipment charges for all Cargo and not only for Containers which are existing in some of

the Ports.

K. SERVICE TAX

Coastal shipping / Inland Waterways compared to foreign going has great disadvantage in

running their vessels between various ports within the country. Ships pay Service tax at each and

every port for the same cargo. For example if Container “A” moves from Bombay to Goa, then

service tax is liable in Mumbai and when the Container is discharged in Goa, again the Port

levies Service Tax at the time of discharging Cargo. We have to pay service tax twice. Hence our

suggestion is that the service tax for coastal ships should be completely exempted, if not, the

nominal tax can be paid on yearly basis for the coastal vessels registered in India.

L. SHORTAGE OF MANPOWER

There is huge shortage of Manning personnel prevailing in the Indian Coast. Sometimes vessels

are held up because of manpower. Our country has enough manpower to man Indian ships but

unfortunately most of the Officers leave the country and serve foreign ships rather than the

Indian ships. The foreign ship owners pay less amount of money than the Indian ship owners but

since they have to pay the tax on Indian ships, the Officers tend to leave the company and go

abroad. The tax can be reduced to 5% from the present 30% in order to retain the Officers on the

Indian ships. Till such time the shortage persists, we should have minimum manning scales in

which the number of certified Officers should be two on Deck and two in Engine Room. This

should be good enough to run the vessels up to 10,000DWT in Indian Coast. Policy also should

be made for any Officer passing exams in India will compulsorily has to serve three years on

Indian ships before they can join foreign owned ships.

M. CREATE DRY DOCKS & REPAIR YARDS

At existing / new Non-Major Ports to accommodate smaller coastal vessels by providing draft of

around 4 to 5 meters. Needs allocation of requisite land and water frontage exclusively

earmarked for this purpose.

N. ENHANCED / ADEQUATE CONNECTIVITY FOR PORTS WITH RAIL / ROAD

TRANSPORT

All Major Ports to be also adequately connected to highways with four lane roads for speedy

cargo evacuation.

O. FORMULATE COMPREHENSIVE LIST OF SEPARATE RULES

Regarding Design, Construction, Operation, Safety, Pollution aspects etc. for Coastal Vessels.

P. ORGANIC INTEGRATION OF COASTAL SHIPPING AND IWT

Modes / operations by bringing the two modes under a single organization for their development

in a focused manner.

XI. CONCLUSION

Coastal shipping has several inherent advantages over modes of transport such as road

and rail. It is fuel efficient, environment friendly, can ease traffic congestion and arrest

the loss of human lives due to accidents. Several coastal countries are making optimal use

of this mode of transport. In the European Union, for example, coastal shipping has an

enviable 43 percent modal share in tonnes km, which is expected to increase further.

In India development of Coastal shipping is hampered by lot of barriers such as lack of

infrastructure facilities in minor ports, high tariffs in major ports, cumbersome customs

procedures, customs duties on bunkers and spares, high manning scales etc.

The cabotage restrictions, while protecting Indian tonnage, discourage the growth of

coastal shipping in as much as Indian tonnage is not adequate and the Indian industry is

not aggressive enough to increase the share of coastal shipping.

Relaxing cabotage laws would not create a level playing field. It would be desirable to

allow foreign vessels to compete for coastal cargo and this would help bring in

technology and efficiency, which would reduce the cost of logistics and make Indian

products more competitive in the international market.

Permitting foreign flag carriers for coastal movements would bring in cost efficiencies,

technology and the network to connect the various ports in the country to the ICTT at

Kochi, the sources said.

They also cited some of the main factors for the slow growth of coastal shipping — non-

availability of concessional finance for acquisition of coastal vessels; high import duties

on bunker oil and spares; high manning scales, which increase operational costs;

incidence of corporate for coastal as against tonnage tax for ocean-going vessel and

personal income tax, etc.

Coastal ships, unlike ocean-going vessels, have to pay duties on bunker oil. This duty

increases the cost of operation.

The cost of bunker fuel oil for a coastal vessel is reported to be higher than that for an

ocean-going vessel to the extent of around 28 per cent to 36 per cent.

Similarly, import duties on capital goods and spares also cast a burden on coastal

shipping, as these vessels are heavily dependent on imported spares.

Generally speaking the productivity on the berths is on the low side, a capacity increase

can be achieved through mechanization of cargo handling and other efficiency

improvement measures.

Coastal freight traffic is expected to rise up to 138 million tonnes by the end of year

2011-12

XII. BIBLIOGRAPHY

a) Books

C.R.Kothari, Research Methodology,2nd Revised edition 2004

P.K.Samanta & A.K Mohanty, Port Infrastructure and Economic Development, published

in 2005

b) Magazines, Journals and Newspapers

The Hindu Business Line

Times Shipping Journal

Fairplay International Journal

c) Online Sources

http://www.shipping.nic.in /

http://www.iwai.nic.in/

http://www.tariffauthority.gov.in/

http://www.dgshipping.in/

http://www.ipa.nic.in/

http://www.infrastructure.gov.in/

http://www.ieindia.org/pdf/88/88MR102.pdf

d) Reports

Port Development Plans (Volume 1 & 2), 2009

Infrastructure Development in India, 2009

Report of the Committee of Secretaries Road Rail Connectivity of Major Ports, 2009

Inland waterways Authority of India, Annual Report, 2008-09

A study on the Development of Coastal Shipping, Tata Consultancy Report, 2003

Working Group Report on Shipping and IWT