Indian Ports: Private Vs Government

Maritime Activity Reports, Inc.

January 23, 2015

Image: Indian Ports Association (IPA)

Image: Indian Ports Association (IPA)

Rising competition from fast growing private sector ports is forcing government-controlled major ports to re-invent themselves, reports Business Standard. Slowdown in India's international trade is adding to the woes.

The government-owned port trusts had been used to near monopoly revenues and profits from 'grateful' exporters and importers.  These ports are now finding it difficult to fill their berths as newer ports are willing to sing in customer's tune.

A recent report from JOC stated that chronic capacity constraints and infrastructure woes at some state-owned ports spur the diversion of cargo and vessels to nearby minor ports.
 
The gainers have been large private sector ports such as Adani Ports, Pipavav Port and Vadinar Port among others.
 
India has a 7,500 km coastline with about 200 private and intermediate ports and 12 major ports. Statistics show these ports increased their share of India’s total seaborne trade from 23.6 percent in fiscal 2000-01 to 42.9 percent in 2013-14, with volumes going up from 86.9 million tons to 417.12 million tons, respectively. 
 
The cargo volume share of country's 12 major ports declined to 55% in FY14 from 72% at the end of March 2008, according to data from ministry of shipping.
 
The JOC analysis reveals minor ports recorded a 7.5 percent year-over-year growth in cargo volumes for fiscal year 2013-14, which ended in March 2014, versus a mere 1.8 percent increase at 12 major public ports in the same year.  In terms of container handling in 2013-14, minor ports’ volumes soared a whopping 53.6 percent to 3 million 20-foot-equivalent units, while publicly-owned ports saw cumulative throughput slide 3 percent to nearly 7.5 million TEUs.
 
Industry observers say that cargo volumes at private sector ports will continue to grow at more than twice the rate of growth recorded by 12 major public sector ports. Major ports are used to working in monopoly environment where customers would chase them rather than other way round. But exporters and importers now have other options (private sector ports) and they are choosing the convenience provided by these newer ports.
 
The newer ports are willing to give customized services to large clients to seek assured business from clients. Private sector ports can also afford to be flexible in pricing as they do not come under Tariff Authority for Major Ports (TAMP). This is also a main reason why private ports can sign long-term contracts with clients. Ports trusts don’t have this flexibility.
 
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