Demand & Supply Assessment of ports in India

7/29/2019 Demand & Supply Assessment of ports in India

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Demand & Supply Assessment of ports in India&

Growth Drivers for Investors

Cdr Manoj Bhatt / Anand V Sharma

Mantrana Maritime Advisory Pvt Ltd

2nd India Port Expansion and Capacity Upgrading

Chennai, India on November 3rd & 4th, 2011


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Contents

Indian Ports Sector Overview

Demand Drivers of Ports in India

Historic Trend for Port Traffic Growth by region

Region wise Market Share of Indian Ports

Analysis of Commodities Handled at Indian Ports

Reasons & Impact of Port Development in Gujarat A Case Study

Upcoming Capacity An Assessment

Upcoming Capacity Backlash & Resolution Upcoming Capacity Real-world examples

Conclusion

About Mantrana & Arcadis

www.mantrana.in


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Indian Ports Sector Overview

Indian trade is dominated by low value high volume commodities

Share of 1.5% of Global trade by Value & Close to 8% by Volume

Liquid & Bulk Dominates Indian Port Traffic, with following key drivers

Cumulative Refining Capacity of 193 MMTPA

Export of raw material, Iron Ore India is 3rd largest exporter

Energy Demand from Coal Fired power plants, Steel Plants & Industrial Units

Containerized Cargo would be the next growth drivers Rise in Per Capita Income would lead to higher consumption of finished goods

Gradual rise of export oriented manufacturing in India

Existing Government owned ports find difficult to accommodate growth

Cities have grown around them restricting their expansion

Commercially unattractive to handle new generation ships with large draft by way of Dredging.

Opens Opportunity for Large Scale Private Participation & Greenfield Ports

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Demand Drivers of Ports in India

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India has huge landlocked region

Large population spread with rising

disposable income

Huge investment in Infrastructure @ coast

Industrial development such as power

plants/ steel plants

LandlockedHinterland

Source: Mantrana Maritime Advisory


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Historic Trend for Port Traffic Growth by region

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In last 15 Years, Indian Port Traffic has increased 4 times. How much Stakeholders Gained from Growth?

0

200

400

600

800

1,000

1994-95

220

1999-00

328

2004-05

522

2010-11

884

StateWisePort Traffic (mn Tonnes)

Gujarat

West Bengal

AndamanNicobar

Maharashtra

Goa

Karnataka

Kerela

Tamilnadu

Pondicherry

AndhraPradesh

Orissa


Data: IPA/INA/GMB

15 yr CAGR = 9.7% `

10 yr CAGR = 10.4%

5yr CAGR : 8%

5yr CAGR : 10%

5yr CAGR : 11%

2010-11 traffic is Provisional


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Region wise Market Share of Indian Ports

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0

20

40

60

80

100%

1994-95

220

1999-00

328

2004-05

522

2010-11

884

Gujarat

West Bengal

Andaman Nicobar

Maharashtra

Goa

KarnatakaKerela

Tamilnadu

Pondicherry

Andhra Pradesh

Orissa

Source: Mantrana Maritime AdvisoryData: IPA/INA/GMB

Market Share in %/Total in mn Tonnes

In last 15 Years, Every State has gained traffic. However, Gujarat has gained maximum Market Shareincreasing from 20% to 30% & Maharshtra, Goa, Tamil Nadu and West Bengal have lost theirs



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Analysis of Commodities Handled at Indian Ports

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0

200

400

600

800

1,000

1999-00

299

2004-05

522

2010-11

884

Commodity Wise Port Traffic (mn Tonnes)

Crude & Petroleum

Iron Ore

Fertilizer

Coal

Container

Others

Source: Mantrana Maritime AdvisoryData: IPA/INA/GMB/

Traffic Driven by Refineries, With Use of SBM/SPM.Relevance & Benefit to Port is Limited

Iron Ore has influence of government policy on Export

Driven by industries. However, industries with largerequirements such as power plants look for captive Jetty

Huge Potential in Future due to rise of consumption &

Manufacturing. However, traffic dictated by shipping lines

These are distributed in lower volumes across portsdepending upon Hinterland



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Reasons & Impact of Port Development in Gujarat A Case Study

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Industries & Ports together have led to the overall Social & Economic development of Gujarat

Gujarat handles about 35% of Indias Port Traffic because theyhave developed Industries as well, which is driving port volumes

Source: Mantrana Maritime AdvisoryData: IPA/INA/GMB/


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2020 Capacity does not include plans for captive Ports /

Green Field Ports

What could be Capacity if they too come up?

Equivalent to35% of Global

Trade (2010)

0

1,000

2,000

3,000

4,000

2010-11

884

2030

3,107

Comparision Between Existing Port Traffic & Capacity Planned (mn Tonnes)

Gujarat

West BengalAndaman Nicobar

Maharashtra

Goa

Karnataka

Kerela

Tamilnadu

Pondicherry

Andhra Pradesh

Orissa

Source: Mantrana Maritime AdvisoryData: IPA/INA/GMB/Maritime Agenda

Existing Traffic

Planned Capacity

2010-11 2020


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10

1056

285

464

128

6383

44

160

18

130

97

331

109

368

57

360

46

154

Gujarat

Maharashtra

Goa

Karnataka

Kerala

TamilNadu

AndhraPradesh

Orissa

West

Bengal

Port Traffic (2009-10)

Ports Capacities by 2020

* All values are in Million Tonnes

Will the trade in these statesincrease to complement the

augmented capacities at its portsby 2020?


Data: IPA/GMB/Maritime Agenda


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Upcoming Capacity Backlash & Resolution

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Will these maritime states have enough trade volume to justify the capacity expansion by 2020?

Trade growth may not be uniform across all the maritime states

Increase in handling capacity doesnt translate into increase in port traffic

Addition in port capacity will not ensure availability of corresponding cargo

In case of overcapacity, ports will be contending for the same share of cargo

Consequently, uneven distribution of cargo volume

Some companies may perform better than others

Its the presence of industries that, ultimately, drives the port business

Augmentation in capacity is borne out of demand from thriving industries in the region

Only presence of adequate industries can justify the increase in ports capacities

Increase in port capacity will be logical only if its accompanied by industrialization


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Upcoming Capacity Real-world examples

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JNPT vs Mumbai Port Trust

JNPT was commissioned as MbPTs satellite port, to help decongest the MbPT

Over a period of time, due to better infrastructure, JNPT attracted more traffic

JNPT started attracting container share from MbPT

In the last 15 years, JNPT has grown to become the largest container terminal in India, while MbPThas been reduced to the smallest container terminal in India

Kolkata Dock System (KDS) vs. Haldia Dock Complex (HDC)

HDC, similar to JNPT, was intended as KDSs satellite port

In 2001-02, KDS handled barely 5 mn Tonnes, while HDC handled nearly 25 mn Tonnes.

Even today, HDC witnesses more traffic than KDS. In 2010-11, KDSs traffic was 12.5 mn Tonnes,

while HDCs was 34.8 mn Tonnes

Inter-port competition is a potential threat for the intended capacity expansion drive

Of the two competing ports, one is bound to lose some amount of either existing or additional traffic share


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Conclusion

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India Needs more port capacity. However, judicious planning is essential

Just Setting up port does not attract traffic

In the absence of Industries and trade growth, Ports fight for Same Cargo. Win for one port is

loss to another port..

Skewed ratio of supply and demand may render some of the expansion ventures non-viable

Be Choosy in selecting Right Investment Herd Mentality will Cost you High

Port Prospers and Rewards, if it is developed at right location with right infrastructure and

Correct market focus ------ -Else it could turn out to be Sunk Cost


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About Mantrana

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Undertakes Independent Assessment of Ports & Related infrastructure

Statistical Analysis & Primary Interaction with the Customer is the Key Methods used forAnalysis

No Room for Passionate views/ Opinions & All recommendations are driven by Numbers &

Logic

Has Association with Arcadis, A Dutch company with expertise on all technical matters

related to port.


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About Mantrana

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Thank You for Attention

Mantrana Maritime Advisory Pvt. Ltd.A-207, Sai Chambers, Plot No. 44Sector -11 CBD BealpurNavi Mumbai - 400 614.

Maharashtra, India

Landmark : Near CBD Station, Opp. IDBI Bank Bldg.

Tel : +91-22-6609 8010 / 6609 8011Fax : +91-22-6609 8013Email : [email protected] : www.mantrana.in

Demand & Supply Assessment of ports in India

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