Key issues in port development in India Marten van den Bossche Managing Partner Ecorys New Delhi , 8 February 2012

Six key issues port development India

1. How many ports, what capacity, where located, when developed?

2. Organising efficient operations

3. Enabling fair competition, regulate where necessary

4. Trade facilitation: organising efficient information exchange

5. Short sea shipping as sustainable alternative for road and rail

6. Developing ports as international connection nodes in structural

economic development

Key issue 1: How many ports, what capacity, where located, when developed?

• Poor port performance: less exports, more expensive imports, less economic growth

• What you see today is not what you will get! At least 2/3 of Indian port capacity needed is not yet realised.

• There will be a need for 4-6 principal Indian ports, at strategically chosen locations.

• International examples: container ports of > 1 million TEU in NW-Europe, US & Canada, China and India

Main container ports in Hamburg-Le Havre range (NW-Europe)

Hamburg 7.9 MTEU Bremen/Bremerhafen 4.9 MTEU Rotterdam 11.1 MTEU Antwerp 8.5 MTEU Zeebrugge 2.4 MTEU Le Havre 2.4 MTEU (Containerisation International 2010)

Main container ports in US & Canada

Vancouver 2.5 MTEU Seattle 2.1 MTEU Tacoma 1.5 MTEU Oakland 2.3 MTEU Los Angeles 7.8 MTEU Long Beach 6.3 MTEU Montreal 1.3 MTEU New York/New Jersey 5.3 MTEU Virginia 1.8 MTEU Charleston 1.4 MTEU Savannah 2.8 MTEU Houston 1.8 MTEU (Containerisation International 2010)

Yingkou 3.3 MTEU Tjianjin 10.1 MTEU Dalian 5.2 MTEU Qingdao 12.0 MTEU Lianyungan 3.9 MTEU Taicang 2.2 MTEU Shanghai 29.1 MTEU Ningbo 13.1 MTEU Xiamen 5.8 MTEU Shenzhen 22.5 MTEU Guangzhou 12.6 MTEU Hong-Kong 23.7 MTEU (Containerisation International 2010)

Main container ports in China

Main container ports in India

Mundra 1.1 MTEU Jawaharlal Nehru 4.8 MTEU Chennai 1.2 MTEU* (Containerisation International 2010, *2009)

Key issue 2: Realising port efficiency International KPI’s for containers and bulk

• Best port performance will be achieved in competitive environment for terminal operations

• Monopolistic market situation tends to deliver lower KPI’s • Some caveats:

– Situation specific: comparison with care – OD/transhipment specific – Dependent on local berthing and terminal conditions – Climate specific – Scale specific – Ship size specific – Etc.

Port performance

• Container crane output (in boxes/hour)

0 5 10 15 20 25 30 35 40 45

Bremerhafen (2007)

Antwerp (2007)

Mundra (2010)

Hong-Kong (2010)

Singapore (2010)

Chennai (2009)

Shanghai (2010)

Durban (2010)

JNPT (2010 estimate)

Maputo (2009)

boxes/hr

Source: Container productivity at New Zealand ports, Ministry of Transport, 2011

Port performance

• Container quay throughput (in TEU/m)

0 500 1000 1500 2000 2500 3000

JNPT (NCICT 2010)

JNPT (GTI 2010)

Singapore (2006)

JNPT (JNPTCT 2010)

Mundra (MICT 2010)

Rotterdam (2006)

Pipavav (APM 2010)

Mundra (AMCT 2010)

Kandla (ABG 2010)

Source Indian ports: Port efficiency change in container handling terminals: a case of ports in JNPT-Mundra range of ports in India, A. Bhatt &P. Gaur, 2010 Source Singapore and Rotterdam: Containerport Markets in the Middle East and South Asia to 2020, Ocean Shipping Consultants Ltd, 2007

Port performance

• Iron ore export terminals loading rates (ton/hr)

Source: Global iron ore load ports – information handbook, Wilhelmsen Ships Service, 2008

0 2000 4000 6000 8000 10000 12000

Ponta Ubu

Dampier

Saldanha

Ponta da Madeira

Tubarao

Port Hedland

Guaiba

Murmugao

Paradip

Orissa

Kakinada

ton/hr

Key issue 3: Fair competition, competent regulation

• Best practices: integrated transport master plan (Europe: TEN-T, China), including a master plan for Port development: locations, capacities, timing

• Government tasks 1. enable fair competition 2. basic infrastructures at strategic locations 3. ensure nautical safety 4. ensure public access

• Regulatory framework: assign regulatory roles to proper

government levels (national, state, local), and specific autonomous bodies if necessary

• Design proper roles between public and private parties: landlord model, PPP vs classical procurement models

Choice model on presence and type of port competition and its respective regulatory needs

More ports serve same hinterland?

More ports compete for same cargoes?

Competition between operators in the port?

Competition between ports

yes

yes

no

no

Strict governmental control Is needed, ensuring: -Efficient port operations -Fair tariffs -Optimal public benefits

Competition will ensure: -Efficient port operations -Fair tariffs Government should regulate conflict arbitration and level playing field

no yes

Cargo is captive?

Port competition matters! - Some port tariff comparisons

0

50

100

150

200

250

300

350

NW Europe US Asia

high

low

Comparison EU, US and ASIA

0

20

40

60

80

100

120

140

160

NW Europe S Europe

high

low

In USD/TEU In EUR/TEU

Comparison NW-EU and S-EU

Source OSC 2005 Source ECORYS 2007

Negative impacts of lack of intra- and/or inter- port competition

• Higher handling fees due to monopolistic market

conditions

• Less efficient terminal and port operations, longer waiting times for ships, longer dwell times of containers, less efficient use of space

• Wrong investment choices

• Higher costs of living for the communities that depend on the port.

Key issue 4: trade facilititation through improved data handling in ports

• International EDI-developments show: without guidance no uniform systems

• Once established and invested in: reluctance to change

• Systems in ports to be connected to EDI of other authorities and part of integrated trade facilitation policies

European ports: without guidance heterogeneous use of IT systems and data storage in ports

02468

101214161820

Electronically Electronically &manually

Manually No input &storage

Main data received by AIS in Europe

• Source: database of 40 EU-ports, Ecorys 2007

Main data received by AIS

52%59%

48%48%48%

37%44%

37%44%

41%37%

30%26%

37%22%

33%22%

0% 10% 20% 30% 40% 50% 60% 70%

MMSI Call sign

IMO number Length and beam

Type of ship Location antenna

Ship's position Position Time stamp

COG SOG

Heading Navigational status

ROT Ship's draught

Hazardous cargoDestination and ETA

Route plan

Fixed information

Voyage information

Key issue 5: the short sea shipping potential

• Short sea shipping in Europe (Source Eurostat): –2009: 978 million tons of freight (intra-EU and domestic

shipping) –2009: 3,333 million tons of maritime freight overall

• Important solution for logistical flows: EU, Vietnam, US

• Main Bottlenecks –Service levels (ships, terminals, intermodal connections),

frequencies, specific OD characteristics –Traditional stance of shippers

• Best practices in removing those bottlenecks

–Examples: Promotion of SSS in Europe

Promotion of SSS in Europe

• Specific attention in EC white papers on transport • Marco Polo programme: aimed at financial support to launching

multimodal transport links (incl. SSS). • Risks: distortion of competition, taking away cargo from existing

multimodal transport services instead of taking cargo away from road.

• Motorways of the Seas: aimed at improving maritime infrastructure to facilitate SSS

• Position of ports in TEN-T network • European Shortsea Network (www.shortsea.info): European

network of country offices for SSS promotion, positioned close to market parties.

Short sea shipping as solution for Vietnam

90% of trade flows between North and South via short sea shipping: rapid growth

Vietnam’s population density(proxy for economic activity)

Vietnam’s key logistics-intense regions

Red River Delta

Southeast

North-South trade

Key issue 6: Ports and corridor development

• Port are nodes in networks instead of goals in themselves • Performance strongly related to hinterland connections

• Capacity hinterland connections needs to match capacity of the port

• EU: position of ports in TEN-T network; new corridor approach

• Various African ports have dedicated corridor development agencies aiming to develop ports in conjunction with hinterland transport corridors: • Maputo corridor logistics initiative • Dar es Salaam corridor group • Walvis Bay corridor group

• Example in India: Delhi-Mumbai corridor

Example: TEN-T priority axis 18 Rhine/Meuse-Main-Danube inland waterway axis

Source: TEN-T priority axes and projects 2005

Example: TEN-T priority axis 24 Railway axis Lyon/Genoa-Basle-Duisburg-Rotterdam/Antwerp • Source: TEN-T priority axes and projects 2005

• Crossing national borders

• Connecting economic centres

• Multimodal solutions

• Not only infrastructures: also strategic dry ports

• Ports are part of corridors

Summary of the six key issues

1. How many ports, what capacity, where located, when developed?

2. Organising efficient operations

3. Enabling fair competition, regulate where necessary

4. Trade facilitation: organising efficient information exchange

5. Short sea shipping as sustainable alternative for road and rail

6. Developing ports as international connection nodes in structural

economic development