Coastal Shipping: Alternate Way
Dheeraj Gupta, Officer - Supply Chain Management, Larsen and Toubro Ltd

India having coastline of 7517 km have the potential of selecting an alternate option of road and rail transport, which have now almost crossed their limits and choked. While currently going through a tough time, the industry is cyclical by nature and has experienced many peaks and troughs in the past. Let us explore the possibility to utilise this natural resource as an asset to achieve our transport goal in a better way.

India having a long coastline is served by 13 major ports (12 government and 1 corporate) and 187 notified minor and intermediate ports.

These ports account for nearly 90 per cent (by volume) of India’s international trade. Yet, coastal shipping, which accounts for only 6 per cent of the country’s overall domestic freight shipping is a complex and volatile industry that is constantly navigating the many twists and turns of the global economy.

Shipping sector today encompasses the entire spectrum - international shipping, coastal shipping and inland waterways each charting its own navigational channels. The explosive economic growth as seen in India over the past decade has led to congested roads and overburned railway network. India has 4 million kms of roads, accounting for nearly 60 per cent of the domestic traffic of which the National Highways, which are 1.7 per cent of the network, carry as much as 40 per cent of the road freight. The Indian Railway network, one of the largest in the world is overburdened and operating at over 100 per cent utilisation. Numerous projects for upgradation are under way. These projects are unlikely to keep pace and meet the future demand.

Unlike road transport, however, coastal shipping can only be a link in a multi-modal transport chain. For coastal shipping to be viable, the multi-modal chain as a whole including the land legs should be efficient and cost-effective, a fact that is sometimes lost sight of. The India story will continue for quite some time to come and our economy will grow at a fast clip. However, road capacity is likely to be in short supply in the near future. Coastal waterways could help fill the gap. It is, thus, imperative that we divert freight from road to coastal waterways.

Congestion of Roads and Railways
The explosive economic growth witnessed in India since the turn of the century has led to congested roads and railways struggling to cope with ever increasing traffic. India has over 4 million kms of roads, the second largest network in the world. Some 65 per cent of domestic freight is moved by road. Yet, most of our roads are narrow and unsurfaced. National Highways, which are motorable with relatively greater ease account for a mere 1.7 per cent of the network but carry as much as 40 per cent of road freight. The Indian railway network too is one of the world’s largest with 115,000 kms of track over a route of 65,000 kms and 7,500 stations. The Railways carry 30 per cent of domestic freight annually. However, the network is overburdened, the condition of bridges enroute poor and signalling systems outdated restricting average train speeds around 30 kmph.

Various ambitious projects for expansion and upgradation of roads and rail networks are under way. The National Highways Development Project has just seen the completion of the Golden Quadrilateral. The North-South and East-West Corridors are under implementation and further development is planned. The National Rail Vikas Yojana, a massive railway development plan aims at reducing capacity bottlenecks, providing rail based port connectivity, constructing mega bridges and developing multi-modal transport corridors. Six dedicated freight corridors are on the anvil. These road and rail projects are, however, unlikely to keep pace with and adequately meet the challenge of economic growth in the foreseeable future.

Studies have shown that the cost of transporting goods in containers from North India to South India and vice-versa can be reduced by as much as 40-50 per cent at comparable transit times by using the multi-modal combination of rail and sea. All these factors indicate that coastal shipping has a potential area for heavy investment in the future carriage of cargo by coastal ships has several inherent advantages over road and even rail. It conserves energy, since ships are more fuel efficient than trucks. It is safer. Ships pollute the air a lot less than trucks.

Coastal shipping also reduces congestion on land and can cater to huge parcel sizes. It is estimated that coastal cargo movement in India will continue to increase. This will increase demand for coastal shipbuilding and ship repair. Domestic coastal trade is likely to assume more importance due to the slowdown in global (overseas) trade and shipping.

Despite the global downturn, Indian domestic trade is expected to remain strong and coastal shipping will retain its strong potential. According to the Government’s 11th five year plan, coastal shipping will be proved revenue worth Rs 190 crores via ship repairs alone.

The future growth of port sector in India, including those of private minor ports, hinges a lot on coastal movement and inland waterways, even though the same may not be obvious today. The rail capacity constraint across India is the right trigger for growth of this sector. Ports have to build capacities in future for coastal cargoes with its own dynamics, being different from EXIM trade.

Planning Commission has approved a Gross Budgetary Support (GBS) (at current prices) of Rs 6,960 crore for the Ministry of Shipping for the 12th Plan period. This implies a 108.5 per cent increase in GBS allocation to the Ministry during the current plan compared to 11th Plan allocation of Rs 3337.58 crore. Out of GBS of Rs 6960.00 crore approved by Planning Commission, the share of Ports, Shipping and IWT sectors are Rs 3057.47 crore, Rs 2402.53 crore and Rs 1500.00 crore respectively.