Executive Summary

Sea ports are an essential strategic infrastructure which leads to export growth and
merchandise trade. As per the Review of Maritime Transport 2015, the contribution of
developing countries towards the world merchandise trade is around 40 per cent whereas India
is in the sixteenth place for its maritime infrastructure. However, India’s seaport performance is
well below the benchmark of international productivity. Therefore, an attempt is made to assess
the operational performance of ports in terms of vessel, container and total traffic handled
during the last decade. As per the results among thirteen major ports, seven ports performance
seems to be increasing but still inefficient with their existing infrastructure and other ports are
efficient ports. Therefore, the optimum utilization of the infrastructure is needed for sustainable
growth of the nation.

Types of port
Depending on a variety of factors such as location, depth, and ship sizes, ports are classified into
various types. Some of the main types are as follows:

a. Sea ports
 These are the most common types of ports around the world which are used
for commercial shipping activities These ports are built on a sea location and
enable the accommodation of both small and large vessels.

 Numerous seaports are situated along the coastline and actively handle the
ongoing cargo transactions.

 A seaport can be further categorized as cargo port or cruise port.

 Special warehouses are also constructed to store the shipment, and to

maintain the regular stocking.

 Seaports form some of the biggest and busiest ports in the world.

b. Inland Ports:

 Inland ports are ports built on comparatively smaller water bodies such as
rivers or lakes. They can either be for cargo purpose or for passengers or for
both.
  Some of these inland ports can have access to the sea with the help of a
canal system. As such ports are built on inland waterways they usually
behave like normal seaports but are not able to allow deep draft ship traffic.
Some of the inland ports can be also be specifically made for recreational
purpose allowing only small sized vessels or can be used just for ferrying
people and fishing activities.

 Inland ports are known for their quality to function in a smooth manner,
unlike the clogged sea ports.These ports can also sometimes be referred to as
dry ports, and are similar to active intermodal hubs. The inland port at
Montreal is the biggest of its kind.

c. Fishing Port:

 Fishing ports mainly donates to the commercial sphere as it participates in

fishing. The fishing activities can also be treated as a mode of recreation. The
existence of a fishing port entirely relies upon the availability of fishes in that
region of the ocean. A fishing port can be an inland port or a seaport.

d. Warm Water Port

 The biggest advantage where a warm water port is concerned, is that the
water does not freeze during the frosty winters. Therefore, it is free to
operate all year round without a temporary shutdown during the freezing
time. Such ports help to a great extent to boost the economy of the nation.

 A few notable examples may include Ukraine’s Odessa, Russia’s Vostochny

Port and Murmansk Port, Japan’s Kushiro and Alaska’s Valdez.

e. Dry Port:

 Dry ports are defined as inland terminals that can be interconnected with a
seaport via road or rail transportation facilities, and they usually act as
centers of multimodal logistics. A dry port proves useful in the trade of
importing and exporting cargo and can help to lessen the inevitable
congestion at a nearby seaport. Its functions are quite similar to that of a
seaport, with the only difference that is not situated near the coastline.
  A dry port consists of all the necessary machinery to handle the constant
clearance of shipment, like proper cargo-instrumentations, rail sidings,
storehouses, and even container yards.

f. Cargo home ports:

This type of port specializes in dealing with the activities of a cruise ships, and
provide the platform for the passengers to enter and disembark the cruises at the
beginning and the end of the journeys, respectively. A cruise home port is also
capable of providing the essential provisions required for a luxurious cruise voyage.
The supplying may vary from fuel resources to fresh drinking water, wines, foods etc.

A typical cruise home port is always congested and is buzzing with people boarding
or leaving the cruises. Some of the popular cruise home ports include Florida’s Port
of Miami and Port Everglades, and Puerto Rico’s Port of San Juan.

Similarly, Port of Call is a type of port which is paid a brief visit by a ship on voyage. It
is mainly required for necessary cargo discharge, or for carrying out essential repair
works. Many passengers can also leave the vessel at a “port of call”.

As mentioned earlier, the ships can also replenish their fuel supplies or food storage.
It serves as a stopover port, in between the home ports of a particular vessel.

g. Cargo Ports:

 These ports act according to the cargo it manages and the amenities available
differ from one port to the other. These ports are also known as “bulk ports”
or “break bulk ports”.

 Bulk Cargo: Refers to freight, both dry and liquid, that is not packaged such as
minerals (oil, coal, iron ore, bauxite) and grains. It often requires the use of
specialized ships such as oil tankers as well as specialized transshipment and
storage facilities. Conventionally, this cargo has a single origin, destination
and client and prone to economies of scale.

 Break-bulk cargo. Refers to general cargo that has been packaged in some
way with the use of bags, boxes, drums and particularly containers. This cargo
tends to have numerous origins, destinations and clients. Before
containerization, economies of scale were difficult to achieve with break-bulk
cargo as the loading and unloading process was very labor and time
 consuming. The dynamics of the break bulk market are related to
manufacturing and consumption.

 The cargo ports involve many mechanical techniques to load or unload the
shipment. A cargo port may be designed to deal with single, as well as
multiple types of products. Items such as liquid fuels, chemicals, food grains,
timber, machines and motorcars, are transported to various places,
employing the adeptness of a cargo port. Deep water ports are sometimes
used along with those cargo ports which do not have sufficient depth to allow
big ships.

 A cargo port which engages in the transfer of containerized goods is referred

to as a container port. Numerous operating terminals branch out from
individual bulk ports, and are assigned to maintain the various kinds of ship
ladings. Stevedores are the companies which act as terminal operators and
preside over the actions of the diverse operating terminals.

Port Infrastructure in India:

Sea ports infrastructure plays an important role in the economic progress of any
nation in the globalized era. The countries which are landlocked and do not have
their own sea ports, are also dependent at on the adjoining countries sea ports for
their external needs; if not, they cannot reap the economic dividend emanating from
fast economic growth. Therefore, in an age of globalization where goods and
commodities have to be transported from one country to another, efficient port
infrastructure is the key to a country’s economic success. The same is manifested in
the Indian cargo traffic profile. Around 90 percent by volume and 75 percent by
value of India’s foreign trade takes place through water transport and is handled by
maritime ports only.

In India’s logistics operations, ports not only play a crucial role in facilitating
international trade, but are fulcrum of economic activity in their surroundings are
hinterland.

In the 1960’s Export Processing Zones (EPZ) were first set up at sea ports for prompt
handling and reducing transportation cost and trade cycle time.

India is rich in maritime boundary and has a coastline of 7517 km, spread over 13
States and Union Territories, which is studded with 13 major ports and 188 non
major ports. Of all the non-major ports, about 60 ports are actively involved in
international cargo handling, and the rest are used for coastal shipping and
occasional international logistics operations. The total traffic carried by both the
major and non-major ports during 2012-13 was estimated at around 1000 metric
tonnes.

The 12 major ports carry about 76 percent of the total traffic, with Vishakhapatnam
and Kandla as the top traffic handlers, since 2003-04. However, India has a long way
to go for improving the efficiency at sea ports as it takes 21 days to clear import
cargo in India, compared to just 3 days in Singapore.

In recent years, the Government of India has liberalized and privatized the port
policy in India so as to attract private and foreign players in this sector, as there is
growing conflict between trade expansion and logistical resources in our country,
resulting in congestion, high dwell time and higher logistical cost. Under the
liberalized policy, some minor ports have been added. For example: Mundra port, in
Gujarat, which registered a cargo traffic of over 75 million tonnes per annum during
the financial year 2013-14, which is higher than that of many major ports in the
country. It can be said that the words such as major, minor or intermediate do not
have strict associations with the traffic volumes served by these ports. This
classification has more of administrative significance than commercial interests.
Traffic projects for the major and non-major ports for the period 2014-2020 are
provided below. It helps us in understanding the future needs of port infrastructure
required to meet the growing demands of the country.

Problems of Indian ports:

Indian ports suffer from several problems.

1. Congestion at India ports, poor connectivity and accessibility of mother vessels,

including major liner shipping and lack of adequate facilities for cargo handling
and stevedoring at ports.

2. Operational breakdown at many ports due to poor maintenance, substandard

equipment and excessive use of long hours for executing logistic operations.

3. even the best of Indian ports suffer from problems of navigable draft, which
means required water level for safe water transports for arriving and departing
ships due to inadequate dredging of channels is not available. As a result, large
capacity ships avoid Indian shores for commercial shipping business. Except a few
ports, majority of Indian ports do not offer night navigation facilities, leading to
queuing of ships at high sea. This creates pressure on various terminal operators
during day time.
4. In addition to poor physical infrastructure of Indian ports, they also lack back-end
infrastructure. For example: inadequate dry ports-Container Freight Stations and
Inland Container Depots-have to provide customs clearance facilities for different
types of cargos.

5. The road leading to major ports in India are narrow and congested, leading to
higher inordinate delay for cargo evacuation as well as cargo feeding of
international trade operations.

6. Even after allowing 100 percent FDI into Indian ports, investment has been a
major problem for upgradation of existing facilities. The existing Tariff Authority
for Major Ports (TAMP) rules for fixation of port tariff are discriminatory, and
have to be changed for promoting efficiency and productivity. Private terminal
operators have raised their voice against these rules several times and it is high
time that our policymakers framed rules promoting competitiveness under
transparent tariff policy.

Measures taken by Government of India to address the Port related

challenges:

Suggestions for strengthening Indian Sea Ports:

the possible initiatives that our policy makers should take in order to strengthen our
port infrastructure are first creating a single window for all regulatory and financial
clearance.

Foreign investors usually get distracted due to plethora of overregulation from

various agencies, which cause delay in port-infrastructure activities. The Ministry of
Shipping should try to bring an umbrella body for clearance of all related rules and
regulations after approval of SEZ by the Body of Approval, Ministry of Commerce.
The body should give clearance for port development, relating to licensing,
environment and conservation, safety, quality of service, dispute resolution, CFS
development etc and should act as a quasi-judicial body for faster settlement of
disputes and pending issues relating to port development in India.

Second, there is a need for labour reforms at Indian ports, especially when
stevedoring operations have been mechanized. Labor laws governing Indian ports
are archaic and outdated, and are not contemporary to current geo-economic
realities. Wherever there are initiatives for private sector investment for bringing in
 mechanized cargo handling operations, labour unions protest to such initiatives. The
Dock Workers (Regulation of Employment) Act 1948 is outdated and favours labour
rights, rather than striking a balance.

Third, there is a need for policy balance for both major and non-major ports, to grow
simultaneously although they are governed differently due to differing rules of Major
Ports Act 1963 and different State Maritime Boards. Many non-major ports have
come to a level that they are challenging major ports by means of traffic operations,
cargo dwell time, turnaround time, port tariffs and other business parameters. Ports
of Mundra, Pipavav, Dharma and Dahej are giving tough competition to nearby major
ports. However, for the balanced economic development of the country at east and
west coast, the Ministry of Shipping should have a coherent policy for all States of
India and disparities in economic incentives or benefits should be removed among
various states. This will create a level-playing field for all operators all over India.

Fourth, there is need for bringing the parity in tariff structure of both major and non-
major ports. Port tariff structure varies widely among ports and is extremely
complex. For balanced maritime development of India, port tariff charged should not
only be fair, simple and transparent but should also be based on broad banding and
scientific clustering of cargo categories. The problem is that tariffs as of now, at
major ports, are regulated by TAMP. However, non-major ports decide their tariff
rates by usually challenging the might of major ports. There should be coherence
between TAMP tariff and state maritime board rates

Fifth, there is a need for improving India’s port infrastructure to global standards.
Indian ports will have to upgrade their infrastructure to meet future traffic
requirements of a growing economy. The National Maritime Development Plan and
current traffic survey exercises being carried out across all major ports are aimed at
identifying the future port requirements, keeping in mind the commodity mix to be
handled at port. Efforts must be made that such identified projects must be executed
in a time-bound manner in order to ensure that Indian ports must match global
standards of operational efficiency by 2020 so that the dream of India as global
manufacturing, trading and services may be achieved.

The Sagarmala Programme is a strategic ₹8.5 trillion (US$120 billion or €110 billion)
investment initiative of the Government of Indiaentailing setting up of new mega ports,
modernization of India's existing ports, development of 14 Coastal Employment
Zones (CEZs) and Coastal Employment Units, enhancement of port connectivity via road,
rail, multi-modal logistics parks, pipelines & waterways and promote coastal community
development, resulting in boosting merchandise exports by US$110 billion, and
generation of around 10,000,000 direct and indirect job
Sixth, there is an urgent need to improve the hinterland connectivity of Indian ports.
The problem is that major ports are under Central Government’s authority but the
roads linking such ports are under State PWD. Rail connectivity and capacity to ports
in India is under constraint mainly due to inadequate investments, use of low speed
trains, lack of double decker freight trains, priority to passenger trains and cross
subsidization (i.e. higher operating charges from cargo freight than passengers). As
the cargo traffic from India is growing faster, a plan must be made to develop
adequate capacity for all modes of transports and cargo evacuation.

Opportunities for Indian Ports:

1. increasing scope for Private Ports:

 With rising demand for port infrastructure due to growing imports

(crude, coal) and containerisation, public ports (major ports) will fall
short of meeting demand

 This provides private ports with an opportunity to serve the spill-off

demand from major ports and increase their capacities in line with
forecasted new demand.

 Cochin Port Trust (CPT) announced measures to increase its revenue by

generating higher container traffic and increasing the number of
passenger liners. CPT is also planning to setup a small industrial port at
the southern end of Willingdon Island to boost business.

2. Ship repair facilities at port:

 Dry ports are necessary to provide ship repair facilities. Out of all major-
ports, Kolkata has 5 dry docks, Mumbai and Visakhapatnam have 2; the
rest have 1 or no dock at all

 Given the positive outlook for cargo traffic and the resulting increase in
number of vessels visiting ports, demand for ship repair services will go
up. This will provide opportunities to build new dry docks and setup
ancillary repair facilities.
  Potential market size of ship repair in India is around Rs 2,500-3,000 crore
(US$ 388-466 million) of which around Rs 1,000-1,500 crore (US$ 155-233
million) has been tapped as of 2017.

3. Port Support Services:

 Operation and maintenance services such as pilotage, dredging,

harbouring and provision of marine assets such as barges and dredgers
are expected to increase in coming years

 Increasing investments and cargo traffic point to a healthy outlook for

port support services

 These include Operation and Maintenance (O&M) services like pilotage,

harbouring and provision of marine assets like barges and dredgers.

 JNPT in Navi Mumbai signed an agreement with Development Bank of

Singapore and State Bank of India, for external commercial borrowing
worth US$ 400 million for expansion of road network connecting the
port.