In FY 14, total cargo handled at major ports increased by a tepid 2% to 556 million tonnes from 546 million tonnes during FY 13. Non major ports, however are poised to register higher cargo volume growth in FY14 of 13-15%. In H1FY14, cargo volumes at non-major ports had registered a comparatively stronger 13% growth overall from 185 million tonnes to 209 million tonnes. Thus, despite the stronger growth at non major ports, overall cargo growth at Indian ports is estimated to have recorded modest growth of 4-6% for the full year FY14.
According to Mr. K. Ravichandran, Senior Vice-President and Co-Head, Corporate Ratings, ICRA, “The growth at major ports was pegged down by a further decline in iron-ore cargo volumes following mining restrictions in major states like Karnataka; Goa and Orissa and other policy related uncertainties like imposition of export duty. Lower container and fertilizer volumes also pegged down growth at Major Ports. These declines were offset by healthy growth in coal imports, which along with the stable other bulk cargoes (solid and liquid) supported the modest growth registered.”
ICRA Research notes that during the first two months of FY 2015, the cargo throughput at major ports has registered a 5% growth over the corresponding period of previous year. The growth was supported by an increase in all cargoes except coal (-3.2%) and POL (-1.2%), at all ports. Iron ore registered volume growth of 8.2% for the first time in many quarters and containers also showed an increase of 5.6%. At JNPT and Chennai (which handle the majority of the container cargo at major ports) the increase in container volumes was moderate, with 6.8% and 2.9% increase in volumes respectively. New Mangalore (-3.6%) and Kandla (-0.4%) reported volume declines during the period, while Mormugao (24.8%), Kamarajar (Ennore, 13.9%) and Tuticorin (13.7%) reported the highest cargo growth rates. Nonetheless, Ennore and Paradip ports have bucked the trend of cargo decline, posting 48.4% and 44.9% year on year growths respectively. Lower coal volumes, affected the volumes of major bulk handling ports like Paradip, New Mangalore, Vizag and Haldia (Kolkata).
On July 31, 2013, the Ministry of Shipping (MoS) announced new guidelines for setting of tariffs in major ports. The new guidelines have come into effect from the same date and will be applicable to projects bid out since. With respect to these new guidelines, Mr. K Ravichandran mentioned “ICRA Research believes the existing private operators and major port trusts continue to be governed by the tariff guidelines of 2005 and 2008, which are seen to have certain inherent flaws. This has led to demands from existing private cargo handling firms for migration to similar guidelines which allow market linked tariffs. Separately, as a step to address the tariff anomalies vis-a-vis Non Major Ports, the ministry has circulated ‘Revised Guidelines for Tariff Determination for Major Ports, 2014’ draft. These guidelines offer some upside to the tariff of MPTs provided they meet certain performance standards, which could partially address the tariff anomalies that exist vis-a-vis Non Major Ports.”
The Ministry of Shipping (MoS) has achieved the target set for 2013-14 of awarding 30 port projects. These projects would entail an estimated investment of around Rs. 210 billion and result in capacity addition of 217 MMTPA (increase of ~27% over existing capacity of the major ports). This represents a significant increase in terms of capacity and cost over the projects awarded during 2012-13, wherein a total of 32 projects were awarded entailing a capacity addition of 137 MMTPA at an investment of around Rs. 67 billion. Among the major projects awarded during FY14, was the development of 4th Container Terminal at Jawaharlal Nehru Port Trust (JNPT), which was awarded during February 2014 to PSA International, Container Terminal at Kamarajar Port (awarded to Adani Ports and Special Economic Zone Ltd) and development of three iron ore berths at Visakhapatnam Port (awarded to Essar Vizag Terminal Ltd). These three projects together amount to a capacity of 100.5 MTPA (representing 46% of the total capacity awarded for 2013-14) and an investment of Rs. 101.25 billion (~48% of the total investment).
ICRA Research notes that the Ministry of Shipping plans to award 35 projects in 2014-15 which is expected to add 259 mtpa in capacity at an estimated investment of Rs. 137 billion. Out of these, 23 projects will be taken on a priority basis (entailing an investment of Rs. 52 billion) while the remaining have been marked as standby projects. Nonetheless, as per Mr. K Ravichandran, “the actual materialization of project awards as planned by the MoS would be a long drawn affair, given the other structural issues hampering development at major ports - such as delays in obtaining requisite statutory approvals, signing of framework agreements and non fulfillment of dredging commitments by the concerned Major Ports.”
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