New Berthing Policy for Dry Bulk Cargo for Major Ports in Place from 20th August 2016

Ministry of Shipping has formulated a new Berthing Policy for Dry Bulk Cargo for all Major Ports which will come into effect from 20th August, 2016. The objective of the new Berthing Policy is to:

Provide a standardized framework for calculation of norms, specific to the commodity handled and the infrastructure available on the berth

Design norms with the objective of driving higher productivity and achieving near-design capacity of the available equipments/infrastructure in order to:

Reduce berthing time & overall turn-around time of ships; drive higher cargo throughput using the available infrastructure in the Major Ports.

Improve utilization of port assets and create additional capacity without any significant capital investment.

Increase competitiveness of the Major Port by creating value for the trade through reduced logistics cost.

Reassess the capacity of the berths based on the expected performance of the berth equipments and vessels derived from performance norms.

Standardize anchorage charges across Major Ports to reduce turnaround time.

All the Major Ports will be holding trade meetings between 1st July to 18th July, 2016 to sensitize the norms, incentives, penalties & charges to be implemented. The policy will be implemented by all Major Ports by 20th August, 2016.

Background

Dry bulk cargo currently makes up >26% of the cargo handled at the 12 major ports. Furthermore growth in coastal shipping is expected to add ~100-150 MMTPA of additional dry bulk cargo at ports by 2020-25. Recent benchmarking of ports' performance across key dry bulk commodities has identified significant scope for improvement of productivities in-comparison to best-in-class peers. The low productivity has contributed to high turn-around times in addition to resulting in higher berth occupancy levels across major ports. Furthermore, low productivity prevents ports from being able to utilize the full capacity of exiting assets, thereby directly diminishing return on investment for ports. Significant productivity improvements are therefore necessary at major ports not only to ensure additional dry bulk cargo throughput, but also for avoidance of CAPEX in additional capacity creation.

Performance norms and penalties linked to performance norms are used by most international ports to improve overall productivity of operations. For instance, major international coal loading ports such as Newcastle and Dalrymple Bay specify number of hatch changes and draft surveys, de-ballasting rates as well as overall productivity with provisions for denied berthing and/or penalties. Penalties linked to non-compliance with productivity norms are also levied by ports to create the right incentive/dis-incentive structure and improve performance.

Currently, however in many major ports it has been observed that performance norms are not being used optimally to improve productivity. Furthermore, currently, there is no standardized, systematic method for arriving at norms for different commodities. Also, in cases where norms have been prescribed, it is observed that these norms do not utilize the entire capacity of the best available equipment on berth. A guideline for calculation of performance norms for different commodities, taking into account the infrastructure available, is therefore important for enabling ports to use performance norms as a key lever to drive productivity improvement across ports.

This is another important step towards the overall objective of improving efficiency at Ports to reduce logistic costs and provide an environment which promotes domestic manufacturing sector creating employment opportunities and at the same time helps reduce consumer costs for edible oil, power generated by thermal coal transported through coastal shipping route.

Powered by Capital Market - Live News