Searching for a better port

Coastal shipping is the perennial favourite of academicians keen to identify a topic worthy of study. There is hardly a chamber of commerce in the country that has not held a seminar on it and innumerable study groups appointed at various times have given a series of ecommendations for its growth and development. It is perhaps because of this overkill that coastal shipping still continues to languish.

Consider the facts. Coastal tonnage in India is barely 13 per cent of the total fleet and the share is actually declining. More than 50 per cent of the coastal fleet is more than 16 years old and nearly 28 per cent of it is above 20 years of age. While rail transport accounts for nearly 57 per cent of traffic moved and the share of road ways is 41.6 per cent, coastal shipping carries barely 1.5 per cent of tonnage within the country.

And yet, in theory at least, coastal shipping has nearly everything going for it. It is by far the cheapest mode of transport on offer, the comparative unit cost for transportation being Re 1 as against Rs 2 by rail, Rs 5 by road and Rs 15 by air.

It is also the most energy-efficient means of transportation and needs no capital expenditure for infrastructure development. When one remembers that the Golden Quadrilateral is expected to cost about Rs 60, 000 crore, the advantages of a system which relies on waterways gifted by nature and which does not need any capital intensive infrastructure to be created in advance, become apparent.

While a number of well-intentioned prescriptions have been written for the growth and development of coastal shipping, most of them do not address the main problems the industry faces.

Typical is the demand from arm-chair analysts that government should give special incentives for coastal shipping and, if possible, give it the status of infrastructure. This demand actually cuts at the very root of the main USP of coastal shipping.

We argue on the one hand that coastal shipping is the most cost efficient method of transportation, and in the very next breath demand that it should be given concessions that other industries do not get.

This shows a strange lack of consistency. Equally illogical is the demand that major ports should reserve berths especially for coastal vessels. Such a demand may have had some relevance in the days when pre-berthing detentions were the order of the day and most vessels factored in a delay of several days because of congestion in Indian ports.

Following the addition to capacity in major ports, pre-berthing detention is a thing of the past. Now berths wait for ships instead of the other way around, so the rationale behind that demand no longer exists.

Originally, manning scales for all vessels were laid down in the Merchant Shipping Act itself and no distinction was made between international voyages and coastal voyages. On an international voyage a ship must frequently go for three weeks at a time without the sight of land.

In a coastal voyage on the other hand a vessel is rarely more than three hours away from the nearest port. To prescribe the same manning scale for both vessels, therefore, was clearly unjustified. The problem was solved by an amendment which took manning scales out of the Act and allowed the government to prescribe different scales for different voyages.

Now coastal lines must negotiate appropriate manning scales with the DG Shipping, and, more importantly, with seafarers' unions. The latter may be inclined to demand large crews as in the past but when it is pointed out that the choice is between having a lean manning scale or seeing the demise of coastal shipping, there is every likelihood that they will see the logic of the argument.

Although congestion at major ports is no longer a problem, these ports will still not be the answer to the needs of coastal shipping. This is because major ports have, over the years, become islands of high cost.

An industry that must attract traffic through its competitive freight rates cannot possibly afford the charges levied by major ports. Coastal shipping does not need berths to be reserved for it at major ports where astronomical costs will be charged and where vessels cannot move out without clearance from Customs.

It needs instead a string of small ports at suitable locations along the coast. Outlay on the construction of such ports should ideally be low so that port charges are not jacked up to amortise huge capital costs.

Every such port, however, should have excellent multi-modal connectivity with the hinterland. Goods once landed at these ports or destined for them from the interior must move easily and without great expense.

Only then will we be able to leverage the cost advantage that coastal shipping has over other forms of transport. Most important, since these ports will cater only to coastal shipping, Customs authorities should have no role to play and should, therefore, not be present at the port.

It is here that coastal shipping requires help from government. A study to identify locations for small ports has already been undertaken. Coastal shipping lines should demand early construction of such ports.

They should also demand governmental assistance, not in the form of hand-outs to coastal lines, but through the creation of multi modal connectivity for such ports.

Low-cost ports which offer quick and efficient connections to the hinterland will do far more for coastal shipping than a string of meaningless concessions that more often than not encourage vested interests and fly in the face of the main argument that coastal shipping must be encouraged because it is efficient, cost effective and environment friendly.

It is really on these sound principles that the case for coastal shipping must be built. Here is a green alternative that can help tackle the perennial traffic snarls that are such a common feature on our roads, reduce the loss of life through accidents on our highways and encourage both low-cost ship building as well as greater employment at sea.

All over the world, what is called short sea shipping is given the highest priority in transport policy formulation not because of any ideological bias, but precisely because it is seen as the best way of de-congesting roads, eliminating pollution and accidents on over-crowded highways and reducing the enormous costs of constructing and maintaining these highways.

In Germany they have gone one step further. The state levies what is called the LKW Maut, which is a road toll imposed on lorries. The idea is not merely to give a boost to short sea shipping on oceans and waterways.

The tax actually serves an allocative function by moving the huge payment involved in constructing roads from the tax payer to the actual user. When the bills for the Golden Quadrilateral are finally presented and the dent they make in the annual budget is clear, we would do well to ponder these matters and work out ways of giving coastal shipping its place in the sun.

The author is a former secretary, shipping, in the Union Government.