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Chennai, July 31, 2000
The shipping industry can be classified
as overseas, off-shore or coastal shipping. Overseas shipping involves
movement of cargo vessels between two or more countries. Off-shore shipping,
as the name implies is generally for movement of men, material and essentials
to oil rigs in deep-sea and accounts for less than 3 percent of the total
shipping activity.
Coastal shipping refers to shipping
of goods from one port to another within a country. Although India has
a long coastline of over 5,700 km, only 7 percent of the total maritime
trade is contributed by coastal shipping. In 1960, the coastal tonnage
in India was 0.34 million Gross Registered Tonnage (GRT) distributed over 101 ships, while in 1999
it had only marginally increased to 0.44 million GRT of 94 ships. In 1997-98,
the coastal traffic was around 22.6 million tonnes in terms of volume.
Coal was the major cargo with a share of 63 percent, followed by crude
oil and petroleum products with 23 percent and iron ore/pellets at 12 percent.
The share of general cargo in coastal trade has declined from about 40
percent in 1960 to 1 percent at present.
The several advantages offered by
coastal shipping should have made it a preferred mode of transport. Coastal
shipping is definitely a cheaper option compared to road or rail movement
due to better economies of scale. A cost analysis on the fuel cost incurred
to move general or bulk cargo from Mumbai to Goa revealed that the cost
of fuel by the sea route was nine times lower than by the road route.
The ability to move large volumes
in a short period gives coastal shipping a distinct competitive advantage
over other modes of transport. Huge quantities of cargoes like coal, iron-ore,
crude oil, petroleum products etc can be shipped to consuming areas effectively.
For instance, Reliance industry can move petroleum products from its 27
million tonnes refinery at Jam Nagar (Gujarat) to various other ports on
the west and east coast. Likewise several thousand tonnes of coal required
for thermal plants near ports like Paradip, Tuticorin and Vizag are being
supplied through ships.
Coastal shipping is also environmentally
friendly, since the movement of polluting and hazardous products through
densely populated areas can be avoided. Since the environmental rules and
pollution control norms are getting more stringent, road transport would
become costlier.
The stock loss in road and rail transport
is higher because of the smaller parcels and the possible risks of theft
and pilferage. The large shiploads lead to lower losses and on a sea voyage
and pilferage can be minimized or even eliminated with effective control
systems in place.
The Indian coastal shipping industry
has not been able to realize its potential since it suffers from several
limitations and problems. Some of the major hindrances are listed below:
Lack of a long-term governmental
policy is blamed for the stagnation in coastal shipping. When the government
introduced the Multimodal Transportation of Goods Act in 1993, it did not
include coastal shipping in the Act. This was quite surprising, since multimodal
transport signifies movement of goods by tow or more modes of transport.
However the government is trying
to do its bit for this sector. The proposed Sethusamudram canal is among
the major government initiatives that can catalyze coastal shipping. It
involves deepening of the Gulf of Mannar by capital dredging at a cost
of USD 1-2 billion and expected to take 5-7 years. The canal, once operational,
will cut down the distance between east and west coast of India by 400
nautical miles, thus resulting in lower costs. This project will lead to
increased coastal shipping activity, since ships would not be required
to travel around Sri Lanka. One survey estimates a potential traffic of
about 50 million tonnes through the proposed canal.
The ninth Five Year Plan Working
Group on Shipping has recommended augmentation of the Indian coastal fleet
to around 1 million GRT by the end of the plan period, that is, March 31-2002.
In July 1998, the Ministry of Surface Transport set up an expert committee
to draft the Coastal Shipping Act. By March 1999, the Committee had submitted
its report, proposing enactment of a separate Act for coastal shipping
and extending fiscal benefits to the sector for speedy development.
Coastal shipping also has some inherent
drawbacks. For instance, coastal movement of cargo would be commercially
viable only above a certain minimum haulage distance and parcel size, depending
on the type of cargo. Companies such as L&T, Essar and Gujarat Ambuja
have been able to achieve a competitive logistics, since they are able
to offer the required volumes.
Despite some demerits, it is clear
that Indian trade and commerce will stand to immensely benefit from coastal
shipping. But the major problems will have to be addressed and solutions
found without losing further time. First and foremost, coastal transportation
needs to be integrated with other forms of transport namely road, rail
and air. It is important that coastal shipping becomes an important link
in the mutimodal transport network for which private sector investment
and a supportive governmental policy are essential requirements.
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