Central government-owned ports such as Kandla and Visakhapatnam might be the top two in the pecking order in terms of bulk cargo that they handle. But they might soon be overtaken by the new private upstarts, which have set up ports in Mundra and Pipavav (in Gujarat) and Gangavaram (Andhra Pradesh) and are growing at a rapid pace.
Bulk cargo does not include container traffic, for which Jawahar Lal Nehru Port (Navi Mumbai) is the largest.
Mundra, Gangavaram and Pipavav taken together are projected to handle more bulk cargo (about 68 million tonnes) this year than Visakhapatnam (projected to handle 67 million tonnes), which emerged as the second largest port in the country in terms of cargo handled in 2008-09. And the gap with Kandla (targeted to handle 76 million tonnes this year), the largest port in the country for bulk cargo, is also reducing rapidly.
Vishwas Udgirkar, an executive director at PricewaterhouseCoopers says, “At the rate at which the leading private ports are growing, they are catching up with their public sector counterparts. Mundra has been recording a high growth rate. In addition, it has excess capacity, unlike Kandla. In a couple of years, it would carry at least as much cargo as Kandla does.”
Mundra, the largest private port in the country, operated by Adani Group, expects cargo volumes to go up 40 per cent over last year. A senior executive of the port informed, “In 2008-09, we carried nearly 36 million tonnes of cargo; this year, we are aiming at carrying around 50 million tonnes. Cargo volumes are growing at the port and we are confident we will achieve our target by the end of the year.”
An official spokesperson of APM Terminals’ owned Pipavav port also said: “Till the end of October this year, we have registered around 50 per cent growth over the cargo volumes we handled in the corresponding period last year. We are set to achieve 60 per cent growth by the end of the year.”
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Udgirkar adds, “Private ports have modernised cargo handling facilities and are more operationally efficient. This saves on time, which is a distinct advantage. Private managements focus on marketing products to attract more clients. Incremental traffic is thus getting diverted to these ports.”
On the eastern coast, Gangavaram (Andhra Pradesh), a public-private initiative of the state government, run by a consortium led by D V S Raju, is doing substantial business. The port, into its first year of operations, has already carried around 10 million tonnes of cargo. CFO Pranav Choudhury said: “We are expecting to do Rs 350 crore of business or 14 million tonnes by March next year.”
The projected revenues of Gangavaram port in the first year of operations look attractive when compared to the fact that Kandla had a turnover of Rs 591 crore and Visakhapatnam does Rs 580 crore of business (and is also located in Andhra Pradesh).
More important, private ports are taking away business from government ports. For instance, the Vizag Steel plant has already transferred two million tonnes of the coal it used to ship through the Visakhapatnam port to Gangavaram. Chowdhury adds: “Our port, being the deepest in the country, has facilities for anchoring large vessels up to 200,000 DWT (dead tonne weightage). Users get the cost advantage, as they can transport cargo on larger vessels and save on ocean freight expenses.”
Executives across Pipavav, Mundra and Gangavaram agree that state-owned major ports, where multiple agencies have to be engaged for varying services, compare poorly with private ports where users are offered integrated solutions which help in promoting business. A senior executive in Mundra port says, “Our focus has always been on delivering better services. We provide end-to-end solutions, which clients find convenient.”
Private ports also say they offer competitive rates to attract customers. An executive of Pipavav port concedes, “As a private port, Pipavav port offers competitive tariff in order to attract traffic. We believe that market forces should be allowed to determine tariff and that healthy competition will be beneficial to the industry.” At Mundram, port tariffs were brought down by 5-10 per cent to retain customers in the downturn. This helped in drawing more business to the port.
Also, central government-owned ports have constraints in facilities to handle more cargo. This results in pre-berthing delays. While the turn-around time at Kandla and Vizag is around 3.5 days, that at private ports are restricted to a few hours. At Gangavaram, there are no pre-berthing delays, while at Pipavav the turn-around time is no more than two to three hours on average.