 "Even as cargo throughput grows by 4.6%, iron-ore cargo falls in major ports")
According to a recent analysis by credit rating firm ICRA, the iron ore cargo volumes continue to slide following mining restrictions in major states including Karnataka, Goa and Orissa, as well as other policy related uncertainties like imposition of export duty.
The report further highlights, that in addition to iron-ore cargo, Petroleum, oil and lubricants (POL) and coal volume growth, remained significantly lower than overall growth in FY14 at 0.1 per cent and 14 per cent respectively, while other cargo, containers and FRM registered growth of 5 per cent, 8 per cent and 17 per cent respectively. In FY14, total cargo handled at Indian ports increased by 4.3per cent to 976 million tonnes from 935 million tonnes during FY13.
The growth was pegged down by sluggish cargo performance at the major ports which registered a meagre 1.8 per cent growth in cargo volumes to 556 million tonnes in FY14. Non major ports on the other hand b buoyed the overall growth rate by recording an 8.3per cent growth in throughput on a year-on-year (yoy) basis to 420 million tonnes.
“Non major ports, by virtue of a more diversified cargo mix and higher efficiency standards registered higher growth in cargo volumes for FY14 and 7MFY15. Non major ports, thus continue to boost the growth in overall all-India port volumes. As a result, in market share terms, major ports account for approximately around 57per cent of total throughput in FY2014 compared to 58 per cent in FY 2013, while the share of non major ports rose up to 43 per cent in FY 2014, increasing from 42 per cent during the previous year,” the ICRA report claimed.
Among the listed non-major ports, Adani Ports & SEZ Ltd, which operates ports at Mundra, Dhamra, Dahej and Hazira through SPVs, continued to register strong growth in Q2 FY15 (8per cent up to 26.6 million tonnes at Mundra; 25per cent up to 35.2 million tonnes overall) in its volumes across all cargo segments, while Essar Port Ltd, operator of bulk terminals at Hazira, Vadinar and Paradip (under SPVs), registered a decline of 4per cent in overall volumes to 12.62 million tonnes in Q2FY15 as captive cargo for the group remained subdued. Gujarat Pipavav Port Limited, operator of the Pipavav Port also registered healthy growth in its container throughput as well as bulk volumes (38per cent, 3.26 Million Tonnes).
The Indian Railways (IR) has increased haulage charges by 25-27 per cent with effect from December 5, 2014 and also imposed a 10 per cent congestion surcharge with effect from November 24, 2014 on all goods traffic, including containers, originating in all ports. Further, the terminal access charges (only for using railway terminals) for Container train operators (CTOs) have been hiked by 6.3per cent w.e.f November 25, 2014.
ICRA feels that the upward revisions would adversely affect the profitability of the CTOs, besides impacting the demand as it makes road transport more competitive, who have also benefitted recently from the cut in diesel prices. Hence, the above increase in haulage charges would lead to partial shift in the cargo traffic from railways to roads.
While the cargo growth outlook for the Indian port sector continues to be strong over the medium to long term driven by the domestic requirements of coal, for power and other sectors; crude oil, for meeting domestic petroleum requirements, some near term uncertainty may, however, be associated with particular cargo categories like imported coal, due to uncertainties plaguing the power sector and persisting delays in execution of greenfield power projects; iron ore, due to unresolved policy issues; and containers, due to the weak global environment affecting exim trade.
ICRA says that iron-ore still continues to be shrouded with policy related issues and accordingly its volumes are also expected to be modest over the near term at least. The sharp drop in prices in recent months is also expected to affect export volumes. "However, it could see some revival in the medium term as the Goa government has initiated steps to lift mining bans (13 mining leases already renewed) which has been in place since September 2012. Further, the resolution of the ongoing tariff policy related discussions to bring clarity on the tariffs going forward would be crucial for the long term cargo growth prospects at the major ports," the report adds.