BMI View: The primary issue in Indian shipping continues to be the state of the nation's ports. Investment in the 12 major state-run facilities has not kept up with the demand engendered by rapid economic growth experienced in India over the past decade. This is leading to repeated issues of congestion at port s. I nvestment is now starting to be made, but t his may be a case of too little too late. Further more , plans to push ahead with the privatisation of the state-run facilities risk mass strikes in the sector in the coming years . An agreement was reached between the government and the port workers in March which averted a general strike, but the risk remains as privatisation plans move forward. Although we believe the move is necessary in order to compete in the long-run, in the short term the privatisation will likely see throughput lost to private ports.
Headline Industry Data
2015 port of Chennai tonnage throughput forecast to grow by 2.5%.
2015 port of Jawaharlal Nehru container throughput forecast to grow by 5.7%.
Key Industry Trends
Gateway Rail To Build Container Depot: India-based logistics facilitator Gateway Distriparks' subsidiary Gateway Rail Freight will establish its fourth inland container depot at Viramgam near Ahmedabad in Gujarat. 'This will be a terminal on the confluence of the two double stack routes between Garhi Harsaru in Gurgaon (Haryana) and two main ports on the west coast at Mundra and Pipavav in Gujarat,' said Gateway Distriparks. Gateway Rail will build the terminal with a railway siding and container yard on 141,640sq m of land. The company has secured the necessary regulatory approval from Western Railway. The facility is expected to start operations within one year.
APSEZ Bid Accepted For Vizhinjam Port Project: The Kerala state government has accepted Adani Ports and Special Economic Zone's (APSEZ) bid for the Vizhinjam International Deepwater Multipurpose Seaport project in Thiruvananthapuram, Kerala, India. The project involves building a container transhipment terminal, having an initial capacity of 600,000 twenty foot equivalent units (TEUs) annually, which can be increased to 1mn TEUs. The facility will be developed on a design, build, finance, operate and transfer basis under a 40-year contract that can be extended further by 20 years. The first phase of the public-private partnership project will cost about INR75.25bn (USD1.18bn). APSEZ plans to spend about INR24.54bn (USD383.5mn) on the project. The company is also seeking a INR16.35bn (USD255.5mn) grant. BMI notes that the Indian ports sector is steadily becoming more private sector.
Congestion-Easing Container Terminal Planned In Tamil Nadu: The state government of Tamil Nadu plans to set up a new container terminal in Ennore in order to reduce congestion caused by lorries that deliver and collect cargo from the city sea ports. The ports in the region have long suffered from over-crowding and congestion-related delays, Chennai especially. According to official sources, the terminal will be developed by the Chennai Metropolitan Development Authority on a vacant plot opposite Ennore Thermal Power Plant.
Key Risks To Outlook
The key risk to our medium-term throughput forecasts for India's ports continues to be the problem of congestion at the state-run major ports. Any further bans on dusty cargos at major ports, or an extension of the ban on mining in India, would also impact our outlook. Industrial action has also proved a problem, with container lines imposing congestion surcharges on facilities as workers have gone on strike. Signs that JNPT's fourth terminal is moving forward are positive.