With the trade and shipping agreements with Bangladesh and South Korea and discussions around relaxation of cabotage, marine highways, earlier referred to as coastal shipping, have taken on greater significance in the maritime sector in the recent years. Twinkle Sahita
Maritime sector has caught the attention in the recent years with the announcement by Nitin Gadkari, Minister for Shipping, Road Transport and Highways, at the Maritime Summit held in Mumbai, to invest huge amount in India’s ports sector, which is likely to help boost the country’s economy.
Significant portion of the investments is dedicated to marine highways. The Indian government plans to develop 10 coastal economic regions as part of plans to revive the country’s Sagarmala (string of ports) project. The coastal zones would be converted into manufacturing hubs, supported by port modernisation projects, and could span 300-500 kilometre of the coastline.
About 8300 square kilometre, are largely dependent on marine highways for cargo and passengers. Marine highway traffic operates in the zone between the ‘internal waters’ (base lined as the point, where the waters recede fuel can move one tonne of cargo for 24 and 85 kilometres on road and rail respectively, the corresponding distance covered through marine highways would be 105 kilometres , making it significantly more energy & resource efficient and resulting in lower emissions.
The drivers for the rapid growth of marine highways include development of new ports, which to be successful would need to connect with respective hub ports for export/ import and with other ports for domestic cargo movement.
Prime Minister Narendra Modi’s ‘Make in India’ campaign would generate cargo for exports and domestic movement. Further, the need to move bulky over-dimensional (ODC) cargo for the windmills, power plants and oil exploration projects to support the growing infrastructure needs, would drive demand. Recently announced government subsidies to shippers under the scheme for incentivising modal shift of cargo (SIMSC) for cargo, containers and vehicles would also contribute to the need for the same.
“There are around 125 vessels deployed on India’s marine highways presently, which include during the lowest tide) to the zone with ‘smooth/partial smooth waters’, where the waves are of a height up to 2 metres. This is within the territorial waters of India, within 12 nautical miles from the baseline. To make the marine highway system work, service providers need to work towards a seamless flow of cargo between road & sea, rail & sea and inter-operate with inland waterways and international feeder operations,” says Niraj Narsaria, CEO of Global Ocean Group.
The present coastal cargo profile comprises largely of petrol, oil lubricants (POL), iron ore, pallets etc besides coal and fertilizers. These are mainly nominated for the government/PSU and captive private sector use. There is a significant potential for new cargo by enticing modal shift from road/rail to marine highways. For cargo originating closer to the west coast, these could include industrial and finished products like steel, tiles, cars cement and also marble, fertilizers and food grains. For the east coast, these could include bulk and minerals like silica, bauxite, manganese and limestone besides cars and engineering good from the south. For containerised cargo, the market size for coastal shipping along with international feeder operations is estimated to be around $500 million in value and about 1.3 million TEU (twenty foot equivalent units) in volume annually and is expected to grow at over 20 percent per annum.
Highways play a strategic role in the development of an economy and are equally crucial for the connectivity to the ports. Golden Quadrilateral, launched in 2001, is a network of highways connecting India's four top metropolitan cities, namely Delhi, Mumbai, Chennai and Kolkata.
“Golden Quadrilateral is one of the key highway projects that will help marine sector in a great extent. All other major highways which connect to ports need overhauling and better infrastructure,” informs R. Jayakumar, chairman, Jayem Logistics.
Marine highways have mere 6 percent modal share in India, compared to majority transported by road and rail because of challenges infrastructural and regulatory challenges. Infrastructure related challenges include shortage of handling facilities for coastal vessels at ports, high port charges, draft at smaller ports, and connectivity among ports and inland rail/road connectivity with the hinterland. Regulation and taxation related issues include cabotage, tonnage tax, high import duties of bunker, personal income tax for the crew, customs issues. Further, lack of formal coordination among sectors (rail-marine-roadair) and administrative requirements, create challenges in providing ‘door-to-door’ multimodal service.
“In past fifteen to twenty years, India’s logistics landscape has changed. New concepts like logistics parks, Free Trade Warehousing Zones, modern Hi-Tech ports and world class warehouse facilities are changing the perspective of logistics industry. Technology has equally played a major role in quality performance, better visibility, and faster clearance and on time deliveries,” adds Jayakumar.
Logistics parks are another key factor which will redefine the shipping and ports sector. Again these logistics parks have to be connected with major highways and ports for ease of access and better coordination.
Amidst all this, inland waterways and marine highways evolving role cannot be neglected.
The government is also looking to develop the inland waterway sector as an alternative to road and rail routes to transport goods to the nation’s ports and hopes to attract private investment in the sector.
As service providers using marine highways seamlessly integrate their services with feedering for International operations and inland waterways for the domestic operations, it would become the lifeline for emerging ports and a differentiator for hub-ports.