Indian ports near saturation of handling capacity: Experts

Mumbai: Indian ports need to more than double capacity to handle a surge in trade volumes as they approach saturation in an economy growing at more than 8 percent annually, a leading financial expert said Wednesday.

Sanjay Sinha, Director of Indian credit-rating agency CRISIL, said the country’s ports were using 98 percent of their entire capacity to process annual shipments of 390 million tonnes, compared to 60 to 65 percent at most ports worldwide.

“We expect the (freight) demand to continue to grow over the next 10 years,” he told a conference on ports in Mumbai, India’s finance and shipping capital. “We have to increase our capacity.” Sinha estimated the ports would need to increase capacity by 2.3 times to cope with the volume surge.

The near-saturation of ports means ships now wait up to nine to 10 hours before berthing, compared to a few hours in Singapore, while the average time to leave port after unloading was more than a day, compared to 12 hours in Singapore, he said.

The size of the parcels that can be processed was also smaller than other international ports, underlining the need for more investment in infrastructure, he added.

Slow computerisation impeded the operational efficiency of Indian ports, while wages in key ports such as Mumbai and Chennai account for more than half the cost of operation, whereas the ratio is less than a sixth at more efficient ports.

Earlier, the head of India’s largest port for container traffic near Mumbai forecast 15 percent growth in 2006 volumes, helped by an expansion of facilities.

“We will be able to increase our container traffic as we are in the process of setting up a new terminal,” Ravi Bhushan Budhiraja of the Jawaharlal Nehru Port Trust told an news agency on the sidelines of the conference. In 2005, container traffic at the port on India’s west coast grew 9.3 percent to 2.58 million tonnes TEUs (Twenty-foot Equivalent Units).

The new terminal will become operational in August and raise the port’s container traffic capacity by 1.3 million TEUs annually, Budhiraja said, or about 50 percent.

Container traffic in 2007 could grow by 20 percent, he said.

The port is likely to invite global tenders in six months for a fourth terminal, which will open in 2010, Budhiraja said.

India’s 6,000-km (3,700-mile) coastline is dotted with 12 major and 185 minor ports. The federal government manages the major ports while state governments run the minor ones.

Major ports handle 75 percent of traffic. About 80 percent of port traffic volume is in the form of dry and liquid bulk. DT