Govt. targets 120 mn tonne capacity addition in ports

Operating margins to increase to 44 per cent from 39 per cent during 2015-16

An increase in the capacity addition comes despite the government lowering its freight target for ports this year

Union Shipping Minister Nitin Gadkari has set an ambitious target of capacity addition at 12 major ports by 120 million tonnes in 2016-17. These ports had added the highest-ever capacity of 94 million tonnes in 2015-16.

Mr. Gadkari has asked shipping ministry officials to aim for awarding new projects to add capacity of 180 million tonnes in the major ports over 2016-17, and ensure that new capacities for 120 million tonnes become operational during the year.

Operating margins

As per the targets, the operating margin for the major ports is set to increase to 44 per cent, compared to 39 per cent during 2015-16. The operating margins in 2014-15 stood at 35 per cent. The Minister has also directed officials to ensure that that overall operating margins increase by five percentage points compared to the previous fiscal, with the condition that no major port reports an improvement of less than one percentage one, according to a ministry note reviewed by The Hindu .

“There is a significant focus of the government on improving operations. The target of improving the operational margin by 500 basis points is desirable but will also be a challenge. It is worth appreciating that the government is working on improving operational efficiencies of Shipping Corporation of India, Dredging Corporation of India and Cochin Shipyard,” said Hemant Bhattbhatt, Chief Executive Officer, HMSA Consultancy Services LLP.

As of March 2016, the total capacity of major ports increased to 965 million tonnes from 871 million tonnes in March 2015.

An increase in the capacity addition comes despite the government lowering its freight target for ports this year compared to the previous fiscal year’s targets. As per global standards, ports should utilise 70 per cent of their capacity, with the remaining capacity being idle to drive efficient operations and to avoid delays in turnaround time or evacuation of cargo, Mr Bhattbhatt said.

Cargo targets

The cargo handled by the major ports increased by 4.3 per cent to 606 million tonnes in 2015-16 compared to 581 million tonnes a year ago. The major ports failed to achieve the target of 695 million tonnes set by the Shipping Ministry for 2015-16 prompting a scale down of targets for 2016-17 to 644 million tonnes. The 12 major ports—Kandla, Mumbai, JNPT, Marmugao, New Managlore, Cochin, Chennai, Ennore, VO Chidambaranar, Visakhapatnam, Paradip and Kolkata (including Haldia) — handle more than 60 per cent of the country’s cargo traffic.

“The targets are fixed keeping in view the global trends and past performance of ports in previous years. The views of the port (officials) are also taken into consideration while deciding the targets,” Union Minister of State for Shipping Pon Radhakrishnan said in a written reply in the Rajya Sabha earlier this month. The Minister said that four ports could not meet cargo handling targets due to various reasons such as an embargo on handling dusty cargo, reduction in exports and an economic slowdown.

The government also plans to award projects worth at least Rs 2,000 crore towards inland waterways development, known as Jal Marg Vikas programme, in 2016-17. “Projects in the inland waterways have not picked up and to set a target ensuring that all projects in waterways development programme are awarded sounds ambitious,” Mr. BhattBhatt added.