Week ending October 14, 2002

News on Shipping

P&O plans mainline services from Chennai P&O Nedlloyd, the container-shipping arm of the P&O group, is planning to launch mainline services from Chennai for both US and European destinations. The timing and frequency of the service and whether P&O would go on its own or in partnership with other shipping lines are still being worked out. The proposed US service, will connect the US West Coast ports via Singapore and Hong Kong. P&O Ports, the container terminal operation wing of P&O group has recently acquired the Chennai container terminal and plans to develop it into a seaport of international standards.

Perils of FOC regime highlighted The Flag of Convenience (FOC) Action Week organized by the Cochin Port Staff Association (CPSA) has urged government intervention to check sub-standard shipping practice. Highlighting the dangers posed by FoC system, the association has called upon governments to ensure minimum labour standards in the global shipping sector. It has further pointed out that exploitation of seafarers by ship owners was on the rise worldwide and that governments should initiate joint action to check this unlawful system. The FOC action week this year was mainly focused on concluding ITF-approved agreements in vessels and to create public awareness against FOC system through seminars, rallies and meetings with seafarers and dockers.

Steamer agents plead for port modernization Cochin Steamer Agents Association has urged government to take immediate steps to procure modern equipment to improve productivity and turnaround of vessels at the container terminal of Cochin port. The association has pointed out that the average productivity at the box terminal was 70 moves per shift (225 moves in 24 hours). Whereas neighboring Chennai and Tuticorin ports achieved this in just few hours. The average turnaround of vessels at Kochi is was 60 hours, based on an average of 400 moves, while Tuticorin and Chennai ports take around 18 to 20 hours. Low productivity at Kochi is attributed to frequent breakdown of equipment, which is obsolete. As per the IPA norms, the life of port equipment is eight years, but most of the equipment in Kochi are more than 18 years old.

Star Cruise targets Indian market Star Cruises, one of world's largest cruise company, is planning to tap the out-bound tourist traffic from India. With cruises increasingly looked at by corporate as an innovative way to launch new products or reward efficient staff in their companies, the market for cruise shipping is expected to be growing in India. The steep price of cruise shipping is considered out of bound for most average Indian travelers, which range from $320 to $1,700 per passenger. To break the market barrier, Star Cruise is launching `Star Saver', a promotional package that is targeting niche segments such as corporate houses, senior citizens, honey-mooners etc. The cruise shipping s bullish on travel trends in India and is hoping to grow by 20 per cent this year. Star Cruises is part of Star Cruises Group, in which Gentings, Malaysia-based promoters have 52 per cent equity. The group reported a turnover of $1,338 million in 2002 and has registered sales of $758 million in the first six months this year.

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News on Ports

CPT measures to improve port performance Cochin Port Trust (CPT) have initiated a number of measures to improve the port performance, in terms of cost competitiveness. Mr. A. Janardhana Rao, deputy chairman of CPT, who recently presented a paper on "Improving port productivity, reducing cost and increasing port revenue" listed the planned measures, which include, implementation of another round of VRS and rollback of the retirement age, change of the pricing method of maintenance dredging contract, verification of stock items to identify non-moving, slow moving and obsolete items, strict administrative control on overtime posting, restrictions on fresh recruitment, ensuring total participation of all categories to increase cargo traffic, etc. the port. The paper noted that that CPT turnaround was important also for the economy of Kerala, as 25 per cent of the State's GDP was traded through the port. It noted that over a period, there was either only marginal increase in non- traditional cargo handled at the port, which was a matter of grave concern, which is getting diverted to the neighboring ports. The paper was presented at a seminar to mark the 57th anniversary celebrations of the Cochin Port Staff Association.

Eight bidders likely for JNP chemical terminal Larsen & Toubro, IPCL, United Storage and Tanks International, Indian Molasses Company and TotalFinaElf are among the eight parties reported to be interested in setting up new chemical terminal to be built at the JN port. The proposed terminal is estimated to cost about Rs 3,000 crore and will be handling all types of chemical cargoes and liquefied natural gas (LNG). The terminal will have a capacity to handle nine million tonnes cargo - three million tonnes LNG and six million tonnes chemicals - per annum. The terminal facilities will comprise one LNG berth, 2 offshore berths and tank farms and other facilities in an reclaimed area of 50 hectares. In the second phase of the project, four more berths and tank-farm facilities spread over another 50 hectares of reclaimed land is planned to be set up. Eight companies have reportedly purchased RFQ (request for qualification) documents, which will have to be submitted by October 30.

US West Coast port strike fallout Seven major shipping lines, calling at the US West Coast ports, have imposed a congestion surcharge of $500 per 20-foot equivalent units (TEUs). The surcharge would mainly affect those exporters sending shipment on a pre-paid (freight paid by the shipper) arrangement. For shipment sent on f.o.b. basis (free-on-board, where the buyer bears all costs and risk of loss or damage to the goods), the surcharge would however no impact as the consignee bears the cost. About 60 per cent of the shipment to the US from India is through f.o.b. basis.

Cochin Shipyard to build vessel for UAE Cochin Shipyard Ltd. (CSL) has bagged an order from National Petroleum Construction Company, Abu Dhabi (UAE) for building an ocean-going cargo launch vessel. The 130-metre long vessel, to be constructed at a cost of $8.3 million is likely to be completed by February 2003. CSL is also talking to several other companies abroad for building orders. The public sector yard is pitching to take up as much foreign building and repair orders as possible and have a diversified clientele. The CSL has recently handed over newly constructed double-hull tanker, Maharshi Parasuram to Shipping Corporation of India (SCI). The vessel, built at a cost of Rs 190 crore, was constructed in a record time of 25 months. The 237-metre long vessel has 10 cargo tanks with a capacity to carry one lakh cubic meter (cu. m) of crude oil and eight water ballast tanks for carrying 36,000 (cu. m) of seawater. CSL has also reportedly finalised the specifications for construction of two more Aframax tankers for SCI, of 1,10,000 dwt each at a cost of $38 million each. The CSL during 2001-02 has posted net profit of Rs 27.59 crore, compared to Rs 35 crore posted in the previous year.

Cargo handling up 24 pc at Kochi in first six months of 2002-03 Cochin Port Trust (CPT) has registered a 24 per cent increase in cargo handling during the first half of the current fiscal over the corresponding period in 2001-02. The port handled 66.98 lakh tonnes of cargo in the first half and the container traffic also recorded a substantial increase during the period. For the first time, the port received three railway rakes of rice (3,500 tonnes) from Haryana and Punjab meant for exports. There has been an increase in the import cargo mix, including crude oil, received at the port. During the first half of current fiscal year, 40.45 lakh tonnes of crude were discharged at the port, as compared to 30.55 lakh tonnes handled during the same corresponding period last year. There has also been an increase in the handling of fertilizer raw materials from 1.92 lakh tonnes to 2.35 lakh tonnes. Cargoes such as coal, ilmenite sand, sodium bicarbonate, raw cashew, sugar, rice, etc accounted for a total tonnage of 1,17,766. The port also handled 1,017 TEUs of sugar originating from Coimbatore.

TAMP rejects ChPT proposals on tariff hike The Tariff Authority for Major Ports (TAMP) has, in its order, rejected most of the proposals made by the Chennai Port Trust (ChPT) for increase in tariff for cargo and equipment at the port. The TAMP order has however; conceded 20 percent hike in existing vessel-related charges. The port trust had earlier proposed increases in tariff for various activities/sub-activities ranging from 25 per cent to 290 per cent. The scale of rates prescribed by the port trust was last revised in April 2000. TAMP order has also observed that port trust should consult its users at the proposal-formulation stage itself so that the likely market response can gauged at the time of formulating tariff hike proposal.

Mumbai port to get ISO 9001 The Mumbai Port Trust (MbPT) is set acquire ISO 9001:2000 Quality Management Standard Certification. The final audit for this certification was completed by Det Norske Veritas (DNV), which has recommended the certification.

TAMP rejects Tuticorin port's tariff hike plan The Tariff Authority for Major Ports (TAMP) has rejected the Tuticorin Port Trust's (TPT) proposal for a 10-per cent increase in cargo-related and vessels-related charges. Consequently, the rates prevalent since 2000 would continue to be applicable. The authority has also rejected the port trust's proposal to extend deep draft levy, applied at 50 per cent of the vessel-related charges such as port dues, pilotage and berth hire charges. However, with TAMP order, the TPT"s efforts to raise additional resources for investment in capital assets and capacity augmentation is likely to be marginally affected. In a press note TPT has said that order will lead to a reduction in collection of funds for meeting the liability on account of a loan of Rs 230 crore availed of from the Japanese Bank for Internal Cooperation in 1999-2000, for deepening the port draft to 10.7 m. Port users have however welcomed the TAMP order and have opined that in the current depressed market conditions, reduction of the levy would enhance the port's competitiveness for handling bulk and break-bulk cargo.

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News on Inland Waterways