Week ending February 25, 2003

News on Shipping

Maersk to launch weekly service to US West Coast : Maersk India Pvt. Ltd. is launching a weekly service, which will connect India to the Far East and the US West Coast. The first call at Nhava Sheva (JN port container terminal) will be on March 4. The service will touch Colombo, Tanjung Pelepas (Malaysia), Hong Kong, Yantian (China) and Kwangyang (South Korea) en route to Los Angeles. On its return trip, the service will touch Shanghai and Jebel Ali (Dubai) among other ports of call. The service, which will deploy nine vessels of around 4,000 TEUs, will provide customers with a direct connection to the Far Eastern countries as well as the US West Coast. While the transit time on the Nhava Sheva - Hong Kong leg will be twelve days; the Nhava Sheva-Los Angeles leg will take twenty-seven days.

P&O Nedlloyd sets up a new testing centre : P&O Nedlloyd, a leading international shipping line, is setting up a new hazardous cargo back-end facility in Powai, Mumbai, which is expected to begin operations in April 2003. The proposed centre will focus on back-end operations for clearing hazardous cargo. The company has already set up a business and quality testing centre at its Pune location, alongside its existing India Shared Service Centre (ISSC) and Systems Support Centre in Pune, which is handling day-today back office systems and systems operations. The new service is part of the US $ 4.5 billion global shipping and logistics major's efforts to have a centre, which will manage new generation systems, instead of migrating them here from elsewhere. The company is also setting up its second business process outsourcing centre - for disaster recovery at Chennai, where it already has a BPO presence.

News on Ports

Paradip port seeks land for import, storage and processing of timber : Paradip Port Trust (PPT), which handles about 24 million tonnes of cargo per annum, including mainly dry bulk, liquid bulk cargo, is planning to diversify into non-traditional break-bulk cargoes and has invited applications for lease of land from interested parties, with minimum of three years of experience in trading timber/logs with a track record of having imported at least 5,000 tonnes of timber in the last three years. The land proposed to be leased will be for a minimum period of thirty years and shall be as per the provisions of the Paradip Port Trust Immovable Properties (Lands & Houses) Leasing and Licensing Regulations, 1975.

Chennai port gets floating crane from China : The Chennai Port Trust (ChPT) has procured a new floating crane worth Rs 23.54 crore from the Beijing-based China Harbour Engineering Company. The 150-tonne floating crane, "Thangam'', would replace the 120-tonne "Vaigai'', which has been in operation for 40 years. According to Mr. P. Baskaradoss, chairman of ChPT "Thangam" would handle heavy equipment and meet the requirements of industrial establishments including Chennai Petroleum Chemicals Ltd (CPCL), Madras Fertilisers Ltd. (MFL), Tamil Nadu Newsprint and Indian Oil Corporation (IOC). The Chinese firm built the floating crane as per the Indian Register Shipping (IRS) class at its shipyard in Tianjin, Port of China. The crane was towed from China to Chennai and was delivered on January 9. ChPT plans to replace seven wharf cranes at the port at a cost of about Rs 35 crore. The port authorities are also considering a proposal to allow port users bring their own small equipment.

New harbour designs needed says ChPT chief: New harbour development in the country should meet requirements of all types of cargoes, including hazardous chemicals and LNG. This needs emphasis on innovative harbour designs with offshore facilities, Mr. P. Baskaradoss, chairman of Chennai Port Trust (ChPT) stated in a presidential address delivered at the two-day national seminar organised by the ChPT and Indian Institution of Bridge Engineers (Tamil Nadu Chapter), on harbour structures - Nashar-2003 in Chennai. Mr. Baskaradoss said that ports are a dynamic system, growing and changing while the purpose for which it was constructed was undergoing sea-change. While conventionally, ports have been handling petroleum and petroleum products inside the harbours through dedicated terminals, the concept of single buoy mooring (SBM) system has now begun to play an important role. Besides with oil companies wanting to handle their cargoes at cheaper cost in the ports, are favoring setting up their own private terminals either through SBM or jetties, ports are forced to make their operation cheaper and attractive to customers. Port operations are also becoming fully mechanized from earlier labour-oriented systems, with a view to improve turnaround times of ships besides reducing costs. Port planning and design have thus, become complex, requiring coordinated efforts and expertise from all levels including planners, economists, designers, operators, ship builders, land transport agencies, funding agencies, social planners, labour unions and environmental agencies. About 50 papers were presented at the seminar on harbour design, construction, maintenance and preventive measures, repair and rehabilitation of harbour structures.

Kochi Refinery to set up SBM in Puthuvypeen : The tussle between the Kochi port and the Kochi Refineries Ltd. (KPL) over setting up of a single buoy mooring (SBM) has been nearly settled with the latter agreeing to install a SBM at Puthuvypeen, near existing Cochin port. However, negotiations are on for fixing the wharfage and other tariff rates, with KRL keen to get revised tariffs at the level existing in other ports having SBM facility. The special committees constituted by both organisations have identified the place to set up the facility. The refinery had earlier proposed Manakkodam near Cherthala for setting up the SBM at an estimated investment of Rs 600-800 crore. The setting up of an SBM outside the port limits would help the refinery to save a whopping Rs 200 crore a year, as it could bring VLCCs at the facility. However, the port objected to the proposal saying that installing a facility outside the port limits would affect the port's revenue, since 70 per cent of the port revenue comes through oil and other products. Chennai port plans to cut wharfage for CPCL The Chennai Port Trust (ChPT) has proposed a reduction in wharfage for Chennai Petroleum Corporation Ltd (CPCL) to Rs. 10 per tonne from the present Rs. 27. The reduction in wharfage charges is one of the measures taken by the Chennai port to retain CPCL, which was exploring possibilities of shifting crude imports out of Chennai port to reduce costs. Once approved by CPCL, the Chennai port would seek the approval of Tariff Authority for Major Ports (TAMP).

News on Ship Breaking

Ship catches fire at Alang yard : About six persons have died and more than dozen workers have been injured at the world's largest ship breaking yard at Alang in Gujarat. The ship - "Amina", which was parked in the yard for auction was being readied for breaking when it caught fire for reasons yet to be investigated.

News on Logistics

Punjab government to divest Conware :The Punjab government has decided to sell its entire 100 per cent stake in Punjab State Container & Warehousing Corporation (Conware) and has invited expression of interest (EOI) from prospective investors. R.R. Financial Consultants, Delhi-based financial consultants have been appointed as the global adviser to the disinvestment process. Conware was incorporated in 1995 to set up a container freight station and undertake terminal services such as container handling and warehousing and other allied activities relating to exports and imports to and from Punjab, routed through the Nhava Sheva port. A CFS was built far away from Punjab on a 27.5-acre land at Dronagiri, Nhava Sheva, near JNP at a cost of over Rs 90 crore (original estimate Rs 70.5 crore) and commissioned in August 1999 (original date was April 1998). The capacity of the CFS was 1,00,000 TEUs annually. During initial two years of operation, Conware suffered a huge loss, eroding its capital on account of heavy depreciation and the payment of interest on commercial loans. The loss continued even as the volume of business grew from Rs 4.23 crore in 1999-2000 to Rs 16.44 crore in 2000-01. In 1999-00, the container throughput was 37,799 TEUs, which increased to 1,05,480 TEUs in 2000-01. In the first nine months of 2001-02, the throughput was 1,05,478 TEUs. Thus, even at more than 100 per cent capacity utilisation has not helped the corporation achieve the break-even.

Railways freight traffic up during Apr-Jan 2002-03 :The Indian Railways have earned Rs 22,117.57 crore from their freight operations during the first ten months of the current fiscal from April 2002 to January 2003. Till January 2003, the Railways have moved 426.37 million tonnes of freight traffic, which was 7.87 million tonnes above the target of 418.50 million tonnes set for the period. Of the total earnings, coal transportation alone accounted for Rs 9,539.95 crore, foodgrains movement contributed Rs 2,620.48 crore, petroleum, oil and lubricants (POL) carriage stood at Rs 2,257.20 crore, while cement movement realised Rs 1,719.16 crore. Transportation of raw materials to steel plants contributed Rs. 937.39 crore, while movement of finished iron and steel fetched Rs 1,068.13 crore, iron ore export traffic realised Rs 498.52 crore, fertiliser traffic contributed Rs 1,080.17 crore, while another Rs 2,396.57 crore came from other goods. Given the buoyancy in freight traffic, the Railway Ministry anticipates that the current year's freight target of 510 million tonnes will be exceeded.

Railway budget likely to be up by Rs 200 crore : The budgetary plan size of the Indian Railways is likely to be pegged at Rs 12,530 crore, up Rs 200 crore from the existing level of Rs 12,330 crore. As per indications reportedly emanating from the Railway Ministry, the budgetary support from the central exchequer is likely to be however, maintained at the current level of Rs 5,840 crore given the general squeeze anticipated in the infrastructure sectors including railways. The Finance Ministry is also believed to be looking at curtailing budgetary support for infrastructure sectors from the Rs 1,34,500 crore recommended by the Planning Commission to about Rs 1,17,060 crore. In case the budgetary support is not increased, the Railway ministry would have to resort to higher market borrowings through IRFC, as the scope for increasing the internal resource mobilization in terms of raising passenger and freight rates is considered to be less likely. The Railway budget for 2003-04 is also widely expected to announce flexible pricing strategy for peak and non-peak hours in the second AC segment to keep up with the competition from the airlines.