Container traffic in India has outpaced the global growth rates and is expected to grow 3-4 times in the near future, which throws up unprecedented opportunities for container-specific handling equipment.
In line with global trends, India also followed suit to create more container handling facilities, at many locations, during the past decades. However, as reported by the market watchers and significant industry players, container traffic in the country is now poised for an unprecedented growth in the immediate future.
KPMG, a renowned research group, in their report Container Market in India, released in December 2015 have reported: The growth of Indian container traffic has outpaced global growth rates, thus increasing India´s share in global container trade.
Container traffic in the country has grown at a CAGR of 15 per cent as compared to 8 per cent globally, driving its share of global container traffic from 0.6 per cent in 1991 to 1.8 per cent in 2012. They have further highlighted that at $8.3 trillion, China´s GDP is approximately 4.5 times that of India´s (by value). In comparison, China´s container traffic is estimated at 140 million TEUs while that of India is estimated at 10 million TEUs, reflecting a 14 times rise in container volumes. With container traffic expected to increase at a CAGR of 6-7 per cent over the next five years, several major and non-major ports aim to increase container handling capacities to cater to growing container traffic and maintain healthy utilisation levels. Since containers traffic is huge at CSFs and ICDs, use of container specific equipment integrated with software is of the essence. Most recognised suppliers are present in India to provide high tech solutions in this high end market place.
Container handling equipment and logistics players of the industry concur with KPMG´s projections and are actively involved in ramping up their company specific deliverables, to meet the upcoming onslaught of growth.
Steep growth trajectory
Sanjay Saxena, BU Head and Vice President of Heavy Equipment Division, Sany India, comments,´With the growing demand for container handling facilities in India, the port capacity has grown over the past decade. During the period 2002-14, the container handling capacity at Indian ports increased at a CAGR of 11 per cent, from 5.2 million TEUs in 2002 to 19.5 million TEUs in 2014. However, the capacity on the West coast of India grew faster at a CAGR of 12 per cent during this period compared to 10 per cent on the East coast. Container handling capacity at the major ports of the country grew at a CAGR of 7 per cent over the period 2002-14 to reach 12.3 million TEUs. However, during the same period, the capacity at the non-Major ports grew at very fast rate of 35 per cent to Developing additional capacities in ports is a futuristic move and all portsreach 7.3 million TEUs in 2014 compared to a meager 0.2 million TEUs in 2002. Mundra has emerged as the fastest growing port followed by Pipavav, both located on the upper West coast of India. India is making a lot of efforts to increase the infrastructure at the ports and is trying to bring it at par with some of the other ports around the world.´
Praveen Waychal, General Manager - Sales & Services, Cargotec India Pvt Ltd, estimates that volumes handled by ports for EXIM containers in 2014- 2015 was 7.96 million TEUs, which was 6.74 per cent up over 2013-2014 performance. CONCOR handled volumes (domestic - 4, 89,371 TEUs and international - 26,21,385 TUEs) for 2014-15.
Government Initiatives give jet fuelled propellants to growth:
While unveiling plans worth Rs 10 trillion ($150 billion) in the highway and shipping sectors by 2019, Nitin Gadkari, Union Minister for Roads, Highways and Shipping stated that the country´s basic infrastructure is forecast to change in the next five years. The Minister stated that the Government of India has set an ambitious target to convert 101 rivers across the country into waterways to promote water transport and propel economic growth.
The government plans to establish two new major ports, one at Sagar in West Bengal and the other at Dugarajapatnam in the Nellore district of Andhra Pradesh. Prime Minister Narendra Modi has laid the foundation stone for the Fourth Container Terminal of Jawaharlal Nehru Port at Mumbai, which is expected to increase the existing capacity of the container terminal by more than twice.
The Ministry of Shipping, in collaboration with the Rajasthan government, has planned to develop an Inland Shipping Port at Jalore, Rajasthan.
The Cabinet Committee on Economic Affairs (CCEA) has approved the mechanisation of East Quay (EQ) Berths-1, 2 and 3 at Paradip Port on Build, Operate and Transfer (BOT) basis, under PPP mode, which will increase their coal handling capacity from existing 7.85 million tonne to 30 million tonne.
The government is undertaking the following measures for the ports´ capacity expansion:
Growth-enabling Budget allocations 2016-17
The Government has allocated Rs 800 crore for the next fiscal year for development of new ports and ongoing works on its national water ways project. Finance Minister, Arun Jaitley outlined his vision for the Indian port sector in his Union Budget speech; there were nods of approval from the industry. Jaitley said the Government would encourage public sector ports to corporatise. Private ports have proved that ports can be an attractive investment possibility. To enable public sector ports to attract private investments and leverage their huge unutilised land resources, they will be encouraged to become companies.
Experts commended the proposed corporatisation as a brilliant move to shake up the waning management and turn the government-owned ports consumer- and investor-friendly. The Finance Minister also announced a series of measures for modernising existing ports and building new ports along India´s East and West coasts. He said that initiatives are being introduced to reinvigorate infrastructure sector through Public-Private Partnership (PPP).
The Government of India plans to invest Rs 70,000 crore ($10.5 billion) in 12 major ports in the next five years under the ´Sagarmala´ initiative. The Government is also planning to set up low-cost non-major ports along the coastline under the Sagarmala project and has asked all the 12 major ports to accord priority berthing to such vessels and to encourage quicker movement of cargo.
All the above plans and announcements made in this year´s Budget will positively impact the growth of ports in India. As a trickle effect the associated industries will also see a major boost in growth.
Waychal opines,´The Budget would drive execution and implementation of infra projects, which in turn would boost the requirement for our equipment/services and solutions. We also expect that more spending in infrastructure segment would also mean heavy industrial activities like steel, cement would increase and that would have a spiraling effect on other businesses for growth. He adds,´We believe the allocation of Rs 2.21 lakh crore for infrastructure sector is a very crucial move to support and boost the limping infrastructure segment. Today, the speed of delivery of cargo is affected due to congestion of roads hence allocation of Rs 97,000 crore for road sector alone is a good decision in drastic improvements in this segment. Government is planning to award new road projects of 10,000 km in FY2017. In the Budget, Rs 19,000 crore is allocated for rural road development under Pradhanmantri Gram Sadak Yojana.´
In this Budget, the Finance Minister has announced a series of measures for modernising existing ports and building new ports along India´s East and West coasts. The initiatives are being introduced to reinvigorate infrastructure sector through PPP.
Myriad container handling equipment
Container handling is a complex operation.´A lot of cargo handling equipment is used to facilitate movement of cargo to and from the ship´s side and the transit shed, warehouse, barge, railway wagon or road vehicle,´ says Ramesh Babu, Managing Director, Seashell Logistics Pvt Ltd.
The deployment of both loaded and unloaded capacity equipment versions is quite extensive in India and is offered by most equipment suppliers. However, the choice lies with the end user and is dependent on the extent of container traffic handled. Similarly, many equipment categories are offered with electric or battery powered and mechanical prime movers, to suit the end user requirement or preference. Understandably, there is no brand loyalty or preference by the buyers. The equipment selection and procurement or even repeat ordering depends largely on the overall vendor capability and track record.
Leading equipment suppliers in container handling space offer a wide range of solutions to adequately meet customers´ mechanisation requirements, designed to optimise operational excellence in their areas or location specific needs. They can be broadly classified as under:
Ship to Shore
-Ship-to-Shore Gantry Crane
-Level luffing crane
-High reach forklift
-Rubber tyred gantry
-Rail mounted gantry
-Automatic stacking crane
-Empty container handler
-Variable reach truck
-Self loading and unloading side loader
-Automatic guided vehicle
´Today, our customers are looking for cost-efficiency through efficient yet economic operation in handling solutions. Kalmar is the pioneer in introducing path-breaking technologies in raising the standards of performance and setting benchmarks of productivity, reliability and efficiency. Loaded container equipment are generally 45 tonne capacity top lifter type reach stackers while empty container are equipment with around 6-8 tonne lifting capacity with stacking height of 3 or 4 high. These come is two variants, viz., side lifters and top lifter (reach stacker type). However, we have empty container handlers up to 9 high handling,´ says Waychal.
On the other hand, Shyam Pathak, Sales Director (South Asia), Terex Port Solutions, claims,´Terex Port Solutions offers the most comprehensive port-related product range in the market place. The range includes machines for loading and unloading vessels of all type and size (containers, general cargo, bulk and project cargo), transport of containers from quay to stack, stacking cranes for housekeeping in stack yards and handling containers. Our range is supplemented by consulting services, software (management, navigation, simulation, emulation) and customer services.
With these products and software in hand we offer holistic solutions for port and terminal operators. With this portfolio in hand we are prepared to comply with customer requests for manual and automated solutions. This range also allows us to supply equipment to small, medium-sized and large-scale terminals. Customers expect us to understand their business and to put a dedicated solution in front of them. It goes without saying that equipment which is capable to handle full containers is equally able to handle empty containers. Our equipment handles full containers with the exception of empty container handlers which are dedicated machines to serve empty container stacks. Here, the product name´empty container handler´ says it all. RTGs or rubber-tired gantry cranes are machines which are operated in container stacks. They receive the containers from a horizontal container transport machine like terminal tractors (Import). For export it is the other way around. Straddle carriers offer two functions which are horizontal container transport and container stacking in only one machine. Which solution is/was found depends on the terminals and their container handling strategy (required stacking density, need for space, restrictions of space, operation history, etc).´
Saxena highlights his company´s abilities,´Sany Group offers wide range of products to cater to this industry which include ship-to-shore crane; rubber tyre gantry/rail mounted gantry; loaded reach stacker/empty reach stacker; fork lift; empty container handler; variable reach truck; self-loading & unloading side loader; bulk cargo side loader and port tyre crane.´
End user perspective
Most large players present in India are handling portfolio of different types of cargo viz., containers, break bulk and bulk at sea ports, ICDs and other locations. Many are global players having long term presence in the country either directly or through tie-ups with local partners, while many are exclusively of Indian origin but having strong international presence.
All major equipment users have active plans in motion, to grow and diversify their operations.
Ramesh Babu informs,´We have expertise in handling containerised loads and we have fulfilled this service at sea ports and inland container terminals at all major ports in India. Annually we handle nearly 20,000 TEUs per annum. The equipment required in handling containerised loads are basically these equipments. The use is not limited to these equipments but mostly these equipments are used. Their specifications are not limited to some particular quantity or load. It caters to lifting of as low as 10 kg to as big as 100 tonne. Also there are wide varieties of these equipments to be used specifically for a particular requirement.´
´We, at APM Terminals Pipavav, have extensive cargo handling facilities for container, bulk, liquid cargo and RoRo vessels. A dedicated container stack yard and warehousing infrastructure ensure sufficient storage at port. The port also handles specialised project cargo. Besides, we have surplus landside and waterside for further development to meet the surge in cargo handling. We currently have a capacity to handle up to 8,50,000 TEUs of containers, 4-5 million MTs of dry bulk cargo, 2 million MTs of liquid cargo,´ says Keld Pedersen, Managing Director, APM Terminals Pipavav. He adds,´Pipavav Port also has a RoRo facility which has a capacity to handle 2,50,000 vehicles annually. The port is equipped with a stock yard for cars along with a Pre Dispatch Inspection (PDI) facility. The facility is also equipped with a mobilisation yard with a capacity to accommodate significant number of cars on the Quay. RoRo yard facility at Pipavav Port has been developed with modern facilities and well trained staff. The yard is set up in partnership with NYK Auto Logistics (India) for developing a dedicated common user integrated RoRo terminal. We have recently acquired three new cranes from China which will help to complete the vessel operations faster, reduce the turnaround time and increase efficiency and productivity. To help reduce transportation costs, enhance operational capacity for the port, inland container depots and rail operators, we upgraded infrastructure to carry double stack high cube containers. The new service is strategically intended to benefit shippers, consignees, shipping lines, rail operators, and ICDs.
Oliver Bohm, CEO, Schenker India Pvt Ltd, explains,´We handle containerised cargo at ports and ICDs. Normally we use 20´, 40´ and 40´ high cube containers for ocean freight cargo. For project/break-bulk cargo, we sometime require open-top containers and in air-freight we use the airlines or our own pallets. For the retail industry, we sometime require GoH (Garments of Hangers) in airfreight, where we use as a customised cargo equipment to send the cargo directly to stores.´
Consultation a must
It must be clearly understood that container equipment is mostly imported and very expensive and requires intensive pre-sales and aftermarket support to enable the users match the equipment capacities commensurate to their cargo handling deliverables, operational excellence and most importantly lowest possible life-cycle costs of the equipment.
All leading equipment suppliers offer consultancy and aftermarket services to their existing and prospective customers in a) equipment selection; b) world class aftermarket support; c) training or skill development and d) best of breed economy solutions.
Pathak informs,´To start with the pre-sales phases: It is very important to learn about the customer and its operations. Take a mobile harbour crane as an example. We would need to know about the kind of cargo the customer would like to load and unload, we would also need to know the quay infrastructure and the vessels he would like to serve not only now but also in the future. We would need to know even more but it shall be enough to illustrate the case. Based on this knowledge and together with the customer we can offer the ´right´ solution. Likewise, aftermarket support is quite important in order to keep the customer machine or fleet running so that the customer can serve the vessels whenever the machines are needed. Reliability and availability are quite important for customers. We help to maintain both.´ He adds,´The good news is that TPS with its comprehensive range of products can offer and supply either solution depending on customer and project needs. Finding the´right´ solution can be supported by our consulting services including simulation and emulation of the terminal. There are even more possibilities for container handling, such as automated ones.´
Waychal confirms the thought process,´Operation and Maintenance skills and capabilities are crucial differentiating factors in the present set-up of offerings. Service support is utmost essential and is seen as an important parameter while choosing an equipment partner.´ He adds,´Constant training for the maintenance and operation team is required to upgrade their competence skills in-line with changing working environment, business needs and technological advancements.´
Saxena presents Sany´s standpoint and their initiatives,´O&M is a critical area in case of heavy equipment, as proper O&M leads to maximum machine availability thus leading to the maximum utilisation and profitability. In case of the port machinery, the machine breakdown leads to severe impact on profit line, impact on the trust factor with the client and ultimately the loss. As the ship waiting demurrage charges are very high as compared to the machine cost, we at Sany always believe to keep the O&M as top of our concern and interest. Sany has set up a global training center at our Pune plant which offers basic and advanced training courses on operation and maintenance of entire range of equipment offered by us. We have also associated ourselves with Industry Body ICEMA under skill development programme of Government of India to take care of skill development of O&M crew.´
According to Pathak, safety is not linked to additional capacity but is seen as a major topic also in ports and terminal investments, whether it´s in India or in any other country in the world. He states,´We offer machines and solutions also dedicated to safety and safety regulations. Safety shall be part of the selling process you are also asking for below.´
Safety is the most important parameter one should look for in port operations, according to Waychal.´Unlike many overseas ports in Europe and the Americas, Indian ports cannot avoid the involvement of people movement in port operations due to requirement of procedures. Hence, equipment should be smart to sense this element and give warning signals to people moving around the machinery. We believe proximity sensors, rear view cameras, and spreader mounted camera are very basic requirements in ensuring the safety of people and containers around in port areas,´ he explains.
Equipment customers often ask for environmentally-friendly products to comply with regulations put in front of them. According to Pathak, TPS is a forerunner in battery-driven equipment like automated guided vehicles (AGVs). He elaborates,´There is also a need for driver assistant features we comply with, for e.g., smart crane features to make work for drivers more easy and productive. Besides manual solutions with drivers there is a tendency to automate terminal operations with regard to, e.g., container transport and stacking. It goes without saying that TPS has already completed major projects with automated stacking cranes (ASCs) and AGVs including management software and battery exchange stations for its AGV technology.´
The supply chain is a vital component, efficient planning of which can bring down costs to a great extent. According to Ramesh Babu, manufacturers are working towards leaner supply chains with lesser lead times in order to gain competitiveness in the market.´Transportation, warehousing and distribution are the critical components of the entire supply chain. With manufacturing activity increasing in the last few years, logistics has gained equal importance in order to provide better goods at lesser cost. The burgeoning Indian economy, strongly supported by increasing FDI, improved market reforms and regulations and growing consumption levels in the country has been the major driver of the logistics market. The government is investing in infrastructure to make the sector more competitive, efficient and cost-effective. But currently, the sector is highly fragmented with small players holding small units distributed across states with many challenges like: Inadequate skilled labour, inefficient material handling with outdated handling equipment, limited technology penetration and innovation, and lack of world-class standards and specifications. Fixing these problems can fuel this industry to benchmark the best practices used in developed countries,´ he observes.
Waychal responds,´Developing additional capacities in ports is a futuristic move and all ports should work in that direction. However, the challenges on the land side are at critical stages. The connectivity with good roads between ports and end customers would ensure the speed, safe delivery and lower costs which would be a mutually win-win situation. Even though we have good domestic consumption resulting in higher imports, we also need to develop export competitiveness for ensuring more and more goods are exported. Government´s´Make In India´ initiative is a good step in this direction. Once implemented, this initiative can result in higher exports and thus utilisation of additional capacities planned by various ports.´
In line with the growing trend of container traffic, major port operators and equipment players are gearing up for capacity expansion and introduction of new technologies and solutions. Says Ramesh Babu,´We would like to be the leader and trend setter in the industry. We continuously provide new solutions to our customers and exceed their expectations. We share the responsibility in our customer´s growth, which makes us a partner of choice.´
Pedersen states,´We are currently in the midst of an expansion primarily to increase the container handling capacity from 850,000 TEUs to 1.35 million TEUs a year.´ Bohm observes,´Yes, our customers will certainly benefit from the expansion of new and small ports. Apart from hinterland connectivity for our customers, it will provide more space in transit, and reduce time and cost of logistics in India. Since these ports are well equipped to handle full scale ocean freight operations, waiting time for cargo loading and unloading is much lesser than the bigger ports in JNPT.´ He goes further,´These initiatives will also help us reach the hinterland customers with more and convenient options making their supply chain more efficient. So in our opinion, once this part of the global supply chain becomes more efficient, the entire supply chain will benefit with better turnaround time and lower cost. To catch up with this initiative, we are planning to open a few more offices in the North region where there is a direct correlation with customers´ requirement in time and cost.´
While Saxena optimistically points out, ´ would like to mention that there is enormous potential in port equipment segment but still we have very less number of indigenous manufacturing in this field. The industry needs to work hard to create ´Made in India´ port machinery and harness the ample potential in coming years.´ A conducive environment backed with funds is in place for enabling the growth of container traffic in the country. Equipment suppliers and logistics companies are strategically positioned to convert their respective visions into reality.
´Developing additional capacities in ports is a futuristic move and all ports should work in that direction.´
New prospects: Sanjay Saxena highlights to help understand the projected capacity expansion plans comprehensively:
New Container Handling Projects envisaged up to 2020: