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CMYK February - March 2013

SeaPorts BUSINESS

connecting global wealth creators

Vol. 1 Issue 3

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FACILITATING MARITIME COMMERCE

GCC Ports - Series I

State Focus

The New Logistics Hub

Koji Sekimizu IMO, Secretary-General

Ottonel Popesco PEMA President

Pankaj Kumar CEO, GMB

Stylianos Aggeloudis CEO Thessaloniki Port

Gujarat Ports

RĂŠmi Paccou Schneider Electric.

CMYK

CMYK Editorial

The Ports' Bottleneck Gateway to India's international trade, Indian ports account for about 95% (volume) and 70% (value) of India's EXIM trade. Growth projections of India's seaborne trade exceed current cargo handling capacity of Indian ports. This bottle neck at Indian ports will choke India's trade flows. All major ports are operating beyond their rated capacity, where globally 70% is considered ideal. Therefore, the proposed port projects announced in the new Budget augur well for the shipping industry. This includes the proposal to develop a new major port each at Sagar in West Bengal, and another in Andhra Pradesh, and a new outer harbour in the V.O. Chidambaranar port in Tamil Nadu through the PPP route. However, the Sagar island port project is very controversial and needs to be looked into. Former Finance Minister Pranab Mukherjee had alluded to it in his 2010 Budget speech, but the Kolkata Port had abandoned it because the project was found to be unviable. Does the current government think this project will become economically viable now? It is difficult to understand why the central government is providing funds for a project that has already been declared unviable. Chidambaram's other announcement in the Budget, of sops for India's shipbuilding industry can be welcomed without any reservations about viability. The exemption from excise duty and by extension elimination of countervailing duty should make Indian shipbuilders competitive again in the global market. China and South Korea continue to account for more than 75 per cent of the global shipbuilding market. However, in the case of Chinese shipbuilders there's a tradeoff between cost and quality in favor of cost, while South Korean shipbuilders are high on both, cost and quality. India can compete with both on fronts, cost and quality. We are a already a low-cost manufacturing hub for the global automotive market. We can replicate the same success in ship building. We have the requisite engineering and manufacturing skill sets here. All that's needed is developing the manufacturing infrastructure and government sops to foster this industry to global standards. Cochin Shipyard is a good example of this, it has built quite a few ships for European clients. The cover story for this issue is on ports in the Gulf Cooperation Council (GCC) group of countries. Their strategic location along international shipping lanes that connect the East and West and recent developments there have made them the 'New Logistics Hub.' Originally driven by the global oil trade, these ports have now metamorphosed into a logistics hub for non-oil cargo and transshipment. And their two biggest ports Jebel Ali Port in Dubai and Khalifa Port in Abu Dhabi have shown what port led development can do. Both are busy beehives of trading and manufacturing. The Jebel Ali Free Trade Zone is already expanding into its Phase II, and Khalifa Industrial Zone (KIZAD) already boasts of housing the world's biggest aluminum smelter. And the youngest SEZ there is the Ajman Free Zone which is focused on the SME segment. In fact AFZA recently had its second road show across India to lure investors to Ajman. Read this cover story and other features in this issue to send us your feedback. We appreciate it and use it to fine tune our focus so that you, the Reader, is always assured of premium fare in each issue.

Bipin Sinha Executive Editor

February-March 2013

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CMYK News Analysis

Budget The Budget 2013-14, presented by Finance Minister P Chidambaram, should be seen in the context of a difficult macroeconomic backdrop. This Budget seems to be more about fiscal consolidation rather than important policy announcements.

February-March 2013

Walking the fiscal tightrope The only important announcements for the Ports and Shipping sectors are the proposals to construct some new ports and some sops for the shipbuilding industry in the form of tax exemptions. "Two new major ports will be established in Sagar, West Bengal and in Andhra Pradesh to add 100 million tonnes of capacity," the Finance Minister said while announcing the Budget proposals for 2013-14. In addition, a new outer harbour will be developed in the VOC port (V O Chidambaram Port Trust, formerly Tuticorin Port Port Trust) at Thoothukkudi, Tamil Nadu through PPP at an estimated cost Rs 7,500 crore. When completed, this will add

42 million tonnes of capacity. The proposal to develop a new major port each in Sagar, West Bengal, and in Andhra Pradesh will add 100 million tonnes of capacity. Further, a new o u t e r h a r b o u r i n t h e V. O. Chidambaranar port in Tamil Nadu through PPP will add another 42 million tonnes of capacity. Both these measures will lead to an increase in port capacities in a phased manner over a period of 5-6 years. Considering the acute capacity crunch at Indian ports currently, the additional capacity augurs well for the ports sector, but all these capacities will come on-stream in the long run,

SeaPorts BUSINESS CMYK

CMYK News Analysis

as building ports take time. On an immediate basis, these announcements do not mean much and it will be business as usual for port companies. Stocks of ports companies like Adani Ports, Special Economic Zone Ltd and Essar Ports are still declining substantially. There are limited benefits for private players as traffic at ports continue to register moderate growth and overall capacity utilisation rates are expected to decline. Allocation of funds in the form of tax-free infrastructure bonds and low-cost infrastructure debt funds is expected to marginally benefit the sector by facilitating availability of funds for port projects.

Association of India. China and South Korea continue to account for more than 75 per cent of the global shipbuilding market. There is a price difference of 30-35 per cent in the cost of vessels produced in India as compared to China, with hardly any orders coming to Indian shipyards. The subsidy scheme was introduced in mid-1990s to help the shipbuilding industry and since then been given five-year extensions until it expired on August 14, 2007. The scheme offered shipbuilders a 30 per cent subsidy on the cost of building oceangoing merchant vessels that were more than 80m long if they were built for the domestic market.

For shipbuilders he said, "A measure of relief to the shipbuilding industry, I propose to exempt ships and vessels from excise duty. Consequently, there will be no CVD (countervailing duty) on imported ships and vessels." This will be a big boost for Indian shipyards, who have seen their global market share fall from 1.2 per cent in 2007 to 0.1 per cent in the past five years, according to Shipyards

Overall the Finance Minister seems to have succeeded in capping the fiscal deficit at 5.2 per cent of GDP in FY13 (achieved by compressing budgeted expenditure by 4 per cent) and hopes to cap it further at 4.8 per cent during FY14. While the capital expenditure is significantly cut â&#x20AC;&#x201C; by 18 per cent, to lower the fiscal deficit to 4.8 per cent of GDP in FY14 Chidambaram is betting on a revenue

February-March 2013

growth of 23.4 per cent and expenditure growth of 16.4 per cent, compared to the revised estimates for the current year. The revenue target for FY14 looks ambitious considering the fact that revenue collection has been falling below the budgeted revenue in four of the last five years, including the current fiscal, The FM may have touched upon DTC and GST in the Budget speech, but the implementation road map is missing. With an eye on the General elections in 2014 he has Focused on inclusive growth by allocating substantial amount of resources to agriculture and various welfare schemes. The Ministry of Rural Development's allocation has been increased by 46 per cent over the revised estimate of FY13. This budget has not broken any significant ground. It only seems to have spread scarce resources even more thinly across too many schemes and programs. +

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SeaPorts BUSINESS FACILITATING SHIPPING & MARITIME COMMERCE

CMYK News Analysis

Railway Budget

Hardly any gravy on Bansal's gravy train! The Railway Minister Pavan Bansal seems to have presented his maiden Budget with an eye on the forthcoming general elections. He has left passenger fares almost untouched and has hiked freight rates marginally, an average increase 5%. The cash cow for Indian Railways has always been freight. The ministry has targeted the hike in resource mobilization at only 4% of current figures. This also fails to take into account the prevailing high inflation rates and any further hike in liabilities following recommendations b y f u t u r e Pa y C o m m i s s i o n s . Therefore it wont be surprising if operating ratios go back to over 90%. The entire railway system depends on an efficient operating ratio. The previous budget had made efforts to

bring down the operating ratio of 2012-13 to 84.9%, and to bring it down to 74.7% for the entire 12th Five-Year Plan period. The previous year has seen a slippage of 4% in operating ratio to an astounding 88.8% and the target for the next financial year is marginally lower at 87.8%. Even such a measly target appears unachievable given what the minister has done to raise resources. In the last Rail Budget, Railways had predicted its operating ratio to be 84.9 per cent, whereas at present, its operating ratio is hovering around at an unhealthy 88 per cent to 89 per cent. Despite the slowing freight business and the loading target being scaled down by 18 million tonnes (mt) to 1,007 mt, the operating ratio for

The Railway Minister has failed to present an impressive Budget for 2013-14. Although it has launched many new initiatives the most important issues have hardly been touched upon. And even a marginal rise in freight rates is going to lose substantial cargo to the road segment.

February-March 2013

SeaPorts BUSINESS CMYK

CMYK News Analysis

this year is 88.8 per cent. For 2013-14, the ratio is estimated at 87.8 per cent. The operating ratio has been managed well by limiting ordinary working expenses to Rs 84,400 crore. At Rs 1,43,742 crore, gross traffic receipts are budgeted to rise 12.6 per cent over the revised estimate of Rs 1,25,680 crore for 2012-13. This is Rs 6,872 crore less than the budgetary target. The Rail Budget will address concerns of private sector with respect to recently established projects connecting mines, ports, to cities. It has allotted investments of Rs 9,000 crore, including Rs 3,800 crore for port connectivity project with freight allotment to the companies. In the 12th Plan the railway size is to be Rs 5.19 lakh crore, with gross budgetary support of Rs 1.94 lakh crore. Of this Rs one lakh crore is to be raised from publicprivate partnership, and Rs 1.05 lakh crore through internal resources in the 12th Plan. Of its total market borrowing of Rs 2 lakh crore, only Rs 10,000 crore will be allocated in the first year of 12th plan. There's talk of a Gross Budgetary Support (GBS) of Rs 1.9 lakh crore over five years, but this

February-March 2013

year and the next year, it is not more than Rs 50,000 crore. It remains to be seen how the GBS going to increase in the last three years of the 12th Plan. How is the ministry going to bridge the resource gap with public-private partnerships being a non-starter. In a growing economy, the railways have a potential of contributing up to 2.5% to the GDP. This budget on the other hand will drag the GDP down as it fails to allow movement of goods and services at a more competitive rate. The Railways must be financially sustainable, but its estimated losses at Rs 24,000 crore in 2012-13 will aggravate the situation. Therefore its plan to set up a Debt Service Fund and the Indian Railways Institute of Financial Management augur well for the railways. An independent Rail Tariff Authority has also been formalized. The railways would create a new fund to service debt from the Japan International Cooperation Agency and the World Bank. Loans from the two multilateral lending agencies would be used to fund dedicated freight corridors. However, the increased dependence on borrowings will continue. The Indian Railway

Finance Corporation expected to raise Rs 15,103 crore from the market to fund 24 per cent of the Plan expenditure of Rs 63,363 crore in 2013-14. Internal generation would contribute Rs 14,260 crore. With gloomy expectations from the Rail Budget shares of companies that benefit from Railways' investments fell an average 3.59 per cent a day ahead of the Railway Budget. Expectations of muted expenditure on railway infrastructure and the assumption that there would be no further fare hikes may have contributed to the fall. Among the worst hit companies were Kernex Microsystems, Zicom Electronic Security Systems, Titagarh Wagons, Stone India, Hind Rectifiers, Kalindee Rail Nirman (Engineers), Bartronics India and BEML. All in all by adding the fuel adjustment component (FAC) across the board on freight alone, and not touching the passenger fares, Bansal has further dis-incentivised goods traffic on railways, benefitting the + road transport segment.

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CMYK New Analysis

SCI

B K Mandal, Chairman & Managing Director, Shipping Corporation of India Ltd.

From riches to rags! Time was when SCI was a buoyant company with a lot of promise. It started out with 19 vessels and the fleet gradually grew into 83 ships of 4.6 million metric tons deadweight (DWT) with interests in ten different segments of the shipping trade. Established on October 2, 1961 SCI was an amalgamation of Eastern Shipping Corporation and Western Shipping Corporation. Two more shipping companies, Jayanti Shipping Company and Mogul Lines Limited, were merged with SCI in 1973 and 1986 respectively.

Navratna Status It has the biggest fleet among Indian shipping companies and will be taking delivery of more new vessels till end 2014. Caught between global overcapacity of shipping tonnage and recessionary head winds in global trade, SCI faces restricted cash inflows due to very low charter hire and freight rates. Staying afloat in such choppy waters is going to be tough for the company, says Satish Chavan

February-March 2013

Starting out as a marginal Liner shipping company with just 19 vessels, the SCI has today evolved into the largest Indian shipping Company. It has substantial interests in various segments of the shipping trade. SCI's owned fleet includes Bulk

carriers, Crude oil tankers, Product tankers, Container vessels, Passenger- cum- Cargo vessels, Phosphoric Acid / Chemical carriers, LPG / Ammonia carriers and Offshore Supply Vessels. Sailing steady for nearly five decades, today it has a significant presence on the global maritime map. SCI also has a 'Navratna' status listing by the Indian Government. However now, reeling under the global slowdown, the company is facing spending cuts in the recently announced Budget. SCI will be spending around 22 per cent less money in 2013-14 compared to the current year. According to the Union Budget estimates the PSU Navratna's total internal and extra budgetary resources stand at Rs 1,939 crore for the coming financial year, compared to Rs 2,497 crore spent in 2012-13. Chances of SCI surviving the

SeaPorts BUSINESS CMYK

CMYK New Analysis

recession are very strong with a new CMD at its helm. “In the Liner segment, restructuring of the services and expenditure control are being done. In the Bulk and Tanker segment, we will look forward to long term tie-up (time charter) wherever possible,” says B K Mandal, Chairman & Managing Director, Shipping Corporation of India Ltd. Money saved from the spending cuts will be used to purchase vessels during the coming year. Around 17 ships are still to be delivered to SCI, of which delivery of at least four to five are expected in 2013-14. India has a total fleet strength of 1158 ships with gross tonnage of 10.45 million, of which SCI accounts for 32.60 per cent share of total shipping capacity of the country. “SCI's presence in the Offshore segment has gone up from 2011-12 to 2012-13 and profit in this segment has gone up to the tune of 90%. SCI intends to further improve its presence in the Offshore segment and accordingly more Offshore vessels have been ordered, deliveries of which will take place in 2013-14,” adds Mandal. In view of the current glut in shipping tonnage in the global shipping industry, SCI is not going to place any new orders or acquire any existing vessels from the market this year. The company recently took the delivery of

February-March 2013

120 tonne bollard pull capacity Anchor Handling, Towing & Supply (AHTS) vessel “m.v. SCI Urja,” bringing its over all fleet size to 80 vessels with a capacity of 5.91 million dead weight tonnage. SCI has taken delivery of eleven vessels during 2012-13 and disposed off five old vessels. SCI recently handed over its anchor handling, towing and supply vessels (AHTSVs) m.v. SCI 01 and m.v. SCI 04, and a bulk carrier m.v. Lok Prem to their new owners. As a result of both these activities, the average age of its fleet is now around 10 years.

Sinking Fortunes Subsequent to SCI posting a net loss of Rs 75 crore during the OctoberDecember quarter, as against a net profit of Rs 74 crore in the same period a year ago, its shares plunged over 5 per cent a day after. Recently SCI was trading 5.2 per cent lower at Rs 48.15, and hit a low of Rs 48.15 and a high of Rs 50.65 in trade. However, for the nine month period ending December 2012 the company registered a profit of Rs 167 crore as against a loss of Rs 72 crore for the corresponding period last year. “In first three quarters ending 31.12.2012, SCI has registered net profit of Rs.167 crores. However, in the quarter ending 31st December,

2012, it has incurred a loss of Rs.75 crores. Out of three broad segments of SCI, Liner segment and Offshore segments have posted profits in the third quarter whereas the Bulk segment consisting of tankers and dry bulk carriers have posted losses. The performance of SCI is reflective of the recession which the shipping industry is undergoing presently partly due to global macro-economic factors and partly due to excess tonnage prevailing, causing a supply and demand mismatch,” explains Mandal. The long-term as well as mediumterm outlook remains negative for SCI stock now. It has closed below an important support level. Only a close above Rs 117 would change the outlook to positive for the stock. Shipping Corporation now finds an immediate resistance at Rs 72 and support at Rs 49. The country's largest shipping company also recorded a 22 per cent fall in its total revenue during the period, as the global shipping industry continues to reel heavily in the face of strong global recessionary + headwinds.

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CMYK Port Focus

Thessaloniki Port

â&#x20AC;&#x153;We have launched a customer centric policyâ&#x20AC;?

The port of Thessaloniki is strategically located to serve markets in the Balkan Peninsula. The Thessaloniki Port Authority S.A. has launched some strategic initiatives to make it a gateway for seaborne trade to the Balkans. In a freewheeling chat with Wilfred Moreas, its President-CEO Stylianos Aggeloudis, discusses these initiatives and his plan to invite private promoters to develop the port as a modern logistics hub.

Thessaloniki Port plans to become logistics hub and transshipment hub of the Balkan Region. What is your strategy and investment plan to achieve this status.

February-March 2013

To further strengthen its role in the Balkans, the port authority is implementing a strategy aimed at increasing the cargo traffic from neighboring countries. For this we have launched a customer centric policy in order to be able to respond to the peculiar needs of each port user. Also, since 2010, the company organizes an annual roadshow to the target markets of the Balkan Peninsula. Thirdly the company applies an attractive pricing policy by keeping the port costs almost

unchanged the last three years. In fact we have specialized contracts for those customers wishing to transport big amounts of cargo through the port of Thessaloniki. Regarding the infrastructures, there are three investment plans for increasing the port's role in the Balkans. The major investment plan is expansion of the port's container terminal. The project with an estimated budget of â&#x201A;Ź150million will expand the terminal by 500m in length, 300 in width and will provide a depth of 16m. With this investment the port will be able to handle container ships up to 10.000 TEU's (comparing with the current status of a maximum capacity of 5.000 TEU's). Another planned investment is the expansion of dock 24 (at the sixth

SeaPorts BUSINESS CMYK

CMYK Port Focus

till 2015, something that is useful for the cruise companies in order to have a picture of the port expenses for their future itineraries.

pier), which handles almost the 50% of the ports dry bulk throughput. The project has an estimated cost of â&#x201A;Ź35 million and will expand dock 24 by 300 m in length and 3000 m. in width, with a depth of 16m. This expansion is important for the port as it will give the ability to facilitate cargo ships up to 80.000 DWT (currently the dock facilitates cargo ships with a maximum capacity of 55.000 DWT), thus giving the port users the potential to exploit bigger economies of scale. Finally, the company plans to develop a logistic center inside the port for the provision of added value services to the port users.

Now that the Macedonia cruise passenger terminal is shifted to a neoclassical building, do you have any plans to develop the port as a major gateway to the Mediterranean cruise market? A few weeks ago, the port authority started works for renovation of the passenger terminal building. This building has a long history with

February-March 2013

unique architectural characteristics and our goal is to highlight its uniqueness in order to become a landmark for the city of Thessaloniki. We expect to proceed with a full restoration of the building as soon as the Greek government gives us the relevant permission. Moreover, the port's first pier, next to the passenger terminal, was recently renovated and transformed to a leisure area for the cruise passengers (with restaurants and cafes), involving an investment of â&#x201A;Ź1,05 million. Regarding our strategy towards the development of cruise traffic we are moving on five pillars: Âˇ Competitive pricing policy. The port of Thessaloniki is among the cheapest in Greece on cruise related port dues. Also on January 2013 the Board of Directors decided to freeze the port dues for the next three years, thus the current prices will be valid

We are participating in several cruise events every year (exhibitions, conferences, meetings) for the promotion of Thessaloniki as a cruise destination.

We have regular meetings with cruise companies for the promotion of the port and for a closer cooperation.

We are planning to exploit further the port infrastructures for the development of cruise business. In this context the existing passenger terminal along with the second pier of the port (development of a new cruise terminal)could attract the interest of private investors.

We are seeking cooperation of the city in promoting the port as a cruise destination. Till now several stakeholders (like the City of Thessaloniki, the Chamber of Commerce and Industry and the Commercial Association of Thessaloniki) have signed a Memorandum of Understanding with the Port Authority for the development of common initiatives.

How does your port plan to weather the current economic crisis facing the Greek economy. Despite the economic crisis in Greece, the financial results of the

Year

Turnover

Earnings after taxes

2009

45.948.872

6.496.842

2010

49.617.466

9.288.755

2011

51.222.138

15.328.813

SeaPorts BUSINESS CMYK

CMYK Port Focus

Thessaloniki Port Authority S.A. are beyond our expectations. The last three years we have registered a continuous increase in turnover and earnings before taxes, something that is expected to happen also in 2012. Based on these data its evident that the port of Thessaloniki is overcoming the difficulties of the economic crisis. This is due to an aggressive policy we are pursuing to promote the port to neighboring countries aiming to expand the port's hinterland and to attract more cargoes. As a result and despite the economic crisis, the port managed to increase the transit cargoes from neighboring countries. Also the port's administration managed to reduce operations costs, thus increasing the profit margins from the provision of port services.

Tell us about the various facilities available at your port. Especially road and rail connectivity. The port of Thessaloniki is the second biggest port in Greece and the major port for dry bulk and general cargoes. It can handle any kind of cargo and passenger traffic. It has six piers with a total quay length of 6200 meters and a depth up to 12 m and a storage area of 600.000 sq.m. (indoor and open area). The port has three terminals, the passenger for the facilitation of cruise and ferry traffic, the dry bulk and general cargo terminal and the container terminal. Also the port has a Free Zone for transit cargoes (no taxes in the cargoes, plus reduces storage fees). The port of Thessaloniki is strategically located in Northern Greece and at the heart of the Southern Balkan area. The port is directly linked with the national road and rail network and is the only port in Greece that has rail infrastructures on each dock, thus

February-March 2013

enabling multimodal transports. The port also has direct access to the planned Pan-European Corridors IV and X, providing easy access to Central Europe.

What kind of material handling and logistics infrastructure is available at your port. The dry bulk and general cargo terminal is equipped with 43 railmounted dock cranes with a capacity of up to 40 tones. Also there are two mobile harbor cranes with a lifting capacity of 100 tones and various other cargo handling equipment such as loaders, trucks, forklifts, excavators etc. Also there is a SILO installation at the fourth pier of the port. The port has already ordered two new rail-mounted dock cranes (with a lifting capacity of 40 tons) and during 2013 we are planning to order three more. The container terminal is equipped with four gantry cranes, two panamax and two post-panamax. The rest of the container handling equipment includes 17 straddle carriers (two of them delivered on February 2013), a transtainer of 50 ton lifting capacity for (un)loading train wagons, trailers, forklifts, tractors and front lifts.

For logistics operations there are various warehouses in the port area where a company can provide added value services to cargoes. The port has also the equipment for the formation of block trains to and from the port's hinterland.

Your vision for the future of Thessaloniki port. The vision for the port of Thessaloniki is to continue its development in order to be established as the major gateway port in the Balkans. Among the priorities is the beginning of the investments for expansion of the container terminal and the dock 24, something that will give a competitive advantage to the port for the next 10 years as we will be able to handle bigger cargo ships. Furthermore the reinforcement of the port's cargo handling equipment with new, technologically advanced dock cranes will give as the ability to provide to our customers efficient port services with increased quality. If I have to describe my vision for the port in a few words these will be â&#x20AC;&#x153;A modern, efficient and competitive port, focused on the port users' peculiar needs.â&#x20AC;? +

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CMYK Interview

International “The reality is that shipping Maritime is the lynchpin of the global Organization economy” Tell us about the IMO's recently launched initiative 'Sustainable Maritime Development.' What can regulatory authorities and governments across the globe do to further this initiative.

“Sustainable development: IMO's contribution beyond Rio+20” was the theme chosen by the International Maritime Organization (IMO) for this year's World Maritime Day. Its SecretaryGeneral Koji Sekimizu tells Wilfred Moraes about the several initiatives launched under his stewardship, including how the IMO is combating the threat of piracy at sea.

February-March 2013

The initiative of sustainable development goals for the maritime transport sector will be IMO's own contribution to the United Nations led work on sustainable development goals, following on from the United Nations Conference on Sustainable Development held in Rio de Janeiro (Rio+20), held in June last year. This work at IMO ties in with this year's World Maritime Day theme – “Sustainable development: IMO's contribution beyond Rio+20” – which was chosen by the IMO C o u n c i l l a s t y e a r. B u t t h e development and implementation of these goals will be an ongoing process,

which will likely continue beyond 2013. I have established a task-force at IMO to start work on eight pillars around which sustainable maritime development goals could be set. These are: l

Safety culture and environmental stewardship

Energy efficiency

New technology and innovation

Maritime education and training

Maritime security and anti-piracy actions

Maritime traffic management

Maritime infrastructure development

Global standards at IMO.

At the moment, this work is in its

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CMYK Interview became the first regional G o v e r n m e n t- t o - G o v e r n m e n t agreement to promote and enhance co-operation against piracy and armed robbery.

early stages and I would seek the support of Governments and regulatory authorities - as well as the shipping industry - to join together and provide a positive contribution towards formulating sustainable maritime development goals.

What Metrics will be used to set “global standards at IMO,” mentioned in your speech recently on occasion of the World Maritime Day. The process is in its early stages. The details of how this could work and what parameters might be used are still being formulated. However, given the nature of shipping, global standards are paramount. In this respect, IMO also needs to ensure that its regulations are adapted to an ever-changing world. The reduction of administrative burdens that has been initiated by the Council is one of the activities that I hope will make the vast body of IMO regulations even more globally accepted.

Considering the recessionary headwinds in developed economies, what is your 17

February-March 2013

outlook for maritime trade in the near future? It is not for me to predict the outlook for maritime trade. The economics of maritime trade will depend on the troughs and peaks of the world economy. But there will always be a need for maritime trade to provide the flow of essential goods and commodities.

What initiatives has the IMO taken to ensure safety at sea, in view of the growing menace of sea pirates? IMO has been addressing the issue of piracy and armed robbery at sea since the rise in attacks was brought to the attention of the Organization in the early 1980s. A key component of IMO's strategy has been to foster the development of regional agreements. This has worked to considerable effect, most notably in the former piracy hot-spot of the Straits of Malacca, Singapore and the South China Sea, where the Regional Cooperation Agreement on Combating Piracy and Armed Robbery against Ships in Asia (ReCAAP), concluded in 2004,

The benefit of many of the positive lessons learned from the experience with ReCAAP is now being harnessed in the Djibouti Code of Conduct, set up by IMO in 2009 to develop regional capacity to counter piracy in the Gulf of Aden and western Indian Ocean, and which now extends to 20 signatory countries, who undertake to cooperate in a variety of activities, including investigation, arrest and prosecution; interdiction and seizure of suspect ships and property; the rescue of ships and persons subject to piracy and the facilitation of proper care, treatment and repatriation of seafarers; and the conduct of shared operations, both among signatory States and with navies from countries outside the region. IMO has been providing support to Djibouti Code signatories to establish their capacity to implement provision of the Code since 2010. Under the Code, three Information Sharing Centres (ISCs) have been established, in Dar es Salaam, the United Republic of Tanzania, Mombasa, Kenya and Sana'a, Yemen. This clearly draws on the model of the ReCAAP ISC in Singapore – and, in November 2011, the piracy information-sharing infrastructure under the Djibouti Code was significantly enhanced with the signing of an important agreement whereby the ReCAAP ISC has joined the Djibouti Code information sharing network, resulting in a major expansion of the reporting area to cover the Indian Ocean coastal States. The establishment of a Regional Training Centre in Djibouti, in partnership with the EU, is another significant, tangible step towards creating

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CMYK Interview regional capability to counteract pirate activities. We expect the construction of the new building for the Centre to be completed soon. IMO will continue to work in partnership with other agencies, the United Nations, and Governments to address the piracy issue, not just off Somalia but in other regions of the world where it is a concern.

There is currently a shortage of qualified staff to man merchant shipping fleets. What initiatives has the IMO launched for maritime education and training. In 2008, IMO launched the “Go to Sea!” campaign, in association with the International Labour Organization, the “Round Table” of shipping non- Governmental organizations – BIMCO, ICS/ISF, I N T E R C A R G O a n d I N T E R TA N KO – a n d t h e International Transport Workers Federation. The specific aim is to promote seafaring as an attractive option for young people of the right calibre, one which can provide them with rewarding, stimulating and long-term prospects, not only at sea but also in the broader maritime industry. As part of this, IMO provided translation assistance towards a multilingual DVD film - Careers in International Shipping – produced by the International shipping Federation and aimed at young people, to promote the attractions of a career in the international shipping industry. Other projects have been initiated by Governments and the shipping industry. In 2010, the Member States of IMO agreed that the unique contribution made by seafarers from all over the world to international seaborne trade, the world economy and civil society as a whole, should be marked

February-March 2013

with a special day, the international Day of the Seafarer, on 25 June annually, Social media campaigns on this day, organized by the IMO Secretariat, serve to raise the profile of seafaring. In terms of training, the World Maritime University (WMU) was established by IMO in Malmö, Sweden, in 1983, and the International Maritime Law Institute (IMLI) was established by IMO in 1988, in Malta. Both are post-graduate centres of excellence providing training for men and women already working in the maritime field, such as in maritime administrations. To assist those looking to study seafaring as a profession, IMO hosts on its website, at www.imo.org, the international Compendium of Maritime Training Institutes, which provides a comprehensive source of information on the wide range of maritime training facilities available around the world. The contents of the database relate to the type of facilities, training programmes and short courses offered by maritime training institutions around the world. Governments and/or maritime training institutes

themselves are responsible for updating the information contained in the Compendium.

What major issues is the IMO addressing to foster global maritime trade? IMO's remit extends to the regulatory side of international shipping, in other words, adopting the necessary international standards to ensure safety and security of shipping and the prevention of pollution form ships. While IMO does not have a specific role in fostering global maritime trade, the reality is that shipping is the lynchpin of the global economy. Given that shipping is so essential to the continued development and future growth of the world economy, IMO must continue to take the lead in supporting the shipping industry with the appropriate global standards and by helping to promote, through technical cooperation, the necessary national maritime transportation policy and institutional frameworks for a sustainable maritime transportation sector. +

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Be one of many delegates from port authorities, terminal operators, shipping lines, port planners, consultants and suppliers of equipment and services that have already confirmed their attendance. The programme will follow a pathway that will show how to work towards sustainable development through policy, planning and finance implications and to control environmental aspects such as emissions, noise pollution, dredging impact and measuring and reducing the portâ&#x20AC;&#x2122;s carbon footprint. The challenges of supplying renewable energy to ports will also be included together with innovations and technologies that will green the logistics chain. To book your delegate place or for further information about the programme and the remaining sponsorship opportunities please email: conference@greenportasia.com or call +44 (0) 1329 825335 or visit

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GCC Ports The original growth impetus for ports in Gulf Cooperation Council (GCC) was oil trade flows from the Arabian Gulf to the rest of the world. Almost fifty years later as trade winds shift from developed economies to emerging markets and from oil to non-oil commodities, these ports have metamorphosed into growth engines for the GCC economy, finds SATISH CHAVAN

February-March 2013

The New Logistics Hub Situated strategically at the cross roads of major international shipping lanes from the East to the West, GCC ports have now moved on from just oil trade to become a major logistics hub for transshipment and a logistics distribution hub for the lucrative market of GCC countries, which has over 2 billion people.. Most ports in the GCC group of countries are excellent examples of what a modern port and its port real estate should be. The two major ports with a lions share are, Dubai Port operated by Dubai Ports World, and Khalifa Port operated by Abu Dhabi Ports

Company. Many of the 35 major ports in the six-nation GCC are undergoing major expansion to handle a bigger capacity. UAE ports have the highest share of volume in the region and some like DP World rank among the top 10 ports globally. According to a report 'Markaz Infrastructure Report' issued late 2012, GCC's exports as a percentage of world's exports have increased substantially, â&#x20AC;&#x153;The 35 GCC ports serve the enormous volume of trade in and out of the Arabian Gulf freetrade zones, as well as the enormous

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CMYK Cover Story

Indo-Gulf Free Trade Agreement GCC and India hope to conclude a free trade agreement (FTA) within a year. Leading a CII business delegation to Muscat last year, former Chairman of CII (southern region), K K M Kutty said, "We have to manage all six GCC countries and that is the problem. Within a year, it should come through. If the (free trade) negotiation was with one country, it would have been much easier. The CII is pressing the government and local trade bodies in GCC countries to speed up the process. The six GCC countries - Oman, UAE, Bahrain, Kuwait, Qatar and Saudi Arabia and India have identified various potential sectors like amounts of oil, chemicals, and other industrial exports coming out of the East Coast of the Arabian Peninsula. In addition, these ports serve as the entry-point for most of the imports of Saudi Arabia and the other Arab Gulf countries. GCC's exports as a percentage of world's exports increased from 3.34% in 2005 to 4.71% in 2011 and GCC's imports as a percentage of world's imports increased from 1.93% in 2005 to 2.33% in 2011.â&#x20AC;? The total investment of GCC in port developments is pegged at US $ 30 bn2. Major port developments in GCC are the Khalifa Industrial Zone of Abu Dhabi (KIZAD) port (USD 10bn) in Abu Dhabi, New Doha port (USD 7bn) in Qatar and the Millennium port (USD 6bn) in Saudi Arabia. Thus, UAE is the GCC country with the highest investment in port developments at USD 10.7bn i.e. 36% of GCC's port investments. Problem of plenty Additional capacities are being built

February-March 2013

petroleum oil and energy, gas and fertilisers, information technology, higher education, civil aviation and agriculture. An FTA with these GCC countries will benefit India since they control over 45 per cent of the world's recoverable oil wealth and 20 per cent of gas resources. The FTA will remove restrictive duties and lower tariffs on goods being traded, and enable Indian pharma and chemical industry to export their products to the Gulf region. +

at many GCC ports. More than 35 ports of in the GCC will be adding space for as many as 60 million standard containers over ten years, more than doubling capacity from the current 50 million boxes. Once these projects come on stream GCC will face serious problem of overcapacity. According to Drewry forecasts, the GCC port throughput will increase by almost 46% from 2011 to 2015, but capacity will increase by almost 58% due to which port utilization will reach a peak in 2014 and may come down from 76% in 2014 to 64% in 2015 due to o v e r c a p a c i t y. H e n c e p o r t developments should not conflict and lead to overcapacity. Port based Real Estate Port based FTZ indicates the role of maritime gateways as growth engines. Some like Jebel Ali and KIZAD are already in expansion mode. This year Jebel Ali will add Terminal 2 (T2) and Terminal 3 (T3) will be completed in 2014. KIZAD already boasts of housing the world's

biggest aluminum smelter Emirates Aluminium (EMAL). The latest FTZ to come up is the Ajman Free Zone Authority (AFZA) which focused on the SME sector. Future Projections The UAE has 13 ports, whose main ports had a CAGR of 10% in container traffic, from 9 million Twenty Foot Equivalent Units3 (TEUs) in 2004 to 17 million TEUs in 2014. Dubai port alone accounted for 13 million TEUs 2011 and is forecasted to increase from US $ 465 bn in 2011 to US $ 600 bn by 2015. Apart from the KIZAD mega project in Abu Dhabi, other projects in UAE are the Mussafah Port II in Abu Dhabi, Jebel Ali terminal 3 in Dubai, Fujairah LNG terminal in Fujairah and Shahama port upgradation in Abu Dhabi. +

Second part of the GCC Ports Series will be carried in the April-May 2013 issue

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CMYK Cover Story

Markaz

GCC ports in the Arabian Gulf have become key hubs for global East-West trade What is the growth rate (CAGR) of seaborne trade in the GCC region? Are major GCC ports well equipped to handle this increasing cargo?

Mandagolathur R. Raghu, Senior VP (Research), Kuwait Financial Centre 'Markaz

The GCC countries have 35 ports in all; some of these ports are currently undergoing expansion to meet the increasing demand. Volumes have witnessed robust growth, increasing at an estimated 9% seven-year CAGR to 28 million TEUs in 2011 according to our report that was published recently on GCC ports.

The GCC is well known for its oil trade. However, a shift in the direction (and nature) of trade is taking place between the GCC and the world. About 30 years ago, the OECD accounted for 85% of the GCC's trade. By 2009, the emerging markets accounted for 45%. Trade growth with emerging markets have been rising at 11% annually between 1980 and 2009, whereas the annual growth with the OECD was only 5%. The emergence of India and China has presented the GCC with substantial opportunities as hubs.

The Markaz Financial Centre published a research paper on GCC ports in 2010. That report had already identified key emerging trends that have now made GCC ports a global logistics hub for international shipping lanes passing through the Arabian Gulf. Mandagolathur R. Raghu, Senior VP (Research), Kuwait Financial Centre 'Markaz', discusses with SeaPorts Business, the latest developments in GCC ports and ports' real estate.

February-March 2013

SeaPorts BUSINESS CMYK

CMYK Cover Story

Figure 1: World Container traffic and GDP

some of the Gulf's key destinations according to our latest research. The GCC needs to greatly modernize and simplify its way of doing business especially in the areas of customs, immigration, and other business processes, if it is to capitalize on this opportunity. Other forms of transportation upgrade are underway and/or being planned in air, roads, and railways. Seaports cannot lag behind.

Therefore, GCC ports need to rampup capacity, not only to cater to their own increasing needs, but also to develop a hub strategy.

How can GCC ports capitalize on their strategic location along international trade routes spanning Asia, Europe, and Africa? The GCC ports are strategically located on the most important global trade route, between Western markets and the growing economies of East and South-East Asia. They are capitalizing on their strategic location by undergoing extensive expansion of ports capacity that supports the increase in trade and related sea-port activities in the

region. Over the years, GCC ports in the Arabian Gulf have become key hubs for global East-West trade. They serve the large volume of trade in and out of the Arabian Gulf freetrade zones, as well as the enormous amounts of oil, chemicals, and other industrial exports coming out of the large oil-production and industrial areas on the East Coast of the Arabian Peninsula. In addition, these ports serve as the entry-point for most of the imports of Saudi Arabia and the other Arab Gulf countries. The GCC is further strengthening their position to serve as a vital link between the Far East and Australasia, Europe, and North America, by investing over $36 billion in development of port transportation infrastructure in

Figure 2: Forecasted port capacity, throughput and utilization of GCC ports

What kind of road and rail connectivity will add value to GCC ports and enhance their operational performance? Due to the nature of freight carried by cargo ships, seaports should ideally have good connections towards inland points. The ideal way of continuing this low-cost logistic is rail. GCC countries are currently planning a GCC rail network from Kuwait to Oman (and beyond at both points in a later Phase) which will pass through the other GCC countries. With the proposed GCC regional rail network entering the early phases of development in the UAE and Saudi Arabia, the road map for land-sea-air connectivity is in place to drive new intra-regional o p p o r t u n i t y. A d d i t i o n a l l y, development of next generation terminal facilities are needed to accommodate future projected demand. Presently, intra-regional transportation in heavily dependent upon roads. However, most of the GCC countries are looking at alternative forms of transportation to ease the strain on the roads. Rail is more energy-efficient than road transportation.

What are the latest developments in oil and gas terminals at GCC ports? The GCC countries have developed

February-March 2013

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CMYK Cover Story

a vast network of specialized oil and gas terminals, which handle more than 1.5 billion tons of crude oil and gas exports per year. Saudi Arabia is expected to launch a second hi-tech container terminal in 2015 with capacity for 1.8 million TEUs per annum. The north western port of Dhiba is expected to get a new $46.4 million container terminal. Two additional terminals, valued at $38.4 million, are to be constructed at King Fahd Industrial Port in Jubail while Jeddah Islamic Port is forecasting an average increase of 10.9 percent through to 2016. Qatar's new $7.1 billion mega-port project, located close to the busy Messaeid Industrial Zone and the port is aiming for a 2016 opening, with eventual capacity of six million TEU per year by 2028. In the UAE, Jebel Ali is expected to see its terminal three capacities expanded to 19 million TEU per annum, with Abu Dhabi's Khalifa Port Terminal adding a further 15 million TEU per year upon completion in 2030.

To what extent are port based Free Trade Zones driving economic growths in the GCC region? The port based FTZ indicates the role of maritime gateways as growth

February-March 2013

engines. The ports are home to a cluster of world-scale industries and supported by an equally impressive logistics infrastructure. These ventures will serve as a catalyst for investment in downstream industries and related support services and will create employment on a major scale. Seaports also have a direct impact on the GDP growth of the nation which can be seen from the below chart:

Which non-oil commodities is driving growth of GCC ports? The GCC ports handle large volumes of general and bulk cargo (the term general and bulk cargo relates to cargo types which are mostly not shipped in containers, such as grains, fuels, timber, certain chemicals and metals, specialized cargo like cement, vehicles, etc., but not including crude oil and gas). Current GCC figures are slightly less than 250 million tons of general and bulk cargo, and by the early 2020s, these figures are expected to be in excess of 400 million tons per year.

What major investments are being done to expand capacities at GCC ports?

The GCC countries are allocating $36 billion to further develop their port infrastructure amid increasing foreign non-oil trade volumes according to Markaz research. The throughput and utilization of the ports in the GCC region has been forecasted to increase steadily from 2012 â&#x20AC;&#x201C; 2014 . The period between 20132014 will be critical as the port utilization is estimated to reach the peak. Hence port developments are necessary in the GCC region. The decrease in port utilization during 2014-2015 may happen due to overcapacity caused by the various port expansions and new port developments in the GCC region. A number of projects are currently in progress, in various GCC countries, to develop and expand existing ports as well as to set up new ports to meet the rising cargo traffic. Strong oil prices have helped the GCC increase expenditure, most of which are being focused on infrastructure. Seaports are witnessing robust growth in investments to increase capacity and thus cater for more demand. So far, Abu Dhabi and Dubai have invested the highest amount in port development projects. The other GCC countries are also improving their ports. +

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DP World

Dubai is unique in the region in its multi-modal connectivity DP World (UAE Region), handled its 100 millionth container last month. What were the major milestones in achieving this record.

Ranked among the Top 10 ports in the world, DP World has always been at the forefront of cutting edge technology and innovation. It has been entrenched as the 'Best Seaport in the Middle East' for several years now, and its Jebel FTZ is a good example of port led real estate development. In a free wheeling discussion with SeaPorts Business, DP World's Group CEO Mohammed Sharaf, tells us about the Best Practices that won them numerous awards.

The record was achieved between January 2003 and January 2013 and covers all container boxes handled in both Mina Rashid and Jebel Ali Port. Our UAE region's annual container throughput increased more than 150% over the decade from around 5 million TEU (twenty foot equivalent container units) in 2003 to 13.3 million TEU in 2012. In all, the two container ports have handled 135 million TEU since the opening of Jebel Ali in 1979. A major milestone in the development of Dubai's modern port industry goes back to 1969 when the late Ruler, Sheikh Rashid Bin Saeed Al Maktoum gave instructions for a four-berth deep-water harbour to be constructed close to the mouth of Dubai Creek. By 1978, with a capacity of 1,500,000 TEU, the number of berths at Mina Rashid was increased to 35. Encouraged by the market's response, Sheikh Rashid launched an even more ambitious project. When opened in 1979, Jebel Ali Port was ranked the world's largest man-made harbour. In May 1991, Dubai Ports Authority (DPA) was established to manage both Mina Rashid and Jebel Ali Port. The merger led to a dramatic increase in throughput, exceeding one million TEU a year for the first time. The commercial activities of DPA and the international arm of the

February-March 2013

o r g a n i s a t i o n , D u b a i Po r t s International (DPI) were merged in 2005 to form DP World. In 2007, DP World,(UAE Region) achieved throughput of 10,000,000 TEU in a single year. After a few months, container and general cargo operations at Mina Rashid were shifted to Jebel Ali Port, the gateway to a market of more than 2 billion people. For well over a year now, DP World, (UAE Region) has been handling average volumes of more than 1 million TEU every month.

DP World has won numerous awards in 2012, including the â&#x20AC;&#x153;Best Seaport in the Middle Eastâ&#x20AC;? for 18 consecutive years. What Best Practices fetched you these awards. DP World has a track record of winning awards and we believe it is a direct result of our commitment to meeting our customers' needs through increased efficiency, world class facilities, unique cost effective services, and also as a result of our commitment to the environment and to the communities in which we operate. We have equipped our regions and terminals with a highly skilled workforce and strong leaders who have immense experience across the length and breadth of the industry. Our culture of training, innovation, safety and security has our employees and our customers' assets as our first priority.

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CMYK Cover Story

The relationships we have with customers are built on a mutual understanding of long term benefit. At the end of the day, we are the preferred choice for customers and they are uppermost in our thoughts and actions.

Tell us about DP World's expansion plans in the GCC region. 2013 will see the opening of Jebel Ali's Terminal 2 (T2) which adds capacity of 1 million TEU containers while Terminal 3 (T3) will be completed in 2014 with a capacity of 4 million TEUs. Together T2 and T3 will increase the total capacity of Jebel Ali Port to 19 million TEU by 2014.

What green initiatives DP World has taken towards sustainability and 27

February-March 2013

environmental protection. We contribute to long term sustainability following a 'four quadrant' model, undertaking activities under the umbrellas of community, environment, people and safety, and marketplace. With an average concession life of 43 years, we are committed to sustainability actively engaging with the communities in which we operate, supporting their development directly and indirectly. We continually monitor our impact on the environment across all our terminal operations, striving to reduce our footprint through innovation, new technologies and behavioural change. We have been working towards a 27% cut of CO2 emissions over a 5 year period (against a 2008 base

year), including a programme to reduce energy consumption, which is based on actual moves within a terminal. It has four strands: l

Elimination of unnecessary resource consumption

Equipment improvement

Operational efficiency solutions

Awareness programmes

We have identified a number of initiatives to support this approach including Prismalence - an innovative solution that reduces light energy consumption through the use of precision cut lenses with typically 50% power savings achieved. Prismalence has been partially installed in yard lighting at Southampton and fully in the new terminal expansion at Karachi. The introduction of driver training

SeaPorts BUSINESS CMYK

CMYK Cover Story programmes can contribute to a reduction in fuel costs. In 2013, an Eco Driving training programme will be developed and implemented across business units. Meanwhile, our London Gateway terminal due to open later this year will provide the UK with deep sea container port capacity closer to the key areas of consumption so reducing movement of goods by road. It will also provide railconnected logistics, further reducing the need for road travel. London Gateway will thereby help the UK reduce greenhouse gases whilst maintaining economic growth taking 2,000 heavy goods vehicles per day off the road network, the equivalent of 148,000 tonnes of CO2 annually. The port and logistics park will set new standards in productivity and efficiency, key to keeping the UK directly connected to world trade.

GCC ports are emerging an important Logistics Hub due to its strategic location along international trade routes spanning Asia, Europe and Africa. What is DP World's strategy to capitalize on this strategic location. Dubai is the major logistics hub in the region and our strategy is to align with our partners to capitalise on our strategic location. Dubai is unique in the region in its multi-modal connectivity. The Dubai Logistics Corridor (DLC) links Jebel Ali port with the free zone logistics park and the new Al Maktoum Airport, bringing together both government and nongovernment organisations to boost trade and to continue to position the emirate as the leader in logistics across the region.

February-March 2013

The DLC links sea, land and air transport routes for the first time in the Middle East. At some 200 square kilometres, it connects and integrates more than 6800 companies, providing shippers with a 30 minute link between port and airport. As a sea-air-land bridge offering multi modal transport solutions, it's a mammoth undertaking and one that has reinforced and supported Dubai's non-oil trade as well as cementing its position at the crossroads of world trade routes. This is underpinned by the Dubai Trade electronic portal â&#x20AC;&#x201C; a remarkable entity creating one seamless offering to make life easier for business. By providing integrated electronic services that connects a wide range of trade and l o g i s t i c s p r o v i d e r s a n d ke y government agencies, including Dubai Customs, within a single electronic window it cuts red tape and oils the wheels of business. Speeding the supply chain is one of the missions of this online ecommerce platform. It combines more than 800 e-services of DP World, Economic Zones World, Dubai Customs and Dubai Multi Commodities Centre, in addition to several leading banks. More than 70,000 companies in the trade and logistics sector are now plugged into the system, conducting nearly 15 million online transactions in 2012 a growth rate of 21% over 2011. It is innovation like this that has contributed significantly to the UAE ranking number 1 in the MENA region in Trading Across Borders, according to the World Bank's Doing Business report, and number 5 worldwide. All of this underlines Dubai's position as the ideal base for trading across borders with its unique geographical position, excellent

infrastructure and seamless processes across private sector and Government agencies. The future will see even greater multi-modal connectivity with the Etihad Rail development underway. This linkage of sea, air, road and rail is unique in the region and adds value not only to the UAE economy but to the wider region's 2 billion people.

Considering the current recession in developed economies like the EU and the US, what is your outlook for world trade, especially in the emerging markets of Asia and Africa. The on-going economic volatility in developed markets is causing a shift in traditional trade patterns from east-west trade in the northern hemisphere markets to east-west trade in southern, emerging markets which will have important implications far into the future. The downturn has also revealed the potential of emerging markets, and it is those markets we believe will lead growth in the future. More than three quarters of our business is in emerging markets and that has been an important ingredient in our continuing to outperform the industry. The regional trade landscape is a characteristic of the future which the transport sector will need to cater for over sea, road, rail and air. Gateway ports and satellite inland depots and warehousing with freight stations will develop. Intra-Asia trade in particular and infrastructure developments are recognized by local governments and incentives are being provided to encourage them. As a result this is the world's + fastest growing trade.

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CMYK Cover Story

ADPC

Doing business through Abu Dhabi Ports is a smooth and hassle-free experience What is the strategy to make your flagship Khalifa Port the leading port among GCC ports?

Khalifa Port has established its niche place in the Arabian Gulf 's logistics ecology. Its future roadmap for expansion is properly chalked out with an eye on capturing the increasing global trade volumes passing through this strategic junction of international shipping lanes. In a tete-a-tete with SeaPorts Business, Capt. Mohamed Al Shamisi, Abu Dhabi Port Company's (ADPC ) Executive Vice President, discusses their strategic plans and what went into making ADT a smart port.

February-March 2013

When designing and building a port from scratch then it is clear that you have to take into consideration not only the current levels of demand but also the future capacity and capabilities to allow for future growth and the appropriate facilities that will be needed. With this very much in mind, ADPC has invested heavily in technology for Khalifa Port. From the automated cranes, to automated gates, as well as involving our partners, like UAE Customs, in adapting processes to make ease of doing business through Abu Dhabi Ports a smooth and hassle-free experience, ADPC will continue to invest heavily in state-of-the-art equipment to make Khalifa Port a leading maritime trade hub, in terms of future shipping requirements, capabilities and advancing

technologies. It's not all about future planning for technological innovations, however; the current technology allows Khalifa Port to offer a unique proposition to customers â&#x20AC;&#x201C; the fact that it is the only semi-automated deep-water port in the region already allows for quick turnaround, preclearance, and an efficient system to handle containers and general cargo. When we looked to benchmark Khalifa Port's capabilities and technology, we did so on the understanding that we were benchmarking against ports that have similar capability â&#x20AC;&#x201C; internationally. This is because it is the first of its kind, in the Gulf Region.

What material handling equipment and technology makes it a Smart Port? Khalifa Port currently offers a series

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CMYK Cover Story of facilities and capabilities for the most modern shipping requirements, among which include: l

ASC's (automated stacking cranes)

Giant Gantry Cranes

TOS (terminal operating system)

Automated Gates

S t a t e - o f- t h e - a r t s e c u r i t y systems and Access Control

KIZAD already houses the world's biggest aluminum smelter. What were the milestones in making it a major port based industrial zone, and what are its future plans? Emirates Aluminium (EMAL) started receiving bulk materials into the Khalifa Port area back in 2010 and since then all EMAL's bulk material comes through Khalifa Port. As most of EMAL's finished products now get exported, Khalifa Port gives a complete end-to-end service solution which, of course, can be and is extended to all tenant company's who are based in the Khalifa Industrial Zone Abu Dhabi (Kizad) – from import to export. ADPC's negotiations with potential

customers, looking to import large quantities of different products t h r o u g h K h a l i f a Po r t , h a s highlighted that the benefits of having a modern port with excellent facilities, infrastructure, low utility, and low rental costs are very clearly understood as necessary advantages for a modern port.

KIZAD sent its fourth trade mission to India, what was the outcome? It is no secret that Abu Dhabi, and the UAE as a whole, has a long history of trade with India and every indication and analysis you can run suggests that this trade is set for further significant increase in the short and long-term future. While we don't talk about potential tenants we are currently in negotiation with, we can say that there is a definite and clear interest being expressed by Indian companies with a view to expanding their factory capacities to KIZAD.

ADPC to protect the Ras Ghanada coral reef. What other initiatives have won you green awards? ADPC takes its commitment to adhering to the highest level of environmental practices and regulations and has been pro-active in terms of creating and developing “green” initiatives to protect the Ras Ghanadah reef and all areas related to its operations. Examples of this include the construction of the Environmental Breakwater at Khalifa Port which continues to see coral growth on the breakwater grow. An independent study has also shown that coral growth doubled during the period of September 2010 to January 2012. We continue to monitor its progress, of course, and we are seeing positive coral growth on the breakwater to this day.

In fact, this has been further facilitated by the fact that last month (February) direct service from Khalifa Port to Indian ports was established. BOX on ADT service to india

With particular reference to Khalifa Port, ADPC has adopted a construction methodology that is specifically designed to protect the reef and includes extensive monitoring systems so as to better control water quality of which ADPC sets extremely high and stringent quality limits.

Tell us about the green initiatives being taken by

ADPC has won series of awards for its efforts to maintaining and

ADT to call at Mundra, JNP The port operator at Abu Dhabi's four main commercial ports, Abu Dhabi Terminals (ADT), has signed an agreement with a consortium of shipping companies to start a direct service between Abu Dhabi's Khalifa Port and the ports of Mundra (Gujarat) and Nhava Sheva (Mumbai). The new service will facilitate more trade between the India and GCC countries. Known as the IGI service, it will link the Arabian Peninsula to India and will add Abu Dhabi to its schedule. “This service further strengthens the market profile of

February-March 2013

Khalifa Port Container Terminal, ensuring Abu Dhabi's importers and exporters as well as trans-shipment customers receive fast and direct connectivity to two of the largest import/export hubs in India,” Martijn Van de Linde, the Chief Executive Officer of ADT said in a statement. “Starting this service also reinforces the growing importance of Khalifa Port Container Terminal as a regional and international shipping hub which offers an ever increasing network of main line and feeder services with direct access to the world's major commercial centres,” he added.

SeaPorts BUSINESS CMYK

CMYK Cover Story Summit 2013, ADPC will meet with other regional ports, our fourth meeting of its kind, based on regional co-operation and planning.

What is ADPC's strategy to capitalize on this strategic location?

protecting a sustainable marine environment in connection with all its activities including, but not limited to: the Environmental Protection Seatrade Middle East Award 2010; the Environmental Protection Award in the Lloyd's List Middle East and Indian Subcontinent category 2011; the C o n s t r u c t i o n We e k l y G C C Construction Sustainability Award 2011, for work on the breakwater, and for the similar category wins at the Big Project BGreen Magazine Awards 2011.

What courses are offered by the ADPC Port Training Centre? How many graduates have passed out from there? The ADPC Ports Training Centre currently offers a series of training programs including: Channel Familiarization; HELM Training; and Vessel Traffic Services. More will be added in the near future but, for now, the Channel Familiarisation course is the main programme. Essentially this is a navigation training course for masters of vessels to train on a simulator on the new Musaffah channel, Abu Dhabi. Currently over 400 masters have been trained on this course. In addition, the ship simulator offers

February-March 2013

ADPC's own pilots the opportunity to update their skills and prepare in advance of arrival for piloting some of the new and often larger vessels going into Khalifa Port and Musaffah. The Ports Training Centre also offers Vessel Traffic Services (VTS) training using a new VTS simulator. ADPC currently has several VTS centres and wants to ensure its officers are trained to the best international standards In April, the Human Element Leadership and Management (HELM) course will be available. These five-day courses, for a maximum of 12 trainees, will become compulsory training for all senior ship's officers by 2017; however, most charterers and ship owners are demanding that their officers take the course immediately, so we are sure to see keen interest when this course starts.

Te l l u s a b o u t A D P C expansion plans in the GCC region? ADPC works closely with our partner ports in the GCC and we have ever increasing and closer ties than ever before as we all recognize the growth opportunities in the region as a whole is experiencing. In fact, at the World Ports Trade

GCC ports are emerging an important global logistics hub, due to its strategic location along international trade routes spanning Asia, Europe and Africa and as commercial maritime activities increasingly shift from West to East. Africa is clearly a region growing in importance for the global maritime trade and the Gulf and Abu Dhabi in particularly are well placed to manage and facilitate these new developments and realities of trade shifts in the global economy.

Considering the current recession in developed economies like the EU and the US, what is your outlook for world trade, especially in the emerging markets of Asia and Africa? Of course, after a major economic downturn people will be naturally cautious but the signs are there that global trade is recovering and levels, if only in modest terms in some regions, are starting to see signs of recovery from the 2008 crisis. The Gulf Region is benefitting from a number of factors in this new economic era and the shift of trade from West to East is clear to the advantage of the Gulf Region's ports. A natural and strategic location for European and Asian trade as well as being on the doorstep of the growing influence of the African region â&#x20AC;&#x201C; for seaborne commerce â&#x20AC;&#x201C; means that there is plenty of room for cautious optimism in the short-term and more robust growth in the medium + to long term.

SeaPorts BUSINESS CMYK

CMYK Interview

Schneider Electric Schneider Electric is a pioneer in developing technologies and products for Shore-to-Ship power, which is becoming de rigueur in ports the world over due to environmental imperatives. In a free wheeling discussion with Bipin Sinha, Lorène Grandidier and Rémi Paccou, discuss their latest products and applications in the ports sector.

“India is not a new market for us” To what extent is Schneider Electric addressing green imperatives in its products and services. Ports worldwide and the shipping industry are increasingly under pressure to improve their environmental performance and new international regulations are coming into force. The International Maritime Organization (IMO) addresses the problem of air pollution due to shipping seriously. As an example, the Marpol 6 Regulations have already set a stipulated timeframe to progressively reduce the fuel's NOx and SOx content. As a result, ships will have no other choice but to increase their usage of lower sulphur fuel or opt for alternative technologies. Shore Connection is one of the promising new technologies. This technology, also known as “cold ironing” or “shore to ship power” consists of plugging in ships at berth into the national grid, allowing them to switch off their auxiliary engines hence cutting all their emissions during their stay in the ports, thus helping them to meet current and future regulations. Schneider Electric is deeply involved in Shore Connection Technology for several years. Numerous installations have already been implemented in

February-March 2013

p o r t s w o r l d w i d e . M o r e o v e r, Schneider Electric plays a key role the Shore Connection Standardization process; In July 2012, the IEC/ISO/IEEE 80005-1 standard has been validated, ensuring global compatibility between ports and ships

Tell us about some cutting edge technology developed by Schneider for ports and marine applications. To meet the needs of both ports and ships, Schneider Electric has developed an innovative shore connection solution called ShoreBoXTM, designed to reduce investment, lead time and operational costs. The ShoreBoX solution consists of a range of standard components and all shore connection modules include tested, validated, and documented architectures, guaranteeing system reliability. Fully packaged in a single metal enclosure, ShoreBoX has been designed with the utmost concern for space and cost optimization. To be able to deal with such complex investment, ports have to be supported throughout the entire project, including design, execution and post-sales services, by dedicated local teams. Ports are a moving environment, as port traffic is likely to change

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CMYK Interview

constantly. Since the berth profile or the electrical power needed by the ship could change, the ShoreBoX solution is able to accommodate the ships of tomorrow's ports. This solution can be implemented and operated without disturbing port activities. The ShoreBoX solution is adaptable to the different power needs and electrical frequency of the ships and to a variety of port infrastructures.

What kinds of automation and smart grids does Schneider offer in marine applications? The ShoreBoXTM includes an energy management and control system enabling ports to optimize their electricity consumption and thereby reduce operational costs. The system tracks and reports all data in real time, giving ports visibility of energysource selection, forecasts, simulation, metering and billing. The system also supplies data on the port environmental indicators to make a shore connection

February-March 2013

investment as green and efficient as possible.

With India's 'Maritime Agenda 2020' focused on capacity addition and development of new ports, what is Schneider Electric's outlook for the Indian market?

operations in this country for years, including port activities. With the participation as the Silver Sponsor to Green Port Asia event, to be held in Mumbai on March, Schneider Electric would like to portray to Indian ports the environmental and business interests they would have by including Shore Connection in their future investments. +

India is not a new market for Schneider Electric, which has RĂŠmi Paccou is in charge of Shore Connection Solution Program within Schneider Electric.

LorĂ¨ne Grandidier is involved in the Shore Connection activity for several years, managing marketing and institutional relationships for Schneider Electric.

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CMYK Focus : Gujarat

Gujarat Ports

â&#x20AC;&#x153;We are serious about capacity augmentation at our portsâ&#x20AC;? Indian ports are facing a serious capacity constraint in view of the projected growth in cargo traffic. What is GMB doing to address this problem?

Gujarat is the most developed maritime state in India, thanks to the Gujarat Maritime Board (GMB). The Board has many firsts to its credit, from being the first state in India to encourage private ports to implementing a focused Ship Building Policy way back in 2010. GMB's CEO & Vice Chairman Pankaj Kumar, IAS, discusses all this with Wilfred Moraes and talks about their future plans.

The port sector in India has witnessed strong growth in traffic during the last five years, with the total traffic handled at all the ports growing at a CAGR of 6.4% to reach 930 million tonnes (MT) by 2011-12. During this period, nonmajor ports have witnessed faster growth in cargo handling compared to major ports, the reason being capacity constraints at most of the major ports. Traffic at non-major ports has grown at CAGR 15.7% in the last five years to reach 370 MT. We are serious about capacity augmentation at our ports. Several ports in Gujarat, -- including the ports of Pipavav, Mundra, Dahej and Hazira -- have been developed which are significantly augmenting the port capacity. The port capacity in Gujarat will get a further fillip in the near future with new ports at Chhara, Kachigadh, Nargol etc, these are presently under different stages of implementation, start operations. Moving forward, we have initiated a study to identify greenfield locations for development of new ports and shipyards. Development of Special Investment Regions (SIRs) will give port capacity a further boost in Gujarat. As per existing project plans, Gujarat port capacity is expected to reach the mark of 1000 MMTPA by 2020, which means we

February-March 2013

will be talking in terms of BMTPA â&#x20AC;&#x201C; billion metric tons now.

Gujarat ports are the logistics gateway to the hinterland of landlocked states of North and Central India. How is the State leveraging this strategic location to attract more business; in terms of logistics infrastructure, connectivity and conducive government policies and tariffs. Taking advantage of the strategic location with which Gujarat is blessed with, it was one of the first states to embark upon port development through private investment in the country and by harnessing development of ports with the international trade, economic benefits have been reaped. The GMB has carefully planned the integrated development of new ports by giving equal importance to last mile connectivity issues like identifying and developing the required road and rail links. Besides administering, regulating and operating the 41 non-major ports of Gujarat, we have developed several models of privatization such as privatizing port services, development of private jetties at the existing ports, development of joint venture ports to instil a sense of confidence among private entrepreneurs, private ports etc just to name a few. Additionally, integrated port development models

SeaPorts BUSINESS CMYK

CMYK Focus : Gujarat

covering SIRs, Port Cities, South Asia's first world class RO-PAX project, Marine Shipbuilding Parks (MSPs) for holistic development of the port sector are also under various stages of development. Going forward, Gujarat ports will continue to facilitate industrial developments to various Special Investment Regions (SIRs) and Industrial Areas (IAs) being planned along the Delhi – Mumbai Freight Corridor.

Tell us about GMB's initiative of “port led development”. The state's investor friendly Port Policy, which incidentally is the first in the country, was announced in 1995. This visionary document spelled out an explicit strategy of port-led development, which included development of 10 new Greenfield sites where privatesector participation was expected to play a dominant role. The result is there for everyone to see. World

February-March 2013

class port facilities like the first state of the art chemical terminal at Dahej, first two operational LNG terminals at Dahej and Hazira, Single Buoy Moorings (SMBs) at Sikka, dedicated container and coal terminals just to name a few have come up in Gujarat. The ports of Gujarat play the role of a catalyst and facilitates industrial development of the region. Instead of passive planning for port capacity subsequent to industrial development, we proactively plan and develop the ports so that economic hubs/ clusters can be developed near the ports. Mundra, Dahej and Hazira are the specific examples of this model. Moreover, the port projects which are underway will support proposed SIRs and SEZs in the State.

Alang-Sosiya is world's largest ship breaking yard, and the year 2012 has been one of the best years for the industry. What is GMB's

contribution to the shipbreaking industry's growth? Alang Ship Recycling Yard, developed by Gujarat Maritime Board in 1982 is one of the largest ship recycling yards in the world. This industry, which is spread across a stretch of 10 kms has a total of 168 plots. The first vessel – MV KOTA TENJONG was beached at Alang on 13/02/1983. During the last two decades, Alang has undergone various stages of development and, after the mid nineties, the ship recycling industry at Alang has witnessed spectacular growth, thereby emerging as a leading ship recycling yard in the world. The year 2012 has been historic for GMB. During the year 2011-12, GMB recycled 415 ships, the highest number of ships recycled till date at Alang, and in the process, has recycled 3.86 million tonne LDT was recycled. This FY, upto

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CMYK Focus : Gujarat February 2013, 367 ships were handled at Alang and 2.62 MT LDT has been recycled.

a balanced risk allocation matrix for developer's interest as well as banker's interest.

GMB's contribution has been multi-fold. GMB is proactive in providing physical, social and environmental infrastructure at Alang. The physical infrastructure includes providing roads, bridges, electricity and water supply at Alang. GMB's contribution in making Alang the most safe location for ship recycling as per International Maritime Organization (IMO) Convention's guideline is immense. Further, as part of the social and environmental infrastructure initiatives, GMB has taken up various initiatives like environment protection, safety and labour welfare measures, health measures and regional development at Alang.

What is GMB doing to encourage ship building industry in the State?

Which port development route has been more successful in Gujarat, PPP or FDI?

We are currently developing MSPs at Dahej and Bhavnagar. We are also in the process of identifying few more Greenfield locations for development of MSPs along the Gujarat coast.

Gujarat has always followed PPP model of port sector development. Private and joint sector ports are developed either through joint sector (Mundra, Pipavav, etc. in the initial period) or through PPP (Dahej, Chhara, etc.). The investor friendly BOOT policy and the bankable document - Model Concession Agreement, have given

February-March 2013

Gujarat was the first state to come out with the Ship Building Policy 2010 with a vision to maintain 60% Gujarat's share in Indian shipbuilding orderbook. The policy provided for land acquisition by GMB and development of common infrastructure facilities with a concept of Marine Shipbuilding Parks (MSPs), a cluster-based approach. The Policy also envisaged that GMB will provide navigational aid and dredging at MSPs and insure Key aspects like national security, environment and supportive facilities.

market) or to major manufacturing clusters (e.g., Chinese ports of Shenzen, etc.). These ports contribute significantly to economic development of the region through comprehensive connectivity infrastructure (rail, road, pipeline) along with freetrade zones or duty-free warehousing zones. We have always believed that ports are part of the integrated logistics value chain. If we intend to make Indian ports globally competitive and expect the ports to facilitate economic development, the entire logistic value chain has to be analysed for cost optimization and smooth business functioning. Therefore, I feel that an Integrated Transport Policy should be in place as it would be of significant importance in the long-term resource allocation for transport sector, as in India, there is still higher budget allocation in the road and rail sectors. Coastal shipping, which has not yet gained momentum in India will also be one + of the driving factors.

What kinds of initiatives are required for Indian ports to scale up global normsâ&#x20AC;?? All global ports boast of providing hassle-free access to large consumption base (e.g., Scandinavian ports for Europe

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CMYK Interview

PEMA

“We are making a valuable contribution on several key issues” PEMA's mission is to provide a community forum and interface among various stakeholders within the port community, and an interface with trade and industry across the globe. How far has it been successful in this mission? What can governments and regulatory bodies across the globe do to further its cause?

The Port Equipment Manufacturers Association (PEMA) is doing yeoman's service to the port community. Effectively it has evolved into a public forum to discuss key issues important for the ports, shipping, and logistics communities. Its President Ottonel Popesco, discuses with Nachiket Basole the Association's goals and what Governments and Regulatory bodies can do to further them.

February-March 2013

PEMA is making a valuable contribution to debate and knowledge of best practice onseveral key issues facing the global ports industry – a role that it has expanded in recent years. The Association's three working groups – the Safety Committee, Environment C o m m i t t e e a n d Te c h n o l o g y

Committee – develop recommendations in these areas for port authorities, equipment manufacturers and the industry as a whole. Most recently, and in conjunction with the TT Club and ICHCA, with whom the Association has worked on several initiatives, PEMA published a detailed set of recommendations for yard equipment safety standards. PEMA also commissions annual research reports on various categories of global port equipment deliveries such as mobile port handling equipment and yard container cranes. These reports are well received in the industry, and are attracting a growing readership. You can download PEMA research papers here:http://www.pema.org/activities/ surveypubblications/Another

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CMYK Interview

indicator of PEMA's success is its steadily growing membership, which now stands at 70 companies drawn from all areas of the ports equipment industry. Members range from vehicle component manufacturers to safety system specialists and consultants. PEMA seeks to establish an open, evidenced-based dialogue with all interested parties to ensure the world's ports operate as safely, efficiently and sustainably. If we can support informed decisionmaking in the industry, we are more likely, I feel, to take substantive steps towards these goals.

efficiency of port vehicles in favor of cleaner more efficiently powered equipment to bring long-term efficiency benefits and cost reductions. Port operators and shipping lines continue to explore the advantages of automation, which is making ports safer, more efficient and often more sustainable.

What kinds of initiatives are required for Indian ports to scale up to global norms? Working together with global players in the ports sector to share expertise and experience, coupled with the necessary investment, will sustain Indian ports' continued development towards becoming world-class elements in the global supply chain.

Technology and engineering have become major facilitators of efficiency, safety, and green practices in port operations. What are the emerging trends?

About PEMA

The most evident trends in the industry are electrification, and automation. The industry is increasingly looking to maximize the

The Port Equipment Manufacturers Association provides a forum and public voice for the global port equipment and technology sectors,

February-March 2013

reflecting their critical role in enabling safe, secure, sustainable and productive ports and thereby supporting world maritime trade. Chief among the aims of the Association is to foster good relations within the world port equipment and technology community, by providing a forum for the exchange of views on global trends in design, manufacture and operation. PEMA also aims to promote and support the global role of the equipment and technology industries, by raising awareness with the media, customers and other stakeholders; forging relations with other port industry associations and bodies; and contributing to best practice initiatives. For further details about PEMA and its activities, visit www.pema.org, or contact Rachael White, PEMA Secretary General, at + rachael.white@pema.org.

SeaPorts BUSINESS CMYK

CMYK Locus Standi

Classis Statutes for Bunkers and Vessels Law

Harsh Pratap Partner

February-March 2013

There have been cases where the Bombay High Court has granted exparte order of arrest of bunkers per se for claims against the owner of the bunkers as distinguished from arresting the vessel. Most of these have gone unchallenged as the parties have subsequently settled the matter and the question whether bunkers per se can be arrested or not had not been tested. There are however two recent cases where this very issue has cropped up. The Bombay High Court has recently made ex-parte orders of arrest of the bunkers and not the vessel itself. In fact, in one of these cases, the Bombay High Court ex-parte ordered an arrest of the bunkers and the freight. There was no claim against

the vessel or her owner and hence there was no question of arresting the vessel itself. The claim was against the charterer under another charter party and the bunkers and freight were sought to be arrested on the basis that the bunkers and freight belonged to thecharterer. On an application filed by the charterers and supported by the owners of the vessel, the Bombay High Court held that there is no statute or convention which permits freight to be arrested and further in a case like this where there is no claim against the vessel or her owner or even the cargo, the freight in respect of the cargo laden on the vessel cannot be arrested. The reasoning appears to be that if the vessel was

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CMYK Locus Standi liable for the claim, then the vessel and the freight could be arrested but if the vessel wasn't liable, the freight could not be arrested. It will be interesting to see whether in a given case where the vessel is liable for the claim, will the Court allow the arrest of freight considering that there is no statute or convention which allows the arrest of freight. For the moment, if there is no claim against the vessel, the freight cannot be arrested. Interestingly, although the Court observed that there should be a maritime claim against the vessel, the Court did not decide on the bunkers issue and has sustained the arrest of bunkers (without prejudice to the argument that bunkers can't be arrested) to the extent that the bunkers belonged to the charterers but vacated the arrest in respect of the remaining bunkers which did not belong to the charterers. One of the reasons the issue of bunker arrest wasn't decided may be that the Court is still seized of another matter where this very same issue is being heard and the Court may take a view only after it has the benefit of the complete submissions on this issue. Hence as matters stand today, in a given case it is possible to arrest bunkers. However, considering that the Court vacated the arrest of bunkers to the extent the bunkers belonged to the vessel owner, it is clear that the Court will not allow bunkers to be arrested + unless clear ownership is shown.

_________________________ The Author is an experienced maritime lawyer and Partner at maritime legal consultancy Classis Law. He has significant experience working with various Indian and foreign clients in the field of shipping, marine insurance and international trade law including working with various foreign law firms, ship owners, charterers, cargo interests, multimodal transport operators, freight forwarders, insurance companies and P & I Cubs.

February-March 2013

SeaPorts BUSINESS CMYK

The port-centric container supply chain event

Host Port

9-11 December 2013 DWTC, Dubai, UAE

Delivering a global container supply chain event for the Middle East High Level Conference

Port Tour

Port Technology Exhibition

Networking

Free Technical Seminars

Co-Located with Multimodal Exhibition

Co-located with

CMYK Feature

Material Metrics for constructing Handling Oil & Gas Terminals Equipment

Capt A K Karkare

Constructing oil & gas terminals require niche competence, careful planning and a strict adherence to the fire fighting code. It also needs in place a complete disaster management plan. Capt A K Karkare shows you how to go about it. He has done it all, from setting up greenfield oil terminals to drafting their fire fighting codes!

February-March 2013

In the logistic chain of sea transportation of bulk crude oil and petroleum products and gases such as Compressed Natural Gas (CNG), Liquid Natural Gas (LNG) and Liquid Petroleum Gas (LPG), the oil and gas terminal forms a vital link without which these products cannot be transported from the procuring base to consumer market, to be used by consumers. These terminals are the highest cost and risk centre, but they are also the highest earner in any port. This is the most sensitive infrastructure in a port from safety and security point of view, especially in the context of modern terrorist threats from the sea on a shore coastline. An oil/gas terminal can be defined as

all facilities constructed in the sea in the port area for loading/unloading of crude and its products from oil tanker, with loading/unloading arms, piping manifolds, and control facilities or pumping in or out of oil/ gas to/from storage and terminal facilities in a port. The general design and location of such a terminal is more important to the port management than its technical details, because for mineral oils, fire safety measures and the prevention of marine spills from the ships as well as shore terminal pipelines are an important concern to the port authority. The technical design will depend on the actual characteristics of the individual tanker ships using the terminal and the kind of fuel grade they will bring in their cargo tanks.

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CMYK Feature

Location of oil terminal Large crude oil and gas loading and discharging ports are located in quite separate and isolated areas, normally far from densely populated regions. Easy access from the sea to suitable areas with calm and very deep water is the most important requirement. A deep draught requirement often leads to offshore terminals with strong fender systems to absorb the berthing impact energies of large tankers. On the landside, for routing of the oil products or crude requirements of local refineries, the zoning of the oil sector inside the commercial port is necessary. The externally situated tank farms are normally owned by the oil companies and are efficiently connected to port pipelines and jetty manifold system where the tanker's manifolds are hooked up to loading /unloading arms fixed on the jetty. Methods for preventing oil spills from spreading are also an important consideration for the port planner.

Land requirement regulation In India, the land requirement of an oil terminal is the combined function of Oil Industry Safety Directorate (OISD) regulations No.116, 117 &118 along with petroleum rules 2002(latest edition of 1964 rules sections 16, 17 &18) .The lay out plan has to be approved and officially sanctioned by the office of the Chief Controller Of Explosives. (CCOE) based at Nagpur. Prior to starting construction of an oil/gas terminal the port authority has to carryout an Environmental Impact Assessment (EIA), and Risk

February-March 2013

and Hazard Analysis (HAZOP) studies. The copies of these reports are submitted to CCOE for receiving inprincipal clearance for putting up the terminal. It is imperative that a layout plan of land requirement is prepared for formal consideration and eventual approval of CCOE and accordingly land is to be acquired for putting up an oil terminal. At locations where the handling temperatures are higher than the flash point of the product or in circumstances where product handled is artificially heated to above its flash point special consideration should be given in the terminal layout. The land requirement is directly proportional to number of tanks and their sizes required to store different grades of the same liquid commodity and the different types of Petroleum and Oil (POL) products to be handled at the oil terminal .For example crude oil has different grades and non â&#x20AC;&#x201C; compatible grades have to be segregated and therefore tanks are made accordingly. Similarly other POL products need the tanks for different grade.

Design of the berths at terminal The oil/gas berth design is regulated by Indian Standards (IS) codes and International Safety Guide for Oil Ta n k e r s & Te r m i n a l s ( I S G O T T ) , Pe r m a n e n t International Association of Navigation Congresses (PIANC), International Association of Lighthouse Authorities (IALA), International Association of Port and Harbors (IAPH) and International maritime Organization (IMO) regulations and guidelines. High Hazard Areas are areas where equipments, piping

SeaPorts BUSINESS CMYK

CMYK Feature

manifolds, valves etc. handling flammable, combustible and toxic products are located.

Planning of a terminal It is difficult to indicate in general terms an oil/gas terminal, since the equipment required and the number of berths needed is not directly related to the total quantity of bulk to be handled. This is mainly because of the need to segregate the invariably large number of grades of the crude oil commodity. Thus numbers of the storage tanks and other equipment needed depend on the number of different grades crude oil expected to arrive at the terminal rather than on the total quantity.

Operations at the terminal Generally the rate of discharging liquid cargo is governed by the capacity of ship's pump rather than by that of the port handling equipment, and for loading the cargo on tankers the limits are set by pumping capacity of the cargo pumps of the terminal which decide the rate of loading of a particular product and its

temperature at that point of time.

Compatibility between ship and terminal The following points should be closely checked to ensurecompatibility between the ship and the terminal. l

Number, length and diameter of loading arms or flexible hoses.

Maximum height of ships manifold.

Manifold connections specifications

Number, diameter and maximum pressure of pier pipelines

All items of equipment are specially designed for handling these oils and are suitable for operation in a hazardous atmosphere. To prevent the build –up of static electricity insulation flanges and electrical earthing cables are used .between the ship and the pier. Loading and unloading arms are fabricated from mild steel and operated manually or hydraulically. Depending

Classification of Petroleum Products. It is imperative for the port to know the entire chemistry of POL products as well as all types of gasses they intend to handle at their terminal. Petroleum Products other than "Liquefied Petroleum Gas" (LPG) which is separate category are classified according to their FLASH POINTS as per closed cup method as follows: The flash point of petroleum liquid is the minimum temperature at which the liquid gives off vapor in sufficient concentration to form an ignitable mixture with air near the surface of the liquid within a container. Class "A”: Liquids which have a flash point below 23 Deg. C Class "B”: Liquids which have a flash point of 23 Deg. C and above but below 65 Deg.C Class "C”: Liquids which have a flash point of 65 Deg. C and above but below 93 Deg.C Unclassified: Liquid which have a flash point of 93 Deg. C and above.

February-March 2013

SeaPorts BUSINESS CMYK

CMYK Feature it has to have an exclusive Dedicated Disaster Management Plan (DMP) and Oil Spill Containment Plan (OSCP) made for the terminal An oil terminal also has to have a special equipped laboratory for testing and quality control of the products imported or exported.

Compatibility between ship and tank farm Following points must be kept in planning to ensure compatibility between the tanker - ship terminal and oil storage Tank Farm

on the designed discharge or loading rate the arms may be from 200 mm dia to 500 mm dia connecting shore manifold to the ships manifold.

The distance between oil berth and storage tanks. (The preferred and recommended conditions for pipeline layout are that they must be shortest, fully isolated from life and property areas and secured from road and rail traffic accidents and largest possible portion of transmission underground)

The pipeline should ideally be long enough to be able to pump through by ships pump without booster station requirement to keep safe and efficient flow rate.

The number of pipelines, their sizes in diameters and maximum pressure tolerance are technical requirements for the closest location of the Tank farm towards the oil berth.

The pipelines need to be laid for the most appropriate and shortest possible distance inside the port limits keeping into view pollution and fire hazards.

The Tank farm has to be situated under Sea Customs Act regulations applicable to port limits as all imports and exports cargos are handled under these regulations.

Tank farm A port may or may not provide suitable tank farm for storage of products. Normally tank farms are not part of the terminals. However some large ports in the Middle East and Europe do provide tank farms within their limits and operate them under their control A tank farm will consist of two distinct groups of storage tanks well separated one group for black oil and one group for white oils, each group being surrounded by bonded walls of adequate height (preferably no more than 20 meters in height).They may be of floating roof or fixed cone roof type. The former type reduces evaporation losses while the oils are in storage. All tanks are mild steel tanks. All tanks have protective bunds to control its leakage. These tanks could be from 500 â&#x20AC;&#x201C; 75,000 cubic meters capacity depending on the soil condition. Cold climate conditions need heating arrangements in the tanks. The LPG and LNG gases are stored in special spheres named after its inventor Horten Spheres. They can be stored best in cryogenic condition. However, LPG can be stored at ambient temperatures.

Fire Fighting System The OISD â&#x20AC;&#x201C; 156 standards is applicable to all oil/gas terminals in ports. The details of the standards are available on the internet. An oil terminal must have its own dedicated independent fire water tanks and supply system with captive power availability to operate it.

Operations and Management All oil and gas terminals are managed by specialized marine personnel trained in handling POL and gas products. They have to undergo specialized Government approved training courses to obtain such certification. + ____________________________________________ The author is a reputed Marine Consultant and Director(Technical) at Sai Techno Consultants, www:saitechno.com. He was a member of the original team that prepared the OISD â&#x20AC;&#x201C; 156 Standards. He can be contacted on arunkarkare@vsnl.com -M:9820129389

Since an oil terminal is the most hazardous part of the port

February-March 2013

SeaPorts BUSINESS CMYK

CMYK Event

IWS

New sponsors and support for IWS 2013! India Warehousing Show has grown leaps and bounds since its inception with over 200 exhibiting companies offering an absolute package to its visitors. Although, the event is a few months away from its release, it has started receiving tremendous support from leading industry players and organisations. Indo Arya Logistics, known for their excellence in providing safe & secured multi modal transportation solutions, will sponsor our VIP Access Programme (VAP) during the show. The VAP invites top professionals from the user industry and host them during the event.

MJ Logistics has confirmed their participation and sponsorship for the show and is also arranging a visit for the delegates to their logistics centre. MJ Logistics is widely categorised as the trusted 3PL logistics provider.

The event has already gained pace and is aggressively bagging participation, sponsorships, and a s s o c i a t i o n s . Wa r e h o u s i n g

February-March 2013

Development & Regulatory Authority (WDRA) has extended their support to India Warehousing Show for the second time. WDRA, constituted under the Warehousing (Development and Regulation) Act 2007, is led by its chairman, Shri Dinesh Rai (retired IAS) with its headquarters in New Delhi. Under the vast scope of warehousing, WDRA is specifically involved in code of conduct and practical training for warehousemen and staff engaged in warehousing business. This year the event will floor opportunities to source best of equipments, feature live demos and exhibit new technologies and solutions required for a seamless logistics operation. Venue: Spread over 72000 sq ft, Pragati Maidan is a venue for large exhibitions and conventions in New Delhi and is situated in the heart of the city flanked by Mathura Road and Bhairon Road. Keeping in mind the ease in travelling, organisers of IWS has insisted on choosing the venue. Fo r m edia qu eries, co nt a ct Siddharth Narain at 91-9971600355 or siddharth.narain@reedmanch.com www.IndiaWarehousingShow.com| www.IndiaTransportLogistics.com +

SeaPorts BUSINESS CMYK

CMYK Event

India Cold Chain Show 2013 on the prowl! With over 3400 professional visitors and 125+ exhibiting companies, India Cold Chain Show 2012 positioned itself as the most important event for the Indian cold chain industry. The exhibition witnessed professionals from varied industry profile such as pharma, agro, packaging solutions, cold chain consultants, hotels, restaurants, cold chain transports, healthcare centres and many more. Thanks to all our exhibitors, visitors, delegates and our supporters, we are encouraged to host the next edition of India Cold Chain Show on 12-1314 September 2013, at the commercial capital of India â&#x20AC;&#x201C; Mumbai, Maharashtra.

economy, has the potential to become one of world's major food suppliers. An efficient cold chain network is the key to prevent spoilage of its total agricultural production. The exhibition and conference will focus on cold storage, cold logistics, temperature controlling, refrigeration, storage & distribution and many more relevant sectors. The show aims at showcasing solutions for effective cold chain distribution system integrated with designs that are energy efficient. We are already looking forward to another successful episode of the event at Bombay Exhibition Centre, Mumbai. Visit www.IndiaColdChainShow.com for more information. +

India, being an agriculture-based

February-March 2013

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CMYK Event

SMM

3rd SMM India is now ready to unveil new technologies & solutions Inter Ads Exhibitions Pvt. Ltd. and HMC International GmbH are proud to present the 3rd edition of SMM India, taking place in Mumbai from 4-6 April 2013 in conjunction with the 50th National Maritime Week, a celebration of maritime activities when India welcomes the national and international maritime industry to an event-packed week in Mumbai. The synergies generated by these two events will undoubtedly result in unique collaborations that create a powerful new impetus for the sector. SMM India is the leading international platform for maritime technology and innovations and brings together a comprehensive gathering of industry and government representatives from around the world. An exclusive seminar, on the occasion of National Maritime Day, 2013, will be conducted by National Maritime Day Celebrations (Central) Committee. The Theme

February-March 2013

for 50th National Maritime Day, 2013 is 'Last 50 years of Indian Shipping-introspection and way ahead'. Major international delegations from maritime community and political representatives are expected to attend the Opening Day Seminar on 4th April 2013 at 1000 hours in the august presence of proposed Chief Guest Shri Milind Deora, the Hon'ble Minister of State for Shipping, Government of India. On 5th April 2013, a Public Private Partnership Summit shall be organized from 1000-1340 hours in which high-ranking representatives from the Indian navy and Indian Coast Guard shall exchange views and experience of vital interest for the maritime professionals. The esteemed Chief Guest for the PPP Summit will be Vice Admiral Shekhar Sinha, PVSM, AVSM, NM & B a r, A D C , F l a g O f f i c e r, Commanding-in-chief, Western Naval Command, Mumbai. "The Public Private Partnership Summit â&#x20AC;&#x201C;

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SMM India is an ideal platform for top level experts of the Maritime industry and high-ranking representatives of the Indian Navy and Coast Guard to exchange views and experience. This once again confirms the exceptional importance of SMM India" said Vice Admiral (Retd.) P.C. Bhasin, Chairman of the Defence Council of the Associated Chambers of Commerce and Industry of India (ASSOCHAM). The summit is an ideal and rare platform for the top-level experts of the Maritime Industry. A special session titled 'Technology Infusion for Future Propulsion Packages with a view to minimum maintenance of shipbuilding machinery/systems on board' will feature highly distinguished panelists. The session chairman for this topic will be Vice Admiral NN Kumar, AVSM, VSM, Chief of Material, Naval Head Quarters.

February-March 2013

Tw o a d d i t i o n a l sessions will complete the programme : Horizon Scan coastal/Inland security – Role of Coast Guard & support agencies chaired by Vice Admiral AG Thapliyal, AVSM, Chief of Personnel, Ministry of Defence (Navy) and " India emerges as a shipbuilding nation – will public private Partnership help" with session chairman Rear Admiral(R ) Rahul Sherawat,

AVSM, Chairman & Managing Director, Mazgaon Dock Limited. As an international subsidiary of SMM, the leading international maritime trade fair in Hamburg, SMM India 2013 will be the region's key platform to launch new maritime technological advances for the domestic and international markets. SMM India will also provide the perfect platform for a high concentration of senior decision makers along with a high attendance of government buyers

and an opportunity to meet visitors and delegations from India and abroad. Many international companies are taking part- the highlight being the German, Chinese and Finnish Pavilions. India's growing strength in the shipbuilding sector, coupled with the renewed drive in the industry, sets the stage perfectly for the 3rd edition of SMM India. Participants can experience the full spectrum of the maritime industry; meet existing and potential clients and network with senior maritime decision makers. SMM India 2011 welcomed an

audience of 3,000 visitors and delegates from over 30 countries – and these numbers are expected to increase for 2013 as the Indian maritime sector remains on a course of considerable growth. SMM is one of its kind that offers you the opportunity to exchange information and ideas – in evennumbered years at the world's leading fair in Hamburg and in oddnumbered years in India. And now, as an exclusive feature of the National Maritime Week, SMM India is truly a must-attend event in the industry calendar. +

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CMYK Market Report

Overcapacity will keep rates volatile With substantial new tonnage scheduled to come on stream this year, freight rates will continue to remain volatile with erratic movements.

February-March 2013

There is little chance of the freight rate volatility seen in the AsiaEurope container trade in 2012 will dissipate this year. Shippers will have to continue juggling with freight rates to keep them above break-even levels. According to a forecast by Drewry Container, the liner shipping industry stands in considerably better shape than it did at this time last year. On the Asia-Europe route, deals are hovering around the $2,000 per 40ft mark. The price movement is basically attributed to shipping lines withdrawing capacity in an almost ad hoc manner in last quarter of 2012, which was aggravated

further by withdraw of several services. But with load factors on both the Asia-North Europe and Asia-Med trades now above the critical 90% level shipping lines have been relatively successful in their latest round of general rate increases and peak season surcharges coming into play this month. This only highlights how the seasonality in container shipping has shifted owning to a series of financial crisis, some carriers have announced peak season surcharges in January. Certainly 2013 will see carriers concentrate more than ever on

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CMYK Market Report capacity management because it served them so well in maintaining some level of profitable freight rates on the Asia-Europe route in the latter part of the year. Add to this the volume of new capacities due to be delivered this year and situation becomes even more difficult. With at least 40 new vessels of the 10,000 TEU size and over, due to be delivered this year (including the first of Maersk's Triple-E 18,000 TEU class), scrapping activity could reach record levels during 2013. “We have put our scrapping forecast up this year, and some market estimates suggest that as much as 400,000 TEU capacity could be scrapped. The previous scrap record was in 2009, which saw just over 350,000 TEU scrapped. According to French consultancy Alphaliner, the global liner fleet increased by 6% in 2012 to reach a total capacity of 16.34m teu, while the Asia-Europe trade actually saw total capacity trimmed by 2% over the course of the year.

February-March 2013

Most of this occurred at the fag end of the year, when there were concerted efforts to reduce capacity by idling less efficient vessels, dropped sailings and pulled strings. Drewry performed an analysis of the six loops that were suspended in October, and by mid-December could verify only eight vessels that were actually idling – the remainder had been redeployed to other trades. Major growth markets in recent years have been Asia-Latin America, which saw double-digit volume increases year-on-year. However, this appears to be slowing down now to the extent that Drewry is predicting 5% growth or possibly less.” The biggest challenge will be handling of more capacity coming into the market. Last year liners managed reasonably well through scrapping and idling. But the see-saw effect of these capacity fluctuations is grave on customers. Since the first significant GRIs were introduced by

lines on Asia-Europe last March, there were another seven rate increases announced through the remainder of the year, according to Drewry, cumulatively amounting to some $3,000 in increases. However, the all-in rate actually declined from about $2,700 in early March to $2,400 as of early January 2013. But at least it gives carriers more control over their destinies, as MOL president Koichi Muto noted in his New Year's address to employees. “In the containerships business, despite a tough environment, we managed to restore freight rates in the first half of the previous year through measures such as adjusting our fleet size through a realignment of alliances, reducing services and restraining ourselves from excessive pursuit of high space utilization.” This example shows that shipping lines need not remain at the mercy of the business environment. +

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