Your Radar to Shipping, Marine & Ports World • Vol - 7 Issue - 3 • DECEMBER 2014 - JANUARY 2015 • MUMBAI • ` 150
Logistics & Transportation
February 2016 | Mumbai - India
E B I R C S B S U NOW! Subscribe annually to
Shipping Marine & Ports World magazine and Offshore World magazine @ only
`1530/-
Offshore World SUBSCRIPTION FORM` 810
Shipping Marine & Ports World ` 810
Combo Offer (SMP+ OSW) ` 1530
Please draw the Cheque /Demand Draft favouring JASUBHAI MEDIA PVT. LTD. To make online payment, log on to www.smpworld.com, www.oswindia.com
Yes ! I would like to subscribe / renew my subscription to SMP/ OSW ` 150
Name: ____________________________________________________________________ Designation:_________________________________________________________________ Company: __________________________________________________________________ Address: ___________________________________________________________________ City: __________________________________ State: _______________________________ Pin Code: ___________________
Shipping, Marine & Ports World A publication that caters to the strategic information needs of professionals in the maritime sector, covering the best management practices, technological developments, new markets and cutting edge innovation in services.
Telephone Code: _________ (O): ____________(Fax): _________________ (Res): _____________ (Mob): ________________Email: ________________________ (Web): ___________________ Payment details : (for non-Mumbai cheque, add ` 30) We/I enclose herewith DD/Cheque No. _______________ dated ___________ drawn on ____________ branch ________________for `: _________________ Credit card details:
favouring Jasubhai Media Pvt. ltd. Any other card for ` _____________
Card No.: Card Member’s Name : __________________________________________________________ Card Expiry Date : _____________________________ Card Member’s Sign ____________________
Offshore World Offshore World is an allencompassing magazine for the hydrocarbon and allied industries. A bi-monthly magazine launched in December 2003, Offshore World disseminates authentic, critical and well-researched information on global hydrocarbon industry innovations.
All the above fields are compulsory it will help us to serve you better. Please fill the form and send it to :
Jasubhai Media Pvt Ltd 3rd Floor, Taj Building, 210, Dr. D N Road, Fort, Mumbai – 400 001 Tel: 022 – 4037 3636 / 4037 3620 • Fax: (022) 4037 3635 E-mail: dilip_parab@jasubhai.com
Web: www.smpworld.com, www.oswindia.com www.chemtech-online.com
Content Chairman : Jasu Shah Publisher, Printer & Editor : Maulik Jasubhai Shah Chief Executive Officer : Hemant Shetty
EDITORIAL
Features Writer Design Team Events Marketing Co-ordinator Subscription Team Production Team
: : : : : :
Vol. 7 | Issue 3 | December 2014 - January 2015 | Mumbai | ` 150
Rakesh Roy (rakesh_roy@jasubhai.com) Mansi Chikani, Kenneth Menezes Abhijeet Mirashi Brenda Fernandes Dilip Parab V Raj Misquitta (Head), Arun Madye
PLACE OF PUBLICATION
Jasubhai Media Private Limited 210, Taj Building, 3rd Floor, Dr. D. N. Road, Fort, Mumbai 400 001 Tel: +91-22-4037 3636, Fax: +91-22-4037 3635
SALES
General Manager, Sales
Shipping, Marine & Ports World RNI No.: MAHENG/2008/29159
: Amit Bhalerao (amit_bhalerao@jasubhai.com) Prashant Koshti (prashant_koshti@jasubhai.com)
MARKETING TEAM & OFFICES Mumbai Godfrey Lobo / V Ramdas / Sabyasachi Das 210, Taj Building, 3rd Floor, Dr. D. N. Road, Fort, Mumbai 400 001 Tel: +91-22-4037 3636 Fax: +91-22-4037 3635 E-mail: godfrey_lobo@jasubhai.com, v_ramdas@jasubhai.com, sabyasachi_das@jasubhai.com Ahmedabad
Vikas Kumar 64/A, Phase 1, GIDC Indl Estate, Vatva, Ahmedabad 382 445 Tel: 91-079-49003636/627, Fax: 91-079-25831825 Mobile: 09712148258 E-mail: vikas_kumar@jasubhai.com
Vadodara
Pervindersingh Rawat 202 Concorde Bldg, Above Times of India Office, R C Dutt Road, Alkapuri, Baroda 390 007 Telefax: 91-0265-2337189 Mobile: 09737114204 E-mail: pervinder_rawat@jasubhai.com
Bengaluru
Princebel M / Huliraj. E.N Mobile: 09444728035; 09481888718 E-mail: princebel_m@jasubhai.com, huliraj_mba@jasubhai.com
Chennai / Coimbatore
Princebel M / Yonack Pradeep 1-A, Jhaver Plaza, 1st floor, Nungambakkam High Road, Chennai 600 034 Tel: 91-044-43123936 Mobile: 09444728035, 09176963737 E-mail: princebel_m@jasubhai.com, yonack_pradeep@jasubhai.com
Delhi
Priyaranjan Singh / Suman Kumar 803, Chiranjeev Tower, No 43, Nehru Place, New Delhi – 110 019 Tel: 011 2629 3174, 011 4674 5513; Fax: 011 2642 7404 E-mail: pr_singh@jasubhai.com, suman_kumar@jasubhai.com
Hyderabad
Princebel M / Sunil Kulkarni Mobile: 09444728035, 09823410712 E-mail: princebel_m@jasubhai.com, sunil_kulkarni@jasubhai.com
Kolkata
E-mail: industrialmags@jasubhai.com
Pune
Sunil Kulkarni Suite 201, White House, 1482 Sadashiv Peth, Tilak Road, Pune 411 030 Tel: 020-24494572, Telefax: 020-24482059 Mobile: 09823410712 E-mail: sunil_kulkarni@jasubhai.com
Jasubhai Media Private Limited Registered Office: 26, Maker Chambers VI, 2nd Floor, Nariman Point, Mumbai 400 021, INDIA. Tel.: 022-4037 3737 Fax: 022-2287 0502 E-mail: sales@jasubhai.com
4
December 2014 - January 2015
Subscription Rate (per year) : Indian - ` 810/-; Foreign - US$ 120 The Publishers and the Editors do not necessarily individually or collectively identify themselves with all the views expressed in this journal. All rights reserved. Reproduction in whole or in part is strictly prohibited without written permission from the Publishers.
Printed and published by Maulik Jasubhai Shah on behalf of Jasubhai Media Pvt. Ltd., 26, Maker Chamber VI, Nariman Point, Mumbai 400 021 and printed at Varma Print, Pragati Industrial Estate, N M Joshi Marg, Lower Parel, Mumbai 400 011 and published from 3 rd Floor, Taj Building, 210, Dr D N Road, Fort, Mumbai 400 001. Editor:MMaulik Jasubhai Shah, 26, Maker Chamber VI, Nariman Point, Mumbai 400 021.
ISO – 9001: 2008 Certificate No. - 33713
JOIN
SAI POOJA CHAMBERS, SECTOR 11, CBD BELAPUR NAVI MUMBAI –400614 TEL : 022 27574082 / 27562179 / 27565179 / 22937095 / FAX NO. 022-27561543 / 09930276084
Email : bpmarine.academy@gmail.com
THE
MERCHANT
NAVY
Accredited with ISO 9001:2008 by A B S Q E
NAME OF THE COURSE
1) Pre-sea Training (Deck & Engine). GP Rating Course.
Website : www.bpmarineacademy.in
/
HOSPITALITY
Courses Graded A2 - (88.91%) By DNV- GL
ELIGIBILTY
Pass with aggregate 40% marks in 10th standard from a recognized Board with Science, Mathematic & English as subjects and with minimum 40% marks in English language either 10th or 12th standard. Pass in 10+2 from any stream with 40% marks in 12th standard. Similarly, required to obtain at least 40% marks in Eng. Either at 10th or 12th standard.
(DG Approved) 2) Certificate Course in Maritime Catering. ( CCMC ) (DG Approved)
3) Orientation Course for catering personnel (18 days)
Candidates holding Degree/Diploma in Hotel management from recognized and reputed board or the universities The candidates should have scored a minimum of 40 % marks in English language at 10th / 12th standard examination.
AGE
Comm. Dt.
17& ½ to 25 years
01 Jan. & 01 July.
17& ½ to 25 years
01 Jan. & 01July.
18 to 25 years
Nov/Feb/ May/Aug
4) Diploma in Nautical Science leading to B.Sc. Nautical Science Degree Programme for Deck Cadet in Association with IMU (INDIAN MARITIME UNIVERSITY). (DG Approved) www.imu.tn.nic.in
a) Pass in 12th Std (10+2) with PCM average not less than 55% and 50% marks in English at SSC or HSC (OR) b) With Physics as individual subject in one of the year, B.Sc. in physics, math’s, Chemistry or Electronics with an average of not less than 55% marks in final year. (OR) c) B.E./B. Tech. Degree from I.I.T Or from college recognized AICTE/UGC/DEC.
5)Three Year Degree Course For B.Sc. Nautical Science, Approved (Mumbai University) (DG Shipping)
a) Pass in 12th Std (10+2) with PCM average not less than 60% and 50% marks in English at SSC or HSC
6) B.Sc In Hospitality Studies (Hotel Management) Affiliated to a) Mumbai University. b) YCMOU
a) Pass In 10+2 (12th Standard) with 45% aggregate marks in any Stream. b) Pass In 10 +2 (12th Standard) in any Stream.
-
7) Electro Technical Officer Course (ETO). (DG Approved)
Diploma With 60% or B. E. / B. Tech. with 50% in Electrical, Electronics & Telecommunication, or Instrumentation and with 12th standard PCM & English 50% in 10th standard or 12th standard
35 yrs & below
March/ July/ December
8) HND in Nautical Science in Association with South Tyneside College / City of Glasgow College MCA (UK) 9) HND in Marine Engineering in Association with South Tyneside College / City of Glasgow College MCA (UK)
Pass in Plus Two (12th Standard) or its equivalent with Math’s, Physics and Chemistry group in Class XII, and preferably at least 50% in English. (1st Year at BPMA & 2nd Year at STC / COGC (UK) Awarded Best National Nautical Centre of Excellence status by UK Govt. Website: www.stc.ac.uk / www.cityofglasgowcollege.ac.uk.
Prefe rably 17 to 25 yrs
Jan & Sep.
Pass in Plus Two (12th Standard) or its equivalent with Maths, Physics and Chemistry group in Class XII, and preferably at least 50% in English (equivalent to IELTS 5.0 minimum)(1st Year at BPMA & 2nd Year at STC / COGC (UK) Awarded Best National Nautical Centre of Excellence status by UK Govt. Website: www.stc.ac.uk / www.cityofglasgowcollege.ac.uk.
Prefe rably 17 to 25 yrs
Jan & Sep.
a). At Least 36 months of qualifying sea b). At least 6 months have been spent on bridge duties in the last 12 months of sea Service
10) MCA Approved Overseas Collaborative 6+6 Rating to OOW Training Programme
11) CHEMCO – SPECIALISED TRAINING FOR CHEMICAL TANKERS OPERATIONS
12) GASCO - SPECIALISED TRAINING
FOR LIQUEFIED GAS TANKERS OPERATIONS
13) ATOT / TASCO – ADVANCED
TRAINING PROGRAMME ON OIL
TANKER OPERATIONS IGS / COW
26) SSO
14) OIL TANKER FAMILIARIZATION 15) CHEMICAL TANKER FAMILIARIZATION 16) LIQUEFIED GAS TANKER FAMILIARIZATION
17) PROFICIENCY IN SURVIVAL CRAFT AND RESCUE BOATS ( PSC
& RB )
18) SHIP MASTER MEDICARE 19) MEDICAL FIRST AID 20) ELEMENTARY FIRST AID
30) E. C. D. I. S.
(Ship Security Officer’s Course)
27) (STSDSD) Security Training for Seafarers
28) AFFC (ADVANCED FIRE FIGHTING COURSE)
29) Up-gradation Course For Engineer Officers (1st Monday of Every Month)
31) R.O.C /A.R.P.A 32) NWKO (NCV) 33) 2ndMate (FG) 34) Mates Phase I & Phase II 35) ASM (FG)
43) Bridging Course for Sailing Electrical Officers to ETO. (16 DAYS ) Dec-3/Jan-7/Feb-5/Mar-5
25 Years
01st August
25 Years
01st August
-
August
21) RESCUE BOAT ONE DAY UPGRADATION 22) NAVIGATION WATCH KEEPING AB
23) PERSONAL SURVIVAL TECHNIQUES 24) PERSONAL SAFETY & SOCIAL RESPONSIBILITIES (PSSR) 25) FIRE PREVENTION & FIRE FIGHTING ( FPFF )
REFRESHER COURSES
36) REFRESHER TRAINING FOR PERSONAL SURVIVAL
TECHNIQUES. AS PER STCW 2010. 37) REFRESHER TRAINING FOR PSC RESCUE BOAT. AS PER STCW 2010 38) REFRESHER TRAINING PROFICIENCY IN FIRE PREVENTION AND FIRE FIGHTING. AS PER STCW 2010. 39) REFRESHER TRAINING FOR ADVANCED FIRE FIGHTING. AS PER STCW2010. 40) SHIP MASTERS MEDICARE REFRESHER (MLC-2006) 41) MEDICAL FIRST AID REFRESHER (MLC -2006) 42) Refresher and Updating Training for ( SHIP SECURITY OFFICER )
AS PER STCW 2010.
rd
44) Up-gradation Course for Deck Officers (3 Monday of Every Month) 45) MEO CLASS-II-SECOND ENGINEER (NCV)(MARCH/JULY/NOVEMBER)
Value Added Courses:46) BRIDGE TEAM MANAGEMENT ( BTM ) 47) BRIDGE RESOURCE MANAGEMENT ( BRM )
21st July
Commencing Shorty:-
48) Marine Boiler and Steam Engineering For Management Level. 49) Marine Boiler and Steam Engineering For Opetrational Level.
Content
Contents
7
18
21
Interview 7 ‘JNPT has the multidimensional advantages to serve landlocked northern and north-western regions of India’ - N N Kumar, Chairman, Jawaharlal Nehru Port Trust 12 ‘Indian logistics industry is at the turning point of its development’ - Vineet Agarwal, Managing Director, Transport Corporation of India (TCI) 15 ‘India’s biggest challenge as well as the largest opportunity is logistics’ - Shashi Kiran Shetty, Executive Chairman, Allcargo Logistics Ltd 18 HFZA: A Key Force to Attract FDI into Sharjah - Saud Salim Al Mazrouei, Director, HFZA Guest Coloumn 21 Cruise Shipping: Indian Scenario - Capt Sandeep Kalia
Marine Archaeology 33 Snorkelers Explore Ancient Ship in Odisha Coast - Rakesh Roy 36 News
Features 23 GST: A Key Driver for Growth of Indian Shipping & Logistics Industry - Sanket Desai 6
26 Coastal Shipping: The Missing Link in Indian Transport - Rohit Chaturvedi 29 GST – Impact on Shipping Industry - Pratik Jain 31 Freight Watch – November to December 2014 - Nazir Ahmed Moulvi & Niteen M Jain
December 2014 - January 2015
46 MarineTech News 50 Bookself
Interview
‘JNPT has the multidimensional advantages to serve landlocked northern and north-western regions of India’
J
awaharlal Nehru Port Trust (JNPT) is known as the main facilitator of India’s International trade, handling around 60% of the country’s containerized cargo, crossing throughput. N N Kumar, Chirman, JNPT, details about the port’s success story so far & future action plans to make JNPT into a new age of India’s International trade facilitator, with an email interaction with Rakesh Roy.
JNPT is the biggest container handling Port in India, handling around 60% of the country’s containerized cargo. Can you please tell us the USP of the port (please share the cargo handling capacity, storage capacity, dry dock, etc. of the port)? JNP has emerged as the main facilitator of India’s international trade by choosing to focus on container traffic very early at a time when containerization was at a nascent stage in India. JNP is the first Major Port of India to lead the way in showing the benefits of Public Private Partnership (PPP) in the Port Sector by commissioning the first private terminal, viz. Nhava Sheva International Container Terminal (NSICT/DP World) in the year 1999 and brought international container handling parameters to India, which has since seen the country’s premier port augmenting infrastructure, becoming more service oriented and in the process of vastly improved efficiencies. JNP took the process forward with the commissioning of a second private container terminal; M/s Gateway Terminals India Pvt Ltd (GTIPL) consortium of AP Moller’s Co & CONCOR in the year 2006 by converting its Bulk Terminal into a Container Terminal. All of this set the ball rolling towards JNP becoming the biggest container handling Port in the country. Ever since its inception, JNP has charted India’s international trade to a glorious course of success and
achievements, breaking all records and creating new benchmarks. JNPT handled 62.35 million tonnes of total cargo during the financial year 2013-14, of the total, the share of containerized cargo was 55.24 million tonnes (88.59%), liquid cargo 6.29 million tones (10.10%) and the remaining 0.82 million tones (1.31%) was miscellaneous cargo in the form of dry bulk and break bulk. Cargo handling capacity:
f JNPT owned Container Terminal: Commenced in May 1989. Capacity: 1.2 million TEUs p.a. f Nhava Sheva International Container Terminal (1st BOT Terminal in the country): Commissioned in April 1999. Capacity: 1.2 million TEUs p.a. f Shallow Draft Berth: 445 meters length developed by JNPT to handle feeder container vessels, dry bulk cargo vessels and other general cargo vessels. Commissioned in September 2002. Capacity: 1.2 million tonnes p.a. f Twin berth Liquid Cargo Terminal of BPCL & IOCL: Commissioned in October 2002. Capacity: 5.5 million tonnes p.a. f Gateway Terminals India Pvt. Ltd. (APM Terminals, Mumbai) (2nd BOT Container Terminal at JN Port): A Maersk – CONCOR consortium, operational from 30th October, 2006. Capacity: 1.8 million TEUs p.a. December 2014 - January 2015
7
Interview
The port handled 4.16 million TEUs of container traffic during the financial year 2013-14, against the design capacity of 4.1 million TEUs, which is 57% of the total container throughput of the country’s Major Ports. Out of the total traffic of 4.16 million TEUs, the share of the JNPCT was 1.31 million TEUs (31.55%), the share of NSICT was 0.97 million TEUs (23.29%) and the remaining 1.88 million TEUs (45.16%) were contributed by M/s APM Terminals. What are the other advantages of the Port like; Hinterland connectivity, trading pattern, logistic, storage, ware housing, etc? JN Port is in a strategic position to service the landlocked northern and north-western regions of India and is located along one of the busiest shipping lanes to East Asia and Europe. It caters to the international export and import trade on key maritime routes, including to and from the Middle East, United States, and other international destinations. The Port is situated on the Eastern end of the Mumbai Harbour, in Nhava Sheva, Maharashtra, south-eastward of Elephanta Island, covering a water area of about 52 sq. kms. The Port shares a common harbour channel with Mumbai Port up to the Jawahar Dweep Island. It is an all-weather tidal port sheltered from wind and waves, with the Elephanta Island protecting the port by serving as a natural breakwater. JN Port’s geographical co-ordinates also ensure optimum sea, road and rail connectivity to and from India’s commercial capital. As a port that largely caters to Original Destination cargo (where the port is either the origin or the end destination), JN Port’s hinterland connectivity is also very robust. The Port is connected to the national railways network, both western and central, by double tracks through Panvel. Good connectivity is also defined by accessibility to Container Freight Stations and Inland Container Depots. There are 33 CFSs in the immediate vicinity around JN Port, and through its rail network, the Port has access to a web of Inland Container Depots throughout India. 8
By road, the Port is well connected through the fourlane NH-4B to the Mumbai-Pune Highway (NH-4) and the Mumbai-Goa Highway (NH-17). The fast-paced development of Navi Mumbai, the satellite city situated on Mumbai’s outskirts, and adjacent to Nhava Sheva has also aided the Port to be connected via the local and state highway network to commercial centres like Thane, Nasik and Ahmedabad. To avoid potential problems involved in a multiplicity of agencies involved in road works, and to expedite road improvement, widening and maintenance works in and around JN Port, the Mumbai-JNPT Port Road Company Limited (MJPRCL) was specially instituted in September 2003. This special purpose vehicle created exclusively for the development of roads around JN Port is a joint venture between National Highways Authority of India, JNPT, CIDCO (Navi Mumbai’s planning authority) and the Government of Maharashtra. The Port has completed four-laning of NH-4B, SH-54 and four-laning of Amra Marg of about 46 km at an estimated cost of ` 3570 million – through an SPV formed between National Highway Authority of India (NHAI), JNPT and CIDCO (The City and Industrial Development Corporation of Maharashtra Ltd.), and further taken up to 6/8 laning of these roads at cost of ` 3000 crore. The Dedicated Freight Corridor Corporation (I) Ltd. (DFCCIL), a Government of India enterprise is planning to construct dedicated railway tracks for rail cargo traffic movement from JNPT to New Delhi. Expected date of completion is March 2017. What are the current biggest challenges ahead for JNPT to maintain the status quo of biggest container port in India? What strategies have you undertaken to maintain the positive growth momentum? Sustaining the level of traffic during the global recession and downturn in shipping industry is a remarkable achievement of JNPT. The Port was struggling with capacity addition projects since 2008, now we have finalised mega projects like dredging, 330 mtrs extension and 4 th container terminal. The dredging project was successfully implemented, construction work of 330 mtrs
December 2014 - January 2015
Interview long stand-alone container terminal has been started and agreement for the 4 th container terminal is also signed and construction work will start shortly. Successful implementation of these two projects will lead to a paradigm shift in shipping world by putting JNPT in the centre of maritime sector. JNPT is currently ranked 24 th among the top 100 Container Ports in the World. How do you plan to make JNPT one of the world’s top ten container ports and what are the major constraints you think to overcome to achieve the same? JNPT is the biggest container port in India, handling around 60 per cent of the country’s containerized cargo. As the busiest gateway and hub in India, it has been constrained in the past by lack of facilities, which has impacted trade. China, Singapore and Sri Lanka have bigger container ports. Due to our capacity constraints, all the containers are being transhipped from China, Singapore, Sri Lanka and even Dubai. Indian trade is paying extra cost for this transhipment. This is why it is necessary to have a big world-class container port so that we can save on transhipment cost as well as attract mother vessels to India. In India, container volumes are expected to witness an exponential growth. Building new container terminals will help meet the growing global demand. Building of greater capacity is part of the port’s long-term vision. The fourth container terminal was planned from various studies, which envisaged that the port would be required to handle container traffic to the tune of 10 million TEUs (twenty-foot equivalent units) by 2018-19. With this capacity addition and 330 m standalone container terminal, JN Port will be able to handle 10 million TEUs, and place itself among the top 10 global container ports. We will be 10 million TEU in four years down the line. Major ports, along with private ports, have a long been demanded for restructuring of TAMP, formation of a regulatory authority for port sector, rationalization of restrictive polices including the various direct/ indirect taxes. What is your take on it? There is no need for regulation of tariff rates at major ports but there should be balanced pricing between major and non-major ports. Tariff Authority for Major Ports (TAMP) regime inhibited the growth of major ports and there was a need to free them from the regulatory regime for better price parity and create a level-playing field to compete with fast expanding non-major ports. The absence of a mechanism to revisit port concession agreements in PPP projects discouraged the participation of private players. In the PPP model the concession agreement is for 30 years. With the fast-
paced technological advancements, the profile of port changes every year and with no mechanism to re-visit the agreement during the period of the concession, port development becomes a casualty. There is an urgent need for guidelines on structuring of PPP projects to mitigate risks to private players. In the absence of policy guidelines, the risks associated with projects development get loaded on to private players, making the project unviable for them to pursue. What are the future development plans of JNPT? Tell us about the new projects in pipeline and how will manage the finance for the same? Following are the details about the new projects: 1) Deepening and widening of Main Harbour Channel and JN Port channel Phase-II f Dredging for deepening and widening of the channel from 14 mtrs. to 15 mtrs. in planning stage. f Estimated cost: ` 2,800 crores (approx.) f Length of Navigational channel: 33.54 Kms f Consultant being appointed for preparation of DPR. f Scheduled date of receipt of bids for consultancy services: November 25, 2014. f Project to be completed by end of 2017. 2) Stand-alone container handling facility with a quay length of 330 m towards the North on DBFOT basis:
f Project comprises of construction 330 mtrs. container berth, approach bridges, extension of guide bund, reclamation of 27 ha area for container yard, and container handling equipments. f Estimated Cost: ` 600 Crores. Concession period: 17 years f Concession Agreement signed with Nhava Sheva (India) Gateway Terminal Pvt. Ltd., an SPV of DP World, on 19 th June 2013. Revenue Share offered : 28.09%. f Date of award of concession: July 3, 2014 f Capacity: 0.8 million TEUs (10 million tonnes) f Partial commissioning by March-2015. f Completion of entire project : July 2, 2016. f Current Status: About 200 meter wharf construction is completed. Construction of approach bridges and guide bund is in progress, reclamation for container yard in progress. The financial progress achieved is 26%.
3) Development of 4th Container Terminal on DBFOT Basis:
f Concession Agreement with M/s. Bharat Mumbai Container Terminals Pvt. Ltd., an SPV of Port of Singapore Authority (PSA), signed on May 6, 2014.
December 2014 - January 2015
9
Interview
f Anticipated date of award of concession is November 13, 2014. f Estimated Cost: ` 7,915 crores (Ph I: ` 4,719 Corres, Ph II: ` 3,196 Crores) f Berth Length: 2 Kms, Capacity: 4.8 million TEUs (60 million tonnes). f Area for back-up facilities: 200 hectares. f Estimated throughput: 5.5 million TEUs f Commissioning of Phase-I: (1 km Berth) of this project having 2.4 million TEUs (30 million tonnes) capacity will be completed by November 2017. f The Phase-II (1 km Berth) of the project with additional 2.4 million TEUs (30 million tonnes) capacity will be completed by November, 2022. f JNPT has submitted application for diversion of mangroves for construction of road and rail access under Forest (Conservation) Act 1980 on 18 th July 2014. f Status: Finance plan and financing documents, performance guarantee submitted on 31 st Oct. 2014, and the same are under scrutiny.
4) Widening of Highway linkages to 6/8 laning:
f Widening of 43.9 kms length of NH-4B, SH-54 and Amra Marg linkages to 6/8 lanes along with 2 lane Service Roads at an estimated cost of ` 3000 crores, by SPV formed by JNPT, NHAI and CIDCO, i.e. Mumbai-JNPT Port Road Company Ltd. f NHAI is the implementing agency. Foundation stone of this project was laid by the Honourable Prime Minister of India on August 16, 2014.
5) Port Based Multi Product Special Economic Zone 10
f Foundation stone laid by the Honourable Prime Minister of India on August 16, 2014.
f Total Area: 277.38 hectares f Expected Investment: ` 4,000 crores. f Direct and Indirect Employment generation for approx. 1.5 lakh persons. f To be executed by a Special Purpose Company (SPC), a wholly-owned subsidiary of JNPT. f Ernst & Young-TCE appointed as overall Advisor of the project. f Letter of approval (LOA) received from Ministry of Commerce & Industry. Notification issued by Ministry of Commerce and Industry. f L&T Romboll Consulting Engineers Ltd., in association with VITYA Consultants Pvt. Ltd. appointed on 21st Oct. 2014 as Consultant for preparation of Detailed Design / Detailed Master Plan. f Environmental clearance was obtained f Area-leveling, construction of security wall and other ancillary works are in progress.
6) Multi-Modal Logistic Park and Dry Port:
f The project comprises of 100 ha of Multi Modal Logistic Park which includes Covered Warehousing, Open Storage, Paved Stacking Areas, Circulating Areas, Truck Parking, Repair facilities for containers, tractor-trailers/trucks and handling equipment. Consultant shall prepare block cost estimate and detailed financial module for the project. f Estimated cost: ` 1,500 crores. f The Port is in the process of appointing a consultant for preparation of DPR for the project.
7) Centralized Parking Plaza:
December 2014 - January 2015
1. Total Area: 45 ha. Parking capacity – 2,000 TTs. 2. Phase-I: f 22 hectare area. Cost: ` 17.4 crores. The work awarded
Interview to M/s Thakur Infra-projects Pvt. Ltd., has commenced in February 2014 and is expected to be completed by February 2015. 50% work is completed. f Phase-II: f The estimate for Phase-II work of 23 hectare area amounting to ` 24.34 crores f Status: Proposal approved and bidding process has been initiated. 8) Rail Connectivity Project:
The Ministry of Railways has planned for a Dedicated Freight Corridor (DFC) connecting JN Port with the Northern hinter-land, being taken up by the Dedicated Freight Corridor Corporation of India Ltd.
Expected date of completion: March 2017
9) Construction of Mooring Dolphin:
Project Cost: ` 9.31 crores.
Capacity addition: 1 million tonnes per annum.
Date of award: January 23, 2014.
Scheduled date of Completion: March 2015
Status: The work is in progress, and as on date 60% work is completed.
10) C onstruction of Additional Liquid Cargo Terminal
Project Cost: ` 2,496 crores.
Capacity: 26 million tonnes
Status: Cabinet approval is awaited. The Port has shortlisted six agencies to issue RFP’s and draft Concession Agreement. As advised by the Ministry of Shipping, the project is being re-structured.
11) C onstruction of Additional Refer Yard:
JNPT is having 320 reefer storage points in the Port owned Container Terminal, and proposes to enhance it to 576 Nos.
Estimated Cost: ` 17 crores
Price bid received. Port will be able to award this project by end of December 2014. Project completion period is 9 months.
What are the expectations by the industry from the new Shipping Minster in order to implement reforms in the
port sector that will move at a faster space to put the sector on fast track? And your comment on the recent 2014 Union Budget towards the Indian Port sector? Ports in India play a vital role in the overall economic development of the country. About 95 per cent by volume and 70 per cent by value of the country’s international trade is carried on through maritime transport. India has a total of 187 minor ports and 13 major ports spread across the nine maritime states. According to the Planning Commission, the capacity of Indian ports will have to nearly double to 2,302 million tonnes (MT) over the next five years to be able to handle the fast growing cargo traffic. The trade has huge expectation from our dynamic Minister of Shipping. There are several issues on which the Hon’ble Minister has already gained a lot of ground, the most important among them are tariff reforms, development of coastal shipping and inland water transport, road linkages to ports and allowing Indian fleet owners to register their ships overseas. In the Union budget 2013-14, host of measures to boost the transport, logistics, exports and other sectors have been announced. India will get 16 new Port projects this year, with a focus on their connectivity to the hinterland. India currently has 13 Major Ports. Union Finance Minister, Arun Jaitley, also reiterated previous Government’s plan to spend ` 11,635 crore to develop the phase one of the outer harbour project in VO Chidambaranar Port Trust at Tuticorin. The Special Economic Zones will be developed along the existing major ports, Kandla in Gujarat and Jawaharlal Nehru Port Trust in Mumbai. December 2014 - January 2015
11
Interview
‘Indian logistics industry is at the turning point of its development’
T
he Logistics sector is rapidly evolving in India and forms the backbone for some key sectors like retail, automobiles, pharmaceuticals, etc. But the sector, as a whole, is facing a lot of inefficiencies like transportation, poor roads, poor warehousing and storage facilities, a complex tax structure and low rate of technology adoption. Vineet Agarwal, Managing Director, Transport Corporation of India (TCI), details on key issues/challenges faced by the industry and existing tax regimes & future demand drivers for the growth of logistic industry in the country. He also recommends effective solutions & reforms in policy regimes to make the sector competitive as par with International Standard, in an email interaction with Rakesh Roy.
What are the challenges currently faced by the logistic industry in India? Logistics cost in India is about 13-14 per cent of the GDP, as against 7-8 per cent in developed countries. The sector faces multiple challenges due to poor conditions of storage infrastructure, inefficiencies in transportation, poor roads, a complex tax structure and low rate of technology adoption. Pending issues with GST is also hampering growth. The sector, as a whole, is not very organised and the work is competitive, especially in the big cities, where there are a vast number of unorganised small truck owners and service providers providing stiff competition at razor thin margins. Technology adoption in the sector is also very low which is leading to lower efficiency and unlike European countries.
Logistics cost in India is about 13-14 per cent of the GDP, as against 7-8 per cent in developed countries.
12
Overloading of trucks is the cause of enormous rate of death since logistics service providers do not consider investing in security measures due to cost reasons. The sector also faces storage and warehouse related risks as the fragmented private logistics companies do not interface with logistic chains. The sector is also in need of skilled manpower as truck drivers face difficulty in accurately logging delivery records, understanding delivery documents, negotiating for return business, handling queries and so on. Please brief us the existing warehousing & storage systems in India which is called the catalyst to logistic industry. Good storage and warehousing facilities are essential to the growth of the logistics industry. The sector, however, faces major challenge because of
December 2014 - January 2015
Interview poor warehousing and storage facilities which is leading to high levels of loss, damage deterioration of stock, especially of perishable items. Insufficient specialist equipments like proper refrigerated storage and containers and poor training are also to blame for the damage of goods. This needs to be changed and firms associated with logistics will have to give a lot of importance to enhancing warehousing facilities as there is massive rise in the transportation of perishable products. Warehousing also need to go to the next level in the wake of just in time manufacturing, global procurement and new models of sales and distribution. Please elaborate us the existing tax regimes and suggested reforms in tax that could boost the industry. Following tax reforms should be undertaken to boost the growth of the sector: I.
Multi-modal policy for the domestic market to encourage adequate linkages of different modes of transportation and uniformity and rationalisation of taxes across modes to promote optimum utilisation of all modes of transportation. II. Tax benefits for expenditure on skill development, logistics infrastructure up-gradation, CENVAT credit for road transport services and coastal shipping services and relaxation in norms for payments by Goods Services Transport Agency (GTA). III. Treatment of warehousing for non-agricultural commodities at par with infrastructure projects to encourage investment in warehousing industry. IV. Implementation GST to enable the creation of the common market and permit free and unimpeded movement of goods and services across the country. V. Access to cheap ECB borrowing to fund capital expenditure plans of logistics firms. VI. Enhancement of the existing limit fixed under Sec 40 A (3) of the Income Tax Act 1961 for payment of expenses from ` 35000 to 75000 as it is difficult to keep expenses in the existing range when transporters are plying vehicles across the country. VII. Modification in the law of abrogation to protect the interest of logistics service providers as currently transporters are made liable for goods for which they are paid only freight charges while Insurance companies charge a premium from the client for insuring goods. What are the future demand drivers that will enhance the sector? We anticipate economic recovery in the coming years and believe that Indian logistics industry is at the turning point of its development. The sector is likely to see demand to come from e-commerce and other consumption driven
sectors with growing disposable. The trend of increased outsourcing of logistics services by non-traditional industries is also one of the prominent growth drivers for the company which is now witnessing demand for services like order processing, kitting and packaging. We are hopeful that implementation of GST will lead to rationalisation of taxes on production, distribution and inventory management leading to the creation of a common market, increased demand for warehouses / hub centres and multi-modal movements between hubs. We also foresee bulk multi-modal movement and reduction in unit cost of transportation due to speeding up of movement by rail and road with the upcoming dedicated freight corridors and diamond quadrilateral project. Your suggestion on effective solutions & policy regimes, etc to make the sector competitive as par with International Standard. We expect the following policy initiatives to make the sector competitive: •
Industry Status: A separate ombudsman on the lines of TRAI, or industry status to address sector issues effectively.
•
Multimodal Policy:
I.
A national level policy to define the blueprint of infrastructure development to encourage adequate linkages of different modes of transportation and hence achieve holistic and balanced multimodal mix. II. Uniformity and rationalisation of service taxes across modes to promote optimum utilisation of all modes of transportation. III. Development and integration of multimodal logistic parks to improve storage facilities, reduce transport costs, and enhance efficiency of the entire logistics network of the country. Large scale projects such as the development of large container terminals should be integrated with hinterland connectivity projects and emphasis should be placed on lastmile connectivity network. We also recommend continued privatisation of container operation by Indian Railways. IV. Comprehensive policy framework for the air freight sector to meet the growing demand and improve efficiency of off-airport facilities for cargo processing, handling for clearance and customs procedures. •
Regulatory Framework
I.
Tax benefits for expenditure on skill development for skill set like driving, loading, picking, packing, etc. logistics infrastructure up-gradation,
December 2014 - January 2015
13
Interview II. Currently there is a high duty for liquid bulk tanktainer which needs to be reduced. III. CENVAT credit for road transport services and coastal shipping services and relaxation in norms for point of taxation for payment of service tax by Goods Services Transport Agency (GTA). IV. Enhance the existing limit fixed of cash payments under Sec 40 A (3) of the Income Tax Act 1961 for payment of expenses from ` 35000 to 75000 as it is difficult to keep expenses in the existing range when transporters are plying vehicles for long distances across the country. V. Treat warehousing for non-agricultural commodities at par with infrastructure projects to encourage investment in warehousing industry. VI. Implement GST to enable the creation of the common market and permit free and unimpeded movement of goods and services across the country. VII. Service Tax - Reverse Charge Mechanism should be applicable only in the case of Import of Services from outside India. VIII. PAN no. should be mentioned in RC, Permit and Insurance for transporter to save time in engaging vehicles. IX. Working GPS & Speed Governors should be mandatory in all vehicles. X. High Security Registration plate should be made compulsory in all states. •
Infrastructure Focus
I.
Create multi-modal logistics’ hubs to give transporters the choice of best modes. II. Man inter-state check post adequately and create government warehouses to ensure safe custody of goods which are not allowed to enter into states due to sales tax documents. III. Separate warehousing space for cargo handling and storage apart from vehicle waiting facility at airports. •
Long Term Planning and Financing for the Sector:
I.
Access to ECB borrowing to fund capital expenditure plans of logistics firms.
•
Law of Subrogation:
I.
Modify law of subrogation to protect the interest of logistics service providers. Currently, transporters liability is fixed under Carrier Act and they are made liable for goods for which they are paid only freight charges while Insurance companies charge a premium from the client for insuring goods.
14
December 2014 - January 2015
Dear Readers, Shipping, Marine & Ports (SMP) World, a premier bimonthly magazine of CHEMTECH Foundation & Jasubhai Media Pvt Ltd, encompasses all segments of the Shipping, Logistics and Ports industries. SMP World, making its debut in 2008, has been known to its matter-of-fact approach and objective reportage, leaving an indelible imprint on the operators of the entire Marine Industry. The magazine not only enjoys immense popularity amongst its readers across the globe, but also acts as a decision-making tool for the industry players. You can contribute in the magazine with technical articles, case studies, and product write-ups. The length of the article should not exceed 1500 words with maximum three illustrations, images, graphs, charts, etc. All the images should be high resolution (300 DPI) and attached separately in JPEG or JPG format. Have a look at Editorial calnder of SMP World - www. smpworld.com To know more about Chemtech Foundation, Jasubhai Media and other publication and events, please our website – www.chemtech-online.com Thank you, Regards, Rakesh Roy Features Writer Jasubhai Media Pvt Ltd Tel: +91 22 4037 3636 (Dir: 40373678) E-mail: rakesh_roy@jasubhai.com
Interview
‘India’s biggest challenge as well as the largest opportunity is logistics’
W
hile India’s economy has seen some of the toughest times over the last two years in terms of its economic growth coupled with sluggish growth seen in domestic manufacturing, exports, power generations, exploration of oil & gas, alternative energy generations, development of urban infrastructure, development of ports and transportation. “But the country is still the second largest developing market in Asia and its domestic market is a huge consumer of products and services created by our economy, thus the backbone of our growth which is logistics has performed more than better as compared to other sectors. Overall logistics industry is actually the movers of EXIM & domestic trade in India, thus it is directly proportional to India’s economic growth,” says Shashi Kiran Shetty, Executive Chairman, Allcargo Logistics Ltd. He further elaborates the current overview, challenges pertain the Indian logistic industry and more on e-commerce, existing taxation system & trade regulations, proposed GST in logistics, warehousing & storage system, Shipping Ministry’s initiatives, and future demand drivers for the Indian Logistic & Transporting Industry, with an email interaction with Rakesh Roy.
Despite a sluggish Indian economy for the past few years, logistics sector has been seemingly wellpositioned in sailing through the turbulent waters. Please apprise us the current overview of Indian logistic industry & what were the factors that have driven the industry in such position? India’s economy has seen some of the toughest times over the last two years in terms of its economic growth. All key macroeconomic variables have been under tremendous stress, from domestic manufacturing, exports, heavy dependence on imports especially fuel, inflation, currency fluctuation and policy delays. These challenges were severely affected by the global economic gloom and monetary crunch. Given India’s
demographic and economical proximity to global markets of United States and Europe, the country has faced major challenges in stabilising its past growth. But India’s opportunity is here to stay. The country is still the second largest developing market in Asia just after China. More than 50 per cent of its population is below the age of thirty-five. Thus this segment of the market is a huge base for consumption of domestic and global products. Underlying in our economic environment are some of the core sectors which drive new growth, development, employment and investments. These are sectors such as power generations, exploration of oil & gas, alternative energy generations, development of urban infrastructure, development of ports and transportation December 2014 - January 2015
15
Interview mediums. All policy decision devoid of emphasis on these core sectors will always fall short of its objectives. These sectors have the potential to rejuvenate our economy into a hyper growth drive, if the policy machinery uses these sectors as an asset and initiate a transparent effective plan to implement these projects into the economy. India’s biggest challenge as well as the largest opportunity is logistics. One of the backbones of our economy and particularly for these sectors will be the logistics infrastructure of our country. It presents the biggest challenge to our sustained growth as well as the largest opportunity to rise as an economic powerhouse. Competitive economies of China, Singapore, Dubai or even European countries have always had the advantage of world class roads, rail connectivity, ports, warehouses, best in class supply chain etc while competing with BRIC economies. India on the scale always had to play catch up. Our economy is driven by the mindset wherein infrastructure is termed as second fiddle as against the most critical component of growth. But due to globalisation and integration of trade agreements that mindset has seen rapid change over the last few years. Thus today infrastructure development has become one the top priorities of the government in kick starting the economic engine again. This is evident from the fact that prime minister’s office is aggressively pushing for infrastructure development plans to be implemented as a priority. Given India’s unique demography and over 7,000 odd kms of coastline, the country needs strategic infrastructure will be propel growth of the economy and act as a catalyst to reduce the cost of doing business in India, as compared to other regional economies, especially China. Thus India’s domestic market is a huge consumer of products and services created by our economy, thus the backbone of our growth which is logistics has performed more than better as compared to other sectors. Overall logistics industry is actually the movers of EXIM & domestic trade in India, thus it is directly proportional to India’s economic growth as well as positive sentiments. Thus it has witnessed good growth in 2014 compared to earlier years. Also, there are constraints and logistics-centric inefficiency hindering the growth of the industry. Can you please brief us the same? More than issues we as a country, industry or as citizens need to look at it as a scope of improvement & an opportunity. The challenges are manifold from a macro point of view as well as from a holistic perspective. First of all adequate infrastructure especially roads connected to our ports, rail connectivity to ports are very important to bring in the seamlessness in our EXIM business. We need to reduce the transaction costs of doing business to & from India, thus all policies, infrastructure, single window clearance and others need to be made towards achieving this goal. Transparent 16
Given India’s unique demography and over 7,000 odd kms of coastline, the country needs strategic infrastructure will be propel growth of the economy and act as a catalyst to reduce the cost of doing business in India, as compared to other regional economies, especially China.
movement of goods with minimum paper work & tax burden needs to be addresses on a war footing The large section of Logistics industry in India still depends on age old means and methods, being passed on from generations, while product or service manufacturers and providers are looking for more efficient and cost effective logistics solutions. What are the immediate attentions and improvement the industry needs to more competitive in national and international markets? Logistics encompasses the entire value chain of the economy, from imports to exports, to production of goods in factories across tier I, II, III and other cities. Thus any product needs to move from point a to b across India through roads, rail, coastal shipping or other mediums. Thus lack of infrastructure connecting these transportation mediums is one of the most crucial challenges for the entire sector. Infrastructure doest not mean road or rail only, it also spans ports, connectivity of roads & rail to ports, state level check points for clearance, single window documentation touch points and transparent tax policies. Thus all sectors within the economy are dependant on logistics thus all sectors are facing challenges today and with appropriate policy decision on war footing, the entire economy with benefit tremendously. With a stable government at the center and a leader who believes in accountability, timely implementation of projects and transparent decision making, government will surely drive the new growth across logistics sectors. Now that ministry of transportation and shipping are under one leadership, challenges will be tacked with a holistic approach and with unison across projects. Government’s and ministry’s pro economic policies and facilitator role will have a positive effect for the entire economy. Private enterprises will also get a boost to evaluate and leverage more opportunities boosting India’s market as a trade hub. Recent years have been seen a revolutionary growth of e-commerce in the way of Indian shops & trades in Tier 2 & Tier 3 sections of the country & is likely to flourish in the future, which is leading to logistics companies responding with new innovations in service for the
December 2014 - January 2015
Interview success of online business. What is your view on it & how is the industry preparing to meet the requisite? E-commerce industry has surely developed our domestic market to a globally benchmarked service delivery and buying experience which was never available before. With the adoption of smart phones and internet driven purchase and information search, this industry will growth will only increase exponentially in coming years. This sector also presents opportunity for existing logistics service providers. Technology driven services with real time visibility of products as well as best in class first and last mile connectivity will drive this industry further. Thus service providers equipped to adopt international best practices and with capability to provide integrated services will have the biggest opportunity to service this industry. What is your view on existing taxation system & trade regulations for supporting the logistic & transportation sector in India? Our existing system as well as regulations were designed and developed with a particular economic requirement in mind. With India’s emergence as a global trade hub and as the second fastest developing economy, many of these policies and regulations have to be adopted and molded to suit our accelerating growth as an economy. With the current governments initiatives many of the updates are already underway and the resulting positive sentiments across our economy is the testament of the success of the pro-economic policies and regulations. These changes are also applicable directly to the logistics sector as a whole, as it is directly proportional to our economy and its growth. What is your view on the regulatory reforms proposed in the GST for transportation and logistics industry in India? GST will play a critical role in next level of growth. For India to truly realise its potential as an international trade hub, we need globally accepted policies & regulations like GST, to add efficiency in the system along with cutting down unnecessary costs and making it affordable. From a macro economic level, GST for the economy if implemented to its fullest, will be a game changer. Infrastructure and Logistics is India’s economic backbone, thus GST implementation will certainly help the industry. More importantly GST will make transaction costs of doing business from India especially EXIM more competitive and make the logistics value chain of our country more efficient Your view on warehousing and storage system in India which is called the backbone of logistic industry? It is extremely essential that our country’s economy is supported by strategically located warehouses not only for exports and imports, but at to reach out to our tier II, III cities and beyond. An efficient, accessible
warehousing infrastructure will be a much needed variable when GST is implemented pan India. From a multiple state level requirement India will move to a globally successful hub and spoke model. This will add to the effort in reducing transaction costs of doing business from India. At present it is estimated that within our economy only about 20-25 per cent of warehousing is outsourced, it needs to move to the global level of more than 60 per cent to make the economy more efficient. This will only happen when public as well as private enterprises work together to leverage this opportunity. With a new government place at center, what are the expectations the industry is looking from the Shipping Ministry to give the much-needed impetus to the industry? Many of the proactive measures already implemented by the ministry are welcome signs for the industry. GST implementation will provide the necessary impetus to create new movement within the EXIM market, thus directly benefiting the economy. There is enormous scope for developing infrastructure such road and rail connectivity linked to our ports. Movement of EXIM cargo to and from ports to hinterlands or outside of the country is a major activity which needs priority attention in terms of infrastructure development. With the governments focus on making coastal shipping a major driver in India’s transportation chain in comparison to road and rail, is one of the most important initiatives which will benefit our economy immensely. What are the main demand drivers you foreseen that will drive the future growth of the Indian Logistic & Transporting Industry? From India’s perspective, the investment has to be focused on building hard infrastructure such as road, ports, roads connecting ports, rail connectivity, level playing fields and trade enhancing policies for coastal shipping, seamless approvals for movement of heavy project cargo within the country and of course timely policy implementation of initiatives such as GST across the economy. The main drivers which will benefit the sector are the Make in India initiative with the focus on manufacturing sector, with India attracting investment and opening its markets for international goods EXIM will drive the industry towards next level of growth. GST will make hub and spoke model a more viable option for logistics and supply chain, thus making our markets more in line to international logistics practices. With infrastructure taking the priority spot, project logistics movement of over size and over dimensional cargo will witness positive growth in coming years. Coastal shipping will witness a more robust adaptability in the logistics value chain of our country. Overall coming years will give a far better and faster growth of our country. December 2014 - January 2015
17
Interview
HFZA: A Key Force to Attract FDI into Sharjah
H
amriyah Free Zone Authority (HFZA) has been widely acclaimed as a major investment destination in West Asia, houses around 6000 companies from across 155 nations, attracting foreign investment from more than 500 industries verticals in the key sectors like oil & gas, petrochemicals, maritime, steel, construction and food. Saud Salim Al Mazrouei, Director, HFZA, details about the free zone’s success story so far & future action plans in making HFZA into a new age of industrial & free zone, with an email interaction with Rakesh Roy.
Hamriyah Free Zone Authority (HFZA) has become an important investment destination in West Asia. What are the key USPs of the zone in attracting global industry, traders and commercial organizations to set up their business in HFZA?
During the first nine months of 2014, HFZA has leased 400,000 square meters of additional land area. HFZA has become a key force that attracts foreign direct investment into Sharjah and the United Arab Emirates.
Hamriyah Free Zone Authority (HFZA), the second largest industrial free zone in the UAE, is today fast emerging as one of the cornerstones of the UAE’s industrial development. Around 1500 news companies were set up in the first 9 months of 2014 and at present the total of 6000 active companies have been established their businesses in this free zone. HFZA has been widely acclaimed as a Free Zone that fosters entrepreneurship and economic development, thanks to its initiatives in accelerating business activity in Sharjah and the UAE. Hamriyah Free Zone today houses enterprises from across 155 nations, attracting foreign investment from more than 500 industry verticals in the key sectors like oil & gas, petrochemicals, maritime, steel, construction, and food. 18
December 2014 - January 2015
Interview HFZA was created with a vision to empower and foster businesses by stimulating industrial and economic growth in an environment free of bureaucracy.
Warehouse is the backbone of any trade zone, please can you apprise significant the warehouse system in HFZA?
The Free Zone’s strategic location that connects it to three seaports: Hamriyah Port, Khalid Port and Khorfakkan Port, all well connected by an extensive road network throughout the UAE and GCC makes HFZA the ideal transshipment hub for the Indian Subcontinent, North and East Africa and the Arabian Gulf.
HFZA provides pre-built warehouses, factories, offices to establish business in the free zone and is looking for strengthening its infrastructure development includes warehouse system in the coming years.
HFZA’s strength lies in its discerning ability to introduce outstanding services and products that adhere to the international standards of excellence for its community of investors to thrive. Can you please apprise us on the investment of HFZA in 2013-14?
The ongoing projects of HFZA include several warehouses and the main road interchange, which includes a flyover and slip roads. The warehouse project is almost completed and most of the warehouses have been already occupied.
During the first half of 2014, 813 companies from 86 countries registered in HFZA, where India topped with 276 companies.
What are the core values that HFZA has been maintaining years to years for striving the business excellence at Hamriyah Free Zone?
300
276
250 200 150 100
76
64
42
50
27
24
21
20
19
19
16
15
14
15
13
13
9
9
9
9
9
0
IN
UN
E IT
D
DI
AR
A
AB
EM
IR
E AT
S K PA
IS
N TA
ET
HI
UN
OP IT
IA
ED
KI
NG
DO
M M
OR
O
CC
O JO S RU
SI
RD
AN
AN
F
E ED
TI RA
ON
CH
IN
UN
A
I
D TE
E AT ST
S FR
AN
CE
KA
K ZA
HS
N TA
NI
GE
RI
A CA
NA
DA
Y AL IT SA
I UD
AR
AB
IA
EG
YP
T ER
IT
RE
A
SY
LE A RI
BA N
NO
AR
N
AB
RE
PU
BL
IC U
E ZB
KI
AN ST
Twenty top most countries establishing business at HFZA during first half of 2014 December 2014 - January 2015
19
Interview We believe in a customer-centric approach with traits like simplified procedures, transparency, modern and competitive business solutions. HFZA was created with a vision to empower and foster businesses by stimulating industrial and economic growth in an environment free of bureaucracy. Currently, HFZA is the Middle East’s fastest operating free zone taking only a record 2-hour processing time for clearing licensing formalities. We follow a strategic approach in achieving our wellarticulated plans and provide outstanding services and facilities to our customers every day. This encompasses a responsible regulatory environment, world-class infrastructure, innovative services and facilities such as total ownership of businesses, repatriation of capital and profits, application of one-stop-shop concept for quick issuance of licenses and a viable visa solution for business owners and their employees. India has been a key trading partner to the UAE. What are the strategies HFZA adopting to lure SMEs from India? India is a key-market for HFZA. Based on mutual interests, the UAE enjoys a warm economic relationship with India. Notably, bilateral trade between India and UAE has grown from USD 43.46 billion in 2009-10 to USD 60 billion in 2013-14. A total of more than 6000 companies are currently establishing their businesses in this free zone, where about 40 per cent are Indian companies. During the first half of this year, over 276 Indian companies registered in HFZA and more are coming. HFZA is overwhelming the growing interest shown by Indian investors in our facilities and commits to offer turn-key solutions and instant & comprehensive business environment with flexible terms and minimal investment for enabling Indian companies to establish a powerful business. We support SMEs immensely and ensure that all companies have access to everything they require to build and conduct their business efficiently at HFZA. To support this important sector of the economy, Hamriyah Free Zone has cobbled together a common sense solution for SMEs. We often participate in events in India to boost relations with the Indian business community and promote the Free Zone to Indian companies and investors. Our booth at the Global SME Summit stirred great interest among hundreds of serious investors and business-men. With the changing scenario of global trading & business, what are the future plans of HFZA to attract more & more global investors? 20
HFZA has been maintained the core values of commitment and perseverance to high standards of performance in providing the International business investors with distinctive investment opportunities in a free market environment since from its inception. These values make HFZA to be the most cost effective, efficient and profitable Free Zone in the region with a commitment of sustainable business development in a tax free environment, full company ownership, exemptions from all commercial levies and repatriation of capital and profits. To add to the value of the esteemed Emirates of Sharjah, HFZA will continue thrive for creating an environment within the Hamriyah Free Zone to attract reputable asset based industry, quality trading and commercial organizations. We will achieve this through the provision of land, buildings, infrastructure and general support, to enable our investors to operate profitably, safely and in an environmentally and socio economically responsible manner. With a vision to create more infrastructure development at HFZA, the Free Zone opened the first phase of Food Plastic & Packaging zone this year. Stretching across 380,000 square meters, this facility targets the various needs of the fast moving consumer goods industry (FMCG) such as food processing, cold storage, plastic products, plastic raw materials, packaging, etc. The vast investment options available at HFZA in various domains, including industrial, commercial and services, today serve as a growth catalyst for both multinational firms looking to expand operations and emerging entrepreneurs with big dreams. In its Phase 2 expansion plan, HFZA has completed the power, water and communication network facilities, which include the Logistic Village and Food Zone. Hamriyah Logistic Village is aimed at providing all-in-one logistics and distribution center for companies operating in the Free Zone.
December 2014 - January 2015
Guest Colomn
Cruise Shipping: Indian Scenario While India is well proven as a tourism source market by its large outbound tourism segment, the country has not seen such kind of Cruise ships operating on Indian coast as of its population size. The author details on the constraints faced by cruse shipping in India and suggests significant steps to develop infrastructure for cruise shipping in the country.
A careful middle path is probably the best way ahead. No overcapitalising the terminal, while striving to buffer the demand spikes by encouraging domestic cruises with liberal government support.
Capt Sekhar Director
AlphaMERS g sekhar@alphamers.com
I
t is not happening in the country, well not yet. Cruise ships are not regularly operating on Indian coast except around 100 vessel calls. This is for all the ports put together in a year. That is not much for a country of this size. What is the reason? Is it just inertia, or more than that? The lack of swanky infrastructure is a dampener, but is not a showstopper. Many of the ports do not have good terminals, except Mumbai and Mangalore. But then terminals are not destinations, they are infrastructure that need to be quick and efficient. One normally takes infrastructural limitations in one’s stride but is easily irritated by sloppy service or inefficiency. I never thought twice about the tarmac bus ride in any airport, but if the baggage is taking longer than usual to arrive, it is a different story. I do not remember many of the ‘functional’ airports I have passed through, unless there is some distinct bad experience. The berth does not directly affect the customer experience either, except if it unpleasant, i.e. dusty or is located far from the gate or the passage to the gate is slowed by trucks and forklifts. Cruise passengers are usually quite willing to disembark for excursion by tenders or boats at various ports. So long as the port service is quick and efficient... Why is dedicated infrastructure not happening? The demand for port infrastructure is a spiked demand. One day it is a vessel with 2000 passengers and the next 30 days there is no vessel call. How does an investor get his lRRs? Or must this infrastructure spending be done by Government under economic benefit or social spending criteria? A very low utilisation causes poor mobilisation, besides financial strain. On the other hand, if a cruise operator brings his
December 2014 - January 2015
21
Guest Colomn 2000 pax vessel to the country even for a day, he expects good service. lf he gets slipshod service, he is not coming back and the country loses whatever traffic it has. Functionally adequate infrastructure is therefore a bare minimum. A careful middle path is probably the best way ahead. No overcapitalising the terminal, while striving to buffer the demand spikes by encouraging domestic cruises with liberal government support. It is a great move to locate the terminal building along the boundary wall of the port instead of being completely inside the port area. This way, the customs and immigration boundary, run along the inner face of the building. Public transport lines up on the outer face of the terminal, exactly like in an airport. A terminal operator can earn some revenues from city clientele, beyond just one or two days of vessel calls in a month. Cruise vessels are typically light on draft but have large GRTs which is a measure of enclosed volume and not weight. They consequently cost the ports lesser Development costs in terms of capital and maintenance dredging. In Indian context, ports are not located upriver and hence air draft is not a constraint. But these cruise vessels pay higher tariffs as per their GRT. Another issue is the cost plus model of Tamp. This is suitable for captive cargo, cargo originating or destined to India. Visiting cruise vessels are not captive market for the country; they can choose to visit Colombo or Maldives instead.
Cruise ships are neither faster nor cheaper for travel on the coastline, thanks to efficient roads, rail and airline capacities.
Therefore, a weightage must be given to competitive pricing with respect to neighboring country ports. Cruise ships are neither faster nor cheaper for travel on the coastline, thanks to efficient roads, rail and airline capacities. Hence it remains predominantly a leisure option competing with resorts and hotels. Interestingly the cruise operator pays for his vessel, fuel and crew as per international market prices, while charging passengers as per price sensitivities of the Indian vacation market. This is burgernomics at its worst. Thankfully, unlike hotels, this asset can be relocated if it is not doing well in a particular geography. India as a tourism source market is well proven by its large outbound tourism segment. The Indians aspiration for cruising is well demonstrated by the large Indian contingents onboard the cruises in Singapore. However, Indians taking to sailing for adventure is nearly absent. Hence the weather and the minimum size of the cruise vessel is an important criteria for Indians. The South-West monsoons are closely bordering the Indian school vacations. Ports by themselves do not have tourism brand value, except perhaps
Kochi and Goa. Islands have yet to be developed to receive cruise vessels of a respectable size. lf not a fullfledged vessel berthing terminal, a good tender landing terminal in the islands is a must. This spot is often the first cultural introduction of a visitor to the country. It will be worthwhile for states to identify picturesque locations for floatels where some of these cruise vessels can moor during the monsoon. The tourists can stay onboard for a day or two and enjoy the self-contained facilities of a ship. lf this catches the imagination of the tourists, the floatel concept will multiply in no time. Of course the sailing experience will be missing, but the large savings in the HLP costs makes it affordable to tourists lower down the consumer pyramid. Such floatels form a temporary accommodation capacity at desired tourist locations. The state government has to perform some technical studies, develop local environment standards and support services at such locations. Innovative products can some from anywhere, which catches the imagination of the Indian psyche. Twenty years back one entrepreneur converted a rice boat in Kerala to a houseboat and the rest, as we know, is history. Imagine being on the deck of a luxury floatel, facing the ghats of Benares, listening to soft fusion music, learning yoga and meditation. We can be glad that the country has a lot of attractions and is low on infrastructure, a situation that can be improved, not the other way around with no attractions and great infrastructure. The best is yet to come.
22
December 2014 - January 2015
Features
GST: A Key Driver for Growth of Indian Shipping & Logistics Industry Though implementation of Goods and Services Tax (GST) in India, the Constitutional Amendment Bill has already tabled in the Lok Sabha recently, by April 2016 appears to be a near reality now, the author elucidates on ‘how GST will play a critical role in next level of growth to Indian Logistic & Transporting Sector.
T
he implementation of Goods and Services Tax (GST) by April 2016 appears to be a near reality now. The Constitutional Amendment Bill is already tabled in the Lok Sabha to pave the way for the introduction of this major reform. India is at the cusp of dawn of GST’s introduction.
In order to introduce GST in India, an amendment in the Constitution of India is necessary in order to confer powers to the Centre to levy tax on sale of goods.
The Logistics sector is rapidly evolving in India and forms the backbone for some key sectors like retail, automobiles, pharmaceuticals, etc. Constitutional Amendment – A Key Step In order to introduce GST in India, an amendment in the Constitution of India is necessary in order to confer powers to the Centre to levy tax on sale of goods. The Constitution (122nd Amendment) Bill, 2014 is the first positive step towards GST and is a reflection of the Union Government accepting all major demands of the State Governments such as compensation, CST equivalent tax for inter-state transactions accruing to the origin state, petroleum not to be taxed under GST at inception, and alcohol to be completely kept out. Key Features of Proposed GST Framework in India A ‘Dual GST’ structure is proposed to be implemented in India which would have two components viz Central GST (‘CGST’) to be levied by the Central Government and State GST (‘SGST’) to be levied by the respective State Governments on all transactions of supply of goods and services except the exempted goods and services. Integrated GST (‘IGST’) is proposed to be applicable on interstate transactions of goods and services (including imports). In addition to the above, there would be a levy of an additional tax (not exceeding 1 per cent) on supply of goods in the course of inter-state trade. Such tax would be collected by the Union for a period of two years and assigned to the state from where the supply originates.
Sanket Desai
Director - Indirect Taxes Ernst & Young LLP g sanket.desai@in.ey.com
Export of goods and services would be zero rated under the proposed GST regime. It is proposed that credit of CGST shall be available against CGST and credit of SGST shall be available against SGST. CGST would not be available as a credit against SGST and SGST would not be available as a credit against December 2014 - January 2015
23
Features It would be essential for the shipping and logistics companies to review the GST draft rules and legislation, as and when published in public domain and to make appropriate representations to ensure eligibility to claim credits of taxes on purchase of goods under the GST regime.
CGST. IGST would be available as a credit against CGST as well as SGST. Impact on Shipping & Logistics Sector Impact on Tax Rates: In the Empowered Committee Meeting held on 11 November 2014, GST subcommittee has proposed Revenue Neutral Rate (RNR) of 26.7 per cent (State GST rate – 13.9 per cent and Central GST rate – 12.8 per cent). It appears that the RNR has been computed assuming that tax base under GST would be the same as that under current indirect tax regime. Hence, in order to have a RNR below 20 per cent. It would be essential to have a more comprehensive tax base under the GST framework. At present, the GST rate has not been finalised. Once the Constitution Amendment Bill is passed, the GST Council shall make recommendations on the GST rates. Service providers of shipping, transportation and logistics sector are likely to experience a tax regime with a higher rate and compliance levels. Today, provision of services attracts service tax at 12.36 per cent. More particularly, transportation of goods by sea, road as well as air currently enjoy lower service tax rates on account of abatements. Under the proposed GST law, supply of services would attract CGST and SGST which is likely to be higher than the current service tax rate. However, in case of B2B transactions, the service receivers are likely to be eligible for credit of the CGST and SGST paid on procurement of services. International Transportation Services: At present, transportation of goods from an overseas port to an Indian port (import cargo) is covered in the negative list of services and not liable to service tax. Similarly, transportation of goods from an Indian port to overseas 24
port (export cargo) done for an Indian customer, the services are exempted services (as per Rule 10 of the Place of Provision of Services Rules, 2012) and such services do not qualify as export. On account of the above, CENVAT credit/refund of taxes paid on inputs, input services and capital goods used for international transportation of goods from India to outside India carried out for Indian customers is not available, which results in higher costs relating to transportation of goods. Globally, major maritime jurisdictions like UK, Singapore, Netherlands, Greece etc, give full credit of taxes paid on inputs used for export and import cargo. This is an opportune time for the shipping industry to represent before the regulatory authorities and ask for ‘zero rating’ status for export and import cargo so that shipping companies can claim credit / refund of input taxes paid on services as well as goods used for provision of international transportation of goods. Credit of Taxes Paid on Purchase of Goods: Indirect taxes and duties paid on ship stores, consumables, container, repairs and maintenance such as VAT, sales tax, octroi duty, additional customs customs duty, special additional customs duty etc are currently not eligible for credit against service tax on output services and add to the transaction costs. Under the GST regime, various indirect taxes such as VAT, sales tax, excise duty, entry tax, octroi duty would be replaced by GST. This should ideally enable shipping and logistics companies to claim credit of taxes paid on procurement of goods under the GST scenario which is currently not available. However, it would be essential for the shipping and logistics companies to review the GST draft rules and legislation, as and when published in public domain and to make appropriate representations to ensure eligibility to claim credits of taxes on purchase of goods under the GST regime. Place of Supply for Various Services: One of the fundamental changes to be brought in with the introduction of GST is the shift from the origin based taxation under the current indirect tax regime to a destination based consumption tax. The place of supply regulations proposed to be introduced under the GST framework would lay down the mechanism to determine the place of supply of goods and services under various scenarios. Since the concept of GST is based on the principle of a destination based consumption tax, the place of
December 2014 - January 2015
Features supply is expected to be the location of the customer/ service receiver. There is also a possibility that for certain specified services such as maintenance, repair, testing and similar services, the place of supply could be the place where the services are performed. However, in the case of many of the services, none of these indicators help in determining a unique place of supply. The supplier could be based in multiple locations within India, and could be supplying from one or more of them. Even the customer could be based at multiple locations. For instance, in case of a container shipping line providing door to door transportation to an Indian customer in relation to export of cargo, the services to be provided would include inland transportation of goods from customer’s premises to the port of export, packing and stuffing the goods, port documentation, loading of goods in the ship for export, international transportation of goods, unloading the goods at the overseas port and inland transportation of goods at the overseas customer’s premises. The place of supply for transportation could be the location of customer, whereas in case of loading, unloading and services provided at the port, could be the place where services are performed. If the place of supply for different services provided under the same contract are different, it could create a lot of administrative hassles and practical challenges for shipping and logistics companies to follow the GST compliances including invoicing (which State’s SGST to be charged), registration and returns in multiple States), etc. Hence, there is a need to have simplified and rationalised Place of Supply Rules to address the aforesaid practical and administrative challenges. Overhaul of Existing Logistics Set-up: GST will unleash a new era of developing logistics infrastructure and take investments to the next level. Given that the inefficient and longer supply chains with warehouses in almost every state is fiscally preferred in the existing regime, it is now time to overhaul and compress the entire logistics set-up. This will lead to changes in logistics requirements of clients, forcing logistics service providers to rethink their business operations, including creating new warehousing and logistics locations and expanding or closing existing warehouses at certain other locations. In fact, networks and infrastructure associated with warehousing and logistics hubs are expected to be the
It would be imperative for transportation and logistics companies to regularly track the GST developments, develop an understanding of these rules under alternate scenarios and how they could impact the design of the accounts and compliance framework for the new system.
most affected in the entire supply chain when GST takes effect. Network and infrastructure related businesses would get drastically realigned, ensuring proximity to manufacturing locations or consumption centres and ultimately resulting in hub-and-spoke models. The impact or rather the opportunity is huge for both the logistic company and their customers to completely relook at their supply chain. Increased Opportunities for Organised Service Providers: The GST regime will see the emergence of the organised service providers since taxes will no longer be added costs for the businesses. Given the highly fragmented nature of the Indian transportation and logistics industry, implementation of GST is expected to unleash a plethora of opportunities for companies in the organized sector. Increase in Outsourcing of Warehousing Requirements: With implementation of GST and phasing out of CST, manufacturers would be encouraged to outsource their warehousing requirements to the third party logistics service provider. This could result in an exponential growth of warehousing business, as well as fuel the faster growth of the entire supply chain and logistics sector. Way Forward It would be imperative for transportation and logistics companies to regularly track the GST developments, develop an understanding of these rules under alternate scenarios and how they could impact the design of the accounts and compliance framework for the new system. The system to be designed must allow flexibility of making changes in the rules and procedures. The other challenge is the sheer magnitude and complexity of the task. The new system will entail a complete transformation of the company’s indirect tax planning, organisation, accounting, IT systems, and compliance structure. December 2014 - January 2015
25
Features
Coastal Shipping: The Missing Link in Indian Transport Despite of having a huge coastline, India lags behind many of its counterparts viz, China & Indonesia in terms of tapping coastal movement as a significant transport alternative. The country’s coastal transportation is merely 3 per cent of the total mode of transportation. The author details on the advantages of costal movement has in comparison to other mode of transportation, constraints faced by the sector and suggests recommendations to enhance the growth of costal shipping in the country.
C
oastal shipping in a country like India with a long coastline, has not received due attention despite its inherent advantages. To put things in perspective, coastal shipping accounts for only 6 per cent of the total domestic freight on a tonne-kilometre basis. The advantages include positive impact on economy and environment, with salubrious effect on other industries and government finances. India lags behind many of its counterparts in terms of tapping coastal movement as a significant transport alternative. For example, Indian coastal shipping volumes are less than a tenth of those in China and just over half of those in Indonesia. The following exhibit clearly shows that coastal shipping has been largely ignored as an alternative transportation medium in favour of other modes.
Break-up of Freight Traffic by Mode of Transportation
Benefits
Rohit Chaturvedi Director
CRISIL Infrastructure Advisory g rohit.chaturvedi@crisil.com
26
Some of the advantages offered by coastal shipping are explained in the subsequent paragraphs. One of the clear advantages enjoyed by coastal shipping over other modes of transports is that it is far more fuel efficient than alternative modes of transport, viz., road
December 2014 - January 2015
Features and rail. In fact, by some estimates coastal shipping is 30 per cent and 50 per cent cheaper than rail and road transportation, respectively. The subsequent exhibit demonstrates the comparison of costs between coastal shipping and other modes of transport.
thus, help realise savings both in time and cost. A case in point being coastal line of Gujarat, where transporting goods like cement from Kachh Region to Mumbai using coastal route is far shorter and less time consuming than transporting the goods using road networks for this origin destination pair.
Operating Cost (`/Ton Km)
Fuel Efficiency (Ton Km/Litre)
Coastal
0.75
105
Coastal shipping also has the potential to offer enormous benefits to the Indian economy through the development of a more integrated transport system, and thereby enhancing the competitive edge of Indian exports.
Road
1.51
24
Rail
1.18
85
Cost Advantages of Coastal Transportation
Another key area where coastal shipping scores over competing modes, is that coastal shipping is significantly more environment friendly. Substantial reduction of CO 2 and CO emissions could be achieved if means could be found to shift the traffic from road and rail networks. The negative externalities, such as noise and air pollution and congestion, pressure on infrastructure such as road & rail and climate change etc, and thus, concomitant external costs may be curtailed by shifting traffic to the coastal mode. In addition, coastal shipping may enable huge cost advantages and convenience in transporting large volumes and over dimensional consignments. Coastal shipping is suited to handle cargo with large dimensions such as heavy machinery and parts. Handling the over dimensional cargo (ODC) is much easier when transported using coastal shipping as compared to rail and road networks owing to size and infrastructure constraints. Coastal shipping may also offer higher economies for the high volume cargo such as cement, coal, and iron over longer distances. In the context of India, coastal shipping may offer transportation through a shorter route in certain geographies as compared to alternative modes and
One of the clear advantages enjoyed by coastal shipping over other modes of transports is that it is far more fuel efficient than alternative modes of transport, viz, road and rail. In fact, by some estimates coastal shipping is 30 per cent and 50 per cent cheaper than rail and road transportation, respectively.
The benefits of coastal shipping are likely to be even more visible post implementation of the Goods and Services Tax (GST) regime, owing to the following factors: - Post GST, economies of scale will emerge as an important decision point rather than savings in taxes for industries, giving rise to consolidation of cargo. - Coastal shipping, with the capability to transport large volume of cargo at lower costs, is likely to provide economies of scale in transportation. Lastly, thriving coastal shipping in India can help in plugging porous maritime borders and preventing untoward incidences such a terrorist activities and smuggling of goods. However, despite the multitude of benefits and favourable geographical conditions, coastal shipping may still not emerge as a significant mode of transport due to variety of problems ranging from policy level issues to infrastructure issues. In order to develop coastal shipping, policy makers have to review the existing issues and develop an enabling framework for encouraging the growth of coastal shipping in India. The following section touches upon some of these issues. Obstacles to Growth The principal issues affecting the coastal shipping are enumerated below: Inadequate Policy and Institutional Support: Since coastline activities are under the respective states, it will be difficult to implement an effective framework without the representation and active participation of all the maritime states in India. Thus active & comprehensive participation of Center & the respective states would necessary to enhance the costal shipping in the country. December 2014 - January 2015
27
Features Also the industry is bogged down by the classical chicken-and-egg situation; that is, traffic is not likely to build up unless there are regular services and services may not be viable without regular volume support.
In order to scale up the industry, it may be worthwhile to provide it with a few fiscal incentives in line with those extended to the infrastructure sector. In addition, other relaxations such as waiver of excise duty on bunker may be extended for a limited period to spur the industry.
The problem is exacerbated by the existence and continuation of cabotage, which constrains the free movement of foreign vessels along the Indian coast. Lack of Fiscal Incentives: The coastal shipping industry is not given any special status and benefits which are usually extended to focus industries. Lack of Infrastructure: Both major and non-major ports lack the infrastructure for coastal shipping. Non-major ports are further weighed down by the lack of connecting infrastructure to their respective hinterland. Inadequate rail and road connection makes it difficult to ply between the hinterland and the ports in a timely and cost-effective manner. Recommendations
routes. This will help in breaking the vicious circle of traffic first or service first by bringing traffic through regular services by foreign vessels. Infrastructure Development
Realising the potential of coastal shipping, the new central government has made a slew of announcements to develop coastal shipping, by making this mode of transport an important component of the Sagarmala Project, an ambitious project to connect coastal regions through the shipping route. The project clearly focuses on coastal shipping by integrating port and other coastal development with efficient and seamless shipping and inland transportation to enhance both domestic and EXIM trade. In the above context, it is high time to critically review the existing regime and remove the roadblocks in the development of coastal shipping in India. The steps may include: Policy and Institutional Development • Form a nodal body with representation from both states and the centre, to prepare an exhaustive list of issues affecting the development and prepare a road map for the development and harmonisation of various policies. • Explore various modes of development including PPP (Public Private Partnerships). However it may be noted that the modes of development should not be limited to PPP and many projects may require direct intervention by the government. • Change the merchant shipping rules by permitting cabotage, simplify the administrative requirements for foreign flag vessels to operate on coastal 28
• Phased development of connectivity projects for identified coastal ports to facilitate movement from/to hinterland. The development may include improving connectivity through careful development of roads, rail, and inland waterways. • Investment in port infrastructure, both movable and immovable, especially at non-major ports Fiscal Incentives In order to scale up the industry, it may be worthwhile to provide it with a few fiscal incentives in line with those extended to the infrastructure sector. In addition, other relaxations such as waiver of excise duty on bunker may be extended for a limited period to spur the industry. However, the incentives should be designed and aligned to further the growth of coastal shipping, rather than benefit the extant operations without any incentive for growth. Conclusion Coastal shipping in India holds a very high potential with substantial pent-up demand and favourable geographical features. The development of coastal shipping will not only provide a cost effective and significantly less polluting mode of transport but also may aid Indian manufacturing by offering additional choice in transporting goods and materials. To realise the potential, concerted efforts will need to be undertaken by both the centre and maritime states to remove the barriers affecting the growth of coastal shipping.
December 2014 - January 2015
Features
GST – Impact on Shipping Industry The much awaited Goods and Service Tax (GST) in India, the indirect tax reform of the century, was introduced in the Parliament in December 2014 and the hopes are all time high that the Constitutional Amendment Bill will be implemented from April 2016 with a consensus between two stakeholders - Central and State Governments. The article highlights the significant impacts of the proposed GST on the Shipping industry.
The Amendment bill envisages taxation of goods and services by Central and State Governments, formation of GST Council to make recommendations to Central and State Governments on issues such as rates, exemptions, threshold and resolution of disputes.
G
ST, the indirect tax reform of the century, has seen a long wait. Having missed several deadlines in the past, it seems GST may finally get to see the light of the day. The Union Finance Minister appeared to have brokered a consensus with the States and as a result, the Constitutional Amendment Bill was introduced in the Parliament in December 2014. With a stable Government at the Center with a visible agenda of tax reforms, the hopes are all time high on introduction of GST regime from 1 April 2016. The Amendment bill envisages taxation of goods and services by Central and State Governments, formation of GST Council to make recommendations to Central and State Governments on issues such as rates, exemptions, threshold and resolution of disputes. It also empowers the government to levy up to 1 per cent non-creditable additional tax on inter-state supplies of goods.
Pratik Jain
Partner - North India Head, Indirect Tax KPMG India g pratikjain@kpmg.com
Indian GST would apply at dual level, with both Centre and States government having taxation rights on all supplies of goods and services. In other words, every transaction for supply of goods or services would henceforth attract two taxes; Central GST (CGST) and State GST (SGST). GST being a destination based consumption tax, the SGST component of tax would accrue to the destination state where the goods or services are consumed, and not in the State from where such supplies are dispatched as it happens presently. Inter-state transactions are proposed to be taxed as per Integrated GST (IGST) model, where State SGST (destination state) share would be transferred through some sort of clearing house mechanism. December 2014 - January 2015
29
Features GST is set to replace the multiple indirect taxes that we have today, thus providing a simplified structure like in many other countries. GST may have a significant impact on the shipping industry as well. Services in relation to domestic transportation through vessel are currently subject to service tax at abated rate (only 40 per cent of the taxable value is subject to tax). However, the industry is not allowed to take credit of taxes levied on inputs, input services and capital goods. Under the current regime, inward ocean freight and transportation through inland waterways are not subject to service tax. It isn’t clear as to whether this exemption would continue under GST. If GST is levied on all such transactions then there will be an increase in taxes paid at least from the cash flow stand point. However, the industry would also get credit or offset for all the taxes paid except for sectors which are currently kept outside the GST net such as petroleum products. Service tax on setting up of port is currently exempt however, the fate of this exemption under GST is not known. In case there is GST levy on the construction activity, it would have significant implications.
The existing tax and MIS infrastructure would also need to be updated. Internal processes such as tax and accounting would need to be geared up to meet the GST requirements. Therefore, the next big question is what should be the next steps by the industry. The industry would need to immediately focus on assessing the overall impact of GST. The impact of GST would comprise of financial (analysis of change in top-line, bottom-line, cash flows etc), IT systems, contracts, etc. The analysis would help the industry not only in smooth transition but also identifying the areas where representation would need to be made for favorable regime.
Service tax on setting up of port is currently exempt however, the fate of this exemption under GST is not known. In case there is GST levy on the construction activity, it would have significant implications.
Import of capital goods, spares, raw materials, consumables etc for repairs of ocean going vessels by registered ship repair units are exempted from Customs duty. As certain components of the Customs duty (CVD and SAD) would be substituted by import GST, it would be imperative to ensure that the exemptions are continued. As State GST component of the import GST would accrue to the State (destination state), grant of GST exemption would need concurrence of the State Government as well. Manufacture of ships, vessels, dredgers and floating docks are currently exempted from excise duty. It remains that these exemptions may not continue under the GST regime. Currently, service tax is being levied at the rate of 12 per cent however, going forward, levy of GST at the rate of at least 16 per cent would imply cash flow issues for customers. GST could fundamentally alter the tax structure for the states therefore, impact on long term contracts would need to be evaluated. These contacts would need to be reviewed to explore the possibility of revision of contract price in view of GST. 30
Liberal credit regime is one of the key features of GST. This should translate into reduction in overall tax cost. However, overall cash flow requirement is likely to increase upon removal of exemptions and concessions, possible higher GST rate on imports, services etc.
The implementation phase, commencing on availability of GST laws, would comprise of implementing the business decisions, updating the IT, internal systems and contracts, finalising communication with vendors/customers.
The upcoming Union Budget (to be announced on the last day of February 2015), perhaps the last preGST budget, is expected to bring reforms in the current tax regime as convergence towards the GST regime. Allocation of funds toward the pending CST compensation would further help to take the States on board. The Constitutional Amendment Bill is likely to be taken up for voting in the upcoming budget session around March 2014 which could see some political moves before it is sent for ratification by half of the States. The Government would also need to fast track the GST Network project which would be the backbone of GST infrastructure. One can expect the GST laws (the GST Act and Rules) in the second half of financial year 201516 paving the way for introduction from 1 April 2016. From the industry standpoint, the next six months would be crucial to ensure smooth transition towards the GST regime. Based upon the recent developments, especially during the last 3 months, 2016 does looks real and the Government as well the Industry would need to sprint to ensure transition to GST is a success.
December 2014 - January 2015
Features
Freight Watch – November to December 2014
Huge plunge in oil prices and reluctance on the part of producers to curtail production created supply glut increasing the demand for VLCCs for transportation and floating storage.
Nazir Ahmed Moulvi Senior Analyst
Department of Research & Strategy Multi-commodity exchange of India Ltd g nazir.moulvi@mcxindia.com
Niteen M Jain Senior Analyst
Department of Research & Strategy Multi-commodity exchange of India Ltd g niteen.jain@mcxindia.com
T
he freight rates for TD3 route, the world’s busiest route to carry oil, opened flat in November at 55 Worldscale point (WS) from previous month’s close. The TD3 route is world benchmark and has a bearing on other routes. The route TD3 originates from Ras Tanura, Saudi Arabia, the world’s biggest oil-export site and concludes at Chiba, Japan. At the start of November, the VLCC market showed some weakness due to weak manufacturing data from China and Japan leading to weakness in freight market. Lack of notable physical demand support especially from China also added to bearish sentiments in freight markets. China and Japan contribute around 20 percent of world crude oil imports. Going forward, U.S., the world’s largest crude oil consumer reported that it added fewer World scale points are a jobs in October. Fear that percentage of a nominal China, the largest exporter rate, or the flat rate, for over to the U.S. will face 3,20,000 specific routes. tailwind amidst economic Flat rates for every voyage, uncertainty in its top export quoted in dollars per tonne, market reflected on crude are revised annually by the oil prices which spilled Worldscale Association in over to the VLCC market. London to reflect changing To artificially curb the fleet fuel costs, port tariffs, and size, VLCC owners resorted exchange rates. In fact, the to slow the sailing speed to flat rate assessment gives a low of 8.7 knots. Still on owners and oil companies on November 18, 2014 the a starting point for VLCC charter rate hit a low negotiating hire rates. of 47.5 WS points.
December 2014 - January 2015
31
Features Very Large Crude Carriers Statistics Particular
Dec-14
Nov-14
MoM % Change Dec-13
YoY % Change
No of Ships in service
588
587
0.2%
581.00
1.2%
DWT Weight in ‘000 tonnes’
180,245
179,925
0.2%
177,688
1.4%
No of new VLCC orders
63
64
-1.6%
37.00
70.3%
No of VLCCs under construction
3
2
50.0%
7.00
-57.1%
No of VLCCs launched
2
2
0.0%
4.00
-50.0%
Order book as DWT %
11.62
11.64
-0.2%
8.31
39.8%
No of VLCCs broken
1
0
-
25.00
-96.0%
No. of VLCCs sailing with cargo
461
443
4.1%
441.00
4.5%
No. of VLCCs anchored
138
149
-7.4%
142.00
-2.8%
Avg. speed of VLCCs in knots (Excl. Anchored) 9.67
9.05
6.9%
9.23
4.8%
Oil - floating storage (1000 barrels) Global
112,168
111,108
1.0%
90,305
24.2%
Middle East Gulf
31,848
23,922
33.1%
23,369
36.3%
India
549
1,978
-72.2%
556
-1.2%
Source: Bloomberg
Later, in the November meeting, OPEC announced to maintain production quotas, despite pressure of falling oil prices and hence clearly indicating continuing demand for VLCCs carrying oil supplies. Pledge for sustained output and the subsequent steep decline in crude oil prices proved to be a game-changer for the VLCC market. The major oil producing countries especially Saudi Arabia, the world’s largest crude oil producer began to cut its official selling prices (OSP) to protect its market share in global oil market. The reduction in OSP especially to U.S. helped VLCCs market owing to longer journey time to U.S. compared with Japan. The Saudi Arabia to U.S. voyage is about twice as long as Saudi to Japan journey, which increases the ton-mile demand reducing the supply of VLCCs. Ton-mile demand, is a gauge of shipping usage calculated by multiplying cargo size with distance. On the Asian side, the steep fall in crude oil prices encouraged China to import a large quantity of oil to add to its strategic reserves. Shipping signals captured by Bloomberg also showed a record number of ships heading towards the country. With U.S. importing lower crude oil amidst record increase in its domestic production, its traditional suppliers from West Africa followed Saudi Arabia footsteps and lowered their crude oil prices as well. Trader from the region booked around 33 VLCCs to load the oil which was 43 percent higher compared to a year ago levels. Due to lower prices, their crude oil found favour with Chinese buyers as well. Shipping signals captured by Bloomberg also showed a record number of ships heading towards the China. Additionally, the Bloomberg reported, Angola and Nigeria, the region’s two biggest exporters were planning to ship around 4 million barrels of oil per day adding to the tanker demand. 32
With Saudi Arabia and Kuwait strong headed to keep its market share intact, OPEC crude production led by them averaged record levels in 2014. At the same time, there was increased demand for VLCCs for the long haul trades from South America and West Africa to the East further adding upward movement in freight rated on TD3 route. Moreover, as more and more crude oil flooded the market, near-month futures prices of the commodity on CME fell in comparison to far month prices creating a market condition known as contango. This encouraged large crude oil traders to hire VLCCs for using them as floating storage and delivering the oil against farmonths futures contract, thereby earning a quick return which is also known as cash future arbitrage. Similar contango condition in 2009 led to over 100 million barrels (equivalent of 50 VLCCs) of oil being stored on tankers at sea and to be sold at later date. As a result the oversupply of VLCCs dropped to a record low of 5 percent in midDecember, lowest since April 2012, pushing the freight to a high of 77.5 WS points on December 16, 2014 during the period under review (November-December). Later, the VLCCs rate of route TD3 weakened as the imports from China slowed increasing supply of VLCCs, largely in anticipation of further weakness in crude oil prices. Additionally, The International Energy Agency, a Paris-based adviser to 29 nations stating that demand for oil will weaken further added to the bearishness in the VLCC market. Overall during Nov-Dec 2014, freight rates moved up by 4.5 percent to close the two-month period at 57.5 WS points. On an annual basis the TD3 route freight index closed flat. (The opinions expressed by authors are their personal views.)
December 2014 - January 2015
Marine Archaeology
Snorkelers Explore Ancient Ship in Odisha Coast
A
team of scuba divers, lead by internationally acclaimed snorkeler Sabir Bux, has explored a sunken ship in the Bay of Bengal. The team comprised Phalguni Rout, Niranjan Mishra, Chandan Das, Khagaswar Barik, Master D Sekhar Rao and Manaswini Maharana, apart from Bux. The ship was found 55-nautical miles from the Chandrabhaga beach along the Konark-Puri coast and 68 feet deep inside the sea. It is assumed that the ship had 150-170 years old. According to Bux, he was getting regular feedback from fishermen operating along the Puri-Konark-Astarang coast that their fishing nets were getting torn in the sea. It took two days for the scuba team to locate the wreaked ship. The 13-member team has video graphed the ship and they will send the video footage to the National Institute of Oceanography in Goa to find out more about its origin.
The ship was found 55-nautical miles from the Chandrabhaga beach along the KonarkPuri coast and 68 feet deep inside the sea. It is assumed that the ship had 150-170 years old.
Prima-facie, the seabed and the wooden pieces and iron rods used in the ship suggest it was an old vessel. Although, the age of the ship can be determined only examining the wood used in the ship. Bux claimed that the ship had been ripped apart by some blast with its wreckage lying scattered on the seabed. According to Former superintending archaeologist, state archeology, Debaraj Pradhan, Odisha had a long maritime history and had good business links with southeast countries. “Some times ships were struck by disasters and sunk without a trace. We had also recovered a sunken ship on the Balasore coast in 1991. It was a Portuguese ship of 16 th century,” said Pradhan. Secretary, Odisha Institute of Maritime and South East Asian Studies, Sunil Patnaik said that they need to analyse the videograph before arriving at a conclusion on the identity of the ship. “This maritime zone was abuzz with activity from 1740 to 1900s. A number of Indian as well as British ships crossed the route that connected Calcutta to the then Madras Province, which is now known as Chennai. The sunken ship might be one of those,” Patnaik added. December 2014 - January 2015
33
SMP Marketing Initiative
34
December 2014 - January 2015
SMP Marketing Initiative
December 2014 - January 2015
35
News Maersk to Focus More onto Southeast Asia Trade Mumbai: Strong growth in the Southeast Asia container trades will be a key focus for Maersk Line’s new Asia-Pacific Chief Executive Lars Mikael Jensen, who was appointed regional head recently.
growth.” However, Jensen acknowledged it will not be an easy task as industry players compete aggressively over pricing.
“Globally, we expect 3 to 5 per cent growth in trade — still stable, but a far cry from the 8 to 10 per cent, say, a decade ago,” he said.
“Margins are indeed under pressure and freight rates have remained on a general downtrend. We are only in the middle of the pack when it comes to regional market share, but we will not grow that by being dirt cheap.”
“But Southeast Asian trade with the world is likely to be higher than that average, at 6 to 7 per cent going forward. My ambition is to grow Maersk Line in the Asia-Pacific in tandem with that above-average trade
We will grow because of our operating efficiency, our product range and our ability to help global customers enter new territories in the emerging Southeast Asia,” Jensen added.
India Plans Big to Enhance its Tonnage
Evergreen Line Expands its Philippines Business Portfolio Mumbai: Evergreen Line is to team up with Cheng Lie Navigation (CNC) to launch the new ChinaPhilippines Service (CPH), in order to offer a more comprehensive service to shippers and importers in the Philippines.
Pon Radhakrishnan Union Minister of State for Shipping
Two ships of around 1,000 TEU will be deployed on the new weekly service, one each operated by the joint service partners. The first sailing on the CPH service will be from Shanghai on the 11 th of December and the port rotation is as follows: Shanghai - Ningbo - Xiamen - Shekou - Manila (south harbour) - Shanghai.
New Delhi: With its massive plan to see more Indian flagged ships, India wants to enhance the domestic ships by more than 400 per cent from 10.31 million tonnes to 43 million tones within the span of five years, said Pon Radhakrishnan, Union Minister of State for Shipping in a written reply in parliament.
The new service is in addition to the four feeder loops, which Evergreen offers serving the Philippines.
He said, “The Maritime Agenda 2010-2020 has set an ambitious target of achieving 43m gross owned and controlled tonnage under Indian flag by the year 2020 so as to increase India’s share in total freight.”
This comprehensive coverage of all major ports in the Philippines, includes Manila (both north and south harbours), Cebu, Davao and General Santos, etc. All services connect to Evergreen’s global network via either Kaohsiung and/or Hong Kong.
He added, the private sector has invested ` 33.33 billion (USD 522.2 million) in Major Port projects during the last five years.
Dr Trivedi Appointed Chairman of National Shipping Board New Delhi: The Ministry of Shipping has appointed Dr Vishwapati Trivedi as Chairman of the National Shipping Board (NSB). The Ministry takes the opinion of the NSB on policy issues. Before joining Shipping Ministry, Trivedi was heading Inland Waterways Authority of India. He has also served as Secretary in 36
the department of Social Justice and Empowerment and Mines. Trivedi has also worked as Special Secretary and Financial Adviser in the Ministry of Home Affairs among others.
December 2014 - January 2015
News Visakhapatnam Container Terminal in Expansion Mode
Krishna Babu Chairman Visakhapatnam Port
Visakhapatnam: Capacity at a container terminal at Visakhapatnam Port, a major state-owned cargo hub on India’s southeastern coast, is set to double to 1 million TEUs annually after a consortium signed a ` 633.11 crore (USD 102 million) construction contract. The consortium — comprising DP World and Mumbai-based JM Baxi Group — will extend the berth of the Visakha Container Terminal Pvt. Ltd by 395-meter (1,296-foot) to 845 meters (2,772 feet). Construction is expected to last two years. “The connectivity to Visakhapatnam Port will be improved with the support of the union Government. The project would facilitate increase in container traffic and the port could serve large hinterland in central India up to New Delhi,” said Krishna Babu, Chairman, Visakhapatnam Port.
Govt Keens to Increase Coastal Movement of Cargo New Delhi: The Union government has taken several initiatives to increase the coastal cargo movement in the country, the Minister of State for Shipping, Pon Radhakrishnan, informed the Upper House of Parliament. As per a report by the National Transport Policy Committee of 1980, though there is about 14,500 kilometer (km) of waterways in the country, which could be navigated by country boats, only 5,200 km of major rivers and 485 km of canals were suitable for mechanised crafts, he said. The government had issued the River-Sea Vessel (RSV) Notification for moderating the technical and manning requirements for vessels operating within the Indian territorial waters by the DirectorateGeneral of Shipping (DG Shipping) on July 31, 2013. Besides, the DG Shipping had issued an order declaring the Inland Vessel (IV) limits for facilitating coastal trade operations. The DG Shipping had also issued the Coastal Shipping Rules for vessels operating within 20 miles off the coast on March 4, 2014, Radhakrishnan said. He also said the Green Channel facility was provided at all Major Ports in the country for faster evacuation of coastal cargo and they were directed to provide priority berthing to coastal vessels in order to reduce waiting time at the gateway facilities.
Fitch Revises Shipping Outlook to Stable Mumbai: Fitch Ratings has revised the EMEA shipping sector outlook to stable for 2015, from negative for 2014, due to expected modest improvement in sector fundamentals, albeit against a backdrop of persistent oversupply and volatility in rates. In a newly-published report, Fitch says performance will vary across segments with tanker, and, to a lesser extent, dry-bulk shipping demonstrating moderate improvements, the LNG and offshore segments maintaining their sound performance, and container shipping remaining under pressure. The ratings agency expects that overcapacity will remain the key factor underlying the shipping sector’s weakness in 2015, although to a varying degree, depending on the segment. We expect weak supply/demand fundamentals in container shipping in 2015 as capacity expansion is likely to continue to outstrip demand growth, but forecast a visible improvement in the supply/demand
balance in tanker shipping. Freight rates will likely remain volatile across all shipping segments, adds Fitch, which forecasts that container freight rates will remain weak in 2015. Nonetheless, a recovery in tanker rates, supported by moderating supply growth and growing oil consumption, is expected. According to Fitch, rigorous cost management along with the recovery in some segments to support an improvement in shipping companies’ financial profiles in 2015. An expected moderation in bunker prices and continued slow steaming will also contribute to cost reductions. Shipping companies that manage to achieve an operating profit are likely to improve their credit metrics in 2015. However, the ratings agency says it expects leverage ratios will remain high, keeping the companies’ credit worthiness in line with low and midlevel speculative-grade ratings. December 2014 - January 2015
37
News Govt to Announce 103 Rivers as National Waterways
Nitin Gadkari Union Minister of Shipping
New Delhi: In order to enhance focus on the development of inland waterways for the movement of goods and passengers, the Union government proposes to announce 103 rivers as National Waterways, said Nitin Gadkari, Union Minister of Shipping. The Minister said the inland water transportation system was largely under-utilised. At present, cargo transportation through this system was confined
only to a few waterways such as Goa, West Bengal, Assam and Kerala. There was an urgent need to explore the possibility of fully developing it as this mode was more cost-effective than the other modes. “Developing waterways will save goods transportation costs to a great extent. Against an average of ` 1 per km in railways, the cost of transporting goods through waterways will come down to around 30 paise a km,” Mr Gadkari pointed out. According to Mr Gadkari, the World Bank has sanctioned ` 4,000 crore to commence work for developing the National Waterway-1 between Haldia and Allahabad and said that eleven water terminals would be built between Haldia and Varanasi. The total navigable length in the country was 14,500 km, of which 5,200 km of rivers and 4,000 km of canals could be utilised for inland water transportation, he added.
Third Party Logistics Market to Touch ` 48K crore by 2019 Mumbai: The Third Party Logistics (3PL) market in the country is expected to touch ` 48,000 crore by 2019, mostly fuelled by outsourcing especially in retail, pharmaceutical, according to a survey. “The Indian 3PL market is geared for a robust growth during 2014-2019. It is anticipated to grow at a CAGR of 21 per cent to touch ` 48,000 crore over the period 2014-2019. “The 3PL market growth is fuelled by factors like the inclined outsourcing by Indian companies and many MNCs particularly in retail, pharmaceutical,
automobile and FMCG sectors,” according to a report by research and consultancy firm RNCOS. The Government’s investment towards development of freight corridors, ports and highways, increasing demand by pharmaceutical industry and significant growth of e-commerce industry will be other growth drivers for the sector, it added. The third-party logistics has been proved to be successful in enhancing logistics efficiency of many organisations and rapidly gained popularity while spreading across the country, the report pointed out.
Foreign Trade Policy after Budget New Delhi: The Government is likely to announce the Foreign Trade Policy (FTP) only after the Finance Minister presents the Budget for 2015-2016. The much-delayed policy would then be applicable from the next financial year. Apparently, the ministry of commerce and industry has sent a communique to exporters in this regard and said the sops given in the previous FTP will continue till March 31 of this financial year. However, the ministry has not made the announcement officially or given reasons for not unveiling the new FTP, rolled out till now for a 38
period of five years, with annual revision. It is learnt the Ministry, ready with a draft FTP, was not able to have its way with the Finance Ministry, which refused to allocate additional funds for the various incentives schemes planned for exporters, officials in the commerce department said. Exporters would like the government to extend some of the other important benefits, such as the three per cent interest subvention scheme. The government wanted to give the policy ‘a brand new look’, with a renewed push to manufacturing under the Make in India policy.
December 2014 - January 2015
News Private Players to Develop Ports in Maharashtra: Fadnavis
Devendra Fadnavis Chief Minister Maharashtra
Mumbai: Two ports in Maharashtra will be developed by private players and these will be operational within a year, said Devendra Fadnavis, Chief Minister, Maharashtra. The Dighi and Jaigarh ports, located in coastal Konkan, will be developed by private parties, he said. Besides these, the foundation stone of Karanja port at Raigad has been laid and it is expected to be developed in 2-3 years, he said. The Government was also working on development of ports in Navi Mumbai, he said. To a question if there was a proposal to introduce inland waterways in Maharashtra which has 720 kms of coastal line, Fadnavis said the issue was under consideration of the state Government.
JNPT’s SEZ Expected to Attract a Huge Investments Mumbai: Speaking at CII International Logistics Summit in Financial Capital of India - Mumbai, N N Kumar, Chairman, Jawaharlal Nehru Port Trust ( JNPT) mentioned that supporting the vision of the Shri Narendra Modi, Hon’ble Prime Minister of India for port led development, JNPT has undertaken an SEZ project on 2077 hectare of land near the port which is expected to attract ` 3000 crore of private investment and create close to 1.5 lac jobs in the area. The port has also undertaken expansion of the 44 kms road network to the port from 4 lanes to 8 lanes. JNPT is also working towards a multimodal logistics park spanning on 100 hectare of land, which will facilitate in quick movement of goods to ports and also tying up with APEC to setup a training centre at the port. He said that JNPT is implementing the 4 th terminal with Singapore Port Authority which is one of the biggest FDI investments in India and also shared that Port of Antwerp is willing to join JNPT for another project. He also added that the implementation of GST will provide free flow of goods which will change the way the sector operated and it will also create jobs for 4000 people at first.
Container M&As on Rise Mumbai: Mergers and takeovers are increasing in the container shipping arena. Following a turbulent few years that included a close shave with bankruptcy, a revolving cast of CEO’s and an anti-trust investigation, US Jones Act carrier Horizon Lines has called it a day and is selling up. Subject to regulatory and shareholder approval, the company is selling its Hawaii operations for USD 141.5 million to the Pasha Group, which will augment its existing roll-on/roll-off operations between the US mainland and Hawaii. Also going is Horizon’s Puerto Rico services, which are being sold to Matson for USD 69.2m. Pasha will acquire four Jones Act containerships, while Matson will gain three diesel -powered containerships and a fourth steam-powered box ship for dry-dock relief, plus terminal operations in Anchorage, Kodiak and Dutch Harbor. Horizon’s Alaska service consists
of two weekly sailings from Tacoma to Anchorage and Kodiak, and a weekly sailing to Dutch Harbor. George Pasha, IV, President and CEO of the Pasha Group said “Since Pasha entered the Hawaii transportation circuit nearly 10 years ago, we have elevated the quality of customer service. With this acquisition, we will supplement that service and provide an improved, more competitive offering on the Hawaii trade lane.” Matt Cox, President and Chief Executive Officer of Matson said “The acquisition of Horizon’s Alaska operations is a rare opportunity to substantially grow our Jones Act business. Horizon’s Alaska business represents a natural geographic extension of our platform as a leader serving our customers in the Pacific. We expect this transaction to deliver immediate shareholder value through earnings and cash flow accretion via significant cost and operating synergies.” December 2014 - January 2015
39
News Andhra Pradesh to Come out with New Maritime Policy Vijayawada: The Andhra Pradesh Government would frame a new Maritime policy in a month to take advantage of its long coastline. Stating this, Chief Minister N Chandrababu Naidu said the state was putting more emphasis on port-led development. The state has a coastline of over 950 km and as part of the policy, the government would set up new ports along the coast apart from developing existing ones and creating new infrastructure. Naidu outlined his strategy to make AP the largest trade gateway for India to countries in the East. In
this context, he said the Visakhapatnam-Kakinada Industrial Area Development Authority would boost trade with countries like Singapore, Malaysia, Thailand, South Korea, China and Japan. He also stated the Government would proceed further on the proposed Petrochemical and Petroleum Investment Region (PCPIR) project between Vizag and Kakinada after clearing all the doubts of the people. The State Government would call for tenders in January for setting up the Signature IT Tower in Visakhapatnam and the foundation stone for the project would be laid within a month or two after that, he said.
Indian Exports to See Positive Sign
Govt to Develop 10 CERs
New Delhi: The 5 per cent growth in the US economy for Q32014 comes amid a general slowdown across the world, which places the United States as the driving force of the global economy.
Bhubaneswar: The Government will develop 10 Coastal Economic Regions (CERs) in the influence zone in its move to revive the flagship Sagarmala (string of ports) project, conceptualized during the Vajpayee regime. The project would need ` 5,000 crore in investment in the next five years, which will include modernization of ports and efficient evacuation besides developing CERs.
This is expected to be positive for India, especially for export-led sectors such as IT and pharmaceuticals, and also the ITeS sector, which could benefit from outsourcing deals.
This will come from gross budgetary support to create infrastructure and other facilities that would make these zones the hub for manufacturing and economic activities and to take such activities to the hinterland.
However, the growth figures would induce the US Federal Reserve to hike rates earlier than expected. This could result in FIIs pulling out for the safe haven of the US, putting pressure on the rupee, especially when the Centre is rooting for a stronger currency.
While this will primarily focus on Major and Minor ports, Government is also pushing its other agenda to attract private investment in the inland waterway sector that can provide a competitive alternative to road and rail network for cargo transport. The shipping ministry said 17,300 km of inland waterways will involve an investment of at least ` 1 lakh crore in the next 5-10 years. While Government will invest around ` 20,000 crore, the rest will come from the private sector.
“A strong US growth augurs well for global growth including that of emerging economies. We are expecting a rate hike by Feb between March and June 2015. While these may have some impact on fund outflows and weakness in rupee, part of it can be already seen in the market,� said Nandkumar Surti, CEO, JP Morgan AMC India.
Major Ports to Upgrade Software
New Delhi: The Government is in the process of upgrading software of the existing port system to achieve a seamless connectivity between different points, Pon Radhakrishnan, Minister of State for Shipping informed the Lok Sabha. Each port is upgrading their existing Port software for implementation of Enterprise Resource Planning 40
(ERP) system. The Ports of vizag, VOC, Tuticorin, New Mangalore Port Trust and Mormugao has already implemented ERP system and rest of the ports are in the process of implementation. To achieve seamless connectivity between different points, a Port Community System (PCS) has been implemented in major ports. The container gate transaction at Major Ports is online and there is no delay in cargo evacuation.
December 2014 - January 2015
News Rajive Kumar is New Shipping Secretary
Rajive Kumar Shipping Secretary
New Delhi: The Appointments Committee of the Cabinet (ACC) has approved the appointment of Rajive Kumar, Special Secretary, Ministry of Petroleum & Natural Gas, as the Secretary, Ministry of Shipping. Kumar is an Indian Administrative Service (IAS) officer of the 1981 batch (Uttar Pradesh cadre). Though he is new to this Ministry and took over only 23 days ago, the Ministry and major ports under it have got feelings that they have got the right boss to keep the India’s major ports handling major export import cargo floating.
Private Firms Keen on Mormugao Port Dredging Project Panaji: Four private firms have so far been keen to partake in the first dredging project to be undertaken on public-private partnership (PPP) basis at Mormugao Port. Among those, Jindal and Adani are the leading firms in the race. The pilot project, to be undertaken at the Mormugao Port, involves deepening of its navigation channel from an existing draught of 14.1 meters to 19 meters at an estimated cost of ` 300 crore. Normally, ports undertake capital dredging at their own expense, but with government support in some cases. It is a recurring expense for most ports in India. This is the first time that dredging is being made as a revenue generating project in the country. The private party will not only bear the cost, but also contribute to the Port’s income.
Kolkata Port Needs to Review Tariff Policy: Assocham Kolkata: The Kolkata Port, which is grappling with an old infrastructure and suffering from the lowest draft, followed by poor quality of services and business attitude, need to be addressed soon, said a study by Assocham. The report also emphasised on reviewing the existing tariff policy which lacks to attract foreign investment in port sector. “There is a need to review the existing tariff policy with special reference to phasing of cross subsidies and suggest ways for adoption of a more realistic tariff policy for the port sector,” the study by ASSOCHAM-ICAI said. Besides, the role of the Traffic Authority for Major Ports may be reviewed with a view to make suitable recommendations, the study noted. The study also slammed the port for poor quality of services and business attitude along with over staffing and lack of capacity. Infrastructure, including rail-link and allied logistics for the proposed Diamond Harbour Container Terminal need to be streamlined at the earliest, an Assocham statement on the study said.
Infrastructure, including rail-link and allied logistics for the proposed Diamond Harbour Container Terminal need to be streamlined at the earliest, an Assocham statement on the study said. The study recommended there was a pressing need to increase the draft in Kolkata Port to fourteen metres from 7 metres. The draft in Kolkata Port was inadequate for dealing bigger ships, the use of which is an important component in reducing costs, it said. There is also the need to get around red-tapism which is a major constraint in accessing clearances for the development of the port, it added. The report also suggested to expand the pace of dredging which also has been inadequate. “Kolkata Port is strategically one of India’s most significant ports with a vast hinterland comprising eastern India that includes West Bengal, Bihar, Jharkhand, UP, MP, Assam, North Eastern states and two landlocked countries, Nepal and Bhutan,” the statement said. December 2014 - January 2015
41
News Deepak Shetty is the New Director General of Shipping
Centre to Divest Stake in DCI New Delhi: The Government plans to divest 5 per cent in state-owned Dredging Corporation of India, a senior official said. The Shipping Ministry will float a Cabinet note soon to bring down the Government stake in the company to 73.5 per cent from 78.5 per cent. Once the Cabinet is nod is secured, the Government will launch an offer for-sale, the official said.
Deepak Shetty Director General of Shipping
New Delhi: Deepak Shetty, a senior 1980 batch officer of Indian Revenue Service (Customs and Central Excise Cadre), has been appointed as New Director General of Shipping (DG), in place of Mr Gautam Chatterjee, a 1982 batch IAS officer.
At present, Dredging Corporation of India has 15 dredgers, with an average age of 25 years, and a total dredging capacity of 70 million cubic metres a year. This year, it acquired two new dredgers and expects the delivery of a third in February from the Netherlands.
The appoinment taken place as part of a reshuffle involving 14 bureaucrats by the Government.
The dredging company is also in talks with the Major Ports to part finance the acquisition of more dredgers.
Prior to this, Shetty was the Joint Director General (Shipping) in the Directorate General of Shipping.
Throughput at Major Ports up in First 7 months of FY15 Mumbai: According to ICRA, during the first 7 months of FY15, cargo throughput at Major Ports registered a modest 4.6 per cent growth over the corresponding period of the previous year.
overall growth in FY14, at 0.1 per cent and 14 per cent, respectively, while other cargo, containers and FRM registered growth of 5 per cent, 8 per cent and 17 per cent, respectively.
The growth was supported by an increase in all cargoes except iron ore (-24%) across all ports. Iron ore cargo volumes continue to slide following mining restrictions in major states like Karnataka, Goa and Odisha, and other policy-related uncertainties like imposition of export duty.
In FY14, total cargo handled at ports had increased by 4.3% to 976 million tonnes (mt) from 935 mt during FY13. The growth was pegged down by sluggish cargo performance at the Major Ports, which registered a meagre 1.8 per cent growth in cargo volumes to 556 mt.
Among the listed non-major ports, Adani Ports & SEZ Ltd, which operates ports at Mundra, Dhamra, Dahej and Hazira through SPVs, continued to register strong growth in Q2 FY15 (8per cent up to 26.6 million tonnes at Mundra; 25per cent up to 35.2 million tonnes overall) in its volumes across all cargo segments, while Essar Port Ltd, operator of bulk terminals at Hazira, Vadinar and Paradip (under SPVs), registered a decline of 4per cent in overall volumes to 12.62 million tonnes in Q2FY15 as captive cargo for the group remained subdued. Gujarat Pipavav Port Limited, operator of the Pipavav Port also registered healthy growth in its container throughput as well as bulk volumes (38per cent, 3.26 Million Tonnes). In addition, POL and coal volume growth remained significantly lower than the 42
Non-major ports, on the other hand, buoyed the overall growth rate by recording an 8.3 per cent growth in throughput on year-on-year basis to 420 mt. While the cargo growth outlook for the Indian port sector continues to be strong over the medium to long term driven by the domestic requirements of coal, for power and other sectors; crude oil, for meeting domestic petroleum requirements, some near term uncertainty may, however, be associated with particular cargo categories like imported coal, due to uncertainties plaguing the power sector and persisting delays in execution of greenfield power projects; iron ore, due to unresolved policy issues; and containers, due to the weak global environment affecting export import trade.
December 2014 - January 2015
News Trade Deficit Jumps to USD 136 billion in 2013-14 Mangalore: India’s foreign trade rose over 18 times since the launch of economic liberalisation programme in 1991 while the trade deficit widened by more than 22 times. The country’s foreign trade (export and import) has increased with an annual average growth rate of 13.42 per cent from USD 42 billion in 1990-91 to USD 765 billion in 201314. However, trade deficit, the difference between imports and exports, jumped to USD 136 billion in 2013-14 from USD 6 billion in 1990-91, according to official data. Experts attributed declining growth of manufacturing sector to the widening of trade deficit. “The growth of India’s manufacturing sector’ declined continuously. From 23-24 per cent share in the GDP, it came down to about 15 per cent currently. This was the main reason for ballooning trade gap,” Ajay Sahai, Director General & CEO of the Federation of Indian Export Organisations (FIEO) said. He said that free trade agreements too have impacted the country’s
Adani, POSCO to Build New Terminal
trade balance. Rise in imports, including oil, has contributed to rise in the country’s trade deficit. India had trade deficit with as many as 80 countries, including China, Australia and Iraq in 2012-13. In the last few years, global economic crisis, the sovereign debt crisis in Europe and the slowdown in developed economies have adversely impacted demand for India’s exports. Further, the countries with which India has favourable trade balance in 2013-14 includes the US, Singapore, Bangladesh, Hong Kong, the Netherlands, Sri Lanka, UK, Kenya, Nepal and Vietnam. Whereas in 1990-91, countries which have imported more from India than exported includes USSR, Hong Kong, Bangladesh, Thailand, Sri Lanka, Egypt, Mauritius, Spain, Afghanistan and Nigeria. During April— November this fiscal, India’s imports were up 4.65 per cent to USD 316.37 billion, while exports were up 5.02 per cent to USD 215.75 billion. Trade deficit during this period stood at USD 100.61 billion as against USD 96.89 billion in the same period last fiscal.
Shipping Ministry Grants Fund for Nautical Depth Study of Kochi Port
Mumbai: Adani Group’s Australian subsidiary said it has signed an MOU with a South Korean steel giant for the construction of a new strategic terminal at Abbot Point coal port to export highquality coal globally at competitive rates.
Kochi: Kochi Port’s plan to carry out a nautical depth study aimed at reducing recurring dredging expenses has received the Shipping Ministry’s nod.
Terminal Zero (T0) will be constructed at the port of Abbot Point near Bowen town, Queensland, as per the Memorandum of Understanding inked between the company and Korea’s POSCO.
The Ministry approved a grant of ` 10 crore for studies on siltation in the channel and optimal ameliorative measures in which it will bear 50 per cent and the balance by the port.
“Construction of T0 is a vital step in ensuring that exports of high quality, cost-efficient coal from mines such as Carmichael in the Galilee can be landed in markets throughout Asia competitively and at scale,” the company said.
It is for the first time that an Indian Major Port is going ahead with a nautical depth dredging, a concept which was in use in most of the riverine ports in Europe’s Netherlands, Belgium, Germany etc. It helped reducing dredging quantities and expenditure. The water injection method used in riverine ports require for dredging wherein water is pumped at high pressure to the bottom of the channel. The clay and sand at the bottom get stirred up in the process enabling vessels to sail through the suspended particles without getting stuck. The high and recurring dredging expense is having a dent on the port’s revenue forcing the management to doll out ` 170 crore last year, especially with the commissioning of the Vallarpadam container terminal.
In a statement, the company said it inked the agreement with POSCO E&C, which sees the Korean firm appointed as the Preferred Engineering, Procurement and Construction (EPC) contractor for Terminal Zero. “T0 will have a capacity for 40 Metric tonnes per annum initially with an expansion to 70 mtpa in its second phase. The port at Abbot has always been the forefront of Adani’s plans to build a long term future with Queensland,” it said.
December 2014 - January 2015
43
News VPT Signs Pact with VCTPL Visakhapatnam: Visakhapatnam Port Chairman M T Krishna Babu said they would develop a Container hub on the model of Singapore. He spoke briefly after signing concession agreement with Visakha Container Terminal Private Ltd (VCTPL) for extension of existing container terminal at a cost of ` 633.11 crore under Public Private Partnership mode.
Once the construction was completed in two years, VCTPL would be able to handle one million TEUs equivalent to 12 million tonne annually. The concession agreement was for a period of 30 years. Babu said the Secretary of Ministry of Shipping had evinced keen interest inn replicating the success of Singapore Port by increasing container traffic at Visakhapatnam Port.
Haryana to Create Logistics Hub
India Seeks Co-production of LNG Tankers with South Korea
New Delhi: The Haryana Government announced that an Integrated Multi-Modal Logistic Hub (IMLH) would be developed at Bawal in the southern part of the state.
New Delhi: India government has sought assistance of South Korean co-production of LNG (liquefied natural gas) tankers with Indian shipyards. External Affairs Minister Sushma Swaraj her South Korea tour met South Korean Minister of Trade, Industry and Energy Yoon Sang-jick and sought support for India’s flagship ‘Make in India’ programme.
To be developed in an area of 1,200 acres at Industrial Model Township-Bawal, the IMLH will be part of the Delhi-Mumbai Industrial Corridor (DMIC) project, a state Government spokesman said here. Bawal, 70 km from Gurgaon, is being developed as an industrial belt along the DelhiJaipur national highway. The State Government also decided to expand IMT-Bawal by another 2,400 acres.
Among other issues, the possibility of South Korean co-production of LNG (liquefied natural gas) tankers with Indian shipyards was discussed between the two leaders, according to sources.
Dry Bulk Shipping Set for Further Recovery Mumbai: Dry bulk shipping is expected to continue its recovery, thanks to declining excess capacity, increasing iron ore shipments and rising grain trade, according to the latest edition of the Dry Bulk Forecaster, published by shipping consultancy Drewry. The dry bulk market rebounded in the third quarter, thanks to the encouraging performance of the Capesize segment, which thrived on strong demand for iron ore from China and high production in Brazil. China’s hunger for imported ore led to a 25 per cent increase in the Baltic Dry Index during the third quarter. However, the Ebola virus outbreak has reduced the number of vessel calls at West African ports, which has disrupted export shipments of major cargoes such as bauxite, aluminium and iron ore from the mineralrich region. “China’s import demand is likely to drive the iron ore trade over the next few years, while animal feeds and oilseeds are expected to lead the grain trade,” said Mr 44
Rahul Sharan, Drewry’s Dry Bulk shipping lead analyst. “Meanwhile, the overall grain trade will remain low in the last quarter of the year because of seasonal factors.” Drewry forecasts that the dry bulk shipping fleet will grow at 5 per cent annually this year and the next, to reach 790 million DWT at the end of 2015. This is a much slower pace than in previous years and is expected to continue over the medium term. “We expect the dry bulk shipping market to improve gradually, on the back of strong long-term demand for iron ore shipments, coupled with moderating growth in the fleet,” continued Mr Sharan. “One-year time charter rates are expected to rise over the next five years, which will act as a stimulus for cash-rich shipowners to acquire more vessels in order to reap the benefits of higher earnings. However, there remains the danger that a brighter market outlook might spur a new ordering spree, which would risk undermining the stability of the trade.”
December 2014 - January 2015
News Shreyas Shipping and Logistics Posts Excellent Q3 results quarter jumped by 18.37 per cent to ` 139.83 crore from ` 118.13 crore , while profit after tax (PAT) shot up to ` 22.42 crore as compared with net loss of ` 2.91.crore for the corresponding period last year.
L-R Capt V K Singh, S Ramakrishnan, Ritesh S Ramakrishnan, V Ramnarayan, S. Varadarajan
“The results display the efficiency of the Company and underscores that it is on the growth trajectory. It is expected to perform better, considering the expansion in capacities, supported by pragmatic policies of the Government to boost economic development of the country,” said Ramesh S Ramakrishnan, Chairman and Managing Director, Shreyas Shipping and Logistics Limited.
Mumbai: Shreyas Shipping and Logistics Limited, a leading Mumbai-based shipping and logistics provider and part of global conglomerate Transworld Group, has come out with excellent performance for the 3rd quarter that ended 31st December 2014. Its total income for the
“In line with, and supporting Prime Minister NarendraModi’s ambitious Sagar Mala project, the Company has decided to dedicate one of its vessels, M. V. OEL VICTORY by renaming it as SSL SAGARMALA” Ramakrishnan added.
Shipping Sector Eyes Major Policy Change in 2015 New Delhi: 2015 will see a major change in policy support to the shipping and port sector. Income Tax exemption to seafarers, cargo support to Indian flag-carriers, duty free-bunker to coastal shipping, incentives to shipyards and de-regulation of port tariff are among a host of promises Nitin Gadkari made from the time he took over as Shipping Minister. As 2014 draws to a close, captains of the industry are pinning hopes on policy support at home that could ease their life in the current challenging global market environment.
North American and US Caribbean Sea areas) must use fuel oil with less than 0.1 per cent sulphur. Ship owners will have to incur additional cost. Either they have to mix fuel oil with gas oil or refit their vessels with new equipments to comply with the regulation. Ships operating in the Far East and Middle East routes will not be affected by the new regulation. However, they will have to gradually prepare for adhering to ‘green shipping’ norms which will become applicable in the future globally.
Countries like Russia, Japan and China are facing economic slowdown. Rates for hauling dry bulk cargo such as iron ore, coal and grains have been under tremendous pressure for the past couple of months. An immediate recovery seems unlikely in the coming days. Tanker rates have improved, but analysts are not sure whether the uptrend will sustain for long, though they expect supply pressure to ease with lesser number of new deliveries in the next year.
Some of the reforms the Minister promised to introduce are crucial for domestic shipping lines to become globally competitive. It is a pity that Indian ships currently carry less than 10 per cent of the country’s own international cargo.
Fall in crude price may be another positive factor. The bunker cost, which accounts for about 40 per cent of shipping lines’ operating expenses, fell sharply in recent months. However, a major worry for shipowners is compliance with the new sulphur emission norms, coming into force from January 1.
The Shipping Ministry should take up the proposed hydrocarbon transportation policy with the Petroleum Ministry. Indian Shipping tonnage has been stagnating around one million GRT. Though ship prices have become attractive, Indian owners find it difficult to raise funds to buy them.
Last year the country imported about 185 million tonnes of crude, but only 13 per of which was carried by Indian ships.
December 2014 - January 2015
45
Marine Tech
New PORTS Real-Time Data System Officially Dedicated
N
OAA, the Jacksonville Marine Transportation Exchange, and the Jacksonville Port Authority have officially dedicated a new information system which will increase safety for ships using the St. Johns River. The system, called Physical Oceanographic Real-Time System (PORTS), provides real-time information on water levels, currents, meteorological conditions, and under-bridge clearance, giving users critical information when traveling through the river. The St. Johns River in Jacksonville will become the 23rd location to use the system and is the second largest PORTS ever established.
PORTS provides real-time information on water levels, currents, meteorological conditions, and under-bridge clearance, giving users critical information when traveling through the river.
Tailored to the specific requirements of each seaport, PORTS is a decision support tool that improves the safety and efficiency of maritime commerce and enhances coastal resilience and natural resource management through the integration of real-time environmental observations, forecasts and other geospatial information. In addition to providing useful information for maritime transportation and coastal resilience, the use of the water temperature and tidal data can be used by the fishing industry to improve catch, while recreational boating excursions can occur more often and be safer through better real-time information available through PORTS.
Giant Vessel to Change Offshore Decommissioning Game: Analyst
The new Allseas vessel, ‘Pieter Schelte’, is able to replace the previous slower method of removing topsides piece by piece with one lift.
T
he new Allseas vessel, ‘Pieter Schelte’, is able to replace the previous slower method of removing topsides piece by piece with one lift, meaning a decommissioning job could be done in a fraction of the time, say analysts Douglas-Westwood in their latest ‘DW Monday’ report. With Pieter Schelte, the figures alone are impressive. 382 m long, 124 m wide and with a slot width of 59 m it can remove topsides up to 48,000 tonnes in a single lift, potentially revolutionizing large decommissioning projects. The vessel has already won a number of contracts with removing three platforms from the Brent field up first. Along with this, the versatile vessel will be laying 890 km of trunkline for the South Stream project. In the latest edition of its ‘Subsea Vessel Report’ Douglas-Westwood forecasts that USD 9.75 billion is to be spent installing pipelines globally between 2015 and 2017, demonstrating that the potential is there for significantly more work in both applications in the coming years.
46
December 2014 - January 2015
Marine Tech
Industry’s First Color Fishfinder by Lowrance The new Elite-3x includes a dual-frequency 83/200 kHz Broadband SounderTM transducer and features an LED-backlit display with detailed 240x360-pixel resolution.
L
owrance, a world-leading brand in marine electronics since 1957 — has announced the newest additions to its Elite family of fishfinder and chartplotter products, the Elite-3x and Elite-3x All Season pack. The most affordable color fishfinder ever introduced, the new Elite-3x includes a dual-frequency 83/200 kHz Broadband SounderTM transducer and features an LED-backlit display with detailed 240x360-pixel resolution that’s easy to see in full sunlight from wide viewing angles. Equipped with award-winning Lowrance Broadband Sounder technology, the Elite-3x allows anglers to quickly and easily identify fish targets, bottom contour, structure detail, bottom hardness, thermoclines and more. Offering selectable dual-frequency operation to maximize the view beneath a boat, 83 kHz sonar provides up to 60 degrees of conical coverage, which is ideal for displaying large fish arches and searching large areas, while 200 kHz sonar provides up to 20 degrees of coverage for enhanced fish-target separation and lure-tracking — ideal for vertical presentations. The Lowrance Skimmer® transducer, included with the Elite-3x, can track bottom at speeds up to 75mph, and it features a builtin water temperature sensor.
Oceanworks to Supply Submarine Rescue Epuipment to Turkey
O
ceanworks International says it is providing three Submarine Emergency Ventilation and Decompression Systems (SEVDS) consisting of Hose, LARS and control systems to Istanbul Shipyard for installation on the three specialist vessels they are building for the Turkish Navy. The delivery of the SEVDS is slated for late 2014. The primary role of the SEVDS is to provide fresh breathing air to survivors of a disabled submarine while extracting the CO2 generated by those survivors. The system is also capable of providing controlled decompression of the submarine.
The primary role of the SEVDS is to provide fresh breathing air to survivors of a disabled submarine while extracting the CO2 generated by those survivors.
OceanWorks has extensive experience in submarine rescue and intervention, including the supply and design of Submarine Emergency Ventilation & Decompression Systems (SEVDS). The system to be provided by OceanWorks has the notable advantage of being the deepest rated system ever built.
December 2014 - January 2015
47
Marine Tech
SeaBotix vLBV in Air-Deployed MCM Exercise The SeaBotix vLBV300 ROV was recently part of a MCM test exercise put on by Explosive Ordnance Disposal Training and Evaluation Unit One (EODTEU ONE) in San Diego. Two small combat rubber raiding craft (CRRC) containing the vLBV and an AUV were launched from a C-130 Aircraft via parachute to the ocean off Southern California and followed by a contingent of US Navy EOD technicians. It is estimated the equipment hit the surface of the ocean at up to 6 m (approximately 20 ft) per second in the partially-inflated CRRCs. The team then readied the gear and deployed the AUV to scan for any targets.
The SeaBotix vLBV300 enables high risk underwater operations by reducing diving hazards to personnel, mission time, and number of team members required to complete operations.
The SeaBotix vLBV300 enables high risk underwater operations by reducing diving hazards to personnel, mission time, and number of team members required to complete operations. One participant contacted a SeaBotix representative after the exercise to thank them for making ‘extremely rugged equipment’.
Sunken WW II Ship Oil Leak Plugged
A
tlantic Coast Marine Group, Inc (ACMG) successfully responds to World War II era motor tanker leaking massive cargo of oil into the Atlantic Ocean’s waters.
Motor tanker WE Hutton was underway in 1942 from Texas to Pennsylvania with a cargo of 65,000 barrels of oil when it was sunk by a German U-Boat, taking 13 lives.
48
Beaufort, North Carolina-based Atlantic Coast Marine Group, Inc (ACMG), a marine salvage, emergency towing and environmental services provider, was recently contracted to provide an initial survey and fast response pollution mitigation to a World War II era vessel believed to be the SS WE Hutton. As ACMG explained, motor tanker WE Hutton was underway in 1942 from Texas to Pennsylvania with a cargo of 65,000 barrels of oil when it was sunk by a German U-Boat, taking 13 lives and remaining a watery grave for the past many years until an oil sheen was recently noticed on the waters near its location off the NC coast. Working at the behest of the United States Coast Guard, ACMG’s environmental services unit promptly responded with multiple dive teams and assessed the scope and quantity of the leaking oil. ACMG thereafter developed and implemented a pollution containment and mitigation plan which stopped the flow of oil without compromising the m/t WE Hutton’s cargo spaces.
December 2014 - January 2015
Marine Tech
Rowe Adds New DVL to its SeaPILOT Line The SeaPILOT OC is the result of collaboration with several small ROV manufacturers to provide a compact, high performance DVL, designed for observation class ROVs.
R
owe Technologies expands SeaPILOT product line for Observation Class ROVs. Rowe Technologies, Inc announced the launch of a new Doppler Velocity Log (DVL) for the SeaPILOT product line. The SeaPILOT OC (Observation Class) is the result of collaboration with several small ROV manufacturers to provide a compact, high performance DVL, designed specifically for observation/inspection class ROVs. The OC is small (5” [127mm] wide x 6” [152mm] tall and 8” [203mm], lightweight (~1 lb [0.45 Kg] in water), is rated for 300m operating depths, and is available in 1,200KHz and 600KHz operating frequencies. To ease integration, the OC supports several input and output data formats and is compatible with a number of third-party control and navigation software packages.
HMAS Bundaberg’s Anchor near Ashmore Island Recovered
P
ersonnel in the coastal mine hunter HMAS Yarra have used their diving expertise to recover an anchor and shackles weighing one tonne from the seabed near Ashmore Island. The anchor, belonging to Armidale class patrol boat HMAS Bundaberg, was cut lose when it firmly wedged beneath a large boulder and the sea floor during a recent patrol for Operation RESOLUTE – the Australian Defence Force’s contribution to the whole-of-government effort to protect Australia’s borders and offshore maritime interests.
HMAS Yarra have used their diving expertise to recover an anchor and shackles weighing one tonne from the seabed near Ashmore Island.
Commanding Officer of Yarra, Lieutenant Commander Brendan O’Hara said the initial reconnaissance dive took approximately one hour. “Before leaving the area, Bundaberg marked the location of the anchor using an orange pimple buoy,” he said.
December 2014 - January 2015
49
Book Review
Port Infrastructure Finance [Hardcover] Editors : Pages : Price : Publisher :
Hilde Meersman, Eddy Van de Voorde & Thierry Vanelslander 299 USD 250.40 Informa Law from Routledge Book Description: This book provides an expert analysis of alternative investments routes and the investment strategies available to the major port players, and is a much-needed guide to expanding the investor base for private debt funding of projects from loan providers to bond investors.This book provides expert insight into areas of port infrastructure finance across the main regions of Europe, Asia, Africa and the USA. Topics include how to estimate future demand by way of forecasting; Public-Private Partnerships; corporatisation; the pricing mechanisms for syndicated loans; European port privatisation; finance strategies for ports in Asia, the USA and Africa; and a discussion of the investment strategies available to the major port players.
Dredging in Coastal Waters (Balkema: Proceedings and Monographs in Engineering, Water and Earth Sciences) [Hardcover] Author : Pages : Price : Publisher :
D Eisma 258 USD 185.51 Taylor & Francis
Book Description: The varied use of dredgers has led to the development of a variety of dredger types, from small ones appropriate to modest inshore projects, to very large sea-going dredgers for large-scale projects calling for the storage of dredged material within the ship. This book contains chapters on dredging operations in the Netherlands, Belgium, the UK, Spain, the US, China and Singapore. Additional chapters discuss more general aspects such as dredging techniques, monitoring of dredging operations, and the prospects of dredging in a changing environment. As well as providing information on dredging activities in different areas, it gives an insight into the activities and problems (environmental or other) involved in modern dredging. It will be of interest to professionals and students alike.
Economics of Shipping Practice and Management [Paperback] Author : Pages : Price : Publisher :
A E Branch 256 USD 82.96 Springers Book Description: The subject of this book is treated in a practical way, providing the reader with an overall understanding of the economics of shipping practice. The increasingly important role of management is given more emphasis, especially in the area of budgets, finance, personnel and marketing. The book should appeal to college and university students preparing for shipping, export, international trade and transport examinations, and to practising managers. Its practical approach, explanations and comprehensive coverage make it particularly appropriate for shipping personnel wanting to broaden their horizons through self-study.
50
December 2014 - January 2015
RNI No.: MAHENG/2008/29159 Date of Publication: 1st of every alternate month.