Tuesday, June 02, 2015


India is blessed with ample sea resources. But it is unfortunate that like many other resources, our  coast-line is highly under utilised. While other developed countries have used the coastal sea movement of cargoes to a great extent and the share of their coastal shipping hogs a substantial pie of their total cargo movement, here in India the coastal shipping has meagre 7% share in our total cargo movement.  

The bottle-necks are well recognised and established for ages. More so,  (I will go on to add that) these bottlenecks have been deliberately created by the government to favour the rail and road transport lobby. Also, the existing major coastal shipping players have no will to fight against the system as it suits them and they are comfortable with the lesser competition status-quo.

Nevertheless, increasing volume of domestic cargo movement and pollution levels will beat the selfish interests of lobbies & syndicates in to submission and coastal shipping will evolve as the leading share-holder in India's domestic cargo movement.

The coastal shipping bottlenecks are well defined for a long time now. Just a brief revision hereunder:

1. Not enough volume for sea transport
2. Not enough carriers to carry sea cargoes.

The above two conditions hold causality relationship with each other. Not enough sea cargo means less demand for domestic shipping, which in turn would ensure a lean and mean fleet. On the other hand a meagre fleet i.e. less supply means higher freights, which in turn leads to less demand.  In order to rescue domestic coastal shipping, we would need to break this vicious circle causality.

Why not enough sea cargo?  
  • The lack of connectivity of non-major ports to the road and rail networks.
  • Lack of infrastructure: it is one of the biggest obstacles faced in coastal shipping industry. The government has failed to develop infrastructure that is expected to make shipment easy and efficient. Infrastructure involves electricity, road network and overall area development which supplements the use of this route.
  • Lack of separate berthing facilities for coastal & IMPEX cargo vessels at major ports and inadequate cargo handling facilities at minor ports.
  • The lack of consensus between state and centre about appropriation of funds for connectivity to non-major ports adversely affects the prospects of coastal shipping.
  • Absence of state maritime boards. Currently, only Gujarat, Maharashtra and Tamil Nadu have a maritime board. This lack of coherence inhibits focus on the development of coastal shipping across the nine coastal states.
  • Lack of lucrative government schemes: Unlike other channels of transportation, the government has not made any efforts to benefit coastal shipping users financially. Companies using coastal shipments until now had to face harsh and impartial taxes like no exemption from Income tax, customs duty on bunkers, landing fees, etc.
  • Slow and cumbersome process at Customs: The shipment process is extremely slow and laborious compared to other modes of transport which are much faster. Companies are unwilling to waste precious time in adhering to these processes.
  • Road & rail transport has an edge over water transport because most of the production and consumption centers are landlocked. Also, it provides door-to-door movement. Over the years, there has been substantial investment in its infrastructure. Coastal shipping, on the other hand, involves double-handling costs.
  • less supply of shipping fleet
Why not enough Shipping Fleet? 
  • Nonavailability of concessional finance to acquire coastal vessels
  • Absence of competitive P&I instruments
  • Absence of long term period charters to facilitate loans and financing of assets.
  • High import duties on bunker oil and spares
  • High manning scales which increase operational costs
  • Stringent specifications relating to construction of vessels, leading to higher capital costs
  • Incidence of corporate tax for coastal as against tonnage tax for ocean-going vessels and personal income tax which discourages quality officers from continuing on Indian coastal vessels
  • Lack of policy measures to promote existing and new coastal shipping players.
  • Less demand. Not enough sea cargo
The Solution!

Knowing the cause, solution is no brainer. Only thing we need is the WILL to promote coastal shipping in India. It would be prudent for the government to rise above petty politics of favouritism and appeasement and make policies for the brighter and safer future of India.


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