Safer, Cheaper, Better?
Ever heard of something being safer, cheaper, better and yet highly underutilized? Indian coastal and inland waterway shipping is one such case. With a long coastline of 7500 kms and surrounded by sea on 3 sides, India has great untapped potential of utilizing these factors in her favor.
Efficient logistics is and will remain the driving force behind a country's growth. Although India cannot boast about it's efficiency.
India has a wide spread to cover in terms of logistics cost as % of GDP. Other emerging and major markets have a huge competitive advantage over India just because of India's inefficient logistic handling.
Currently, Waterways and coastal shipping contribute around 5 % of total transport in the country. Countries like China and US, on the other hand have 25-30% of their transport done through waterways.
As seen above, the share of transport is heavily skewed towards roadways taking up around 55% share of total transport. Rail too, being a major abettor in transporting coal, container, dry bulk & oil cargo takes up a significant 32.65% share. The surprising part comes when we look at the cost structure of these separately.
The waterways being extraordinarily cost-efficient, should ideally constitute a major share of domestic transport. It's safer considering the loss of lives in road accidents and is far less polluting. No surprise the Indian logistic cost is so high. Add to that the below par quality and efficiency of road and rail too when compared to global standards.
Why? Why has this not been done yet? Many reasons. But the major ones being poor port infrastructure and connectivity. Indian ports lag far behind when compared to other ports in terms of traffic handling capacity, turn around time and infrastructure to handle various types of cargo.
India lacks the required modal mix to achieve efficiency. A good modal mix requires seamless connections between various modes of transport with distributed clusters and nodes of production.
Looking at the factors above, one thing is clear, in the coming future, there's a huge role to be played by waterways in India.
Sagarmala is one of Indian Govt's flagship programs and the answer to all major problems sighted above. Sagarmala aims at port led development by developing CEZs (Coastal Economic Zones) which act as various industrial clusters around the country's major and non- major ports. Increase port capacity and infrastructure to world-class levels. Improve connectivity to all major ports. Invest in port infrastructure along the country's rich 14500 km of potentially navigable rivers to develop & improve inland waterway networks. All in order to build an efficient and sustainable logistics system.
Under Sagarmala the govt has envisioned a total of 189 projects for modernisation of ports involving an investment of 22 Bn US Dollars by 2035. The Shipping ministry has set a target capacity of over 3130 MMT (million metric tonnes) by 2020 from current 1700-1900 MMT. Indian cargo traffic is expected to rise to 2500 MT by 2024-25 from 1072.23 MT in 2015-2016.
Part of the projects are completed and majority of them are under implementation. Transportation of goods in national waterway- 1 has commenced. Increase in port capacities and improvement in operations is also seen.
There has been aggressive augmentation in port capacity on all major ports. The govt has further announced numerous incentives to ports and waterways to encourage maritime transport. We can safely expect the maritime traffic going only northwards owing to major improvements and a focused government.
The impact from Sagarmala by 2025 if implemented as planned:
1) Savings from coastal shipping of coal : 17k-18k crores
2) Savings from coastal shipping of steel, cement, foodgrains & fertilizers: 11.5k - 13.5k crores.
3) Savings from modal shift & time & variability reduction of containers: 7k - 9k crores.
4)Doubling of share of waterways in modal mix.
All in all, the country is looking at huge cost savings by shifting to waterways. There might be significant investment opportunities in this game changer of a move.