West Bengal Chief Minister Mamata Banerjee’s recent visit to Germany to attract investments into the state created a lot of buzz and gave an impression that the state is looking to become more business friendly. As the situation of the port in a coastal city is one of the key parameters to judge the industry-friendliness of a state, The Dollar Business decided to do a ground reality check of the state’s leading port – Kolkata Dock Complex (KDS). And the findings were not very encouraging.

Niladri S. Nath | November 2016 Issue | The Dollar Business

Ki dekhte eshechen, dada, soonsan dock [What do you want to see here, an empty dock]?” That was quite an unexpected greeting when we arrived at one of the gates of Netaji Subhas Dock (NSD), an integral part of the Kolkata Dock System (KDS). It was an ominous start, but we decided to continue! And as we passed through the Circular Garden Reach Road – the key arterial road that connects Kolkata Port with other parts of the city and beyond – we began to realise that there was something amiss. After all, not a single container carrying trailer could be spotted on a stretch that faces traffic congestion every other day, or rather every day! And also a port with zero inward or outward container movement and a desert-like look was a hard-to-digest reality.

A few miles and a couple of conversations (with locals) later, we found that the scenario was basically the aftermath of a restriction imposed by the Kolkata Police on heavy vehicular movement on the road between 8 am and 10 pm. More probe into the reason behind the blanket ban dug out a discomfiting fact, which the city has been trying hard to forget. Apparently, since an influential personality had to go through the grind of navigating traffic snarl, someone or something had to bear the brunt. In this case, it was the business at KDS that took the hit.

Marked Distinction

From championing the cause of the British Empire as a holding port to one of the key gateways to India's eastern region, KDS has witnessed fluctuating fortunes through its history. Markedly, it’s the only riverine port in India and is located 203-km away from the sea.

Kolkata Dock System (KDS) comprises three docks – Netaji Subhas Dock (NSD) with 10 berths and Kidderpore Dock (KPD) with 18 berths, along with Budge Budge (BB) Jetties with six berths. Both KPD and NSD have a lock gate each through which the vessels ply. NSD currently has eight berths in operation (two aren't in operation), out of which five are reserved for containerised cargo and two are dedicated to the project and general cargo. And, while NSD has two dry docks, KPD has three dry docks.

The average draft at NSD is about 25 ft. The maximum dimension of vessels accepted at NSD is 565 ft. LOA (length overall) and 80 ft. BOA (beam overall i.e. the overall width of the ship measured at the widest point of the nominal waterline), whereas maximum dimension of vessels that can call KPD is 515 ft. LOA x 70 ft BOA. On the other hand, BB Jetties can accommodate vessels with dimension of 620 ft. LOA x 86 ft. BOA.

While NSD primarily handles containerised cargo, KPD handles break bulk. When it comes to BB Jetties, they have been dedicated for handling liquid bulk. “Kolkata being a city-based port, we focus on handling cargo that is not hazardous to the environment such as pulses, food grains, containerised cargo, over dimensional consignment (ODC) cargo, especially project cargo and wood logs at NSD and KPD. Vegetable oils and petroleum products are handled at BB,” explains S. Balaji Arunkumar, Deputy Chairman, KDS, Kolkata Port Trust(KoPT).

NSD is equipped with three mobile harbour cranes (MHC), and each MHC is capable of handling 20 containers per hour. All in all, it has three MHC berths and two non-MHC berths as of now. It is also bolstered with a towering 125 ft. tall cantilever crane that can handle 200 tonne of ODC project cargo.

In addition, NSD has five container freight stations (CFSs) – two privately owned by Century Ply and three government-owned ones (CONCOR, Balmer Lawrie and Central Warehousing Corporation). Another privately owned CFS is expected to come up soon.

Furthermore, the port authorities have a huge tract of land outside the port area, which they have leased out to companies like ITC, CONCOR and Balmer Lawrie on a long-term basis. To be specific, KoPT has 4,071 acre of land that has been rented out for industrial, residential and commercial purposes.

KDS services quite a vast hinterland comprising the states of Bengal, Bihar, Jharkhand, parts of Uttar Pradesh, Madhya Pradesh, Chattisgarh, Punjab, Hayrana, Rajasthan and some north eastern states. The Port also caters to landlocked countries like Nepal and Bhutan. However, cargo from Nepal now being routed to Visakhapatnam Port is a cause of concern for all stakeholders at the Kolkata Port Trust.

Numbers Don't Lie

As per Kolkata Customs (Port) data, KDS’s revenue has been growing steadily for the last five financial years – except in FY2015. Customs records show that KDS has generated revenues of Rs.4,379.21 crore in FY2012, Rs.4,825.75 crore in FY2013, Rs.5,377.65 crore in FY2014, Rs.5,194.93 crore in FY2015 and Rs.5,629.25 crore in FY2016. Notably, the figures are based on electronic data interchange (EDI) and don’t take into account manual entries. "There aren’t many manual entries these days," reveals a Customs official.

The increasing volume of cargo handled by KDS is also a testimony to its growing popularity. KoPT data reveals that KDS handled 16.688 million metric tonne (MMT) of cargo in FY2016, against 15.283 MMT in FY2015, thus, registering a growth of 9.19%. Interestingly, it's the highest ever cargo throughput attained by KDS. The dock system surpassed the previous high achieved in FY2015. According to the Port officials, the growth was driven mainly by a jump in imports cargo, particularly of engineering goods, electronic goods, edible oils, etc. Incidentally, KDS also achieved the highest ever container throughput of 5,77,749 TEUs in FY2016, recording an impressive growth of 9.39% over 5,28,166 TEUs in FY2015.

Fluctuating Draft

While getting a first-hand view of the Port and speaking to various stakeholders, we encountered the truth that lies beneath this growth story – KDS is gradually losing its competitiveness. This is happening due to several reasons; its unpredictable and fluctuating draft and the resultant effect on cargo movement being one.

Being a riverine port, KDS is dependent on high tide for smooth movement of vessels into the Port. Only when water level in the river rises due to high tide, can large vessels enter and sail out of the Port. Hence, correct draft forecast is very critical for a vessel to navigate the riverine channel to reach the Port. And because the Port also lacks regular dredging, ships have to wait at the sea-mouth for days to get the required draft. This adds to the operational costs and delays the cargo movement. “In this era of competitive and time-bound cargo movement, such delays are not at all acceptable. And because of this, Kolkata Port has become quite costly for both exporters and importers,” says Pinaki Sankar Ghosh, Vice President, Association of Shipping Interests in Calcutta (ASIC).

The low draft restricts bigger vessels from reaching KDS, and hence feeder vessels are employed to bring cargo to the Port from the main vessel. Besides, the distance from the sea also adds to the freight cost of the port user.

“Because of feeder vessel operations, the cost goes up by 20-25%,” says Ramesh Kumar Agarwal, Regional Chairman (Eastern Region), Federation of Indian Export Organisation (FIEO). A majority of the loaded export containers travel to Singapore and Colombo ports from KDS, as KDS acts as a feeder port to those bigger ports. The average cost to transport one 20 ft. container from NSD to the aforesaid destinations works out at $300-350, whereas from other ports, such as Chennai, Tuticorin or Visakhapatnam, the cost is $80-$120. “Such a difference always has a chain effect on the profitability of the business.However, businesses that operate in and around Kolkata have no option and they have to rely on KDS for shipping goods. And this is the only reason the Port is thriving. Otherwise, there is a lot to be achieved in terms of infrastructure, facilities and turnaround time,” feels Ghosh.

It however seems that exporters and importers in Kolkata have made peace with the situation, terming it ‘limitations of the riverine port’. “Cargo from KDS takes two weeks of additional transit time. You need to work on your production planning and shipment schedules accordingly. We have planned our operations to absorb the longer transit time,” shares Sumit Goyal, President (Operations) at Patton International Ltd., a Kolkata-based manufacturer and exporter of light engineering goods.

Congestion Woes

Interestingly, we also learnt that the term congestion is two-dimensional for KDS. The jarring sight of mountains of empty containers on both side of the road was the tell-tale sign of a bigger malaise.

Only 30-40% of the containers used in imports are pressed into service for exports and the leftover empty containers are placed in piles on the plots adjacent to the Port. This has given rise to black marketing of the land space available, with some unscrupulous agents even overcharging. And, not to say, this does not augur well for the business.

To prevent the situation from spiralling out of control, KoPT has, of late, allowed some shipping companies to take away the empty containers and send them back to Singapore. But this isn't a permanent solution.

Not long ago, a container terminal has been sanctioned in the Diamond Harbour region under PPP. Agarwal thinks the Port authorities should work on achieving a higher draft to accommodate bigger vessels to reduce freight cost, and obviously, container congestions.

Nonetheless, Arunkumar assures that KoPT has taken cognizance of the situation and is now planning to take charge of some empty plots and open them for container parking within a  few months.

Not to forget, the main arterial road – Circular Garden Reach Road – leading to NSD and KPD is also in a sorry state. The narrow width and large potholes slow down the pace of container-carrying trucks and trailers. What's even more worrisome is that the Port authorities don’t seem to have an immediate solution to this issue. And only time can tell whether KDS gets a separate lane for cargo. Hence, the question remains – where’s the end to the deadlock?

Sytem Hurdles

There are approximately 400 Custom House Agents (CHAs) working at KDS. However, most of them are unhappy with the operational efficiency and mindset of the Port personnel. “With umpteen interventions at various stages and unnecessary queries raised by the Port officials, clearance becomes a protracted affair,” complains Sudip Dey, a CHA who has been working at KDS for decades.

Sujit Chakraborty, President of Calcutta Customs House Agents' Association, too suggests that the Port should be more active towards safeguarding the interest of all stakeholders. “The Port authorities aren’t making concrete efforts to prevent ship liners from adding arbitrary charges, i.e. congestion charges, water surcharges, etc.,” he rues.
 

Walk The Talk

Undoubtedly, KDS needs to rise above the status quo, else this century-old Port will find itself losing cargo to Paradip and Visakhapatnam ports. Ghosh, from ASIC, feels that KoPT should walk the talk before it’s too late! “All major shipping lines such as Maersk Line, Mediterranean Shipping Company S.A., NYK Line operate from Kolkata, which invariably means business is there. But, KDS needs to serve all stakeholders in a cost-effective manner,” he suggests.

At the same time, one cannot disregard that KDS has challenges of its own. Past experience suggests that no major port has grown within the city limit, which is why, for instance, the Mumbai Port Trust had to build the JNPT (Nhava Sheva) Port. Also, the Port of London had to look at Tilbury and Southampton for expanding operations.

Perhaps the wind of change has started blowing through the Port, with the process of reclaiming the land outside the dock system and planning to lease it out. Sounds good! But then, in days to come, KDS will clearly be judged on two basic parameters – operational efficiency and cost competitiveness, factors on which KDS has been lagging behind when compared with other major ports.

From a strategic geographical location to the proximity to a commercially vibrant hinterland, KDS has what it requires to become a force to reckon with in future. All it needs is the right strategic direction. Is that too big an ask to save a major port?