New Mangalore Port is situated on the West Coast of India, 170 nautical miles south of Mormugao Port and 191 nautical miles north of Cochin Port and is well equipped to handle bulk, liquid chemicals, hazardous cargoes, crude and POL products, heavy l
Have you ever come across an asset that has proven capability, capacity and considerable demand, but remains underutilised and untapped? Beats logic,doesn’t it? But this exactly is the case with the New Mangalore Port. Intrigued by Ministry of Shipping figures, which indicate that the capacity utilisation at the port is the third lowest among all major ports in the country and to figure out the reasons for such state of affairs, The Dollar Business spent a few days in and around the port. What we found was tranquility, and not the hustle and bustle of concentrated activity that is usually associated with dockyards.
Satyapal Menon | July 2015 Issue | The Dollar Business
The journey by bus to Mangalore was unforgettable. Actually, best forgotten! The ride was bone jarring. I thought if this could happen to me travelling in a luxury Volvo, what must be the plight of passengers travelling in regular modes of transport. To add to my jitters, ever since we drove past Hubli (Karnataka; about 375 km from Managalore), the bus seemed to be coming to a jolting halt every couple of metres, giving the feel that the driver was stomping on the brakes, instead of applying them. Finally, after what seemed to be aeons, the bus did reach Mangalore. That’s when I realised it was all a function of the state of the road.
I considered myself fortunate enough to reach the destination with my spinal column intact. I realised, much later, that such ordeals had a lot to do with the fortunes of the New Mangalore port.
Rock of Gibraltar
Flanked by the Western Ghats, Mangalore city continues to suffer due to lack of proper road and rail connectivity. Its mountainous terrain is being branded as some kind of Rock of Gibraltar. Quite appalling isn’t it that despite the availability of technologies, we show incompetence in breaking through such barriers to development. Faith, as often quoted, can move mountains. If not faith, commitment definitely does. Brings to mind the mind-boggling endeavours of a single person – Dasrath Manhi – who chiseled through a mountain to create a passage to his village in Bihar. He embarked on the herculean task after failing in his many attempts to move an equally formidable mountain – the government.
Well, coming back to the point, proposals and plans for a road to Mangalore is lying buried in mountains of yellowed files, with implementation, if any, entangled in the debris of rules related to environmental clearances and processes. The result – New Mangalore port – the only major port in Karnataka – continues to remain in a state of isolation, cut off from even its hinterland. “Isn’t it ridiculous that we are cut-off even from our capital city Bengaluru?” questions Nigam B. Vasani, President of the Mangalore based Kanara Chamber of Commerce and Industry (KCCI). “The situation is such that exporters and importers in Bengaluru have diverted their business to Chennai, Cochin and even Krishnapatnam ports,” he adds.
Although work for proper road connectivity is going on, it is happening at a very a slow pace and is often hitting roadblocks in the form of environmental issues, particularly those related to lack of clarity on tunneling through the Western Ghats.
Too few, too little
The main cargo handled at the New Mangalore port is POL (petroleum, oil and lubricants), coal and iron ore – mostly by captive users like Mangalore Refinery and Petrochemicals Limited (MRPL), Udupi Power Corporation Limited (UPCL), Mangalore Special Economic Zone (MSEZ) and Kudremukh Iron Ore Company Limited (KIOCL). On the other hand, coffee exports and raw cashew imports dominate container cargo at the port. In fact, coffee exports and raw cashew imports respectively accounted for 8,557 TEUs and 7,149 TEUs of the total 62,808 TEUs cargo handled by New Mangalore Port Trust (NMPT) in FY2015. The port also has the advantage of a 14 metre draft and berths of different dimensions ranging from 125 metre to 300 metre in length to accommodate vessels of different sizes. It also has mechanised handling equipment and, at 1.7 days, the best turnaround time (TRT) among all major ports in the country.
Dead veins
The good news, though, ends here. While most major ports in India suffer from congestion, lack of connectivity means New Mangalore port is struggling to even achieve 50% capacity utilisation.
Industry sources indicate that almost 55-60% of business from its hinterland is, today, routed to other ports because of a lack of connectivity. The roads to Mangalore are in such bad condition that many consider it to be too risky, even impossible, to transport consignments to and from it. Poor roads also increase the cost of transportation, forcing several erstwhile NMPT users to use other ports. However, NMPT’s Traffic Manager D. Mahadevaiah attributes the low capacity utilisation at New Mangalore port, at least in FY2015, to less business by captive users like MRPL, KIOCL and UPCL. He is, however, optimistic. “We are expecting an increase in traffic from these captive users in the current year,” he tells The Dollar Business. An export ban on timber by Myanmar has also hit NMPT’s business. The only lifeline between New Mangalore port and its hinterland and the outside world is the rail line provided by Hassan-Mangalore Rail Development Company (HMRDC) Ltd. And while rail cargo volume has remained consistent at 70 lakh MT in the last two financial years, it’s more a case of stagnancy than anything else. For, it indicates that NMPT isn’t being able to attract new customers.
Dark under light
It is incomprehensible that a major port located in an industrially vibrant state like Karnataka, with abundant resources and a significant share in India’s exports, suffers such a fate. Some argue that traders from Bengaluru prefer the Chennai port due to proximity. But if that were to be that case, why is that traders from the rest of Karnataka, particularly those based close to Mangalore, continue to avoid NMPT? In fact, what must come as a surprise to many, some exporters and importers from Mangalore itself are preferring Cochin port over New Mangalore port, despite increased costs involved in transportation. Explaining the reason for this, particularly when it comes to container traffic, Ameen Mohammed, Managing Partner, Hasan Hajee & Co. and former President of KCCI, says, “It is like the chicken first or egg first story. Container lines want more mainland vessels to come in. But today, even containers from Mangalore go to Cochin and Chennai, because feeder vessels are more expensive and it involves double operations, thereby increasing costs.”
In fact, some exporters find even moving containers by road to Cochin, is more feasible than routing through Mangalore.” Rammohan Pai Maroor, a PVC products manufacturer, who sources raw materials from China, also has reasons for moving to Cochin port from the much closer Mangalore port. “Bringing raw materials from Cochin is costlier, but our business requires consignments to reach us on the right day, at the right time. We get faster deliveries from Cochin. There is at least a difference of 15 days, when compared to New Mangalore port. Moreover, more ships call at Cochin. It would always be more convenient to get the consignment through Mangalore, but there are limitations,” Maroor tells The Dollar Business. “
Missing the boat
Karnataka has eight minor ports – Kundapura, Honnavar, Belekeri, Tadri, Bhatkal, Hangarakatta, Malpe and Padubidri – located on the state’s 300 km coastline. Hence, coastal shipping would and should be an ideal alternative to lack of proper road connectivity. In fact, many studies have shown that it could to be a more efficacious option to link the Mangalore port to its hinterland. But, inexplicably, this mode of transportation continues to remain unexplored. Elucidating the importance of coastal shipment, Ameen says, “This is one mode of transport, which can change the Indian marine logistics. We have fantastic water connection. Unfortunately, we have not tapped its potential. For instance, take the case of China. The country is using its coast to connect one city to another. Actually, this mode of transportation is cost effective and can mean faster movement of consignments.”
Hiding in Rome
Isn’t it absurd that while the government is trying to provide all-weather roads to even the remotest of villages in the country, one of the most important cities – a banking and coffee producing hub, with a major port – continues to remain barely accessible by road? Question the concerned authorities on the agonising delay in laying the road network, the repartee, mostly is, “Well, Rome was not built...”
As for me, it was time to leave Mangalore. There was only one bus back to Hyderabad and the only train was a week away. I could not afford to miss the bus, despite the torturous 20-hour journey and three Tollywood stomach churners giving me the heebie-jeebies. Giving me company during these 20 hours, of course, was what else but the question about Rome.
“We had started 24x7 customs operations as early as FY2011” - D. Purushotham, Customs Commissioner, Mangalore
TDB: Can you give us an overview of customs activities within your jurisdiction? Also tell us about the goods that are the major revenue earners for the department.
D. Purushotham (DP): There are ten minor ports – Old Mangalore, Padubidri, Malpe, Hangarkatta, Kundapur (Gangolli), Bhatkal, Honnavar, Tadri, Belekeri and Karwar – under the jurisdiction of the Mangalore Commissionerate. These are located on the coastline between Mangalore and Karwar. Of these, while Karwar is an all-weather port, the rest are riverine anchorage lighterage ports. On the other hand, Honnavar, Bhatkal and Hangarkatta have not been declared as Customs ports. LPG, coal, petroleum coke, met coke, vegetable oil, timber, crude petroleum, bitumen, fertilisers and machinery majorly contribute to the department’s revenue.
TDB: How pragmatic are 24x7 Customs operations, since they require coordination and networking with banks and other departments?
DP: The concept of 24x7 clearances are not new to Mangalore Customs Commissionerate. After being identified for the exports of factory stuffed goods on 24x7 basis by its board, 24x7 operations had accordingly commenced at Mangalore seaport as early as the 15th of July, 2010. Further, during FY2015, New Mangalore seaport was identified for 24x7 Customs clearance of specified imports goods covered by ‘facilitated’ Bills of Entry and exports of factory stuffed containers and other goods that are exported under free Shipping Bills. The online networking is foolproof. All ports are connected. Even for Bills of Entry, you need not come here. You can file a Bill of Entry from your office. Every document can be paid for from your office.
TDB: Though Mangalore Customs has been achieving its targets, the increases in net revenue after the payment of duty drawbacks have been quite insignificant, except for FY2012, when it was slightly over 13%. What do you attribute this to?
DP: The total revenue realised during FY2015 was Rs.1,089 crore, as compared to Rs.1,106 crore in FY2014. This decrease can mainly be attributed to the decline in the share of the top ten importers from 61.1% in FY2014 to 53.6% in FY2015. IOC (-56.4%), Mangalore Fertilisers and Chemicals (MCF; -38.7%), Tata Oil India (-21.8%) and JSW Steel (-17.7%) were among those which registered negative trends. This can be attributed to various factors. In the case of IOC, the reduction of BCD (basic custom duty) on propane has resulted in lower duty augmentation. If you take the case of MCF, the removal of subsidy on imported naphtha has resulted in less imports, thereby affecting Customs revenue. Duty from Total Oil India, an importer of LPG, has decreased due to less imports of LPG/ decrease in value of imports due to a fall in the price of petroleum products in the international market during the current financial year.
TDB: What reforms are on the anvil by Mangalore Customs?
DP: Mangalore Customs has taken up an initiative to set up a Customs Clearance Facilitation Committee (CCFC). The objective of the CCFC is to simplify Customs procedure, reduce number of documents and enable exchanges between government agencies etc. Concerned departments, agencies and other stakeholders have been asked to nominate members for the committee.
TDB: In your opinion, what initiatives are required for the growth of New Mangalore Port?
DP: There are no important or major issues pertaining to Customs. However, at a broader level, the growth of New Mangalore Port depends on factors like road/rail connectivity with the hinterland and the setting up of cold storage facilities for perishable items etc.
TDB: Is it a fact that clearing agents are charging exorbitant rates at New Mangalore Port? If yes, what action is your department contemplating to end this practice?
DP: No such instance has been noticed by us. If noticed, appropriate action, as envisaged in Handling of Cargo in Customs Area Regulation, 2009, will be initiated.
“NMPT will be fully paperless within the next few months” - D. Mahadevaiah, Traffic Manager, New Mangalore Port Trust
TDB: In FY2014, NMPT’s capacity utilisation was just 50%, which reduced further to 47% in FY2015. To what do you attribute this under-utilisation?
D. Mahadevaiah (DM): We handled a record cargo of 39.36 MMT in FY2014, which was about 50% of our handling capacity of 77.77 MMT per annum. The utilisation further reduced to 47% during FY2015 due to less cargo by captive users like MRPL, KIOCL and UPCL. But this is a temporary phenomenon. We are expecting an increase in traffic from these captive users in the current year.
TDB: What is the average turnaround time at NMPT and what initiatives have you undertaken to reduce it?
DM: The average turnaround time at the port during FY2015 was 1.7 days, which puts us in the ‘excellent’ category of the RFD (Results-Framework Document) target fixed by Ministry of Shipping. However, we are closely monitoring operations to further improve it.
TDB: What is the status of the deep-draft multi-purpose general cargo facility? Once completed, how will it help operations?
DM: Work for the construction of the deep-draft multi-purpose general cargo berth No.18 at the western dock arm is in progress and is expected to be commissioned during the current fiscal. Once commissioned, it will help us handle more general cargo vessels with higher drafts.
TDB: Is NMPT contemplating any collaboration(s) with the private sector?
DM: The port is providing equipment at the new berth No.18 and also developing one more berth – No.19 – for handling containers/clean cargo. Both these initiatives are being done through private operators. These would benefit port users and lead to faster operations at a more economical rate.
TDB: Can you give us an idea of the hinterland that NMPT serves? Are you being able to garner traffic from neighboring states as well?
DM: New Mangalore port is the only major port in Karnataka and is the gateway for the state’s EXIM trade. It has got a very vast hinterland that includes Hassan, Bengaluru, Mysore, Madikeri, Chikamgalur, Shimoga, Chitradurga, Hospet, Bellary, Haveri, all the way upto Kannur in Kerala. Lot of cargo from these regions move to and from the port. Due to proactive business development done by the port in the hinterland, it has been able to divert cargo, especially containerised cargo, from neighboring states too.
TDB: Recently, the Centre has announced monetising unused port land. Does NMPT have any plan on those lines?
DM: Unutilised land is not available at NMPT. Of the total area of 2,032 acres, 640 acres are statutory green belt, 329 acres are for the water front, the railway marshalling yard occupies 148 acres, 319 acres are occupied by the residential colony and 565 acres are Custom bound. In addition, NH 66 passes through the port, dividing the total area into two. The available land with NMPT is used to the optimum level by creating infrastructure like storage sheds, container yards, road network etc.
TDB: What other plans are on the anvil to provide better facilities to NMPT users?
DM: We are working on developing additional container storage area and liquid storage tanks, privatising the handling equipment, deepening the channel and lagoon to 18 metres etc. NMPT has implemented ERP and all its operations are online. The port is moving towards being total paperless within the next few months. Once the ongoing projects and those which are in the pipeline are completed, NMPT will emerge as one of the most high-tech ports in the country. NMPT stands committed to the progress of its customers. It helps Indian companies in their export-led growth strategies. For buyers in India, it helps bring down transportation costs. Like the waves that never sleep, NMPT strives ceaselessly for the progress of all stakeholders involved.
“NMPT is surviving only because of oil imports” - Ameen Mohammed, Managing Partner, Hasan Hajee & Co.
TDB: What is the reason for very low capacity utilisation at the New Mangalore port?
Ameen Mohammed (AM): NMPT’s geographical location is a major hindrance. Because of the Western Ghats, it’s not easy to reach the hinterland, neither by road nor by rail. This is one of the main reasons why NMPT hasn’t grown like other major ports. Another problem is that despite being a port city, Mangalore doesn’t have industries like what Visakhapatnam and other port cities have. Mangalore has only one or two major companies, like MRPL, which support NMPT. We would like to see many more companies coming up, so that the port is used to its full potential. The dry bulk cargo at NMPT is not very heartening. It is surviving only because of oil. Else, things would have been very bad.
TDB: How has this impacted your business?
AM: The shipping industry is like a wave in this part of the world. Sometime it comes down, sometime it goes up. It has always been fluctuating. Now we are experiencing a downside. In another year or two, we may again see an uptrend. There is an ICD in Bangalore. However, not even a single container comes to Mangalore despite it being the gateway to Karnataka. Most exports go through Tuticorin, Chennai or Cochin ports. The reason for this is that Bangalore to Chennai is just one straight route. Even if one fourth of these containers come to Mangalore, it can be developed into a container hub. As for now, only feeder vessels come here once in four days.
TDB: Are there problems to accommodate big vessels at NMPT? Do you think NMPT is appropriately equipped in terms of infrastructure?
AM: Draft is not an issue here. However, being an artificial port, NMPT does require dredging. The port also has plans to increase the draft from the current 14.5 metres to 18 metres. A lot of thinking is going into this. I think NMPT should consider having a midstream discharging facility like Goa port, since it would mean being able to accommodate vessels of any size. MRPL has invested on a single point mooring system here. As a result, it is able to operate at the anchorage itself, without any need for a ship to come to the harbour.
TDB: Reports suggest of resentment among traders regarding tariff. Has the issue been resolved?
AM: The issue is still hanging. It has become the biggest headache for traders. First, NMPT officials decided to revise rates. But the final decision on this was taken after three years. Then they imposed the tariff with retrospective effect of three years! Why should I come to a port, which charges tariff with retrospective effect? It’s not that I don’t have alternate options.
“Timber export Ban by Myanmar has affected the port’s business” - Nigam B. Vasani, President, Kanara Chamber of Commerce and Industry
TDB: Mangalore Port’s capacity utilisation is very low. Does it reflect a lack of business potential in its hinterland?
Nigam B. Vasani (NBV): Mangalore port is in a pathetic state because of lack of road connectivity. While this is partly due to topographical factors because we are surrounded by the Western Ghats, the real problem is that things are moving at a snail’s pace. We have submitted several proposals and made many representations and have also been questioning the delays, even lobbying. But the concerned authorities are neither listening to us, nor have they been able to make the right moves to solve the problem.
TDB: Is road connectivity to the port the only problem that is impacting the local industry?
NBV: There are issues about tariff being imposed with retrospective effect as well. Tariff and rentals charged by the port have gone up drastically and importers are feeling the pinch. Hence, they are all moving out, which is bad for both the industry as well as NMPT. The ban on timber exports by Myanmar, a major chunk of which was routed through the Mangalore port, has also created a significant dent. Secondly, imports of pulses like green peas from Canada and US are also facing problems related to fumigation and other technical issues. We had sent a representation to Minister of Commerce Nirmala Sitharaman in this regard and she kept it aside. We hoped that some thought would be given to the issue in the Union Budget. But that didn’t happen.
TDB: Assuming that good road connectivity is established, to what extent would it change the fortunes and prospects of the industries in the hinterland?
NBV: Good connectivity will make a lot of difference, but the question is if it will reduce just the distance or the time taken for transportation as well. Today, huge quantity of coffee is routed through the Mangalore port, but it takes about four hours to transport the coffee from producing hubs like Chikmagalur and Madikeri. Moreover, we have been facing several roadblocks. For instance, when Shiradi Ghat road was blocked, the Deputy Commissioner of Hassan, initially, did not allow us to transport containers through Hassan. Given such impediments, I am not bothered whether I route my consignments through Mangalore or Chennai. It is NMPT, which should be worried about losing out on business.
TDB: Can you give us a brief idea about the export potential of Mangalore and its hinterland?
NBV: Mangalore is a banking hub. KCCI is also pursuing with the government to set up an offshore financial centre in Mangalore, which would facilitate global financial institutions and banks establish their offices here and serve the exporters and importers of this region. The local cashew industry is also doing quite well. In fact, a big American company has setup a cashew nut shell liquid oil manufacturing facility at the Mangalore SEZ. Facilities at the SEZ have been receiving accolades from visiting foreign business teams. Coming to other resources, Mangalore tiles are quite popular globally. There is huge potential for seafood exports as well, which is yet to be tapped. The state government should implement a policy to promote the seafood industry and encourage private players to set up cold storages, as well as improve transportation facilities. We are pursuing with the government to make Mangalore a smart city, since we have all the resources and infrastructure. It has every right to be a smart city.
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