Slowing growth darkens outlook for India’s public ports

The cargo bleed at India’s major public ports in recent months has begun to accelerate, putting additional pressure on stakeholders who need to regain market share lost to private minor ports and optimize capacity added in recent years through considerable investment.

The country’s 12 major port entities saw combined container throughput slide 5.5 percent year over year in November, to 763,000 TEU, the latest provisional port figures show. That follows a 2 percent year-over-year drop in October.

Jawaharlal Nehru Port Trust (JNPT) and Chennai Port, which together represent more than 40 percent of the country’s total containerized trade, took deeper growth cuts in November — falling 9 percent and 19 percent, respectively, year over year, compared with 5 percent and 13 percent declines seen in the prior month. By volume, JNPT handled 384,000 TEU, down from 423,000 TEU in November 2018, while Chennai saw 104,000 TEU, down from 128,000 TEU a year earlier.

November volumes at other smaller major handlers — notably Cochin, Tuticorin, Visakhapatnam, and Kolkata — remained relatively flat against year-ago levels, the analysis found.

The fiscal year-to-date growth rate at India’s major ports fell to 3.3 percent in April through November, down from 8.3 percent in the year-ago period.

While the key reason behind that slowing growth is a softer demand environment, a recent study of the overall Indian container market identified an increasing cargo shift toward minor terminals — propelled by the advantages of superior productivity and unregulated tariffs — as a major factor hurting volumes passing through major ports.

That analysis showed combined Indian port throughput, covering major and minor ports, was up 4 percent to 1.44 million TEU in October, year over year.

By all accounts, amid weaker global and domestic demand, it will be difficult for Indian ports to replicate the growth rates recorded in recent years, including last fiscal year’s 8 percent rise at major ports. But even a modest increase this year can still be considered respectable in difficult market conditions.

Reaching into the interior

Sensing the challenges ahead, JNPT has accelerated sales efforts to tap into beneficial cargo owners (BCOs) farther in the country’s northern interior. To that end, the port authority set up a trade session in Ludhiana this week to showcase the benefits of a new, prioritized weekly train service designed to connect exports from that region to JNPT.

“We had committed to look into this trade request positively when we met earlier this year in August and this will definitely open an opportunity for enhancing cargo generation between Ludhiana and JN Port through rail,” the port said in a notice to the shipping community. “All shipping lines can now take advantage of this new service as this will widely benefit exporters and importers in Ludhiana and its catchment area.”

JNPT and other private ports further up the west coast — especially Mundra, Pipavav, and Hazira — rely heavily on cargo from northern inland container depots, with the rail market tilted slightly in favor of the latter three due to their closer proximity to the northern corridor.  But with greater rail efficiency that allows quicker train turnarounds, JNPT stakeholders are hoping to counter that disadvantage.

Following the opening of a 2.4 million-TEU terminal by PSA International in February last year, JNPT now has sufficient spare capacity. As such, more proactive steps to win additional shipper support are particularly critical for the country’s premier container harbor.