Toyoto's road to rail switch for finished vehicles in SA

Irma Venter


Toyota South Africa Motors (TSAM) switched from road to rail in a decisive manner as it signed an agreement with Transnet Freight Rail (TFR), in which TFR’s Container and Automotive Business Unit, or CAB, would now directly handle the transportation of certain locally manufactured Toyota vehicles destined for the export and domestic markets, as well as vehicles imported into the country.


Under the previous arrangement Toyota vehicles were moved by a logistics service provider with a fleet of road carriers, which only considered rail for surplus volumes.

TSAM said the new agreement was in line with CAB’s stated strategy to offer an end-to-end supply chain solution. To that end the unit had increased its value proposition to customers by, for example, including vehicle loading and yard management in its portfolio of activities.

TSAM expected to benefit from the “significant bulk-carrying capacity” offered by TFR.

“This will translate into long-term savings on vehicle movement and general logistics overhead costs.”

Also making the move to rail an attractive option was the fact that it would lessen TSAM’s carbon footprint, said TSAM president and CEO Dr Johan van Zyl. Adding rail to the transport mix offered "significant benefits" as one consignment of vehicles moved per rail was equivalent to 10 vehicle carriers on the road, he explained.

“We believe that the new arrangement will lighten our reliance and impact on the road transport network and allow for significant cost savings in the longer term. As such we also believe that we will set an example as the leading vehicle retailer and exporter in South Africa to other manufacturers in South Africa to make use of the significant rail infrastructure that is available in the country,” he added.

The contract execution would be in three phases, with the first phase focused on the transportation of cars for the domestic market from Isipingo, in Kwazulu-Natal, to Kaalfontein, in Gauteng; phase 2 the transportation of imported cars from Durban to Kaalfontein and phase 3 the movement of imported cars, as well as cars for the export market, between Isipingo and Durban.

The Toyota plant is located in Durban.

Phase one had already started as a pilot project on October 17, when the first cars were loaded onto the train at the Isipingo terminal, and railed to the Kaalfontein terminal.

This service currently moves 500 vehicles a week, already removing 60 trucks from the N3 over the same period.

This would now be followed by phase 2.

The third and the last phase would be implemented at a later stage, as fit-for-purpose flat and open wagons were currently in the design phase.

“One should keep in mind that this year TSAM will manufacture close on 155 000 vehicles and will retail in excess of 100 000 units in the local market,” said Van Zyl, putting the volumes involved into perspective, even though not all of these vehicles would be moved by TFR.

“Each of these vehicles has to be distributed on time and without damage to each customer, either here or in our export markets.”

TSAM exports vehicles to 57 markets, including Germany, Namibia and Russia.

The company did not want to quantify the estimated cost savings such a move would provide the company.

Source: http://www.engineeringnews.co.za/article/toyota-signs-up-to-move-vehicles-by-rail-2011-12-14

Volumes up @ Mundra Port

Pallavi Pengonda


Mundra Port and Special Economic Zone Ltd (MPSEZ) announced on Monday that its board of directors approved the change of the firm’s name to Adani Port and Special Economic Zone.


Earlier this month, the company announced its September quarter financials, wherein it posted 29% year-on-year (y-o-y) growth in its net profit to Rs 273 crore.
That growth is higher than the 20% net profit growth the company reported in the June quarter. However, revenue growth in the September quarter at 44% to Rs 588 crore has been better than the 27% revenue growth reported in the June quarter.
Revenue growth in the September quarter was mainly helped by good cargo volume growth. MPSEZ handled 16.8 million tonnes of cargo, which represents a 33.5% increase on a y-o-y basis.

Cargo handled is higher on a sequential basis as well. For the September quarter, cargo volume growth was driven primarily by coal volumes. Container volumes, too, registered decent growth of 16%, which according to analysts indicates strong exports and imports. However, slowing exports means that container traffic growth is at risk in the days to come.

On the operating front, MPSEZ’s operating profit rose by a commendable 51% to Rs 410 crore and the margin, too, improved on a y-o-y basis to 66.2%.

However, operating profit margin was higher in the June quarter at 68.5%.
But the strong operating profit growth could not translate into a similar kind of growth at the net level. One reason is that depreciation costs were higher.
Secondly, the company’s interest expenses have increased substantially.
MPSEZ’s loan funds have increased sharply by around 61% to Rs 4,355 crore as on 30 September from March.

Free cash flow (FCF) is likely to be affected. Higher-than-expected growth in capital expenditure in the first half of fiscal 2012 (FY12) and loans to subsidiaries are likely to lead to another year of negative FCF at the stand-alone level, according to analysts from JPMorgan. They estimate Rs 400 crore negative FCF at stand-alone level in FY12 against an earlier estimate of a positive Rs 910 crore.

Since MPSEZ announced its September quarter financials, the stock is down by 14% to Rs 135.90 compared with an 8% decline in the benchmark Sensex. While valuations may appear attractive after the recent decline, investors should keep a tab on traffic growth—a key metric for this stock.

Courtesy: Mint
Copyright © 2007 HT Media All Rights Reserved

Third port @ Azhikkal, Kerala?

Amritha Pillay

Kerala plans to set up its third major port at Azhikkal, following the central government’s directive to coastal states to set up such facilities.

If the Azhikkal port development plan works out, the state would have three main ports — already operational Kochi Port Trust and the planned Vizhinjam port. Vallarpadam, which facilitates transhipment cargo, is part of the Kochi Port Trust.

Major ports are central government controlled ports, administrated as trusts, except for Ennore port, which is run as a company.

“The Central government had asked coastal states to open another major port in the state. We have proposed Azhikkal port to be developed as a major one,” said Oommen Chandy, Kerala chief minister, on the sidelines of CII World Economic Forum-Indian Economic Summit here on Monday.

Azhikkal is in the Kunnor district, around 200 km from Vallarpadam.

It would be interesting to see how will the three ports compete for volumes, as the only existing container terminal Vallarpadam continues to face various issues.

Vallarpadam port started operations in February this year, but continues to face hurdles. The port requires dredging to be carried out to widen its channel. Also, there has been constant lobbying to ease the existing cabotage policy in order to attract transhipment cargo in the true sense.

Cabotage is the transport of goods or passengers between two points in the same country by a vessel registered in another country.

“The Vallarpadam port is witnessing certain teething problems, dredging and the cabotage policy being the main issues,” the minister said.

The much talked about Vizhinjam port is also delayed on various counts, the latest being requirement of security clearance.

In the first round of bidding, the port had received only one bid, but it failed to receive security clearance as a Chinese player was part of the consortium. In the fresh bidding, two technical bids have been received and the security clearance is awaited.

Courtesy: DNA

2011 good for LA Port

Ronald D. White

At the ports of Los Angeles and Long Beach, imports rule. Improvement projects are designed around the fact that the harbor handles 40% of the nation's Asian imports. Officials once joked that their biggest export was Southern California smog.

It may have to rethink that emphasis.

In October, Los Angeles had its biggest month ever for exports, and 2011 is shaping up to be a record year for outbound goods. The Port of Los Angeles handled 193,548 cargo containers filled with exports, a 28.1% increase compared with October 2010, buoying what would have been a drop for the month in overall cargo traffic.

"It was a great month for exports, which are beginning to play more of an important role for us here," said Phillip Sanfield, spokesman for the Los Angeles port.

Los Angeles and Long Beach are the nation's first- and second-ranked container ports, respectively. That makes them an important barometer of the strength of the U.S. economy and a huge jobs engine. More than half of the state's 1.1 million cargo-related jobs are in Southern California.

Long Beach was still tallying October cargo traffic, but preliminary numbers showed declines of 20.3% in imports and 20.8% in exports.

Through September, Long Beach's exports were up 1.8% to 1.1 million containers and imports increased 0.4% to 2.3 million, but it's operating with six cargo terminals this year instead of seven, said Long Beach Port Deputy Executive Director J. Christopher Lytle, with Hyundai moving to the Port of Los Angeles and taking a 10% share of Long Beach's cargo with it.

"The numbers reflect a particularly soft import economy," said Lytle, who is set to become the port's executive director on Jan. 1. Retailers, he added "are being very cautious about their inventories."

Los Angeles' export surge included raw materials and agricultural goods such as cotton and grains. California also manufactures and exports a lot of high-value goods, including electrical and industrial machinery; computers; optical, photo and medical equipment; and aerospace components.

"Adjusting for inflation, we are on a pace to see the best year ever for California exports," said Jock O'Connell, Beacon Economics' international trade adviser. "We've got a fairly minimal exposure to the weaker markets in Europe, and we have benefited strongly from the weakness of the U.S. dollar, which makes U.S. products a bargain internationally."

Christopher Thornberg, founding partner at Beacon Economics, said that California "has shown surprising economic strength in recent months," including job growth of 1.8% over the year, rising taxable sales and falling industrial vacancies. "This can be traced back in part to the strength of the export boom."

Strong exports couldn't overcome weak import numbers. October is typically the last strong month for holiday cargo destined for U.S. stores shelves. But the peak season surge never materialized, becoming instead what the maritime research firm AXS Alphaliner referred to as this year's "peak season flop."

There was a modest increase of imports of 5.5% at the Port of Los Angeles in October, to 349,545, compared with a year earlier. The port moved a total of 712,586 filled and empty containers in October, up 4.4%. Through the first 10 months of the year, Los Angeles is running just 0.7% ahead of its 2010 pace for overall cargo traffic, at 6.6 million containers.

Many ocean shipping lines expected another strong year for U.S. import trade similar to the post-recession gains shown throughout 2010. Instead, too many ships fought for too little cargo, and fuel costs rose. Only three of the world's 20 biggest ocean shipping lines showed a profit in the first half of the year, AXS Alphaliner said.

Casualties included one of the only two U.S.-based shipping lines in the Transpacific trade.

On Thursday, Charlotte, N.C.-based Horizon Lines discontinued its service from the U.S. West Coast to Guam and China. Horizon Lines said the amount that it could charge to haul a 40-foot container fell 37% this year to $1,500, the worst since the recession, while fuel costs climbed more than 40%.

Horizon Lines was one of four new players in the Asia to U.S. West Coast trade that shut down their routes within two years of beginning their service.


Courtesy: Los Angeles Times

Well done, Mundra Port!

Mundra Port and Special Economic Zone (MPSEZ) continued to outperform the major ports in the country in terms of both container and bulk cargo volume growth during the September quarter.

However, the slowing western economies may impact the growth rate of container volumes in the coming quarter, thereby pulling down the performance of the company.

In the quarter ended September 2011, volumes at Mundra port grew 34% year-on-year compared with a combined growth of 1% year-on-year of all the major ports. With this, MPSEZ has now become the fourth-largest port in terms of total cargo volumes in the country.

In the September quarter, cargo volumes at Mundra increased year-on-year by 41% to 12.40 million metric tonnes (MMT). Coal imports were the main driver for the company which grew 56% year-on-year.

The government has started levying a minimum alternate tax (MAT) of 18.5% on book profits on SEZ developers effective this financial year. Though the company has filed a PIL against the levy of MAT on SEZ developers, MAT provisions have been made and it has considered a MAT credit of 55 crore for the current quarter.

Coal imports from Mundra port is likely to increase after the commencement of two power plants near the port.

Container volumes handled at Mundra Port is set to get a boost with the commencement of double stack container trains from Container Corporation of India between Patli in the national capital region and the Mundra port.

On a trailing 12-month basis, MPSEZ's stock trades at price to earnings (P/E) multiple of 26.6. The stock price seems to fairly value the growth potential and future expansions.


Source: Economic Times

Hamburg overtakes Antwerp

Number of standard containers rises to 6.8 million in nine months through to September

The Port of Hamburg has reported that it increased container volumes by 15 percent in the first nine months of the year on trade with Asia and eastern Europe, helping it overtake Antwerp as Europe’s second-largest container port.

The Port said the number of standard containers rose to 6.8 million in the nine months through to September while total trade volumes rose 11 percent to 99 million tons.

In Antwerp, container volumes increased 3.1 percent to 6.5 million TEU in the same period, while Rotterdam, Europe’s largest port, had an almost 8 percent rise to 9 million TEU, according to those two ports.

Hamburg fell behind Antwerp in 2009 after the global economic crisis led to a decline in volumes. An increase in trade with eastern Europe and Asia is now benefiting Germany’s biggest port as Europe’s sovereign debt crisis hampers growth in the region’s largest economies.

“We don’t expect to see a decline in the seaborne trade with the important markets of China, Asia, America and the countries in the Baltic Sea region” in 2012, Port of Hamburg Marketing Chief Executive Officer Claudia Roller said today.

Source: IFW


--

Troubled times ahead for freight carriers

As the container shipping lines try to talk up some very disappointing, if expected, results for the third quarter of 2011 everyone in the market is reviewing their options for the future. With all the big lines struggling to turn any sort of profit the fact that there is oversupply in the industry leaves all the players with poor hands when it comes to their own salvation.

As with the economic cycle of a country the wheel revolves slowly for the bigger freight carriers but eventually it must come to a halt for one or more of them. The woes of French giants like CMA CGM have been well documented but focus in the past few weeks has centred on the Asian owned groups like Mitsui OSK Lines (MOL) whose senior executives, including both the Head of Finance and President Koichi Muto, have indicated recently that they have not ruled out a merger with one or more other Japanese box carriers.

The situation for the Japanese is particularly grim having faced not only the downturn in trade over the past couple of years but the nightmare of the earthquake and subsequent tsunami and now the disastrous Thai floods. The Japanese are notoriously patriotic in their selection of logistics suppliers and the disasters at home caused disruption to many shippers and others in the supply chain. Now, with Thailand supplying the raw materials for many Japanese manufacturing companies, including the automotive, computer and electronic trades, the situation there has ceased production for many with no clear indication as yet when normality will return.

Another factor has been the weakness of other currencies against the yen and the Japanese may well believe a co-operation is necessary to match the scope of the European operations which currently handle around half of the Asia/Europe box trade. Whilst Swiss managed MSC and Danish giant Maersk have the size and resources to await better times the Japanese could presumably benefit from the economy of scale a joint venture would bring. There would however likely be problems as this would inevitably involve the usual pooling of resources and consequent redundancies.

Despite the bigger cargo carriers boasting larger fleets the bulk of these are charter vessels which can, if need be, be discarded in due course leading to huge tonnage carrying quantities of ships being mothballed in harbours around the world again. Maersk for example own only 188 vessels yet list their fleet at over 500, most of the balance being on medium and long term charters, whilst it may be the common practice of route sharing which is what will probably prove the largest stumbling block to any unification.

There exists a hugely tangled web of partnerships between the major carriers and one which flexes constantly all over the globe as the tonnage of trades ebbs and flows for various reasons. Today, for example, comes a notification that Hamburg Süd with CCNI on the one hand and China Shipping, Hanjin and Hyundai on the other have reached agreements on optimising their service offering during the forthcoming slack season between Asia and Mexico/South America West Coast with effect from mid-November 2011. To this end, the partners’ three ‘slings’ will be reduced to two.

This notice illustrates the depth of penetration and the complexity which these multinational arrangements can reach. For one or other partner to withdraw from the service would immediately make the market uneconomical for all players. By restructuring the service level each of the lines can reduce the impact that the loss of trade has on them whilst maintaining a reasonable service level in the reduced circumstances. If the box load ratios improve sufficiently with the new season there are less disappointed shippers and the service reputation remains relatively intact and able to develop again.

The tentative proposal for a Japanese ‘National’ line may simply be hot air but the figures (NYK, MOL,K Line et al have all reported expected losses) mean that cost cutting measures, or increased profits, are required in some form or another to enable all to survive at a time when peak time trade in the Asia/Europe container market fell to the lowest level in over a decade.

Meanwhile the fifteen partners who make up the Transpacific Stabilization Agreement (TSA) are reported today as saying they will introduce a surcharge, rumoured to be in excess of $400 per FEU, to combat loss of revenue in the Asia/US trade. These routes are not so stringently subject to the anti trust regulations which sounded the death knell for the Trans Atlantic Stabilization Agreement and which have contributed to the dire situation the major players now find themselves in.

No one supports cartels and anti trust activities except those that profit by them but the container lines necessarily have to plan decades ahead and, like the giant ships they own, turning from a chosen course can prove a lengthy operation. It is to be hoped that they all manage it before one or more founder on the economic icebergs which are looming up ahead.

Malcolm Purcell McLean: The innovator

Peter A. Coclanis

It's difficult in today's world to turn the volume any higher on the importance of entrepreneurship and innovation. Virtually every organization -- from Alcoa to Al Qaeda, from Zipcar to Zenith Bank -- has made those attributes part of its strategy. Vision statements from businesses, churches, schools and NGOs often sound as though their authors were channeling Joseph Schumpeter.

Amid the paeans to Steve Jobs after his death -- the special issues of magazines, TV tributes, superficial comparisons to Edison and so on -- I'd like to call attention to another American original, now almost forgotten, who would be celebrating his 98th birthday this week: Malcolm Purcell McLean.

McLean's great innovations dwarfed in economic importance the Mac and the iPod, the iPhone and the iPad -- arguably, everything Jobs accomplished.

McLean, like Jobs, seemed an unlikely candidate for entrepreneurial superstardom. He was born in 1914 in the tiny town of Maxton, North Carolina. His family wasn't wealthy, but had sufficient means to allow McLean to stay in school long enough to finish high school in 1931. After managing a gas station for three years, McLean and two of his siblings established the McLean Trucking Company in 1934. For a time, McLean was the company's only driver.

By the next year, McLean Trucking was in the long-haul business up and down the East Coast, and by 1940 the company, now with 30 trucks, had revenues of $230,000. Business increased during the war, and McLean would soon become one of the biggest trucking companies in the country.

Its rapid growth was due to a variety of factors, including acquisitions and an ability to navigate the bureaucracy of a heavily regulated industry. But most important was its efficiency, which allowed it to underbid many of its competitors. The company cut costs relentlessly, particularly through innovations. It was an early adopter of automated terminal technology and was one of the first lines to switch to diesel engines for its trucks.

McLean's push into containers was the next step. Containerization is an "intermodal" method of shipping freight, using standardized, sealed, stackable boxes. Intermodality means that goods can be moved from one transportation mode to another -- ship to railroad car or tractor trailer -- without labor-intensive loading at each transfer point.

On the eve of World War II, intermodal logistics remained relatively rudimentary: Containers were small and non-stackable; they weren't employed systematically; ports and terminals often lacked container-handling equipment. As a result, stevedores, longshoremen, cargo men and freight handlers of various kinds abounded, and transferring freight from one mode to another was still a slow, labor-intensive and relatively expensive process.

McLean once said he came up with the idea that led to modern containerization in 1937 in Hoboken, New Jersey, after waiting for hours to get a cargo of cotton bales that he had hauled up from North Carolina transferred, crate by crate, from his truck onto a ship. There had to be a better way, he thought.

During the war, the push toward containerization intensified. Fully loaded vehicles were sometimes carried on ships, specialized containers were used more and more, and shipyards and terminals introduced more sophisticated freight-handling equipment.

In 1955 McLean sold his interest in McLean Trucking -- it was illegal at the time for a company to be involved in both trucking and shipping -- and purchased the Pan-Atlantic Steamship Corporation. McLean's bold act anticipated Theodore Levitt's insight in "Marketing Myopia," a hugely influential 1960 article in the Harvard Business Review: Know what business you're in and focus on customers rather than products.

McLean knew he was in the transportation business, not the trucking business, and acted accordingly.

Once his purchase was approved, McLean acquired two World War II tankers and had them retrofitted to carry standardized containers. On April 26, 1956, one of these ships, the Ideal-X, became the first vessel in the world to achieve full containerization, setting sail from Port Newark for Houston, carrying 58 33-foot steel and aluminum containers. The containers had been loaded by cranes in less than eight hours, dramatically cutting the loading time and cost-per-ton.

The rest is history. McLean grew his business, changing the name of his company to Sea-Land in 1960, and many competitors entered the market. Innovations throughout the industry -- in loading technology, the configuration of shipyards, container and ship design, and logistics -- rendered intermodal shipping increasingly efficient.

In 1969, when McLean cashed out of Sea-Land, the company was the largest container line in the world.

McLean wasn't through as an entrepreneur and businessman, but his signal contribution had been made. Containerization rendered the global economy more integrated and more efficient. Labor markets were disrupted and economic geography remade. New occupations arose as old ones were destroyed, and new ports emerged as others lapsed into terminal decline. Although the great growth in the transport sector in recent decades has been in air cargo, the container revolution continues to pay huge dividends. Without the changes it wrought, the effects of later innovations in communications -- the Internet, most notably -- would have been far less profound.

Yet McLean was scarcely known outside the shipping industry when he died on May 25, 2001, and remains little remembered today. A reference book published in 2002, called "The North Carolina Century: Tar Heels Who Made a Difference, 1900-2000," had no room for McLean among all the Tar Heels listed in its 645 pages.

In terms of long-term economic importance, though, the Maxton-born trucker trumps them all -- and even, arguably, Jobs himself.

(Peter A. Coclanis is the Albert R. Newsome Distinguished Professor of History and the director of the Global Research Institute at the University of North Carolina at Chapel Hill. The opinions expressed are his own.)

Source: Bloomberg News

Disaster Preparedness 2011: Cargo Container

Andrew Goldsmith

Port security seems to be the forgotten child when it comes to preparing for disasters, at least in the public eye. Potential threats to aviation and mass transit generate many more conversations, and for good reason, but the risks posed to ports, primarily from cargo, cannot be ignored.

A cargo container looks innocuous, just a square, metal box loaded with goods…right? This impression could not be further from the truth.

Cargo containers are highly effective vehicles for any manner of threats, making them a primary focus when it comes to disaster planning and preparedness for port authorities. Every day, millions of cargo containers arrive in U.S. ports from all over the world, including points of origin where dangerous goods -- from radioactive materials to weaponry -- are poorly regulated and easily obtained. So, that big metal box could hold anything from a load of teddy bears to Kalashnikovs to yellow cake uranium.

Pirate assaults on U.S. ports aren’t exactly commonplace, nor are U-boats prowling the waters of the Atlantic in this day and age. The threats posed to port authorities are more subtle and often encased in a 40-foot metal box. That’s why disaster preparedness at ports starts, and practically ends, with cargo containers.

Essentially, the threats posed to ports from cargo containers can be classified into three buckets:

Weaponry -- includes everything from AK-47s to LAW rockets;
Chemical/biological -- is a fairly broad category and can include legal materials that have simply been misclassified during the shipping process (for example, labeling a shipment of hydrochloric acid as “water”) to packaged threats intended to create a disaster, such as disease warfare agents;
Radioactive materials -- Ports deal with radioactivity on a daily basis, but the threat of disaster lies in these materials making their way into the hands of terrorist cells, both domestic and otherwise, for dirty bomb creation or worse.

Notice that contraband doesn’t make the list. While smuggled goods do fuel crime, Cuban cigars or untaxed foreign melons do not pose the same threat as an aftermarket Soviet warhead.

The potential disasters facing ports are wide and varied, ranging from immediate localized catastrophes to slow-burning disasters that could threaten hundreds of thousands of lives. An illegal shipment of weapons or explosives, for example, could wind up in the hands of a sleeper terrorist cell, which could then plot dozens of attacks against major population centers. Another example would be a poorly-marked container full of radioactive materials -- if handled improperly, thousands of tons of cargo and hundreds of port/shipper personnel could be contaminated.

When it comes to preparing for a potential disaster caused by one of the above threats, the first step must always be an effective screening program. If ports do not know what kind of threat their emergency responders will be facing, how can they effectively combat it? This is the first way that screening impacts disaster preparedness -- it gives emergency responders a heads-up as to what they will be facing, because preparations for a large-scale chemical fire are far different than those for a suspected dirty bomb.

Effective cargo screening also helps ports put the proper resources in the right places. By leveraging the latest and greatest technology for screening -- whether it’s a new automated gantry scanning machine or a software algorithm that can automatically detect certain cargo-borne threat patterns -- human resources, such as added security or a bigger and faster disaster response team, can be put towards areas where technology cannot help.

The Department of Homeland Security (DHS) is also trying to help out when it comes to helping ports prepare for potential disasters through screening. The agency formerly mandated 100 percent cargo screening, where every cargo container reaching U.S. shores had to be scanned for potential dangers. In 2012, however, this mandate will change.

Next year, the DHS will mandate a layered approach to port screening -- rather than scanning every single cargo container slated to land on U.S. shores, authorities will leverage intelligence sources to make better-informed decisions when it comes to cargo. Much like the TSA’s long-awaited “trusted traveler” program, shippers will be placed into different categories depending on the risk associated with them and their cargo. This will determine the level of scrutiny their containers will undergo.

This means that ports can be even better prepared for any disasters-in-waiting that might enter, as they’ll know about such threats well before they arrive.

Just like aviation and mass transit, there’s no single silver bullet for ports to prepare for a disaster. But, as in other industries, prevention is the best way to prepare, by leveraging an effective screening program and timely manifest/cargo data, a port can not only prepare itself for the worst, but it can strive to keep the worst from actually happening.

Andrew Goldsmith is the vice president of global marketing for Rapiscan Systems, Inc. He can be reached at:

agoldsmith@rapiscansystems.com

Cochin CFS getting ready

Kerala State Industrial Enterprises (KSIE), the full-service export house of the State Government, expects to commission the Rs 47-crore Cochin International Container Freight Station (CFS) at Kalamassery, near Ernakulam.

Work on the project is now in advanced stages of completion, according to Mr Febi Varghese, Managing Director, KSIE.

The CFS would have a built-up area of 16,000 sq ft and feature a Customs-bonded cargo handling centre that is capable of handling 1,000 containers at a given time.

A multi-purpose export cargo handling centre admeasuring to more than one lakh sq ft in area would be another major attraction at the CFS.

The CFS is expected to play a key role in controlling the movement of freight in and around the Kochi port that has shot into prominence with the commissioning of the Vallarpadam International Container Transhipment Terminal in the neighbourhood.

According to Mr Varghese, KSIE proposes to tie up with Indian Oil Corporation and set up petrol pumps at Thiruvananthapuram, Kalamassery and Kozhikode during the course of this year.

It also plans to take up the operation of courier cargo services at the Thiruvananthapuram and Kozhikode international airports as part of a special arrangement with Airports Authority of India.

A KSIE Vision-2020 document, currently under preparation, seeks to prepare a time-bound action plan and spell out short-term and long-term strategies to implementing the same with the support of employees, Mr Varghese said.

KSIE was set up as a holding company under the Department of Industries in 1973 and had entered the field of managing air cargo complexes five years down the line.

The company has been paying annual dividend ever since, and netted a profit of Rs 6.20 crore during 2010-11.

The first half-year during the current financial year saw it net a 30 per cent rise in profit compared to the corresponding period a year ago.

The Thiruvananthapuram air cargo terminal exports 80 tonnes a day and ranks first in south India in handling ‘perishable cargo.'

The Kozhikode cargo complex, which used to deal with four tonnes in 2002, has grown in turnover volumes and clocks 40 tonnes on a daily basis.

KSIE proposes to set up a cold storage at Kozhikode at a cost of Rs 1.65 crore.

Mr Varghese said that in Thiruvananthapuram, KSIE was able to set up a full-fledged export terminal within 60 days of commissioning of the new international airport at Chakkai, closer to the city.

Courtesy: Hindu Business Line

Record handling @ New Mangalore Port

A record qty of 1512 TEUs handled at New Mangalore Port in a single voyage in the container vessel- M.V. TAMPABAY which called at the Port on 9-11-2011.

This is the highest number of containers ever handled at the port from a single voyage surpassing the earlier record of 1436 TEUs handled on 3-7-2009 from the vessel M.V. ELBE TRADER.

Out of the total 1512 TEUs, 934 were imports and 578 exports. Major items of import are raw cashew and export consists of coffee, cashew kernels, fish and fish products, candles, etc. M/s Atlantic Shipping are the Feeder Line Operators and M/s Delta Infralogistcs Pvt. Ltd.(HML) the agents of the vessel.

Chairman Dr. P. Tamilvanan has stated that the port is witnessing steady growth in container traffic thanks to the pro-active marketing efforts made by the Port management coupled with the infrastructure addition created during the past few years like expansion of container yards, container handling equipments like reach stackers, increased number of reefer plug points, concretization of roads, simplified documentation system etc.

This has yielded positive results in fostering the container movement to the port from the hinterland which is evident from the fact that from 9646 TEUs handled in 2005-06, it has grown to 40,158 TEUs in 2010-11. During the current year 2011-12(as on date) 30,454 TEUs handled as against 25,709 TEUs handled during the corresponding period of previous year.

Container traffic at NMPT got a shot in the arm when the first consignment of 40 feet container with Garments/Linen exported through New Mangalore Port on 7-3-2011 in the container vessel M.V. OEL TRUST. The consignment of 4237 packets of cotton processed garments/linen produced at the Hassan SEZ by M/s Himatsingka Seida Ltd. has been exported to USA. This is for the first time garments are handled at the Port. The Mainline operators are M/s CMA CGM and the handling agents M/s Cargolinks. The total transit time will be 28 days.

P. Tamilvanan, Chairman has attributed the handling of this new cargo, hitherto moving through neighbouring ports, to the pro-active marketing efforts made by the Port at various locations of the hinterland during the last few years coupled with the Infrastructure additions made for the smooth handling of containers. He has added that the above garment unit , which is a 100% export oriented one is expected to move their entire consignment of export to the tune of 25 TEUs per month through New Mangalore Port. The container traffic at the Port has crossed 36000 TEUs during the current year(as on date) with a growth rate of 27%.

Chennai troubles

Ocean carriers serving India’s Port of Chennai said they will consider lifting their bottleneck surcharges if restrictions on cargo movements and berthing delays are avoided at the country’s leading container gateway.

The announcement was made by representatives of the Chennai Steamer Agents’ Association at a recent meeting with the port authorities to review operational and infrastructure issues.

The association represents the entire ship agents’ community at the southeastern port. At the meeting, authorities said they are working on a string of measures to speed truck flow and expand intermodal connections.

The measures include allotment of five separate truck lanes at Zero Gate — three for imports and two for exports; open Gate 5 during night hours; and deploy two private rail operators in addition to state-owned Container Corporation of India. Officials also said port management will approach local customs authorities for reactivating en masse container movements from the terminals.

Port clogging problems at Chennai followed a series of wildcat strikes by harbor truck drivers from end-June to mid-July to protest increased vehicle turnaround times, creating a huge import backlog.

“We are now convinced that the port-terminal authorities are making all possible efforts to sort out the situation and hence, it is imperative that we support them,” CSAA representatives said.

Chennai has two terminals: DP World-managed Chennai Container Terminal and the Chennai International Terminals operated by Singapore's PSA International. Total volume for fiscal 2010-11 ended March 31 was estimated at 1.52 million TEUs and at 914,000 TEUs for the April-October period.
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Courtesy: Journal of Commerce

Congestion @ Chennai Port

For over a year now, Chennai port's two private container terminals have been facing cargo congestion problems affecting the trade. But the situation is far from returning to normal.

Frequent strikes by vehicle operators carrying containerised cargo and poor road connectivity to the port have led to the congestion. This has delayed delivery of cargo to customers abroad.

Every sector has been badly hit by the congestion but the worst affected have been apparel exporters who start their annual shipment of cargo to the US and Europe from September, ahead of the Christmas and New Year season. Factories in and around Chennai make garments for such major brands as Timberland, Marks & Spencer, Talbots and Ann Taylor.

Clients are asking suppliers to avoid shipping out consignments through Chennai, said an official of a large garment manufacturing factory inside the Madras Export Processing Zone (MEPZ).

It all started last year, on November 13. Trailer operators carrying containers stopped plying their vehicles, protesting against the beating up of a cleaner by some residents in North Chennai. These residents are agitated over container trailers plying dangerously on bad-road conditions on the Ennore-Manali highway, posing a risk to people.

“The roads are still bad and there is no alternative route for the truckers,” said Mr S. Raja, a truck operator. The Ennore-Manali highway is vital for the movement of vehicles in and out of the port.

The National Highways Authority of India, along with the Tamil Nadu government, is engaged in widening the highway. The Chennai Port Trust and Ennore Port Ltd are partners in the special purpose vehicle created for this project. This project and the elevated road corridor from Chennai port to Maduravoyal are important for Chennai port's growth.

However, their progress has been very slow, said Mr A.V. Vijayakumar, President, Chennai Customs Clearing and Shipping Agents Association.

The stoppage of vehicle movement, non-motorable roads and availability of only one gate for entry and exit of trailers have slowed down movement of vehicles to and from the terminals. These frequent problems have snowballed into a major congestion — with huge yard inventory and long waiting by ships, said Mr Vijayakumar.

Two months ago, nearly 17,000 boxes piled up at the terminals, against the normal inventory of 7,000 boxes. The two terminals had no space for vehicle movement, he said.

With export boxes not arriving on time at the terminals, the container ships sailed without loading their full quota or waited outside the port's anchorage for two to three days for a full load.

Normally, a ship gets a berth on arrival but it now takes over a week. Similarly, a vehicle carrying a container usually makes two trips a day between a container freight station, located outside the port, and the container terminal.

However, vehicles have been able to make only one trip a day in the past three months. To restore normalcy at the terminals, the stakeholders associated with the containerised trade decided to suspend exports for four days from October 13. This was to speed up the evacuation daily of about 2,500 boxes, each 20 ft long.

“We had to hold the cargo at the warehouses, which were already choking, or at the factory,” said Mr A.M. Gopinath, General Manager (Commercial), Celebrity Fashions. Also, the Tuticorin port could not accommodate all the excess cargo going from Chennai; this created more problems for exporters. The situation in Mumbai was also bad, with delay of seven to eight days.

The need for better road connectivity and more gates at the port was taken up with all the major government officials in the Centre and State. “We are yet to see any concrete measures being taken,” said Mr Vijayakumar.

The delay in delivery to clients is affecting the financial cash flow of exporters, said Mr Vijay Mahtaney, Managing Director of Ambattur Clothing.

The export supply chain works like this. The shipment, which is normally sent as a ‘Freight on Board' option, is dispatched from the factory to a freight station. After getting export clearance from Customs officials, the goods are loaded into containers and transported to the terminal.

The delay mainly happens on this stretch. Once the containers are placed on board the ship, the shipping lines provide a document called Bill of Lading to the exporter. This document, which has cargo details, is produced to the buyer for getting payment, Mr Mahtaney said.

A number of companies that transport goods by container are frustrated with what is happening at the port but are helpless, he said. They still feel Chennai is the only option for the trade due to its proximity to Singapore and Colombo ports, he said.

Delay in delivery of goods affects the reputation of suppliers, said Mr J. Franklin, Senior Vice-President, Pearl Global Ltd, a large garment manufacturing unit in the MEPZ. “We are bleeding due to the delays,” Mr Franklin said. Two major buyers in the US asked Pearl Global to avoid using Chennai port completely. The company used Tuticorin port to send the shipments, he said.

Tuticorin, which also has a private container terminal, is an alternative for exporters. However, this doubles the transportation cost, eroding margins, said Mr S. Surya Narayanan, Executive Director and CFO, Celebrity Fashions.

Chennai will lose its status as a regional container hub if the support infrastructure outside the port is not improved. The Kattupalli port, being built by L&T is expected to be operational early next year. Some of the users from Chennai could move to Kattupalli, located next to Ennore port, said Mr Vijayakumar of the Chennai Customs House Agents Association.

Courtesy: Hindu Business Line

8 days to Chennai from Chabang, K Line offer

"K" Line has unveiled a new weekly service called Jaseco-J shipping from North East Asia to South East Asia.

"K" Line aims to expand the service coverage to and from China to the Philippines and Indonesia with this direct service. The weekly service will follow the following port rotation: Qingdao-Shanghai-Ningbo-Hong Kong-Manila South Port-Manila North Port-Jakarta-Surabaya- anila South Port-Hong Kong-Qingdao.

Earlier, "K" Line has enhanced its East India service with the introduction of a new Thailand-East India Express (TCX) service from Laem Chabang as a slot operator.

The port rotation is as follows: Laem Chabang-Singapore-Port Kelang-Chennai-Visakhapatnam-Port Kelang-Singapore-Laem Chabang.

With this new direct service, the transit time from Laem Chabang to Chennai will reduce to 8 days, thus "K" Line will be able to provide an even better quality service to our valued customers in this region.

"K" Line presently operates another weekly service called INDFEX-2, calling at Pusan, Shanghai, Hong Kong, Shekou, Singapore and East India. (EHL)

K lines adds new route to West India

“K” Line is enhancing its West India service with the introduction of a new Kwangyang/Kaohsiung-West India Express (FIX) service starting November 30 from Kwangyang as a slot operator.

By introducing this new service, “K” Line will be able to provide direct service from Kwangyang and Kaohsiung to Nhava Sheva and Karachi.


“K” Line presently also operates two other weekly services called INDFEX-1 and CIX-2 calling at Xingang, Qingdao, Pusan, Shanghai, Ningbo, Hong Kong and West India.


The new FIX weekly service rotation is Kwangyang, Pusan, Shanghai, Ningbo, Kaohsiung, Singapore, Nhava Sheva, Karachi, Port Klang, Singapore, Kwangyang.


Source: Cargo News Asia

Freightstar in Jindaw Saw kitty - Backgrounder

P. MANOJ

Steel pipe-maker Jindal Saw Ltd plans to acquire Freightstar Pvt. Ltd, the India-based container train operating unit of Dubai's ETA Group, for 1 billion to 1.5 billion rupees, as a shakeout continues in the sector, according to two persons familiar with the deal, reports Mint from Bangalore.

Freightstar has a licence to run container trains on all routes across India.
The transaction documents are being signed and the deal is expected to be announced in the next few days, one of them, an executive at Freightstar, said on condition of anonymity.

The acquisition will help Jindal Saw become India's only multi-modal logistics firm to have its own inland cargo terminals, operating container trains and ships.

Freightstar is among the 16 companies that were granted licenses by the Railway Ministry to run container trains on Indian Railway's tracks after the government privatized container freight train operations in 2006, ending the monopoly of Container Corporation of India Ltd. Freightstar has a licence to run container trains on all routes across India. It currently operates 11 trains both on the domestic as well as the export-import routes.

The company, also, is constructing inland cargo terminals at Nagpur and the National Capital Region.

These assets have been, or are being built with an investment of about 3 billion rupees, of which the equity portion would be about 1 billion rupees, and the balance would be raised from the capital markets, the Freightstar executive said.

Ernst & Young India Pvt. Ltd is advising Freightstar on the transaction.

"The ETA Group feels that because of the recession in Dubai they need to concentrate on their core business," the Freightstar executive said. "Therefore, it is exiting the container train business in India."

The purchase provided "tremendous synergy for Jindal Saw," he said.

Indresh Batra, managing director of Jindal Saw, could not be reached for comments. But Mr. Batra told Reuters in an interview last week that Jindal Saw was in talks to acquire a logistics firm that runs container trains and owns inland cargo terminals at key locations, without naming the company.

"The acquisition will provide the last mile of connectivity and enhance the synergy required to operate bulk movement of cargo along the coast," said a spokesperson for Jindal Saw on Tuesday, adding that the firm was consolidating its operations.

Jindal Saw runs a fleet of eight ships that haul bulk and break-bulk cargo on domestic routes. These ships are operated under Jindal Vector, the brand name for Jindal Waterways Ltd, the short-sea and river transport unit of Jindal Saw.

The company's purchase of Freightstar continues the trend of the past two years of investments and stakes in the freight business.

In April 2009, India Value Fund acquired a majority stake in Innovative B2B Logistics Solutions Ltd (Inlogistics), another licensed container train operator, for about 2 billion rupees.

In November that year, Blackstone Group LP, the world's biggest buyout firm, bought a 37.3% stake in Gateway Rail Freight Ltd, the container-train operating unit of Mumbai-listed container logistics firm Gateway Distriparks Ltd, for 3 billion rupees.

In November 2010, Cafe Coffee Day's V.G. Siddhartha acquired a 15% stake in Chennai-based logistics company Sical Logistics Ltd for 2 billion rupees. The deal gave Mr. Siddhartha access to Sical Multimodal and Rail Transport Ltd, which has a licence to run container trains.

Courtesy: Mint, Bangalore

Technocrat to head NHAI? Not a bad idea

Road transport and highway ministry has proposed a change in the eligibility criteria for the post of chairman of National Highways Authority of India (NHAI).

The ministry wants to bring in a technocrat instead of a bureaucrat at the helm of NHAI.

“Road construction is a technical job. So we have asked (the search committee under Cabinet secretary KM Chandersekhar) whether we can have a technocrat as the chairman of National Highways Authority of India. But before anything is done, I have to discuss the matter with the Prime Minister,” road minister CP Joshi said on Tuesday.

The search committee has been looking for a suitable candidate since last year, and during this period the eligibility rules have been changed twice.

If the suggested change is implemented, hopes of many IAS officers may be dashed. IAS officers RS Gujaral and KS Money are currently in race for the post.

Courtesy: Financial Express

Ircon "Mangalored" - Times of India view

The National Highways Authority of India (NHAI) will not take possession of the 37.5-km four-lane Port connectivity project from Bantwal up to Surathkal unless Ircon, the contractor executing the project on their behalf, addresses various lacunaes brought to their notice. NHAI will continue to make part payment to Ircon in the interim period to ensure continuity, P George Modayil, team leader of the project of NHAI said.

Replying to issues raised on inferior quality of 4-lane highway under Port connectivity project of NHAI by Praveen Chandra Shetty, chairman, road safety sub-committee, KCCI, at a meeting here on Monday, George admitted that the riding quality along some stretches of this highway was not good. "We will undertake a bump integrator test as well as examine the highway using a core cutting machine to check for the quality of the road," he said.

NHAI has repeatedly brought up various issues pertaining to the project to Ircon and they have promised to address our concerns, he said adding that there is no provision to blacklist a contractor merely because a small part of the project component is not up to the mark. The cost of construction of the flyovers at Kuntikana and Kottara represents a small portion of the total original project cost of Rs 194 crore, he noted.

Defending the payment to Ircon, George said not doing so would derail the entire project. Due diligence is being observed before clearing the payments, he said adding not making payments to Ircon would result in total closure of project work. Finding a new contractor at this stage would entail a further delay of at least one to two years, he said adding that the thinking on part of NHAI bosses is to get the project executed through Ircon itself.

The project was awarded to Ircon in 2005 with a 30-month completion time. However, the project could take off only in 2007 due to land acquisition problems. Time over run to the extent of nearly twice the original period of completion is perhaps bleeding Ircon financially, which could well be dipping in to its internal funds to complete the same, he said, adding that it is highly unlikely that Ircon could meet the June 2011 deadline for the project.

Praveen later at a joint inspection of a stretch of the project from Nanthoor up to Kodikal drew the attention of the authorities to the inferior quality of work executed by Ircon. Ravindra K G, assistant commissioner of police, Gopalkrishna Bhat, traffic PSI, Keshava Dharani, senior motor vehicle inspector, Vijay Kumar, principal, KPT, M S Natraj, HoD of civil engineering, KPT and Vijayakumari Shenoy, joint commissioner, MCC were present.

Courtesy: Times of India

Not 10% definitely!

Mahendra Kumar Singh

The Planning Commission is likely to set a target of 9%-9.5% growth during the 12th Five Year Plan, which starts next April. The growth target, which is expected to be finalized at the full Plan panel meeting on this week (Thursday) to be chaired by Prime Minister Manmohan Singh, will come with a rider — agriculture and manufacturing sectors need to grow at 4% and 11%-12%, respectively.

Planners are cautious in setting an 'ambitious' growth target for the next plan since the global economy is still quite sluggish. "We want to present a picture before the PM, which is achievable," said minister of state for planning Ashwini Kumar, ahead of the meeting that will finalize the approach paper for the upcoming 12th Plan.

The thrust of the Plan will be on faster, more inclusive and sustainable development. Creation of more transparent environment will be another focus area since UPA-II has been hit by scams and scandals.

The challenge is to infuse higher private investment to push infrastructure sector—a key factor in clocking high growth.

On the other hand, the government will fund flagship schemes to make the growth more inclusive. Reforms are on the anvil to effectively implement social sector schemes. The plan panel is expected to focus on water management and technological innovation to enhance food production for sustaining current level of agricultural growth of 4% throughout the next plan period.

Courtesy: Times of India

GEFCO buys Mercurio SPA

GEFCO announces the signature of an agreement to acquire 70 % of Gruppo MERCURIO SpA
GEFCO, a 100% affiliate of PSA Peugeot Citroën, signed an agreement with the Italian fund Venice, controlled by Palladio Finanziaria, and RP3 fund to acquire their 70% of the Gruppo MERCURIO, one of the leading player in transportation and distribution of vehicles in Italy and abroad.

MERCURIO has a significant worldwide presence, notably in fast growing areas in Mercosur, India, South-East Asia and Central Europe and has generated revenues of €127 million in 2010.
With this acquisition, GEFCO, European leader in transportation and logistics, will accelerate its development in outbound automotive logistic as well as the diversification of its clients portfolio and the extension of its international footprint. In addition, substantial synergies with MERCURIO will enable GEFCO to strengthen its European network's competitivity.
The acquisition of MERCURIO is subject to, among others, the approval of the relevant antitrust authorities.

Mercurio has a presence in India through a 50:50 joint venture with Pallia Transports and function under Mercurio Pallia Logisitcs. MP is a name to reckon with in car carrier business, under the stewardship of Vipul Nanda, Chairman and Managing Director.

For a detailed story on Mercurio Pallia Logistics, check out the December 2010 Cover Story in Logistics Times at: www.logisticstimes.net/magazine.php (Registration required to browse/access the emgazine)

Backgrounder

The GEFCO group
GEFCO sets the standard in logistics for the industry. Through its six key areas of expertise – Logistics, Gefbox system, Overseas, Overland, Vehicle Distribution and Customs and VAT representation – GEFCO is able to deliver global, innovative solutions in both inbound and outbound logistics for a full range of industrial requirements. Present in 150 countries, GEFCO ranks among Europe's top ten logistics groups with a turnover of 3.4 billion in 2010. The Group has 400 business locations worldwide, a workforce of 9,400 employees and is developing activities in Central Asia, Central and Eastern Europe, in Middle East, Eastern Asia and South America.
Website: www.gefco.net

Third Party Premium hike trouble brewing

Debjoy Sengupta & Shilpy Sinha,ET Bureau

KOLKATA | MUMBAI: The Insurance Regulatory Development Authority's ( Irda )) decision to raise third-party premium for commercial vehicles by about 65-70% on an average is making various transport associations look at the possibility of floating their own general insurance company to cover their vehicles.

Transport associations across the nation have called an emergency meeting on Wednesday to protest the hike that will be applicable from April 25. Some 70-lakh commercial vehicles and 400-odd transport associations all over the country may also go on a nation-wide strike. Gill Raghabir Singh of Gills Roadways Association said the transport association may look at setting up an insurance company of its own.

"We have called an emergency meeting on Wednesday. We may boycott insurance companies and may look at forming an insurance company for third-party motor vehicles," he said.

Gurinder Pal Singh, chairman of the All India Motor Transport Congress , which is the apex body for all transport vehicles, including trucks and busses, said: "We may go on a nation-wide strike of all transporters if need be. Four years ago, the insurance regulator had increased third-party premiums by 150% but was later forced to roll back to 60%. Our costs are spiraling on a regular basis mainly due to rise in diesel and petrol prices. An additional rise in insurance premium will squeeze our already wafer-thin margins. Third-party insurance premiums vary between Rs 10,000 and Rs 20,000, depending upon the class of the vehicle every year. We will now have to shell out anything between Rs 17,000 and Rs 34,000."

Mahendra Arya, member, advisory committee of the Bombay Goods Transport Association, said: "The industry has segregated the data into two parts. Insurers are making a profit on the composite. There is no justification in the rate hike." Tapan Banerjee, joint secretary, Joint council of Bus Syndicates, a bus owners' association in Kolkata , said: "Once the elections in West Bengal are over, we will take the legal recourse. Bus owners are incurring losses on a daily basis and the cost of insurance, including thirdparty, varies from Rs 25,000-40,000 per year. A hike will hit our bottom line adversely and may force many owners to exit the business."

Bengal Bus Syndicate vice-president Dipak Sarkar said: "Tariffs are determined by the state government after discussions with bus owners. We have not been able to raise tariffs for the last one year despite rise in input costs. This is resulting in heavy losses for all bus owners. Any additional rise in costs will be detrimental."

Ashok Banerjee, professor of finance at IIM Calcutta says: "Claims under third party have been historically disproportionate to the premium income. There are a number of instances where vehicles are not maintained properly, leading to accidents and third-party claims. In the overall demand-supply scenario, higher premiums should act as a disincentive to insure poorlymaintained vehicles, so that in the long run, vehicles are maintained better and claims reduce."

S Shrivastva, secretary-general at the Insurance Institute of India said: "The sum assured under third-party insurance is unlimited and doesn't depend on the year of the incident. Even heirs of accident victims can claim liability after several years. This makes it difficult for insurers to provision any claims payable. Additionally, liability claimed by the person suffering injury depends upon a host of factors, including the financial condition of the individual. These factors have resulted in the number of claims rising over the years as well as the claim amounts. A 70% rise in premium is barely enough to meet insurers' liabilities."

Source: Economic Times

http://economictimes.indiatimes.com/articleshow/8023267.cms?prtpage=1

Orissa Private Ports- MoUs opaque?

Smelling corruption in the process of Orissa government's MoU with private parties for setting up about a dozen minor ports, an organisation fighting against corruption sought a CBI probe into the matter.

In a letter to Chief Minister Naveen Patnaik, Transparency International, India (TII) Board Member Biswajit Mohanty alleged that Orissa government had signed concession agreements with private developers for ports without going through open bidding process.

"I find a woeful and complete lack of transparency in the process followed by the commerce and transport department in selection of bidders for development of ports by the private sector. No eligibility criteria as to minimum turnover, financial worth, years of business experience in port development has been announced by government or mentioned in the port policy," Mohanty claimed in the letter.

When contacted, commerce and transport minister Sanjeev Sahoo claimed that utmost transparency had been maintained in the process."There are multiple applications for each port project. We consider them basing on their feasibility report prepared by a central undertaking," Sahoo told PTI rejecting demand of a CBI probe into the matter.

Sahoo said the state government had invited international bidding for Gopalpur Port, but it was following the state's port policy for setting up new minor ports.Orissa government has recently signed an MOU with Essel Mining and Industries for development of the Chudamani port, while it has already handed over two ports, Subarnarekha mouth and Astaranga to Creative Port Development Pvt Ltd and Navayuga Engineering Co Ltd respectively, Mohanty said.

Now there are 25 applicants who desire to develop 8 ports at Bichitrapur, Bahabalpur, Chandipur, Inchuri, Barunei Muhan, Baliharchandi, Palur and Bauda Muhan.

Source: IBNLive

12th Plan: 10% GDP growth, pipedream!

KR Sudhaman

Education, health and infrastructure will be the priority areas of the 12th five-year plan, according to the Planning Commission deputy chairman, Montek Singh Ahluwalia. Besides, the plan will also propose ‘drastic action’ to fix problems in the power sector.

He said on Sunday that it was “probably overambitious” to aim at a double-digit growth in the five-year plan beginning next year. Though, he hastened to add that the exact growth target was yet to be fixed.

He said it would be good if 9 per cent GDP growth could be achieved annually as the global economy was not doing well. “Looking forward, the world economy is not doing well. If India grows at an average of 8.5 per cent in 12th plan period, it would be counted as a very good performance. If we do 9 per cent, it will be excellent. I should add that to get 9 per cent growth or a little over 9 per cent a lot of work has to be done. If we try to take it up by 1 per cent from the 11th plan achievement, it will be 9.2 per cent,” Ahluwalia told Financial Chronicle.

Though the Planning Commission had projected 9 per cent annual growth during the 11th plan, it would end up with average 8.2 per cent. “This is an exceptionally good performance compared to rest of the world,” he said.

Commenting on the IMF observation that India with 10.3 per cent growth would overtake China (10.2 per cent growth), Ahluwalia said one should not get carried away by these numbers as China had been growing much faster for 30 years.

Their per capita income was now much higher than that of India. “Even if India grows at 9 per cent and China at 7 per cent in next 20 years, India would still have a lot of catching up to do,” he said. Ahead of full the Planning Commission meeting on April 21 to be chaired by prime minister Manmohan Singh to discuss the approach paper to 12th plan, Ahluwalia said the government proposed to introduce the public-private partnership (PPP) model in education and health for the first time.

“The human resources development ministry is now considering how to introduce PPP in school education. Of 6,000 model schools, about 3,500 are to be set up in backward areas where we cannot attract the private sector. The remaining 2,500 are to be set up in PPP mode. We will start this year, but 95 per cent of the work will be done in 12th plan,” he said.

This proposal will go to the cabinet soon, he said. A cabinet note prepared by the HRD ministry is already with the Planning Commission. Ahluwalia said the PPP schools should be viewed as a pilot project of the centre. If successful, it could be replicated by state governments as school education was basically a state subject.

In the past the centre had set up 900 Navodhya schools as model residential schools all over the country. These have done exceptionally well. The PPP schools would not necessarily be residential schools.

Turning to the difficult power situation, Ahluwalia said, “More drastic measures were needed. We need to push five or six key issues…Losses on the distribution side are a serious problem. It is not possible to imagine a viable power sector if the losses are Rs 70,000 crore per year. Something has to be done to take care of the weakness in this area.”

“Perhaps incentive funding (in the power sector) will have to be linked to performance and not by merely filling the gap. The banking sector too should impose discipline. Losses are possible only because banks continue to finance public sector distribution companies. If this is tightened, losses (in the power sector) will automatically come down. Poor availability of water, coal and problems of distribution needed to be addressed by the centre and states together.” he said.

On making India a global manufacturing hub, Ahluwalia said the prime minister’s national manufacturing council is meeting on May 4 to give finishing touches to the idea. “It (manufacturing hub) is a good idea. We are in favour of pushing it. The proposal is to create an environment to achieve double-digit growth in manufacturing. This is only one part of what should be a comprehensive approach to manufacturing.”

On the possibility of achieving 14 per cent annual growth in the manufacturing sector, Ahluwalia said, “Frankly achieving such a rate immediately will be difficult, considering that we are struggling at 3.6 per cent factory output growth according to February 2011 data. In April-February, manufacturing grew by 7.8 per cent. Let us take it to 12 per cent. Obviously, if we find this is feasible, we will take it to 14 per cent.”

On taking the share of manufacturing to 25 per cent of GDP from 16 per cent by 2022, he said one should not look at it as a share of GDP. If all other sectors also grew well, the share of manufacturing in GDP would come down. One should rather focus on a sustained double- digit growth in the manufacturing sector.

He made it clear that full Planning Commission meeting on April 21 was not expected to approve the draft approach paper to 12th plan. The purpose was to present some key issues for the plan. “We are working on a draft approach paper that will be finalised based on the discussion in the meeting.”

The Planning Commission has adopted a consultative approach in preparation of twelfth plan. “We have a website and 30,000 visitors have visited it. There have been 1.3 million hits. It is unprecedented and a very new mechanism trying to get views from stakeholders. We are also going to have discussions with the state governments. We are now an economy where growth dynamism is private sector led. The whole of agriculture is in the private sector. We are not taking a view that the government does not have a role because the economy now is the private sector and market driven. The government role too will expand in areas where the private sector does not go.”

Skill development is another area where the next plan will lay an emphasis. The prime minister’s adviser on skill development, S Ramadorai, has been co-opted as chairman of the skills development board headed by Ahluwalia. “I have written to all state chief ministers that Ramadorai would be interacting with them on the issue,” he said.

On infrastructure development, he said, “In the 11th plan, around 65 per cent of infrastructure development was in the public sector and 35 per cent in the private sector. Considering the infrastructure spending was around $500 billion in the 11th plan, the government spent $325 billion. In the 12th plan investment has to be $1 trillion and it is going to be 50 per cent each by the public and private sectors.”
“This is certainly going to be a big challenge.” About the infrastructure debt fund, he said the finance ministry was examining proposals and he hoped to have details by the end of this month.

Source URL: http://www.mydigitalfc.com/economy/education-infrastructure-top-12th-plan-agenda-600.

12th Plan: And Beyond - Port sector

The government is looking at an investment of over Rs one lakh crore in 13 major ports, majority of which will come from the private sector , to expand their capacity by 767.15 million tonnes (MT) in the next 10 years.

"We have identified 352 projects for major ports to increase their capacity by 767 MT. This will entail Rs 1.09 lakh crore investment of which Rs 72,878 crore have been estimated to come from the private sector," a Shipping Ministry official told PTI.

The major ports capacity was recorded at 616.73 MT on March 31, 2010.

Balance Rs 36,571 crore be would be funded through internal resources and the budgetary support, he said.

The proposed investment is in addition to 72 ongoing projects with a total cost of Rs 18,493 crore to generate a capacity of 143 MT.

India at present has 13 major ports - Mumbai, Jawaharlal Nehru Port Trust, Kolkata (with Haldia), Chennai, Visakhapatanam, Cochin, Paradip, New Mangalore, Marmagao, Ennore, Tuticorin, Kandla and Port Blair under the control of Centre.

The development projects have been identified for deepening of channels, construction and re-construction of berths, procurement and modernisation of equipments, hinterland connectivity etc to be undertaken in three phases.

The first phase will end by 2012, the terminal year of the current 11th Five Year Plan while the second phase will be implemented during the 12th Five Year Plan ( 2012-17) and the final phase will end by 2020.

The government unveiled a new policy for the Shipping sector that entails an investment of Rs 5 lakh crore by 2020 to take the ports capacity to 3,200 MT and bring in major reforms in the space.

Earlier, this year, the government unveiled a new Maritime Agenda to take ports capacity to 3,200 million tonnes (MT) from 617 MT on March 31, 2010. Source: http://economictimes.indiatimes.com/news/economy/infrastructure/govt-plans-rs-109-lakh-cr-investment-in-13-major-ports/articleshow/8004813.cms

12th Plan:Growth projections-1

India will need to maintain over 4.5 per cent farm output and 12.4 per cent manufacturing growth during the 12 Plan (2012-17) to achieve the ambitious 10 per cent economic expansion in the five year period.

With adequate focus on agriculture and industrial sectors, the average growth rate in the next Plan can be raised to 10 per cent from 8.1 per cent in the current plan, said a note prepared by the Commission ahead of the meeting of the full Plan panel on April 21.

The meeting to be headed by Prime Minister Manmohan Singh is likely to approve the Approach Paper for the 12th Plan. Among others, the meeting will be attended by Planning Commission members and senior Cabinet ministers including Finance Minister Pranab Mukherjee and Home Minister P Chidambaram .

Although the Commission had pegged the economic growth rate at 9 per cent for the Eleventh Plan (2007-12), it was scaled down to 8.1 per cent in view of the impact of the global financial meltdown on the Indian economy.

The Commission has suggested growth scenario under which 9 per cent growth can be achieved by maintaining 4 per cent agriculture and 9.8 per cent manufacturing growth rates.

At present, India is passing through a critical phase with spiralling inflation and moderating industrial output, particularly manufacturing.

According to the latest data, manufacturing sector has registered a growth of 8.1 per cent, compared to 10.4 per cent in the April-February period of 2010-11. In February, it slowed to 3.5 per cent, compared to 16.1 per cent in the same month last year.

Experts describe India as being in 'catch-22 situation' as taking short term monetary measures like raising key rates would hamper growth and the absence of these initiatives would further fuel inflation.

High prices of vegetables and manufactured items drove the overall inflation in March to 8.98 per cent, way above the RBI's revised (upward) projection of 8 per cent.

The overall inflation measured on the basis of Wholesale Price Index (WPI) was 8.31 per cent in February. The WPI inflation for January was revised upwards to 9.35 per cent from the provisional estimates of 8.23 per cent.

Concerned over high headline inflation, the Commission had raised doubts over clocking the targeted 9 per cent economic growth in the current fiscal.

"We may not hit 9 per cent (economic growth rate in 2011-12), " Planning Commission Deputy Chairman Montek Singh Ahluwalia had said.

Referring to growth prospects in the current fiscal, he said, it may be difficult to achieve 6 per cent farm sector growth expected to be recorded during 2010-11.

"There is no chance for agriculture to grow at 6 per cent this fiscal, it may probably grow at 3 per cent", he said.

Source: Economic Times, April 17, 2011

http://economictimes.indiatimes.com/news/economy/indicators/high-farm-manufacturing-output-must-for-10-gdp-in-12th-plan/articleshow/8004954.cms

Overloading owes, global

You’ve no reason to know Honorary Hermogenes Edejer Ebdane, Jr. Doesn’t matter. He is Secretary in the Department of Public Works and Highways, Government of Philippines. He has been in the news of late – causing sleepless nights to haulage carriers (simply put, commercial vehicle owners) and logistics service providers or LSPs. He’s for the strict implementation of RA 8794 or Anti-Overloading Act. “

As mandated by RA 8794 or the Anti-Overloading Act, these violators must pay the fine of 25% of MVUC. However, while we are penalizing them, this does not prevent them from using the road net carrying their excess weight. This specific measure is meant to ensure that violators not only pay the penalty, but more importantly that overloaded trucks do not get to continue their journey without unloading the excess weight.”

Ebadane’s concern is understandable given the fact that Philippines spends a whopping P13.5 billion every year on maintaining 30,000 km of national highways alone. From May, authorities will be imposing the gross vehicle weight limit (GVW), on top of the current 13,500 kilograms per axle limit on trucks. The maximum allowable GVW will range from 16,880 to 41,000 kg, depending on the truck configuration and number of axles.

Drivers caught violating the law could face confiscations of their licenses as well as their truck’s license plates, and penalties to be calculated based on the apprehended truck’s excess weight. Significantly truckers lobby is arguing that the “shipper’s share of responsibility and accountability in causing the overload” is totally ignored. That is to say, overloading was caused by the cargo and therefore shippers should share the penalty burden. Strict adherence to the law of the land may cost P 5 billion to the truckers. Their worry is also understandable.

The Philippines has the highest allowable axle load limits in the World. Compared to the 13.5 mt/axle limit prescribed by RA 8794, other countries have the following limits: U.S. 9.1 mt/axle, U.K. mt/axle, EU 11.5mt/axle, France 13.0 mt/axle, Thailand 9.1 mt/axle, Pakistan 12.0 mt/axle, and India 9.3 mt/axle. The Philippines government is examining to hold the truck operators civilly and criminally liable for their willful and recurrent violations of the Anti-Overloading Law.

It will be interesting to note how African nations are tackling overload issue. Joe Gidisu, Minister of Road and Highways, is gearing up for strict implementation of axle load control to protect his country’s roads against premature deterioration from June 1. The enforcement was in compliance with the Union Economic Monitaire L'Ouest African (UEMOA) Regulation 2005, which mandated ECOWAS member states to adopt standards and procedures for control of the gauge, the weight and the axle load of every vehicle. For four months, 600 truck drivers and 300 vehicles were held in Burkina Faso-Niger border for flouting axle load regulations before the minister’s intervention brought relief. However, excess cargo was unloaded and transported in other vehicles. NO compromises on that score.

The current legal system which imposes penalties on transport operators who are guilty of overloading, is not working as the fines are "ridiculously" low and does not match the damage caused to roads, according to the Roads Authority of Namibia.

Hileni Fillemon, quoted in Namibian Economist, is of the view that apart from being the main cause of road damage, overloading should be discouraged at all costs as it removes fair competition within the industry. "Unscrupulous transport operators create some advantages for themselves over law-abiding operators by being able to move larger quantities of cargo at fairer prices than their competitors, thus becoming more attractive on the market. Furthermore, the consequences of their actions are spread among all players in the field, thus sharing the related increase in overheads with innocent competitors, in the long run," adds he.

Meanwhile, Researchers Eric Moreno-Quintero and David Watling of Institute for Transport Studies, Leeds University, who wrote “A Stochastic Route Choice Model in Optimal Control of Road Freight Flows: A Mexican Case Study”, categorically maintain that “the inefficiencies arising from increased freight road traffic in the late 1990s in Mexico have posed to planners engaged in the road provision the goal to find new control measures to reduce the adverse impacts, such as road damage and overloading.”

A few developments led to a sea-change on the road freight flow. In the 1990s, road freight traffic in Mexico altered notably after the deregulation of the road freight industry in 1989; the North American Free Trade Agreement (NAFTA) in 1994; and the privatisation of the Mexican Railway in 1997. These changes created new land freight flows, attracting attention to the characterisation of lorry flows on the roads, and the estimation of possible impacts in areas like: route choice, road damage and repair costs, overloading practices and government’s decisions as weight limits, tolls levels and loading enforcement scheme.

This piece appeared in the April 2011 issue of SAARC Journal of Transport

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