Narendra Modi government turns attention to coastal shipping
Time：2014-09-28
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Accordingly, these ports will accord priority berthing, at least on one berth, to dry bulk/general cargo coastal vessels to enable shippers to transport goods from one port to another port in India, irrespective of origin and final destination of the cargo. This will be in addition to the dedicated berths for handling of coastal thermal coal already existing at these ports.
The ports will also have to give priority berthing to coastal container vessels at private terminals and at container berths run by the ports themselves. Coastal vessels accorded priority berthing will not be liable to pay priority berthing charges. The shipping ministry is also preparing an incentive scheme for modal shift of cargo from road/rail to coastal shipping. In case of bulk cargo, all new coastal cargo carried on Indian flag vessels on demonstration of a fresh modal shift would be eligible for an incentive of 50 paisa per tonne per nautical mile up to a maximum of 500 nautical miles, according to the scheme being finalized by the ministry.
The loading ports will administer the release of incentives based on their records of coastal movement by a particular shipper. These ports will be eligible for periodic disbursement of such incentives by the shipping ministry. Initially, the new cargo eligible for the incentives will be fertilizer, foodgrain, steel, marbles, tiles, cement, sugar, salt and automobiles. The list could be expanded further based on trade demand and market trends and availability of funds. These incentives will be available for a period of five years. In the case of coastal container cargo transported on Indian flag vessels, a rebate of up to Rs.1,000 per container in terminal handling charges at both loading and unloading ports is being considered, subject to a cap of 500 containers per vessel.
The proposed incentive support to coastal vessels, based on the recommendations of a seven-member panel headed by P.V.K. Mohan, chairman of the National Shipping Board, is expected to boost coastal shipping and bring in the desired ideal modal mix, which will have a direct as well as indirect impact on the country’s fuel bill, resulting in reduction in fuel cost and creating positive social and environmental impacts. Globally, countries are adopting freight modal shift programmes by providing incentives as a financial reward for switching the shipping method of choice from truck to rail or water.
The ground for such an incentive is that this shift would generate social benefits that offset the cost of the incentives provided. Environmental threats and the climate change emerging from greenhouse gas (GHG) emissions have prompted countries all over the world to focus on promoting a modal shift in cargo transportation from road to waterways. The Indian coastline and inland waterway resources are grossly underutilized for moving domestic cargo.
A modal shift also considerably lowers logistic and fuel consumption costs. There is also a social cost benefit from decongesting roads and minimizing road accidents. The world’s biggest and most comprehensive modal shift programme is the Marco Polo Programme of the European Union which operates with a budget of ?450 million. The programme offers funding for projects that shift freight transportation away from the roads. To qualify for funding under the Marco Polo Programme, the applicant must demonstrate that a project shifts an average of at least 60 million tonne-km of freight per year and benefits the society in terms of noise, pollutants, climate costs as well as accidents, infrastructure and congestion. The Marco Polo scheme aims to free Europe’s roads of an annual volume of 20 billion tonne km of freight.
The United Kingdom has a mode shift revenue support scheme and a waterborne freight grant scheme. In India, Kerala has set up a coastal shipping promotion fund with a corpus of Rs.3 crore (to be enhanced to Rs.300 crore). The state provides an incentive of Rs.1 per tonne per km on cargo moving along the 540 km-long coast of Kerala.
India has some 805 coastal vessels of which only 146 can carry cargo, despite the vast coastline. China has about 12,000 coastal vessels that ship an estimated 1 billion tonnes of coal, steel, grains and fertilizers a year. Currently, the Indian government gives a 40% rebate in vessel-related and cargo-related charges for coastal vessels. A few months ago, the Indian government extended the sea limits for operating inland vessels for better utilization and for supplementing the coastal fleet. Besides, India announced new standards for construction and operation of inland vessels in a bid to integrate it with coastal vessels and foreign-going vessels across the country and reduce construction and operating costs.