Opportunities on the horizon

India plans to more than double its port capacity to 3,200 million tonne at an investment of Rs 2.87 trillion by 2020, drivin the demand for more port handling equipment. Sudheer Vathiyath trains through the prevailing trends in port equipment market.

Maritime transport is critical for the social and economic development of a country and the port sector is one of the main user segments of material handling equipment. The range of material handling equipment varies depending on the cargo, either bulk or containers. The wide range of equipment used includes different type of cranes, forklifts, shovels, gantries, reach stackers, etc.

Port equipment involves 30-40 per cent of the total project cost. Port requires very high percentage of equipment like cranes, other material handling equipment, loaders and unloaders for dry bulk cargo, etc.

In the last 5 years, the investments in port equipment has been 40 per cent of the total investment.

Nripesh Kumar, Director – Capital Projects & Infrastructure, PwC India, says, “Port capacity in India is very less as compared to its potential. For example, India's largest container port is about 4.5 million TEUs of capacity, whereas the Port of Singapore has capacity of over 13 million TEUs and Rotterdam Port has a capacity of 8-9 million TEUs. Looking at India's growth rate and population, the country needs huge investment in ports sector. India has been quite successful in adding port capacities and we need more such capacity additions in future. But along with development of port capacity, we have to enhance hinterland connectivity as well.”

Despite the current slowdown, the Indian economy keeps growing at a steady pace and is fast becoming more relevant in global trade as capacities at Indian ports are bound to increase. The Government of India has already formulated the 2010-20 maritime agenda. The move to construct two new ports in West Bengal and Andhra Pradesh, and a slew of port capacity enhancement activities are underway, port equipment players have an opportunity on the cards and port operators have a chance to acquire technologically advanced equipment leading towards an increased use of port equipment in the future. The market size of port cranes which makes the major category of port equipment is estimated to be close to $300 million in India. This market is expected to grow steadily by 15 to 20 per cent year-on-year.

Emerging trends
Ports are the gateways to India's international trade by sea which handle over 90 per cent of foreign trade. The Indian ports sector is poised for significant growth driven by new manufacturing and power projects and higher cargo traffic at ports. Increase in containerised trade, coupled with the government's active initiatives to develop the Indian ports sector, is expected to further boost the growth. Many private ports also came into operation to cater to the increasing container traffic at ports. It clearly shows the kind of growth in container traffic and the subsequent demand for port cranes and material handling equipment like lift trucks and reach stackers.

In the last few months, development activities have gained momentum with a couple of project awarding taking place. Singapore's PSA International won the largest order to build the fourth container terminal at the largest container port of India, the Jawaharlal Nehru Port Trust (JNPT) for Rs 7,900 crore, marking its entry into India's west coast. The company operates terminals at ports in Kolkata, Chennai and Tuticorin on the east coast. Adani Ports and SEZ (APSEZ) won the bid for a Rs 1,270 crore container terminal at the Ennore port in the southern state of Tamil Nadu. Container terminal projects are also planned at Kandla and Kolkata, while a multipurpose facility is planned at Mumbai. Vizhinjam port project in Kerala has now received five RFQs and also received the environment clearance. After the deregulation of tariffs, India has secured a record Rs 20,700 crore ($3.4 billion) of investment in port projects. According to the Ministry of Shipping, India has awarded bids for 30 ports in the year 2013-14. The projects will add 217.6 million tonne of annual cargo handling capacity.

Technology developments
A typical container terminal today has a density of 100 to 500 TEUs per acre (depending on the yard stacking system in use), crane productivity of 25-30 gross moves per gantry crane hour, average container dwell time of five to six days and truck turnaround of one hour. But future terminal requirements will be considerably more demanding. In order to accommodate the mega containerships, new terminals will require a density of 1,000 to 2,000 TEUs per acre, crane productivity of 200 moves per ship-hour at berth, maximum three days average dwell time and truck turnaround of less than 30 minutes. The draft at the future terminal will need to be minimum 15-16 m and increasingly larger cranes will be required to accommodate ships with a deck stack of up to 28 rows across. The world is moving towards automation. The efficiency of port equipment is related to the volume of cargo handled. For a low and medium volume handling require regular capacity equipment. But in the case of handling large volumes of cargo, the trend is moving towards more and more automation. “As the volume of cargo grows, Indian ports should look towards better efficiency equipment. We have certain ports doing that, but that is not enough. As of now it is quite labour-intensive,” observes Kumar In this scenario, Indian ports need to employ better technology equipment to usher in overall efficiency and productivity. Some of the private ports and terminals at major ports operated by private players have performed well last year. Technologically advanced handling equipment has played a major role in achieving these targets. Kumar says, “There is no much automation happening in Indian ports sector. But there is scope as we have international port operators like DP Wold, PSA etc, who have done automation elsewhere but not in India in a big way.” There is a positive shift towards energy conservation devices and electric RTGs, and the like. Nhava Sheva International Container Terminal (NSICT) at JNPT is an ideal example. “We have cranes from Noell at our terminal. And all RTGs operated at NSICT are using solar power, reducing power consumption and carbon footprint,” says Ajay Singh, CEO, NSICT.

New equipment
The Indian market is developing at a steady speed as new port projects are being constructed and the existing ones are being expanded. Even though the individual performances of ports vary, collectively there is an increase in cargo handling at the Indian ports sector and this has demanded more handling equipment and also the modernisation of existing equipment. There is a huge investment potential in the ports sector, which is expected to grow at above 10 per cent CAGR over the next 10-15 years. The majority of ports in India are being utilised close to their maximum potential, and this has created the need for substantial investment by the government in the ports sector; also, the volume of cargo being handled requires modernisation of the ports. Due to the huge investment being projected in the port segment, there is immense potential for growth of material handling equipment in this area. Nothing remains stagnant; things are going to change for sure. Increase in vessel sizes, enhanced security and safety at ports, growing environmental concerns and automation will all be key drivers for port equipment. Globally, with ships are getting bigger and huge capacities of cargo are being carried by such ships, most of the leading global ports have employed highly automated equipment to increase the speed and capacity of cargo handling. However, Indian ports have still a long way to reach such a stage. In India, containerisation is on the growth path, however the use of port equipment depends on the volume of cargo to be handled at the port. India can move towards better and large capacity handling equipment, but all will depend on the kind of port capacity development happening in future.

Looking ahead
With the economy recovering, the port and ports equipment industry carries tremendous potential for investment. Much of the potential of this industry remains untapped. Undoubtedly, as a greater number of port projects get underway, the prospects for equipment vendors are bound to become more plentiful.