Developers of ports tell us how port connectivity has boosted business, while users say poor connectivity are limiting their plans.Experts:Anil Arora, MD, MJ Logistics, whose plans have been hit by slow implementation of a highway connectivity.Anil Singh, Senior VP & MD (Subcontinent), DP World, which recently launched a direct vessel service to Europe from Cochin, skipping a hub port.Aun Aejaz, Director, Doehle Danautic Logistics, which entered logistics segment two years ago as an extension of its shipping services.BVJK Sharma, Jt MD & CEO, JSW Infrastructure, which hopes to address connectivity at planning stages while developing more ports on the coasts of India.Chander Agarwal, Executive Director, TCI, a major logistics company that started rail cargo service earlier this year.HC Venkatesh, Traffic Manager, Kandla Port Trust, which has not found it necessary to invite private participation in connectivity.Nailesh Gandhi, Director, Express Transport Pvt Ltd, which is planning huge growth especially around west-coast ports. Niek Van der Sluijs, Director of Advisory Group (Maritime), Haskoning India, the Dutch engineering group with a 50-year presence in India. Prakash Tulsiani, MD, APM Terminals Pipavav, which recorded a 35 per cent increase in container movement last quarter. Rajesh Nath, MD, VDMA, the German engineering association that operates mainly from Kolkata. Rajiv Agarwal, MD, Essar Ports, which is doubling its capacity through ongoing expansion projects at Salaya, Paradip and Hazira. Ramachandra Rao, Chief Engineer-Ports, Visakhapatnam Port Trust, who attributes part of the growing volumes at the port to pre-eminent connectivity. Recent expansion includes a new quay berth.Do you or your clients prefer (or do you recommend) to use a certain port (or ports)? What are the main reasons? Please explain how connectivity plays a role in your decision.Arora We do prefer and recommend certain ports to our clients primarily the connectivity coming from the north towards the west. In the west, JNPT is the preferred port because of the size and type of cargo it can handle. The Gujarat ports are more attuned to bulk cargo. That's why for containerised cargo, people prefer JN Port. Closer to Delhi, we advise our clients to book their cargo till Ballabhgarh-Faridabad belt because of congestion at Tughlakabad. We advise them to offload at ACTL or so and send it to us. As our centre is at Palwal (south of Delhi), there is no issue of coming into the city and going out. We are on the highway and the other ICDs are also on the highway, so they can easily access our facility.Connectivity is the only decision making factor because with the customs procedures become transparent and computerised, and there is no preference for any port for any other reason. The major factor is that how quickly you can get it into the land, so connectivity is the only parameter, and of course the port doesn't have to be congested.Van der SluijsHinterland connectivity is one of the major cost elements and hence is a major determining factor the selection of a preferred location. The port handling costs are often only a small element of the total supply chain costs. Inland shipping connections and coastal shipping connections can be viable alternatives for longer distance transport, especially for bulk cargoes if these can be delivered directly to the off-taker. The transport costs per tonne per kilometre should be less than, for example, those in the case of road transport, but on short distances this is offset by so-called double handling. For example, in case of containerised cargoes it likely requires transfer to road anyway to achieve door-to-door transportation, and therefore barging may only be cost-effective on the long distances.The costs for river training can be large due to sedimentation and morphology of the waterways and due to the supporting infrastructure required. Hence a viable operation can only be established if large cargo volumes can be attracted and with a significant involvement and commitment of the authorities.R AgarwalSelection of a particular port by customer is governed by overall logistics cost of the customer, time taken for the transportation of cargo, storage facility for the cargo, ease of transportation and customer service.NathAlmost 60 per cent of our members in India are located in the western part of India. Hence they tend to use the ports in this region. Proximity to international shipping route should help the companies in material movement. There should be availability of 20 m contour within a nautical mile off the coast. Immediacy to national or regional road, rail network help the companies to bring the material and machinery from different parts of the country. The commercial, technological and political importance is also significant in port selection.GandhiOur clients prefer to use certain ports, the main factors being congestion/faster evacuation of cargoes/rail and road connectivity from the ports to the hinterland for both containerised and ODC and heavy lift cargoes. So connectivity plays an important role in our suggestion of ports to our clients on the basis of feasbilility for smooth movement to the customer site, especially for ODC and heavy lift cargoes.In numerical or concrete terms, what benefits do you envisage as a cost of connectivity issues?SharmaAssume a situation where two neighbouring ports, with similar seaward facilities (berths, loading facilities, draft, availability of ships, etc.) are competing for cargo. Port A has good connectivity (road and rail) while Port B has only a limited road connectivity. The time taken to bring in the nominated cargo may be as different as seven in the case of A and 30 for B. Port B would be an expensive proposition.AejazA simple example will highlight this. One of our customers has an ancillary unit to the ITC paper unit in Bhadrachalam, Andhra Pradesh. Due to non-availability of good rail connectivity and infrastructure, it costs them approximately $20 to move one tonne of material from the port to Bhadrachalam. This is equal to, and in some instances higher than, the cost of sea freight in bringing the material from Malaysia-a travel distance of five days.AroraPoor connectivity means our clients pay the demurrages, and suffer delayed shipment and high carriage cost. For temperature-sensitive cargoes, the cost of holding the refrigerated cargo is much higher and there is chance of its perishing.Bad connectivity may cost our client between 10-20 per cent. Currently, on a scale of 1-10, the connectivity can be rated as 3-4. It is just impossible to get a container into North India on time.SinghA decade of privatisation in the port sector itself has shown the huge benefits-a 400 per cent jump in the volume of cargo handled by the non-major ports (many of which are private) in the last decade.TulsianiWith good connectivity Indian ports can become internationally competitive. We would not face congestion issues and there would be efficient movement of goods. This would make it attractive for international shipping lines to call Indian ports. Trade would automatically grow and would have huge impact on the economy's growth. Seamless connectivity to the hinterland reduces costs.R AgarwalWithout good connectivity port assets are of no use as cargo need to be economically transported to the end customer; most of the cargoes like dry bulk, liquid, break bulk and containers need good connectivity for transportation due to their larger volume. Our existing customers are well connected through road, conveyor system, pipelines and rail. We are developing rail connectivity for Hazira and Salaya projects which will make these port facilities highly competitive and will attract new customers.RaoNow you can reach from the Visakhapatnam Port to National Highway within 15 minute. Otherwise we had to travel additional 6-7 km, and an additional time of half an hour or so. Volumes have also no doubt increased.C AgarwalWe are confined to working on east coast of India only. Our main routes are Chennai and Port Blair, but almost all ports in India are constrained by the connectivity to the hinterland. Traffic at the ports is still sluggish and still being haunted by many challenges like congestion, poor connectivity and accessibility, lack of adequate facilities and labour disputes. It affects the major ports operating at more than 90 per cent capacity in terms of higher dwell period and turnaround time.What plans do you have to augment port traffic in light of the new ports as projected? What volumes do you expect?TulsianiPorts cannot succeed without good inland connectivity. Developing the waterfront is not enough. There is an urgent need for good roadways and railways that allow quick cargo evacuation and delivery. The Dedicated Freight Corridor which is long pending should be completed immediately and many other such corridors should be developed throughout the country.R AgarwalWe have plans to double our capacity and enhance the capacity utilisation. Essar Ports' current capacity is 88 MMTPA and capacity utilisation is 50 per cent, ongoing expansion projects at Salaya, Paradip and Hazira will take the capacity to 158 MMTPA by March 2014. We are expecting capacity utilisation to reach at 80 per cent by FY 15 handling 125 MMTPA of cargo. Traffic growth will be driven by expansion of existing steel plants and oil refineries, and commissioning of new steel plants and power plants.RaoWe have established a two-lane road connectivity five years ago-including a CFS and other infrastructure along the way-from our port to NH5, Chennai-Kolkata Highway, as per the national policy for all the major ports to be connected to the nearest NH. That was done and it is operating well. Even it is serving our Exim Park in the western sector where we have many cover storage accommodations and other industries. The total project cost is Rs 116 crore. We have contributed around Rs 32 crore and NHAI contributed the remaining by raising loans and some equity.The port is also connected by rail and a slurry pipeline for iron ore from Bailadilla mines. Although the pipeline transport was interrupted briefly because of Naxal activities, it is restored now. The problem is running pipeline is the equation of land and so many crossings and different departments and organisations involved, including a punchnama from each village it passes through.SinghUnder a new port project philosophy, most port projects being tendered out involve not only development of the port infrastructure but also the backup road and rail connectivity. From our portfolio, the Vallarpadam ICTT is a classic example. Whilst we invested in building a world class terminal facility with the latest technological knowhow, the government also spent considerably on connecting the terminal with a brand new 18 km long rail bridge, as well as a new highway connecting to the national grid.VenkateshKandla Port has a vast hinterland of 10 lakh sq km, covering Gujarat, the North and parts of central India, and has set ambitious plans for augmenting port capacity and increasing cargo throughput.In the 'New perspective plan-Projections of cargo throughput up to 2019-20', during FY2019-20, the port would have a cargo handling capacity of around 195 MMT and is projecting a cargo throughput of around 178 MMT. These projections have been made on the basis of projects already taken up, the new projects envisaged in the near future and development of other ports in its vicinity.Are you planning any expansion in your business based on the upcoming port connectivity?AroraWe had planned our first investment a little ahead of time when the government had announced the Kundli-Manesar-Palwal (KMP) Expressway connecting highways. But the connectivity the government has promised is still to come up. So now we are keeping a watch on the announcements. Only when we see correlated developments on the ground. Because our set ups will take one year to 18 months to come up. While the port and connectivity projects will take at least 3-5 years to come up. So we will only go ahead with our plans once we see action on the ground.AejazEvery logistics player would immensely benefit from port connectivity provided it goes hand in hand with adoption of GST and the back end infrastructure like more rail connectivity and rolling stock. Tragically, the nodal agencies act piecemeal rather than collectively and we have this disjointed approach where if, the port is ready, the rail link is not; if the tracks are laid, the rail wagons are missing.R AgarwalWe are planning expansion of Hazira facility from 30 MMT to 50 MMT for which we are developing rail connectivity to the port. We are also connecting our Salaya port facilities by rail to utilise its full potential.What issues did you face while providing road and/or connectivity to the port?TulsianiPort Pipavav is fortunately located adjacent to the National Higway 8E. We built a 11 km highway to connect to it. We pioneered a JV with the Indian Railways and established the Pipavav Rail Corporation Ltd which has built a 269 km rail link to the main grid at Surendranagar. The problem of congestion arises after joining the main rail network. We need Dedicated Rail Freight corridor.RaoThe primary issue was shifting 132 high-voltage power lines belonging to the state government, and we accomplished this through negotiations and a deposit. Since it is port land all the way from the port to the highway, we did not encounter any land acquisition problems.Can port connectivity be a viable proposition on its own? Are there any plans for port connectivity to be accomplished by private participation?SinghTo exemplify, in 2006, Indian Railways opened up privatisation of its freight corridors. DP World saw this as an opportunity to provide customers with service beyond our terminal gates. Hence we invested in a national licence, and today operate seven container trains from the northern hinterland to major gateways on the west coast under our DP World Intermodal brand.TulsianiInfrastructure projects such as roadways and railways have been proved to be viable. We focus on our core area of business and providing immediate connectivity such as the 269 km rail link and the 11 km road connection to NH8E.R AgarwalPort connectivity projects should be taken by government agencies as they will benefit from increased scale of the operation in terms of higher traffic through rail and road network on commissioning of these facilities. However, if a port has high traffic potential, a connectivity project may be viable on its own as it will increase the capacity utilisation at the port.VenkateshAs Kandla Port has adequate accumulated surpluses, there were no financial constraints or viability issues in implementing connectivity projects. Hence private participation was not found necessary in connectivity projects of our port.Do you believe the government has awoken to the connectivity needs of the ports?GandhiNo, the government has not fully woken up to the needs of the industry and its customers. There are sporadic improvements with long delays and red tape for improving connectivity. This is not the case with new private ports which are coming up and also not the case with certain state governments such as Gujarat and Tamil Nadu.SharmaSadly, the government is only half awake to this issue. While the right noises are made, very little firm action on the ground is visible to make a definite impact on the connectivity issue.NathA high-level committee has finalised the plan for improving rail-road connectivity to major ports within three years. Further, changes in customs procedures are being carried out with a view to reducing the dwell time and transaction costs. The government has also delegated powers to the respective Port Trusts for facilitating speedier decision-making and implementation, and simplification of security and customs is on the anvil as well.Policy direction is now oriented to encouraging the private sector to take the lead in port development activities and operations. FDI under the automatic route is permitted up to 100 per cent for port development projects; 100 per cent income tax exemption is available for a period of 10 years.VenkateshNational Highway and two broad gauge rail lines run till the gates of Kandla Port. Since the port had ample land under it, it faced no land acquisition or clearance issues.C AgarwalFour-laned national highways leading to the city should have connection to dedicated arterial wide roads to the port and not to be used for city traffic. Double line rail connectivity at all major ports should be implemented with large sidings and larger space envelopes to be factored in so as to harness increased volumes of cargo.The government needs to explore options of inland waterway connectivity in a manner to overcome the connectivity constraints. We also need to focus on reducing the cost of customer's supply chain.