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            october 16, 2019

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Cargo growth at major ports slips further y-o-y


Concerns over cargo performance at major ports (India) intensified with 2% yoy degrowth being registered in volumes to 135 million tonnes in the period Oct-Sep 2012 (Q3 FY 13). While on a qoq basis volumes were up by 2%, given that Q3 is generally a period of high cargo activity in the Indian port sector, the growth rate was quite modest. Cumulatively for the period Apr- Dec 2012 (9M FY 13), total cargo at major ports has aggregated 405 million tonnes, 3% lower than the volumes in the same period last fiscal. 
On the regulatory front, efforts to free major ports from tariff jurisdiction have picked up in the recent past with the MoS deliberating major policy changes in order to improve the investment climate and speed-up the pace of capacity expansion at major ports. If this comes through, it could be a major regulatory shift for the sector and could bring significant upside to major port entities and terminals operating therein.  
There is a favorable development in the port sector with increased pace awarding projects, however, the plethora of execution challenges which continue to plague the Indian port sector, the actual translation of these to capacity and improvement of operating standards is still expected to be a long drawn affair. In terms of new project awards, while the progress was lackluster upto H1, there has been a pick-up in activity level in H2. As per Ministry of Shipping (MoS), 22 projects (PPP + non PPP) have been awarded thus far and the Ministry is striving to achieve its target of 42 projects as identified by the PMO by the close of the fiscal. In what may be taken note of as another favourable development, a new security clearance policy has been framed by the MoS to ensure time-bound security clearances for port projects and operators.  
In port services sector, container train business has come under some pressure in the recent past due to the twin effect of steep hike in haulage charges by the Indian Railways entailing a cumulative increase of 31% in two tranches- Dec 2012 and February 2013. With moderation setting in the exim container cargo movement and the already low competitiveness vis-à-vis road movement affecting prospects in domestic container movement, the recent hike in haulage charges has further made the operating conditions tough for container train operators. 

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