Kolkata Dock System-Agony Of A Riverine Port March 2018 issue

Kolkata Dock System-Agony Of A Riverine Port

West Bengal Chief Minister Mamata Banerjee’s recent visit to Germany to attract investments into the state created a lot of buzz and gave an impression that the state is looking to become more business friendly. As the situation of the port in a coastal city is one of the key parameters to judge the industry-friendliness of a state, The Dollar Business decided to do a ground reality check of the state’s leading port – Kolkata Dock Complex (KDS). And the findings were not very encouraging.

Niladri S. Nath | November 2016 Issue | The Dollar Business

Ki dekhte eshechen, dada, soonsan dock [What do you want to see here, an empty dock]?” That was quite an unexpected greeting when we arrived at one of the gates of Netaji Subhas Dock (NSD), an integral part of the Kolkata Dock System (KDS). It was an ominous start, but we decided to continue! And as we passed through the Circular Garden Reach Road – the key arterial road that connects Kolkata Port with other parts of the city and beyond – we began to realise that there was something amiss. After all, not a single container carrying trailer could be spotted on a stretch that faces traffic congestion every other day, or rather every day! And also a port with zero inward or outward container movement and a desert-like look was a hard-to-digest reality.

A few miles and a couple of conversations (with locals) later, we found that the scenario was basically the aftermath of a restriction imposed by the Kolkata Police on heavy vehicular movement on the road between 8 am and 10 pm. More probe into the reason behind the blanket ban dug out a discomfiting fact, which the city has been trying hard to forget. Apparently, since an influential personality had to go through the grind of navigating traffic snarl, someone or something had to bear the brunt. In this case, it was the business at KDS that took the hit.

Marked Distinction

From championing the cause of the British Empire as a holding port to one of the key gateways to India's eastern region, KDS has witnessed fluctuating fortunes through its history. Markedly, it’s the only riverine port in India and is located 203-km away from the sea.

Kolkata Dock System (KDS) comprises three docks – Netaji Subhas Dock (NSD) with 10 berths and Kidderpore Dock (KPD) with 18 berths, along with Budge Budge (BB) Jetties with six berths. Both KPD and NSD have a lock gate each through which the vessels ply. NSD currently has eight berths in operation (two aren't in operation), out of which five are reserved for containerised cargo and two are dedicated to the project and general cargo. And, while NSD has two dry docks, KPD has three dry docks.

The average draft at NSD is about 25 ft. The maximum dimension of vessels accepted at NSD is 565 ft. LOA (length overall) and 80 ft. BOA (beam overall i.e. the overall width of the ship measured at the widest point of the nominal waterline), whereas maximum dimension of vessels that can call KPD is 515 ft. LOA x 70 ft BOA. On the other hand, BB Jetties can accommodate vessels with dimension of 620 ft. LOA x 86 ft. BOA.

While NSD primarily handles containerised cargo, KPD handles break bulk. When it comes to BB Jetties, they have been dedicated for handling liquid bulk. “Kolkata being a city-based port, we focus on handling cargo that is not hazardous to the environment such as pulses, food grains, containerised cargo, over dimensional consignment (ODC) cargo, especially project cargo and wood logs at NSD and KPD. Vegetable oils and petroleum products are handled at BB,” explains S. Balaji Arunkumar, Deputy Chairman, KDS, Kolkata Port Trust(KoPT).

NSD is equipped with three mobile harbour cranes (MHC), and each MHC is capable of handling 20 containers per hour. All in all, it has three MHC berths and two non-MHC berths as of now. It is also bolstered with a towering 125 ft. tall cantilever crane that can handle 200 tonne of ODC project cargo.

In addition, NSD has five container freight stations (CFSs) – two privately owned by Century Ply and three government-owned ones (CONCOR, Balmer Lawrie and Central Warehousing Corporation). Another privately owned CFS is expected to come up soon.

Furthermore, the port authorities have a huge tract of land outside the port area, which they have leased out to companies like ITC, CONCOR and Balmer Lawrie on a long-term basis. To be specific, KoPT has 4,071 acre of land that has been rented out for industrial, residential and commercial purposes.

KDS services quite a vast hinterland comprising the states of Bengal, Bihar, Jharkhand, parts of Uttar Pradesh, Madhya Pradesh, Chattisgarh, Punjab, Hayrana, Rajasthan and some north eastern states. The Port also caters to landlocked countries like Nepal and Bhutan. However, cargo from Nepal now being routed to Visakhapatnam Port is a cause of concern for all stakeholders at the Kolkata Port Trust.

Numbers Don't Lie

As per Kolkata Customs (Port) data, KDS’s revenue has been growing steadily for the last five financial years – except in FY2015. Customs records show that KDS has generated revenues of Rs.4,379.21 crore in FY2012, Rs.4,825.75 crore in FY2013, Rs.5,377.65 crore in FY2014, Rs.5,194.93 crore in FY2015 and Rs.5,629.25 crore in FY2016. Notably, the figures are based on electronic data interchange (EDI) and don’t take into account manual entries. "There aren’t many manual entries these days," reveals a Customs official.

The increasing volume of cargo handled by KDS is also a testimony to its growing popularity. KoPT data reveals that KDS handled 16.688 million metric tonne (MMT) of cargo in FY2016, against 15.283 MMT in FY2015, thus, registering a growth of 9.19%. Interestingly, it's the highest ever cargo throughput attained by KDS. The dock system surpassed the previous high achieved in FY2015. According to the Port officials, the growth was driven mainly by a jump in imports cargo, particularly of engineering goods, electronic goods, edible oils, etc. Incidentally, KDS also achieved the highest ever container throughput of 5,77,749 TEUs in FY2016, recording an impressive growth of 9.39% over 5,28,166 TEUs in FY2015.

Fluctuating Draft

While getting a first-hand view of the Port and speaking to various stakeholders, we encountered the truth that lies beneath this growth story – KDS is gradually losing its competitiveness. This is happening due to several reasons; its unpredictable and fluctuating draft and the resultant effect on cargo movement being one.

Being a riverine port, KDS is dependent on high tide for smooth movement of vessels into the Port. Only when water level in the river rises due to high tide, can large vessels enter and sail out of the Port. Hence, correct draft forecast is very critical for a vessel to navigate the riverine channel to reach the Port. And because the Port also lacks regular dredging, ships have to wait at the sea-mouth for days to get the required draft. This adds to the operational costs and delays the cargo movement. “In this era of competitive and time-bound cargo movement, such delays are not at all acceptable. And because of this, Kolkata Port has become quite costly for both exporters and importers,” says Pinaki Sankar Ghosh, Vice President, Association of Shipping Interests in Calcutta (ASIC).

The low draft restricts bigger vessels from reaching KDS, and hence feeder vessels are employed to bring cargo to the Port from the main vessel. Besides, the distance from the sea also adds to the freight cost of the port user.

“Because of feeder vessel operations, the cost goes up by 20-25%,” says Ramesh Kumar Agarwal, Regional Chairman (Eastern Region), Federation of Indian Export Organisation (FIEO). A majority of the loaded export containers travel to Singapore and Colombo ports from KDS, as KDS acts as a feeder port to those bigger ports. The average cost to transport one 20 ft. container from NSD to the aforesaid destinations works out at $300-350, whereas from other ports, such as Chennai, Tuticorin or Visakhapatnam, the cost is $80-$120. “Such a difference always has a chain effect on the profitability of the business.However, businesses that operate in and around Kolkata have no option and they have to rely on KDS for shipping goods. And this is the only reason the Port is thriving. Otherwise, there is a lot to be achieved in terms of infrastructure, facilities and turnaround time,” feels Ghosh.

It however seems that exporters and importers in Kolkata have made peace with the situation, terming it ‘limitations of the riverine port’. “Cargo from KDS takes two weeks of additional transit time. You need to work on your production planning and shipment schedules accordingly. We have planned our operations to absorb the longer transit time,” shares Sumit Goyal, President (Operations) at Patton International Ltd., a Kolkata-based manufacturer and exporter of light engineering goods.

Congestion Woes

Interestingly, we also learnt that the term congestion is two-dimensional for KDS. The jarring sight of mountains of empty containers on both side of the road was the tell-tale sign of a bigger malaise.

Only 30-40% of the containers used in imports are pressed into service for exports and the leftover empty containers are placed in piles on the plots adjacent to the Port. This has given rise to black marketing of the land space available, with some unscrupulous agents even overcharging. And, not to say, this does not augur well for the business.

To prevent the situation from spiralling out of control, KoPT has, of late, allowed some shipping companies to take away the empty containers and send them back to Singapore. But this isn't a permanent solution.

Not long ago, a container terminal has been sanctioned in the Diamond Harbour region under PPP. Agarwal thinks the Port authorities should work on achieving a higher draft to accommodate bigger vessels to reduce freight cost, and obviously, container congestions.

Nonetheless, Arunkumar assures that KoPT has taken cognizance of the situation and is now planning to take charge of some empty plots and open them for container parking within a  few months.

Not to forget, the main arterial road – Circular Garden Reach Road – leading to NSD and KPD is also in a sorry state. The narrow width and large potholes slow down the pace of container-carrying trucks and trailers. What's even more worrisome is that the Port authorities don’t seem to have an immediate solution to this issue. And only time can tell whether KDS gets a separate lane for cargo. Hence, the question remains – where’s the end to the deadlock?

Sytem Hurdles

There are approximately 400 Custom House Agents (CHAs) working at KDS. However, most of them are unhappy with the operational efficiency and mindset of the Port personnel. “With umpteen interventions at various stages and unnecessary queries raised by the Port officials, clearance becomes a protracted affair,” complains Sudip Dey, a CHA who has been working at KDS for decades.

Sujit Chakraborty, President of Calcutta Customs House Agents' Association, too suggests that the Port should be more active towards safeguarding the interest of all stakeholders. “The Port authorities aren’t making concrete efforts to prevent ship liners from adding arbitrary charges, i.e. congestion charges, water surcharges, etc.,” he rues.

Walk The Talk

Undoubtedly, KDS needs to rise above the status quo, else this century-old Port will find itself losing cargo to Paradip and Visakhapatnam ports. Ghosh, from ASIC, feels that KoPT should walk the talk before it’s too late! “All major shipping lines such as Maersk Line, Mediterranean Shipping Company S.A., NYK Line operate from Kolkata, which invariably means business is there. But, KDS needs to serve all stakeholders in a cost-effective manner,” he suggests.

At the same time, one cannot disregard that KDS has challenges of its own. Past experience suggests that no major port has grown within the city limit, which is why, for instance, the Mumbai Port Trust had to build the JNPT (Nhava Sheva) Port. Also, the Port of London had to look at Tilbury and Southampton for expanding operations.

Perhaps the wind of change has started blowing through the Port, with the process of reclaiming the land outside the dock system and planning to lease it out. Sounds good! But then, in days to come, KDS will clearly be judged on two basic parameters – operational efficiency and cost competitiveness, factors on which KDS has been lagging behind when compared with other major ports.

From a strategic geographical location to the proximity to a commercially vibrant hinterland, KDS has what it requires to become a force to reckon with in future. All it needs is the right strategic direction. Is that too big an ask to save a major port? 

“Port Infrastructure needs to be improved”

Dr. N. K. Soren

TDB: Please give us an insight into the performance of Kolkata Port.

N. K. Soren (NKS): There is a general perception that Kolkata Port (Kolkata Dock System and Haldia Dock System) doesn’t contribute to the Customs revenue collection nationally. The Port is not usually labelled ‘a growing port’. However, being here as the Commissioner of Customs (Port) for one and a half year, I can say that, of late, in terms of revenue generation, the port has witnessed a significant growth.

In statistical terms, we have exceeded the target that was set by CBEC (Central Board of Excise and Customs) in FY2016. We have collected a revenue of Rs.9,100.24 crore against the target of Rs.8,365 crore. Growth has majorly been fuelled by the imports of edible oil, engineering equipment and other trading commodities.

TDB: Kolkata Port is the only riverine major port in India. What major challenges does it face today?

NKS: Being a riverine port, Kolkata Port requires continuous dredging to get rid of siltation and maintain the required drafts at berths. But, despite regular dredging, the situation hasn’t improved much. So, to counter this problem, the Port has begun transloading operations at Sandheads. This adds to the cost. Traffic congestion on the arterial road leading to Netaji Subhas Dock and Kidderpore Dock is another challenge. Recently, a restriction was imposed on heavy vehicular movement in the dock area between 8 am and 10 pm. The root cause of the prohibition is the poor road condition. To solve these issues, all stakeholders – including the port authorities, CFS operators, transporters and ship owners – should come together. The growth in trade would mean an increase in the number of container transport trucks. Hence, the infrastructure, especially the roads, need to be streamlined.

TDB: Brief us on the Customs Commissionerate’s efforts to accelerate Customs clearance at Kolkata Port?

NKS: Apart from introducing a robust and efficient EDI (Electronic Data Interchange) system, we have undertaken several measures to reduce the Customs officials’ intervention in assessment and examination. Under the risk management system, we have classified imported products because some products need either assessment or examination or both, while some require none. We have introduced self-assessment facility for importers and exporters to facilitate faster Customs clearance. Also, we have launched the Accredited Client Programme and Authorised Economic Operators’ Programme apart from introducing 24x7 Customs clearance.

TDB: Tell us about your initiatives to improve ease of doing business.

NKS: As per government directives, we have set up a Custom Clearance Facilitation Committee (CCFC), comprising representations from all stakeholders. The committee meets every month to discuss various issues related to the trade.
A Trade Facilitation Committee (TFC) was also set up, which is represented by various trade bodies, and it meets every month to discuss procedural issues and interpretations of rules and regulations. In addition, we have introduced a single-window system to enable importers and exporters to file documents at one place through the EDI system.


“Our containerised cargo volume is growing”

S. Balaji Arunkumar

TDB: What are the challenges that Kolkata Port is currently facing?

S. Balaji Arunkumar (SBA): I would say, dredging and lock gate constrain. Carrying out regular dredging is an expensive affair and the government is reducing the subsidy. In FY2016, only 85% of the subsidy was granted, thus, this financial year, we decided to cut the requirement from Rs.400 crore to Rs.240 crore. Alternatively, we have opened Eden channel, a new and shorter shipping route with a deeper draft to reduce the distance a ship usually travels to reach Haldia.

Lock gates in Netaji Subhas Dock (NSD) and Kidderpore Dock (KPD) are more than 100 years old. Such is the width of lock gates that bigger vessels with longer beams and lesser drafts can’t enter the port. However, there are other riverine ports in the world which are accessible for vessels with longer beams and shorter drafts. Even if we expand the lock gate or improve the infrastructure, large vessels won’t be able to reach the port because of the sharp turns on the way to the port.

TDB: What initiatives are you taking to develop infrastructure that can cater to future demands?

SBA: We’re investing Rs.48 crore to improve the KDS Railway, to make the container movement faster because the existing railway system has witnessed several derailments – currently, Rites Ltd. is managing the project.

We have also requested our contractor, Bharat Kolkata Container Terminals Pvt. Ltd., to invest in NSD's berth No.3 and turn it into an MHC (Mobile Harbour Crane) berth. Currently, we have three MHC berths, so if that happens NSD will have four MHC berths in total. One MHC berth can handle 20 containers per hour as compared to 14 containers per hour by a non-MHC berth. Hence, the efficiency will definitely increase. Also, we are investing another Rs.15.5 crore on improving warehousing in KPD to handle grains in a more efficient manner.

To ease the traffic congestion on the road, we have proposed a flyover from Netaji Subhas Dock to the Second Hooghly Bridge. NHAI (National Highways Authority of India) is ready to take up the project. What we need now is permission from the defence authorities.

TDB: What target has Kolkata Port Trust set for itself, in terms of cargo handling in current financial year?

SBA: Our cargo handling target for the current financial year is 60 million tonne. Well, we hope to reach 55 million tonne – the best part is that the volume of containerised cargo is growing here. Compared to the first four months of the previous financial year, we registered 19% growth in containerised cargo during the same period this financial year. Also, we are working towards improving the average turnaround time.

TDB: What’s the status of the proposed Sagar Port?

SBA: The cabinet committee has approved the project, but the approval is subject to various conditions. However, developing the connectivity to the Sagar Port has to be prioritised first. The state government has not yet officially announced that they will not develop a port in a nearby location. However, there are reports that the Bengal government is planning to set up a port in Tajpur. And, if that happens, Sagar Port will lose its relevance and viability.


“KoPT has to play a more proactive role”

Sujit Chakraborty

TDB: What major issues do exporters, importers and Customs House Agents face at NSD and KPD?

Sujit Chakraborty (SC): The empty container congestion is one of the key issues for all of us at the docks. Although we work for 18-20 hours a day, we are unable to reduce the congestion. The port authorities have recently given permission to allow ship liners to take away the empty containers, as these containers unnecessarily occupy space in and outside the port area.

In fact, Kolkata Port Trust (KoPT) should reclaim its land, not only to unclog congestion but also to earn revenue. Kolkata Customs authorities have risen to the occasion by allowing parking of loaded containers for exports at their notified areas in Kidderpore Dock (KPD).

TDB: What measures can the authorities take to smoothen Port operations?

SC: In sync with the government initiatives such as ‘Digital India’ and ‘Ease of Doing Business’, we have urged KoPT to lessen human intervention in various processes to reduce the scope of corruption and the transit time. If we do not cut down on costs and time, our importers and exporters will not able to compete in the global market.

At present, the turnaround time at the Port is quite high, and at times, it can run into several days. The Port needs to enhance its procedural
efficiency to remain competitive.

TDB: According to you, what steps should KoPT take to improve the infrastructure in and around the Port?

SC: Given that Kolkata Port is a city-based and riverine port, its infrastructure leaves a lot to be desired. I think the authorities should invest in infrastructure development judiciously. Well, I have used the word ‘judiciously’ because the Port authorities have spent substantial amounts on construction works in KPD that lacks significant cargo movements.

The Port should also pay attention to improve the condition of the main road, which plays a crucial role in adding momentum to the cargo movement. In fact, we have recently proposed that KoPT should set up a dedicated goods corridor with temporary fencing. Traffic congestion at Sandheads is another issue and because of this exporters are not able to connect to the vessels

TDB: What are your expectations from Kolkata Port Trust?

SC: Kolkata Port Trust (KoPT) has to play a more proactive role, just like the way Customs have been streamlining, improving and upgrading their systems to accelerate the processes and remove the bottlenecks. Otherwise, there will be a huge mismatch in operational efficiency between the two. KoPT also needs implement the Port Operations Management System (POMS) and increase the container handling equipment at the port.

And above all, the mindset of the personnel working in the Port needs to change. They need to stop raising unnecessary queries on consignments, which invariably delays the entire process. Most importantly, it’s in the interest of the industrial and economic development of the region that Kolkata Dock System (KDS) is kept alive. We, the Customs House Agents, are trying hard to promote and market the Port to attract business. But, we need the Port’s support to achieve our goal.

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