The Kerala Ports Minister, Mr K. Babu's recent statement on constituting a State maritime board and the Government prioritising the revival of coastal shipping is set to pave the way for a better mode of transportation.

The Kerala Government, of late, has identified the port sector as a major thrust area to promote industrial activity. The Minister's announcement of promoting coastal shipping to help decongest roads in Kerala is an indication in this direction. The Government is also encouraging private sector participation, recognising the need to develop the ports in a time-bound manner.

The action plan

A workshop organised to discuss the report on an action plan for coastal shipping in the State of consultant Deloitte Touche Tohmatsu Pvt Ltd included all the stakeholders of coastal shipping in Kerala.

The key issues that are hampering the development of coastal shipping in Kerala are the lack of port and related infrastructure, absence of efficient material handling equipments, and difficulties in getting finance for the shipping companies. The consultant has suggested remedial measures such as creating basic minimum port and related infrastructure at select ports, devising an incentive framework, and Government's support. The consultant pointed out that coastal shipping service providers are reluctant to operate regular services due to the absence of fixed cargo volume.

To overcome this, the Government should consider providing a guarantee for minimum throughput so that certain shipping service providers can operate regular services. The central and PSU cargo can easily be diverted to coastal shipping if decided by the Government.

Lack of adequate infrastructure and absence of efficient cargo operation discourage coastal vessels from calling at ports. Besides, most non-major port locations are constrained for adequate storage space, goods shed and processing centres, Customs area, CFS, and vehicles transit areas, all of which are needed to facilitate smooth operations.

Dr Jacob Thomas, Director of Ports, told Business Line that the department has provided facilities, including possible draft in basins in six non-major ports, and now it is up to the shippers to use and demand more facilities, which is a sure way for coastal shipping to grow, thereby reducing congestion on State roads.

If this initiative is supported by business and shippers with equal enthusiasm and commitment, he said, cargo transportation in Kerala can be largely diverted to the surface mode within a year and the State may not need wider roads and new bypasses. The State is transporting most of its requirements through road. If the transport is through water, the prices of essential commodities will come down by at least 15 per cent, he said.

Creating awareness

However, a concerted awareness creation among the business community and civil society is the first step to promote coastal shipping in Kerala, which is what the Ports Department is pursuing. The department has already organised workshops in Kochi and Kollam, and one is being planned in Kannur shortly.

Dr Thomas also called upon the business community to utilise the facilities at non-major ports for cargo movement as a ‘corporate business responsibility'. Draft issues in some non-major ports can be addressed by carrying out lighterage operations, he said.

Once the first step is taken by the business community and shippers , he pointed out that demand will certainly bring facilities to non-major ports, especially in the context of Kerala Maritime Board, being set up, facilitating speedy decision-making.

He was of the view that the business community is still reluctant to use the facilities at Kollam port despite facilities. The Kollam port handled only three ships during the last 20 months, especially when huge quantities of raw cashew were imported from African countries by the trading community in Kollam. At present, these cargoes are handled at Kochi and moved to Kollam by road. These cargoes can be attracted to Kollam port at cheaper rates by coastal transport, easing congestion on Kochi-Kollam National Highway, he added.

Cutting costs

The consultant pointed out that as coastal shipping competes with road transport, for which diesel is subsidised, a prudent move would be to do away with the duties on bunker oil to make coastal shipping more economic.

Coastal ships, unlike ocean-going vessels, have to pay duties on bunker oil. Given the situation, the Government should consider VAT relaxation on fuel for coastal ships. Likewise, service tax exemption of 75 per cent of the freight, similar to transportation of goods by road, should be considered for coastal shipping.

The Government, according to the consultant, can co-fund start-up coastal ship services. Coastal shipping services will have long gestation periods to break-even. There have been cases when shipping companies which forayed into costal shipping had to be shut down due to non-viability. If the Government provides cargo support, the operations will become self-sustainable and commercially viable. This will attract more players to the coastal shipping sector.

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