Containerization – Role in Enhancing International Trade Competitiveness.

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Containerization – Role in enhancing International Trade Competitiveness. -H. Sanjit Singh
ASM’s IIBR

Abstract

Shipping is truly the lynchpin of global economy and international trade. More than 90% of world merchandise trade is carried by sea and over 50% of that volume is containerised. India has 12 major and 187 non-major ports along its 7517 km coastline. Cargo traffic handled by Indian ports in 2006-07 was 649 mt, of which 80 mt (6.0 mTEUs) was the container traffic. ` Trade growth, penetration of containerisation, and hub and feeder service structure are the drivers of the container traffic growth. India's export import growth has grown around 24 per cent during 2002-07. Its impact on container traffic growth could be higher, since a greater share of trade is moving towards finished goods requiring containerization. Presently, containerized cargo represents about 30% by value of India's external trade, and this proportion is likely to grow as containerization increasingly penetrates the general cargo trades and increases its share from the current 68 per cent to nearer international levels of around 75-80 per cent [World Bank, 2007]. Considering various growth scenarios and studies, it appears that international trade growth and penetration would result in 21 mTEUs by 2015-16.

Looking at the container traffic growth in the past few years, there seems to be scope for hub operations in India, possibly one each on the east and west coast. As per the projections made by a study of the Jawaharlal Nehru Port Trust, 9 mTEUs of the Indian traffic of 21 mTEUs will be hubbed in 2015-16 [JNPT, 2006]. If 50 per cent hubbing were to take place in India, then 4.5 mTEUs will be hubbed in India, implying transhipment handling of 9 mTEUs. This requires port handling capacity of 30 mTEUs, with 9mTEUs as transhipment at hub ports.

Further, shipping trends will play an important role in deciding whether the Indian ports have potential for hub operations. Hinterland connectivity is a critical area to ensure a seamless flow of containers and improved port productivity. Currently, 30% of the traffic is expected to move hinterland by rail and the remaining is expected to move entirely by road, mostly to nearby CFSs, and some to the interior Inland Container Depots (ICD) [PC, 2006]. There are also issues with respect to evacuation of containers from ICDs. There is a lot of road based congestion due to insufficient infrastructure. Interfacing with customs is another issue.

This paper focuses on issues in marine and port operations, hinterland connectivity, and ICDs; in short, the entire supply chain of container movement for building global trade competitiveness.

1.Introduction

India has 12 major and 187 non major ports along its 7517 km coastline. The compounded annual growth rate (CAGR) of container traffic in TEUs for the period 2001-06 was 15.1%, which is higher than the world's average for this period. Given the growing economy and international trade, a lot of future potential is seen in this sector. This however would be contingent on the maritime sector being equipped to take the challenges emerging from (i) large shipping vessels and deeper draft at ports (ii) hub and feeder operations at ports and along the coast respectively (iii) hinterland connectivity between port and Inland Container Depot (ICD)/Container Freight Station (CFS) and (iv) terminal development on ports and in the hinterland. Other issues relate to use of Information Technology (IT) and better systems to coordinate with bodies like customs and industrial location policy (especially with respect to Special Economic Zones (SEZs).

2. Objectives
i. To understand and map the current and future trends of containerization in India’s international trade. ii. To correlate the growth of containerization with other variables i.e., growth in International Trade (export-import) and growth in GDP

3. Hypothesis
With the current growing economic...
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