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Come August and East India may see a first-of-its-kind initiative in the zone, when the automakers will start transporting cars through the coastal shipping route.
The Kolkata Port Trust (KoPT) is in advanced stages of talks with the Korean carmaker Hyundai to handle 500 cars per consignment via the maritime route, whereby the port will help the car company unload huge volume of cars at one go.
In this endeavour, after several rounds of talks between KoPT and Hyundai, the port authorities have drastically brought down the port charges (wharfage rate) from Rs 2,796 per car to only Rs 700.
"Talks are on with the company as well as other carmakers who have plants in South India. We hope, by the first week of August, KoPT will handle the 500-car consignment," a senior official at KoPT told Business Standard requesting anonymity.
These cars will be loaded from the Chennai dock on a Ro-Ro (Roll On-Roll Off) vessel to land either in Kolkata or Haldia port from where they can be further distributed to their respective destinations.
The Chennai port has also announced a flat wharfage rate of Rs 500 per small car and Rs 2,000 for big cars, besides reducing the wharfage for Ro-Ro vessels by 40 per cent to promote maritime routes. The Kolkata port authorities are also in talks with Ashok Leyland and Honda for the same model.
According to the official quoted earlier, these companies are adopting a wait and watch policy to first analyse how the Hyundai consignment works out. KoPT has kept the wharfage for trucks and other lorries a little higher at Rs 2,000 per vehicle. The official said KoPT has enough space as well as infrastructure, and has already done a viability study for the project to unload 500 cars at one go.
However, this is not the first time that KoPT will be handling such an initiative.
"We have been unloading 150-175 cars per month from maritime vessels, which are sent to Nepal. So, we already have prior experience in this field", the official added.
Sources in the industry said Maruti Suzuki is also thinking about using the country's waterways to transport its cars from its plants in Haryana.
"They are in talks with Inland Waterways Authority of India, where cars will be shipped from its factory through the river waterways and brought till Varanasi. Thereafter, these will be loaded into barges and brought to either Kolkata or Haldia for re-distribution", the person aware of the development said.
According to port official estimates, transportation of cars in bulk through the maritime route against roads is 25-30 per cent cheaper.
It will become further viable, with the central government planning a Rs 3,000 incentive for the carmakers to transport cars via seas. According to another KoPT official, although such cargo movement via the maritime route takes more time, more cars can be transported at one go, which reduces the logistics cost. It also helps in reducing the traffic congestion on highways, besides bringing down the carbon footprint.
"Promotion of such trade will also help in increasing the port's revenue, but it is too early to calculate the income potential", he said.
While the automotive majors are ready to use coastal shipping, cost and return cargo continue to be the major challenges.
A senior official from a logistics company, who offers end-to-end logistics solutions, said coastal shipping is not financially viable since there are multiple handlings.
For instance, it takes minimum five days to reach the dealers in Gujarat from the Chennai factory, whereas by truck it takes only two days.
These factors push the cost, which is not compensated by the incentives given by the ports as wharfage and others.
Another major problem is return cargo from the destination point, which means ships sailing from Chennai to the western and eastern ports have to come back empty, which is a drag on the operational expenses. Young Key Koo, Hyundai Motor India's managing director and chief executive officer said the company is waiting for the government to give some benefits.
"If we have good benefit and advantage, we will dispatch more by ships to Gujarat and other states. We are talking to the government for benefits. We need financial support from the government".
Rakesh Srivasthava, senior vice president - marketing and sales at Hyundai Motor India added the key part is pricing, which is on the expensive side now.
Guillaume Sicard, president of Nissan India's operations, agreed that coastal transportation has a huge potential in India since the country is blessed with a large network of waterbodies. However, the concept of waterways in India is still at a nascent stage and may take a few years to be a competitive alternate source of transportation.
"We are hopeful the proposed plan by the government in the long run would iron out the logistical challenges of auto manufacturers in Chennai," said Sicard.
Back in February this year, Hyundai had sent across 800 cars via a Ro-Ro vessel to Pipavav in Gujarat from where it was redistributed in the west Indian market. The trip, which lasted for five days, had cost around Rs 1.50 crore, of which Rs 37,00,000 accounted for port charges.
During April-May 2016, KoPT handled 1,25,101 TEUs (Twenty-Foot Equivalent Unit) of container traffic, as against 96,326 TEUs in the same months last year, registering the highest growth of 29.87 per cent among all the major ports in the country. It also handled 564 ships, which is the highest in the country in this timeframe.
Kolkata port set to start coastal shipping of cars | Business Standard
The Kolkata Port Trust (KoPT) is in advanced stages of talks with the Korean carmaker Hyundai to handle 500 cars per consignment via the maritime route, whereby the port will help the car company unload huge volume of cars at one go.
In this endeavour, after several rounds of talks between KoPT and Hyundai, the port authorities have drastically brought down the port charges (wharfage rate) from Rs 2,796 per car to only Rs 700.
"Talks are on with the company as well as other carmakers who have plants in South India. We hope, by the first week of August, KoPT will handle the 500-car consignment," a senior official at KoPT told Business Standard requesting anonymity.
These cars will be loaded from the Chennai dock on a Ro-Ro (Roll On-Roll Off) vessel to land either in Kolkata or Haldia port from where they can be further distributed to their respective destinations.
The Chennai port has also announced a flat wharfage rate of Rs 500 per small car and Rs 2,000 for big cars, besides reducing the wharfage for Ro-Ro vessels by 40 per cent to promote maritime routes. The Kolkata port authorities are also in talks with Ashok Leyland and Honda for the same model.
According to the official quoted earlier, these companies are adopting a wait and watch policy to first analyse how the Hyundai consignment works out. KoPT has kept the wharfage for trucks and other lorries a little higher at Rs 2,000 per vehicle. The official said KoPT has enough space as well as infrastructure, and has already done a viability study for the project to unload 500 cars at one go.
However, this is not the first time that KoPT will be handling such an initiative.
"We have been unloading 150-175 cars per month from maritime vessels, which are sent to Nepal. So, we already have prior experience in this field", the official added.
Sources in the industry said Maruti Suzuki is also thinking about using the country's waterways to transport its cars from its plants in Haryana.
"They are in talks with Inland Waterways Authority of India, where cars will be shipped from its factory through the river waterways and brought till Varanasi. Thereafter, these will be loaded into barges and brought to either Kolkata or Haldia for re-distribution", the person aware of the development said.
According to port official estimates, transportation of cars in bulk through the maritime route against roads is 25-30 per cent cheaper.
It will become further viable, with the central government planning a Rs 3,000 incentive for the carmakers to transport cars via seas. According to another KoPT official, although such cargo movement via the maritime route takes more time, more cars can be transported at one go, which reduces the logistics cost. It also helps in reducing the traffic congestion on highways, besides bringing down the carbon footprint.
"Promotion of such trade will also help in increasing the port's revenue, but it is too early to calculate the income potential", he said.
While the automotive majors are ready to use coastal shipping, cost and return cargo continue to be the major challenges.
A senior official from a logistics company, who offers end-to-end logistics solutions, said coastal shipping is not financially viable since there are multiple handlings.
For instance, it takes minimum five days to reach the dealers in Gujarat from the Chennai factory, whereas by truck it takes only two days.
These factors push the cost, which is not compensated by the incentives given by the ports as wharfage and others.
Another major problem is return cargo from the destination point, which means ships sailing from Chennai to the western and eastern ports have to come back empty, which is a drag on the operational expenses. Young Key Koo, Hyundai Motor India's managing director and chief executive officer said the company is waiting for the government to give some benefits.
"If we have good benefit and advantage, we will dispatch more by ships to Gujarat and other states. We are talking to the government for benefits. We need financial support from the government".
Rakesh Srivasthava, senior vice president - marketing and sales at Hyundai Motor India added the key part is pricing, which is on the expensive side now.
Guillaume Sicard, president of Nissan India's operations, agreed that coastal transportation has a huge potential in India since the country is blessed with a large network of waterbodies. However, the concept of waterways in India is still at a nascent stage and may take a few years to be a competitive alternate source of transportation.
"We are hopeful the proposed plan by the government in the long run would iron out the logistical challenges of auto manufacturers in Chennai," said Sicard.
Back in February this year, Hyundai had sent across 800 cars via a Ro-Ro vessel to Pipavav in Gujarat from where it was redistributed in the west Indian market. The trip, which lasted for five days, had cost around Rs 1.50 crore, of which Rs 37,00,000 accounted for port charges.
During April-May 2016, KoPT handled 1,25,101 TEUs (Twenty-Foot Equivalent Unit) of container traffic, as against 96,326 TEUs in the same months last year, registering the highest growth of 29.87 per cent among all the major ports in the country. It also handled 564 ships, which is the highest in the country in this timeframe.
Kolkata port set to start coastal shipping of cars | Business Standard
