More problems lie ahead for Jawaharlal Nehru Port Trust

Jawaharlal Nehru Port Trust’s managers believe that it is unfairly being called inefficient. And they may be right. Part of the problem confronting JNPT is that it is still bound by government regulations.

It cannot be efficient because government regulations do not allow it to be.

First, being a government port, it could not purchase all the cranes it needed at one go. It had to buy one set of cranes, then go in for bidding a year later, and pick up the next set of cranes and so on. The result: it had to wait longer to get the cranes it wanted. It also ended up having dissimilar cranes from different manufacturers, which made the job of maintaining them more complicated and expensive.

It also resulted in crane operators spending a lot more time getting used to another crane after they got used to one type of crane. Finally, the cranes that Jawaharlal Nehru Port container terminal (JNPCT) had were of 28 metres height, compared with 30 metres at Nhava Sheva International Container Terminal NSICT and 38 metres at Gateway Terminals India, or GTI.

More the height, the lesser is the need for the crane to move aside for the ship to get berthed. A shorter crane needs to be moved aside, so that the ship can be docked, and then the crane can move in and pick up the containers. This results in the number of crane moves per hour slowing down.

GTI and NSICT have all cranes of the same make and big enough to handle large post-Panamax-sized vessels. And their cranes can lift two containers at a time, while JNPCT has just two cranes of the twin lifting type.

What really hurts JNPT was that three of its eight cranes were purchased in 1989 and have already outlived their expected lifespan. Incidents of breakdowns are frequent. That is why it has now placed an order for four more cranes (each crane costs around `100 crore). “The old cranes will be moved to the shallow berths which are used for bulk and break-bulk cargo,” says a senior manager.

An email sent last week to JNPT’s chairman requesting a comment on the crane rate and berth productivity data remained unanswered. According to this source, “The first of the new cranes will arrive anytime now, and the other three by March 2011. That will allow us to improve our performance parameters.”

Poor cranes also adversely affected the berthing rates. “When the financial meltdown took place,” says one port official, “most ship owners became more worried about turnaround time. Each ship was expected to complete more trips during the month than before. Hence, even though JNPT’s own charges are much lower than those charged by its next-door competitors, the turnaround factor went against it.” He is confident that by 2011, the lower charges and better turnaround will result in substantial improvement in business. “Already, aware of our order for the new cranes, enquiries for bookings have begun for the next year,” adds another JNPT manager.

“Moreover, it is good to have competitive partners - and this is where the PPP (public-private-partnership) model has worked,” adds the official. It is easier to persuade our workforce to improve their productivity when we have higher benchmarks provided by our private sector partners. Our workers are excellent, but having benchmarks always helps.” With the new cranes, and a buoyant economic environment, JNPT hopes to earn more from operating its terminal than it did before. But with volumes for 2010-11 indicating a decline, it is doubtful if this optimistic outlook has helped.

There are other reasons which suggest that JNPT could be in for more rough weather.

First, its expansion plans are in trouble.

Attempt to begin work on the fourth terminal is being disputed in courts. Even if this plan gets cleared, it could pose more problems for JNPT because the fourth terminal was meant to cater to business coming from the Dedicated Freight Corridor (DFC). Unfortunately, because of the lack of work done by Maharashtra, the first phase of the DFC will end at Vadodara.

This is expected to be completed by 2017. Work on the second phase could end sometime in 2020. This means that the fourth terminal will remain inoperative or poorly utilised as JNPT does not have enough railway lines to bring in goods and evacuate them. Even as of now, with just three terminals, there is a waiting period of as much as one month.

Second, much of the business that JNPT could have got is moving to new ports like Mundra. Already Maruti, which earlier had plans of using JNPT for its exports, has now begun using Mundra. Ditto with Tata Nano and the proposed Honda plants.

Third, a lot of business that could have been taken up by GTI is likely to go to Pipapav. This is because while JNPT charges GTI a royalty of 35.5% per annum, Gujarat Maritime Board charges Pipavav a royalty of just 5%. Both Pipavav and GTI have a common operator — APM. Thus it is in APM’s interest to get its liner operations (Maersk) to move all goods meant for North India to Pipavav where it has excellent rail and road linkages, and pay a lower royalty, which could translate into more competitive offers from that port. That is business that JNPT could have got, but now will not.

Fourth, rail lines to and from JNPT are choked, and this causes much of the delay. Turnaround times for vessels are longer at JNPCT than at GTI, NSICT, or any of the private ports across India.

Unless JNPT pulls up its socks or the government gives it a free hand to become more competitive and commercially responsive, JNPT should actually learn to be content being a landlord, not a port operator.