The primary issue in Indian shipping continues to be the state of the nation's ports. Investment in the 12 major state-run facilities has not kept up with the demand engendered by the rapid economic growth experienced in India over the past decade. This is leading to repeated issues of congestion in the ports; investment is now being made, but this may be a case of too little, too late. Further, Indian ports' troubles are being compounded by a fall in demand in the eurozone, which has contributed to a fall in container throughput at many facilities in recent months.
Headline Industry Data
- 2013/14 Port of Kandla tonnage throughput forecast to grow by 6.2%. Over the medium-term forecast period to 2017/18, growth will average 7.3%.
- 2013/14 Port of Jawaharlal Nehru container throughput forecast to contract by 5.1%, and to average 3.7% growth per annum to the end of our forecast period.
- 2013/14 trade real growth forecast at 5.3%, and to average 8.1% to 2016/17.
Key Industry Trends
Private Port Becomes Country's Largest: In the culmination of a trend that BMI has been following for some time, the Indian port with the greatest throughput in the first quarter of the year (Indian ports' financial years run from April 1 to March 31) is for the first time a privately operated facility; the Adani-run port of Mundra has overtaken the state-run port of Kandla in its Q1 throughput. Given the issues facing the older facilities, we believe that the newer, private ports will continue to grow at their expense.
MSC Reflags To Gain Transhipment Trade: The Indian container shipping market sector endured a tough year in 2012/13 (ended March 31 2013), with volumes at most box-handling facilities having declined. Despite the dip in throughput last year we remain bullish with regards to the medium- and longterm growth prospects for Indian container volumes. In light of this we believe that other liner firms will follow Mediterranean Shipping Company (MSC)'s tactic of flagging vessels to India in order to get by restrictive cabotage rules and gain access to the transhipment market.
Nissan Signs Port Of Ennore Car-Handling Deal: The Indian unit of Japanese carmaker Nissan has signed an agreement with the Port of Ennore. The agreement will see the company manage the port's car exports. The arrangement has a 10-year duration and will see the company ship at least 60,000 cars annually, in exchange for traffic concessions, free parking at the port's automotive facility and cargohandling priority.
Key Risks To Outlook
At present the key risk to our short-term throughput forecasts for India's ports, particular in terms of container handling, comes from the eurozone. The currency bloc is forecast for another year of recession in 2013, which could impact on India's exports as it did the previous year.
The key risk to our medium-term throughput forecasts for India's ports continues to be the problem of congestion at the state-run major ports. Any further bans on dusty cargos at major ports would also impact on our outlook.