Sir, let me begin this conversation with a very obvious question of Covid-19 pandemic on the port operations. As per the recent information released by Indian Ports Association, the major ports traffic volumes have been hit. Of course, every port is in that same scenario, Chennai Port has seen a 17% drop in volumes. How is the rebound happening and what is the current scenario at the Port?
Before lockdown itself all the ports have been undertaking measures for handling ships from countries affected by COVID. Detailed SOPs were released and all ports were following the instructions of Ministry of Health and Family Welfare, Ministry of Shipping, DG Shipping. All the ports have ensured smooth handling of ships and operations remained unaffected by lockdown. In the initial months from March to August we had serious effects on the business, especially during April, May, June, there has been decrease of about 20% among all the major ports, and in Chennai especially the impact has been slightly more. We were down by 30% during that period. Mainly because, our product concentration is containers and POL; both were seriously affected and after that in July, August, the decline has been low and we are seeing rebound in business September onwards. In total cargo, we are at almost the same level as last year, slightly above also. In containerised trade there has been positive growth from September onwards.
Our containerised trade grew by 15% this September over same period last year and that trend is good. As on date, we are 11% more than last year in containers, especially in the last 3 months, and particularly in December the trend is good – we are almost 17% more. I think rebound is happening at a good pace and by this financial year end, we should be able to wipe off most of the losses what we incurred. Financial year 2022 should be really good for the port as well as for the country. It is really heartening to note the rebound in the container sector.
COVID-19 also offered some positive opportunities like recently we have seen congestion at some of the transhipment hubs, especially in Colombo. I believe Indian ports can take advantage of it and increase transhipment volumes at our ports, especially in Chennai port. Even CONCOR has come forward to evacuate transhipment cargo. So, how is the port positioned to take advantage of this?
The cooperation between CONCOR and Chennai Port has been really good over the years, and I would like to mention the excellent work done by port and Concor together during the COVID time. During COVID time we didn’t want to refuse any ship and we didn’t want to reduce the pace at which ships were being handled. Road movement was really affected, at least for few days, it was not there, after that with all efforts from all the stakeholders, it has started. The CFSs were flooded with containers as whatever had been moved there was not getting cleared. So, during that time we immediately started the movement.
We have one extended gate facility in CONCOR’s premises at Tondiarpet yard. It is about 10 kilometers from our port and we use it for moving DPD containers for specific customers. This facility has come in handy for us during the COVID times. We have started en-block movement of import containers by train and Concor has helped in this movement by not charging any ground storage for 30 to 45 days. So, the customer was also not affected that much. We have moved about 180 trains during the couple of months and more than 10,500 containers have been moved there. Whenever there is a congestion we are trying to encourage people to take this course of rail movement. I think more and more people should come and start using this whenever a customer feels DPD facility can be used and they can have flexibility in keeping the containers.
Based on this success the port is looking for creating certain more extended gate facilities which will have rail connectivity. We are in talks with Southern Railways and we have identified a location about 200 kilometers from Chennai towards Bangalore because main hinterland is Bangalore and North West Tamil Nadu, Bangalore region, Hosur, Tumkur, Bidadi of Karnataka and Chittoor in Andhra Pradesh. We have done technical and commercial feasibility study to locate an extended gate facility. We are in talks with railways. Soon we will be coming up with a plan for creating an extended gate rail facility where we can do en-block movement of containers from where these people will pick up the containers, and export containers will be collected there. We will provide a window time wherein you bring the container at that particular time and we will connect to the required ship. That sort of a customer-specific solution we are planning to give taking the help of the terminals, railways and container train operators. This, we will be announced soon.
In the same context, I think port has also an understanding with Shreyas Shipping for exim cargo transhipment. So, how is it going?
We have done one study through McKinsey about the transhipment happening for Indian cargo in foreign ports. 40% of our cargo is handed there except JNPT, many of the East Coast ports cargo is handled in Colombo, Singapore, Dubai or Malaysia. So, there have been lot of discussions and we found on the eastern coast, Chennai is ideally positioned because of the mainline calls and the mixture of gateway traffic as well as some of the transhipped cargo, we would be in a better position in case we get some coastal services started on the east coast. We will take the advantage of mainlines calling here. This, we have been talking to mainlines as well as the coastal shippers, and the talks with Shreyas has really resulted in good dividends.
From July we started this service. We have entered into an agreement and announced a special concession for the ships which are bringing transhipment cargo feeding Chennai port as well as the exim vessels which will take these containers. We have designed a special concession scheme which has attracted them. After signing up agreement on 30th June, July onwards we started getting services. We are having 3 services, two of coastal and one of exim and other two services which the coastal services connect from Vizag, Paradeep, Kolkata, Haldia, Chittagong to Chennai. From here, these containers go abroad to different destinations. Certainly, these containers were going to Colombo or Singapore earlier. This reduces the cost for the end customer, and our handling in a small way has increased. Every month, we are doing 10,000 plus containers in this. I am sure more and more services will start coming in. In the light of this, what you mentioned about the Covid and other problems at Colombo, the opportunity is in these ports. We are also looking at that.
You know our subsidiary port Kamarajar Port Limited has also got a modern container terminal. There we started getting mainline services which were hitherto going to Colombo. They have started coming and with these main lines Kamarajar Port is in discussion for offering tailor-made solutions. I am sure, they will also start sticking to this port not only during this COVID time but even after that. That is really looking good in this eastern corridor both for Kamarajar Port as well as Chennai port and we are really looking for more and more people to come and join this successful trial what we have carried out so that more and more containers can be transhipped here within the country of all the gateway traffic of India.
It is heartening to see all these proactive steps towards improving the volumes at the port. Sir, in your efforts to improve ease of doing business at the port, you have planned for an Enterprise Business System (EBS). So, how does it help the customer and what is the timeline that you have to put it in place?
These digital solutions to make things easy for customers have been a priority for us and our honourable minister of shipping has also prioritised it. Over the past few years some initiatives have already been commissioned. Let me trace back; Chennai Port was the first port to start the RFID system. This was a joint effort by CFSS, terminals, port and Customs. In 2016, we started one RFID which has removed the necessity of bringing physical papers to the terminal so that the movement and information about containers are transferred digitally between Customs, CFSS and the terminals. Following that, the PCS, Port Community System upgradation has been taken up centrally by IPA. All the ports have participated in that. Now, PCS 1X improved version has been released.
Almost all the stakeholders who have to be connected have been brought onboard this PCS platform, and Chennai Port has taken a lot of effort in bringing all the stakeholders like steamer agents, CHAs, CFSs, and other stevedores onboarded the system. This is the right time our system is also totally digitized and merged with all these systems so that there is seamless experience for the customer. In this direction, this Enterprise Business Solution has been taken up and IPA has taken up this as a centralized project for serving 6 ports – Kolkata, Haldia, Paradeep, our port and Mumbai, Deendayal Port. Totally about 6 ports have been included in this. I am happy to say that Chennai port is leading in implementation and we are almost through and I am expecting it to be live this December itself.
Tentatively, I have fixed myself target of going online on 29th December. Once this is done, I think all the other ports will follow in few months in 2021. So, what this system will enable is seamlessly we will be connecting to PCS and other terminal system, customs and Indian Railways. All the modules will come up.
Already we have commissioned one RFID-based automated harbour entry permit system. In the last one year nobody came to my office to get a pass. Our pass office is almost closed and everything is now online, people can print their pass, take the pass on their mobile, come to the gate and get entry. So, this has been made very easy now. Unnecessary documentation will be avoided. If there is documentation, there is delay, and when there is delay and lack of transparency, people get lot of doubts on the service. So, all those things will be removed, and I am sure the cycle time of each process within the port, internal processes, all will come down. This will really give value to the customer. By December, Chennai Port will go online in all probability. I think this will be a real new experience for the people for the financial year 2021-22.
Truly, if it becomes operational by end of this month, you have a New Year gift to the Chennai Port users. So, let me take you to the competition part of it. As it is, Chennai Port has lot of competition around it and if the Major Ports Authority Bill is implemented, I think further competition will set in. Apart from whatever steps you are taking in terms of building the efficiency of the port, what is your strategy to take Chennai Port ahead of this competition and then still remain very user-friendly port for the trade?
If at all any port is facing competition, Chennai Port will be number 1 in that. Maybe 10, 15 years back Chennai Port had hinterland. The same hinterland is served by at least 5 ports in this region. So, that way competition is there, and I feel competition is good so that it makes us to think differently and find out ways and means to survive and grow in these circumstances. At the strategic level, you must be knowing that we have bought Kamarajar Port Limited. This March, we have completed the process. This was one strategic decision. First thing is that there is no unhealthy competition between two public entities and there are certain advantages in Chennai, while Kamarajar Port also has certain advantages.
Kamarajar Port was created by Chennai Port about 20 years back as a satellite port because Chennai Port was not able to handle certain types of bulk cargo as it is located within the city. That was the idea with which that port has been created. The same logic holds good today.
So, our strategy here is to make sure that our operations become cost-effective, reduce their costs so that we can reduce the rates and we keep our customers here. For expansion, for giving value in terms of handling bigger ships, in terms of more modernization, and further expansion, we would be looking at our arm which is the Kamarajar Port. We have adequate capacity from the marine side in the Chennai Port. We are having certain issues as of now in capacity for evacuating by road. We have excellent rail connectivity but by road there are problems. On that, we are pursuing the elevated road between Maduravoyal and Chennai Port whose work will start soon, may be by 21 February, the work may start. So, once that comes, I think our capacity utilization will really go up. With all our modernization and digitalization, whatever I was talking about, certainly we would be having more room to reduce cost. If you see in the last 5 years, our strategy from the marketing side is to build relationships and have long-term contracts. See, 2006, 2007, Hyundai started exporting cars. At that time, this was the only port. They had a contract with the Chennai Port for 10 years. 2016, 2017 this contract ended.
The situation was different. There were so many other ports. At that time, there was lot of competition. We could sustain and we won the contract. For another 10 years, we have extended the contract. Not only Hyundai signed for 10 years, after 2 year another arm of Korean automobile company, the factory which has come up in Anantapur, Andhra Pradesh…Kia Motors, we were able to convince them also about the value they get and we got that signed from 2019 to 2029, we have got the contract. It is not that we are not competitive. We are competitive on pricing side and more than that, the feedback what we get is they are happy with our service from the Marine side and all other small issues are getting sorted. So, this capacity utilization by optimally using the existing capacity at Chennai Port gives value to the customer so that they stick on here. For calling bigger ships or handling coal or iron ore we have Kamarajar Port. There we are going in big way for expansion, deepening for handle cape size vessels, next generation container vessels, and LNG. There the expansion is targeted at that sort of new products. Currently, in FY 2019, Chennai handled around 50 million tonnes and Kamarajar Port around 35 million tonnes.
Now Covid has come and there are aberrations. I am sure, in financial year, 2021 – 2022, both entities put together, I am looking at a figure of 100 million tonnes. We will certainly cross 100 million tonnes. This year, we may be handling less than 80 million tonnes but, in a year, I am sure there will be a jump, 15% to 20% in a year. 2021-22, both the entities will be touching 100 million. There will be no doubt about it.
That’s wonderful. Before I end this conversation, Mr. Ravindran, I have one question. What are the lessons you have learnt during Covid?
See Covid lessons, you see on one side, the business handling of ships without any problem; there is a lot of dedication from the employees. I didn’t have any problem. See, we told people that they need not come. We told necessary people only we will force them to come. But there was no day because of attendance, we had problem in handling. I was really happy to see the employees’ dedication to the work. this is one thing we noted. And the teams from the Government of India also, Minister of Shipping,
Minister of Health and Family Welfare, DG Shipping; the way the whole situation has been handled, be it quarantine requirements, be it the change of crew for the ships. Whoever has been stranded crew, they have to come to any port. We didn’t have that crew switching and all. There were no protocols. It was not normal points. But everything had started and lot of coordination, lot of meetings happened.
This has been really exercise wherein we could see many departments working together. Within the port also, apart from the Department of Immigration or MMD or Customs, other than that each stakeholder steamer agents or other people, they have all come up. Training those people, and there lot of learning we had. Another one is to make the people realize and make them disciplined in terms of wearing masks and washing, all those things. These are all so really good learning. Coordination and cooperation between various agents has happened so smoothly. These are the things which we could see back and then think that really, you know, these are experiences you get during that time.
