Port Sector Report

Topics: Bulk cargo, Cargo, Barge Pages: 83 (7347 words) Published: June 9, 2014
INDIAN PORT SECTOR
Cargo pressure continues at major ports with iron ore and containers the main laggards; resumption of iron ore exports due to possible regulatory changes could be positive for the ports

ICRA RESEARCH SERVICES
Corporate Ratings
Contacts: RATING FEATURE
ICRA
K. Ravichandran
+91 44 4596 4301
ravichandran@icraindia.com
Ankit Patel
+91 79 4027 1562
ankit.patel@icraindia.com
Mathew K. Eranat
+91 44 4596 4309
mathew.eranat@icraindia.com

October 2013

Key Developments – Q1 2013-14
Cargo pressure continues at major ports; iron ore and containers the main laggards: Cargo throughput declined during the first three months of FY 2014, with a 1.0% reduction in volumes over that in the corresponding period of previous year and 2% decline on sequential basis. Considering the reported volumes for the first five months (April-August), cargo throughput at major ports showed marginal improvement of 2.0% over the corresponding period of previous year (233 MT against 229 MT). The lower throughput at most of the major ports notwithstanding, New Mangalore, Ennore and Paradip ports have bucked the trend of cargo decline, posting 12%, 57% and 38% year on year growths respectively. Both these ports saw healthy growth in POL and coal imports, while Paradip also benefited from rising crude oil imports following the commissioning of new facilities. Million tonnes

Major Ports
% Change qoq
% Change yoy

Q1 FY 12
147
-4%
5%

Q2 FY 12
133
-10%
2%

Q3 FY 12
138
4%
-5%

Q4 FY 12
142
3%
-7%

Q1 FY 13
138
-3%
-6%

Q2 FY 13
132
-4%
-1%

Q3 FY 13
135
2%
-2%

Q4 FY 13
140
4%
-1%

Q1 FY 14
137
-2%
-1%

Iron ore has been the main laggard in the first five months (April-August) of FY 2014, registering a 44% decline on yoy basis, as a result of the continued stalemate on domestic mining activities. Container volumes have also shown some slippage, declining by 5% yoy owing to the lagged effect of slowdown in global markets and domestic economy setting in. At JNPT and Chennai (which handle the majority of the container cargo at major ports), the decline in container volumes was pronounced, with 10% and 5% decline in TEU volumes respectively during this period. On the other hand, items which showed positive growth were Fertilizers, Coal and POL. Lower international urea prices during the quarter have prompted Indian players to stock up fertilizers, resulting in a 4% increase in fertilizers volumes. Coal and POL, registered volume growth of 31% and 3% yoy respectively; these two are expected to remain as significant contributors to the cargo growth at major ports, given the levels of import dependency for such cargoes. While revival of container volumes would be dependent on pickup in the overall manufacturing sector activities and correspondingly exim trade, iron ore exports could be favorably supported by resumption of mining in certain areas; moreover, the Government of India has been exploring various options to boost export activities, including revival of iron ore exports.

Non major ports faring better due to presence of diverse and captive cargo streams: The listed non major port entities have, however, reported robust increase in throughput, with volumes of Adani Ports and Special Economic Zone Limited (APSEZL) and Essar Ports Limited (EPL) increasing by 35% and 11% yoy respectively. The growth at APSEZL’s flagship Mundra port has been driven mainly by upscaling of liquid cargo and dry bulk volumes by 23% and 68% respectively, even as container traffic growth has been relatively muted at 11% yoy. The growth at Essar’s port terminals has been on the back of expanded capacity and increase in offtake by its group companies, with Vadinar registering 10% yoy throughput growth and Hazira registering 1% growth during the quarter on yoy basis. EPL also benefitted from the new volumes of the iron-ore terminal at Paradip, which had commenced operations in December 2012. Pipavav...
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