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Sea traffic carries 95.0 percent of India's exports by volume and 70.0 percent in value terms. Considering the present stage of economic development, the shifting of manufacturing activities to India, privatization of port operations, and demand from foreign nations to containerize commodities bode well for the market.
New analysis from Frost & Sullivan (automotive.frost.com), Strategic Assessment of Containerization Trends in India, finds that container capacity handled for international and domestic traffic stood at 9.1 million twenty-foot equivalent units (TEU) in 2008, and expects this to reach 21.0 million TEUs in 2014.
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"Indian merchandise export and import has registered a double digit growth of 23.0 percent during the year 2007-08," says a Frost & Sullivan Research Analyst. "Trade was growing at over 25.3 percent CAGR over the past 5 years. Since a greater share of trade is moving towards finished goods requiring containerization, the container traffic in the country is experiencing an impressive growth."
However, the Indian ports infrastructure is far behind world standards. With global and Indian trade growing at 11-12 percent per annum, congestion at major ports can depress port performance and impede containerization growth unless sufficient port capacity is created.
"Further, the absence of a hub port in India has resulted in a significant share of containers leaving an Indian port going through a feeder, with transshipment and mainline movement causing additional delay," observes the analyst. "This results in a delay of 40 hours to 50 hours as containers are transshipped through ports such as Colombo, Singapore (east), Dubai, and Salalah (west)."
To keep abreast of the growth rate, the Government of India must ratchet up port capacity expansion plans. It is already developing the port infrastructure through PPPs, allowing 100 percent FDI in construction and maintenance of ports, operations, and other supportive services. PPPs add value to infrastructure development at ports by being advantageous to the Government, private companies, and customers because they have the opportunity to choose from various options while discharging their commodities.
The upcoming Vallarpadam International Transshipment Terminal and Vizhinjam Terminal will position India as a transshipment hub, conferring major advantages to Indian exporters in terms of reduction in feeder service cost and faster shipping service if the cargo is routed through Kochi instead of Colombo, Sri Lanka.
"To ensure future growth, India must intensify efforts to strengthen the overall logistics chain by improving port and landside infrastructure and integration," notes the analyst. "India is clearly emerging into the spotlight as productivity growth is strong and container volumes are slated to witness robust growth in the coming years."
Domestic transportation of containers is predominantly undertaken by road transporters and Container Corporation of India (CONCOR). Eventually, the entry of private rail operators will lead to innovations and competition that will encourage operators to develop customized solutions including new box types for domestic cargo. Private rail operators and coastal shipping will pick up momentum with the development of minor ports such as Mundra, Pipavav, and Vallarpadam, which will be better equipped to handle huge liners.
Strategic Assessment of Containerization Trends in India is part of the Automotive and Transportation Growth Partnership Service program, which also includes research in the following markets: Strategic Analysis of Cement Transportation Market in India, Strategic Analysis of Metal Transportation Market in India, and Strategic Analysis Of Liquid and Gaseous Cargo Transportation Market in India. All research services included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants.
Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth and achieve best in class positions in growth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined research and best practice models to drive the generation, evaluation, and implementation of powerful growth strategies. Frost & Sullivan leverages over 45 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from more than 35 offices on six continents.
Strategic Assessment of Containerization Trends in India / P2B2
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