India is doing so many things right, but a lack of world-class infrastructure and high port and inland costs continue to limit the country's economic progress, says a senior executive with global container transportation leader APL.
As global sourcing and manufacturing continues to shift to Asian locations, foreign investors will choose to invest near ports with world-class efficiency in port infrastructure, according to Kenneth Glenn, APL president for South Asia. His comments, made before a recent gathering at the Southern Asia Ports, Logistics and Shipping conference in Mumbai, were made available by the shipping company.
"If India can develop thriving retail and manufacturing sectors to rival its services sector, the sky is the limit in terms of its economic potential. But currently, inadequate infrastructure and high costs are hurting its development as an exporter to the rest of the world."
By late 2008 some 25 percent of world container ship capacity will come from vessels of at least 6,000 twenty-foot equivalent units, Glenn says, but India does not have a port that can handle this class of ship. "Until India can develop these type of global class facilities, it will not fulfill its cargo carrying potential."
Last year, Mumbai's Jawal Nehru Port Trust (JNPT) was the only Indian entry in the list of the world's top 100 container ports, he says. It was ranked at number 36; Chennai, another Indian port, was listed at 109. "This suggests that investment in ports is too fragmented and spread across too many sites of insufficient scale," says Glenn.
"When India's ports are assessed against the attributes of a world-class port, they do not stack up well, lacking many of the characteristics international ship operators look for in order to increase vessel calls."
The imbalance of container trade towards JNPT, which accounts for around 60 percent of total Indian volumes, is creating acute congestion, according to Glenn.
However, he said that simply adding more port capacity at multiple locations is not the answer, citing a recent analysis conducted for APL by industry analyst Drewry (Connecting India: Transport Challenges and Opportunities, October 2005). "The answer lies in the concentration of capacity, the building of critical mass, of gaining at least one, and preferably two, seats at the table of 'first-class' global hubs," says Glenn.
India's export-driven progress is also hampered by some of the world's highest port and rail costs, according to the APL officer. He says that the cost of transporting one TEU one kilometer in India is 53 percent higher than in the United States.
Visit www.apl.com.