The yard at the container-handling centre at Dronagiri, near Mumbai, does not at first glance show many signs of India’s formidable transport problems. The shipping containers are stacked high awaiting movement inland or export from the nearby Jawaharlal Nehru port, India’s busiest container port.
Large trucks with grabbing arms sort the huge piles of boxes. Yet closer examination reveals reminders of the daunting mixture of congestion, inefficiency and bureaucracy which makes it far harder than it should be to move goods in the world’s second most populous country.
The trucks waiting for containers are mostly small and ageing – because there is little investment capital in India’s fragmented logistics industry and few owners are willing to risk better trucks on the potholed, dangerous roads. The centre also swarms with people – testimony to the large numbers of staff employed in most logistics enterprises and their relative inefficiency. The gate is guarded by policemen, a reminder of India’s ever-present, and burdensome, bureaucracy.
The problems have become so severe and pose such a threat to the country’s economic growth that they are now one of India’s leading political issues and government ministers have pledged billions of dollars on infrastructure spending to ease them.
Yet many in the transport industry believe such promises are likely to remain largely unfulfilled until India scraps some of its many limitations on private investment in transport infrastructure and starts tapping outside funds and expertise to improve the situation.
CS Verma, chief executive of Gateway Distriparks, says India’s government should have woken up long ago to the need to expand infrastructure capacity. “The trading flows have grown so dramatically, while the governmental procedures and policies have been extremely slow to plan for them,” he says. ”This has led to deficiencies within the total infrastructure.”
The symptoms of the present inefficiencies are to be seen across much of the Indian economy. Ashit Desai, chief operating officer of All Cargo Logistics, a Mumbai-based transport company, says the small trucks and the lack of capacity on the country’s rail network add to chronic port congestion. “It slows down the evacuation of containers to the hinterland and increases transit times,” he says.
Mr Desai also believes the lack of modern facilities has prevented Indian businesses from moving to shipping their goods in containers – the accepted and most efficient means of moving most finished goods elsewhere in the world.
Kenneth Glenn, President for South Asia of APL, a Singapore-based container carrier shipping line, says costs in India are artificially high. “It’s not that India is high-cost from an operating cost standpoint – although there are some components that are,” he says. “It’s largely expensive because it’s inefficient.”
Trade growth also seems to be held back, to judge by the sudden surge of cargo which emerges whenever efficient new goods-handling facilities come into use. Sashedharan Vasudevan, general manager operations at Gateway Terminals of India, a container terminal at Jawaharlal Nehru Port, points out that the port’s volumes rose during 2006, despite the opening of two new ports at Mundra and Pipavav which took much of the port’s former business.
Yet it is possible to build modern, efficient facilities in India when circumstances allow. The recently-opened Gateway Terminals has the latest, highly efficient container-handling equipment, with cranes able to lift two containers off a ship at the same time and an efficiently-run storage yard. In common with many of the best pieces of India’s transport system, its construction tapped foreign expertise – the terminal operating company is owned 80 per cent by part of Denmark’s AP Møller-Maersk Group.
Such private-sector expertise is effectively excluded, however, from roads, railways and dredging – an important issue in a country where many river mouths are heavily silted and shallow. While many in the transport industry would like to see those sectors opened up to foreign investment, there are widespread doubts it will happen.
“Unfortunately, privatisation has not been a focus in this country,” says CS Verma.
Some in the Indian government even seem to see foreign investment as a threat. Many tenders to build container terminals take years to award – against months in other countries – as the authorities vet applicants.
Despite the complaints, there are undoubtedly some optimistic signs. Prakash Tulsiani, chief operating officer of Gateway Terminals of India, points out that the rail line into Jawaharlal Nehru Port has recently been increased from single to double track, upping daily capacity by 50 per cent. There are also plans for a dedicated line for freight trains hundreds of miles from the port to Delhi and from Delhi to Kolkata. Some new toll roads and improved airports are under construction.
But most in the industry feel enthusiastic about such measures only by comparison with India’s present, desperate position. They feel far less positive when comparing themselves with China, India’s great regional rival, whch has brushed aside barriers to growth with which India has spent years grappling.
As a result, the fast-developing port of Shanghai in 2006 handled more than 21m twenty-foot equivalent units (TEUs) of containers and China as a whole handled more than 100m. The whole of India handled only 5m.
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