study on western hinterland & analysis of indias biggest sea port jnpt
TRANSCRIPT
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CHAPTER 1
EXECUTIVE SUMMARY
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EXECUTIVE SUMMARY
The real growth that Indian GDP has is reflected in its international trade and
consequently in the traffic growth that ports have been witnessing over the past
few years. This trend in growth is expected to continue, with international trade
expected to grow at a rate even higher than at present. The ability of Indian port
infrastructure to meet these increasing demands will be critical to the growth of the
economy. In this context, it has been recognized that a national plan needs to be
developed which would identify in a structured manner, the required investments
in port and related infrastructure, while at the same time reducing dependence on
government funds. In order to meet this objective, the planning commission and
the ministry of shipping, road transport and highways has initiated this business
planning exercise for major ports.
JNPT has an important place amongst Indian ports due to the kind of traffic that it
serves as well as being a pioneer in involving large-scale private sector
participation. It is also one of the first ports to initiate this exercise.
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JNPT consisted of 3 phases
• Inception stage – “As-is” assessment of the port
• Interim stage – Traffic forecast, vision development & projects
• Draft final stage – Action plan and financial model
The as-is assessment identified general port operations, hinterland connectivity and
competitive position.
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CHAPTER 2
RESEARCH DESING
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RESEARCH DESING
Objective
- To attract more container cargo to JNPT Ports.
- To study Western Hinterland Mapping.
- To study Port Choice Determinants.
Scope
- Study includes container cargo for four ports i.e. Mundra, Kandla, Pipavav
and JNPT.
- Data regarding JNPT is provided by Adani – MPSEZ.
- Only loaded containers are considered for the purpose of study. Empty
containers are not part of study.
- Study includes five Port Choice Determinants
i.e. Port Infrastructure, Vessel Frequency, Port Location (From Sea Routes),
Hinterland Connectivity and Number of Container Freight station.
- Assessment of selected ports on the basis of five port choice determinants.
Design
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Exploratory Research
Research Process
Hinterland mapping for container cargo.
Opinion of freight forwarders for five port choice determinants to derive ranking of
the same.
Data Collection
Source
- Primary: Port Authorities, Container Terminals, Freight Forwarders, Custom
House Agents, Shipping Line Agent and Customs Department
- Secondary: Indian Ports Association Journal, Times Shipping Journal, Port
Profiles, EXIM Publications
Instrument: Personal Interview
Analytical Tools
- Weighted Mean for ranking of port choice determinants.
Further Scope
- Detailed analysis of Port Infrastructure with qualitative and efficiency
measures.
- Survey of shippers to understand their willingness for sending their cargo to
JNPT ports, issues faced by them and expectations as well as streamlining
factors of the process from their side.
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Vision Development
Following the as-is assessment, the vision of the port was developed. The first step
was an understanding of the business environment of JNPT. Constraints and
drivers of change in the environment were identified as part of this exercise. An
important constraint that emerged was the limited space for terminal side
expansion at the current location .This understanding of the business environment
was used as the basis to identify strengths, weaknesses, opportunities and threats
for JNPT. Key strengths that emerged for JNPT were the frequency of services,
available port infrastructure and strong financial position. Weaknesses at JNPT
include distance from major shipping routes, limited draft and shortage of staff in
key areas. The most significant threat for JNPT is the increasing pressure on road
and rail connectivity. Other threats for JNPT
include developments by private competitors.
For the purpose of assessing opportunities, they were divided into 3 broad
categories-
Opportunities in export-import traffic (where the origin or destination is
within JNPT's hinterland)•
Opportunities from trans-shipment and • Other value added opportunities
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An analysis of potential cargo types for export import (EXIM) traffic on the
basis of two parameters, market attractiveness and alignment to capabilities,
indicated that container and liquid cargo were attractive opportunities worth
pursuing.
On analyzing the coastal trans-shipment opportunity, it was found that certain
factors impacted its attractiveness, including distances from major shipping routes,
other competing ports being developed and draft. As a result, the port could look at
this option opportunistically rather than as a key focus area. Aligned to the export
import traffic focus, other potential value added services were examined which
could strengthen JNPT's positioning. Potential value added opportunities taken up
for assessment included distribution, logistics and free trade areas. An opportunity
assessment for JNPT was conducted by analyzing opportunities based on four key
parameters
Strength/Weakness of port with respect to the opportunity
Revenue potential
Growth potential
Sustainability/ Stability of revenues
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In the opportunity landscape for JNPT, export-import container traffic, free trade
zone, distribution/logistics emerged as attractive opportunities. In addition, Ro-Ro
could be a potential opportunity area for the port, which it could pursue
opportunistically. Based on the assessment as well as the SWOT analysis, the
vision was developed through a visioning workshop carried out with port.
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CHAPTER - 3
PORTS IN INDIA
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PORTS IN INDIA
Globalization has led to an increase in world trade highlighting the importance of
ports as a trade gateway. About 95% by volume and 70% by value of India’s
international trade is carried out through its port. India’s coast line of 7517 km is
dotted with 12 Major Ports and 187 non major ports. The Major Ports are under the
control of the Central Government and the Nonmajor Ports are under the respective
State Governments.
Major Ports
The total volume of the traffic handled by all the Indian ports during 2005-06 was
around 576 million tonnes, of which 423 million tonnes i.e. around 74 percent was
handled by Major Ports and remaining 153 million tonnes by the Nonmajor ports.
Composition of Cargo at Major Port
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Major ports of India
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CHAPTER – 4
INCEPTION OF JNPT
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INCEPTION OF JNPT
India’s increasing international trade necessitated the development of additional
facilities to decongest the traffic at the Mumbai Port. The need of an alternative
port in the region to handle the increasing traffic led to the development of JNPT in
1989. With its vast back up area JNPT was believed to have a strong potential for
the development of additional facilities as per demand and was ideally suited for
future maritime requirements.
JNPT Profile
JNPT is the second youngest port after Ennore. JNPT is located at the eastern end
of Mumbai in the Nhava Sheva area and situated at latitude 18º 56’ 43” N and
longitude 72º 56’ 24” E. JNPT’s approach channel is an extension of the Mumbai
Harbour main channel (See Exhibit ) from a location south of Jawahar Dweep
Island. In the Nhava Sheva area at the eastern end of
Mumbai Bay is located Jawaharlal Nehru Port, approx 33 km inland of the
Mumbai Harbour Channel entrance point at sea. The Elephanta Island is on one
side, facing the port and Nhava and Sheva Islands are on the other end. JNPT lies
towards the east of the Bombay Port.
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Current designed channel depth of JNPT is 11 metres and depth at berths is 13.5
metres. JNPT can take in vessels having laden draft upto 12.5 metres. A map of
JNPT has been included overleaf.
The width of the channel is 400 metres at entry point and 460 metres off the berths.
Port cargo handling facilities include container terminals, a liquid handling
terminal and a shallow water berth which can handle break-bulk and container
traffic both.
Port Highlights
Accredited with ISO 9001-2000 Certification
Ranks 31st among the top 100 Container Ports in the world
Handles 56% of India’s total containerized cargo
Highly automated and computerized operations with Single Window System
Recipient of Indira Priyadarshini Vrikshamitra Award – 1996 for the
Greenest Port in India
Equipped with the latest Vessel Traffic Management System (VTMS) to
track/monitor vessel movements ensuring safe navigation
Spread over a land area of 2,584 hectares
Served by 16 Container Freight Stations and over 23 Inland Container
Depots
Well connected by National Rail/Road network
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Evaluation of Export import cargo opportunities
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CHAPTER – 5
GENERAL DESCRIPTION
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GENERAL DESCRIPTION
HISTORY
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CHAPTER - 6
GOALS AND STRATEGY
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GOALS AND STRATEGY
Development of action plans for the port requires the vision to be cascaded to a set
of actionable goals with a timeframe attached to them. Goals were identified
through an analysis of various elements of the vision. JNPT would need to
undertake multiple goals to achieve its vision. The goals that were identified for
the port are illustrated below:–
Achievement of 10Mn TEUs of traffic at JNPT
Improve efficiency across the port
To develop logistics capabilities and services at JNPT
To expand JNPT to new locations
Invest into hinterland connectivity ventures
Timeframe for Goals
Goals need to be prioritized to ensure planned development at a port. Prioritization
of goals also provides timeframes within which the goals should be achieved. To
ascertain the timeframe of the goals, KPMG followed a framework of “ease of
implementation vs. criticality”, which was used to evaluate the goals.
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Role of the Port
It is envisaged that the port will increasingly play the role of a landlord with
limited presence in port terminal operations (JNPCT). JNPT will evolve primarily
into a landlord port facilitating services by terminal operating companies and other
providers. The solitary terminal will be the responsibility of JNPT over the
medium term horizon of the plan period
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PERSPECTIVE PLAN
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Framework to identify long and short term goals
As part of the business plan development exercise an action plan for the port was
developed for the next 7-8 years. This action plan was based on the short term
goals identified – • Reaching 10Mn TEUs of traffic at JNPT by 2015-16
To offer logistic services at JNPT by 2011-12
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To improve efficiency in port operations by 2009-10
Strategy to achieve goals
A strategy to achieve the goals was outlined focussing on the following elements –
Cost: JNPT would endeavour to reduce costs by improving efficiency and
thereby ensure competitive services for user.
Customers: JNPT would attract and retain customers through addition of
core and value added services.
Geographies: JNPT would focus on the northern and Maharashtra region and
would enable traffic from the regions through planned development within
and nearby the port.
Services: JNPT would provide value added services and would capture a
larger share of the logistics value chain. The strategy for achieving the goals
would need to be supported by a financial and commercial strategy.
Commercial Strategy: The commercial strategy deals with the three levers
of customer management, cost management and service offerings of the
port. It is aimed at achieving commercial success within the operating
business environment through effective management of customers and
suppliers.
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National Container Traffic Projections using bottom up approach
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JNPTs Container traffic projections
Capacity of the port would be 11.67 Million TEUs at 75% berth occupancy in
2015-16 and 2016-17. At 70% berth occupancy the overall capacity (under the
current geographical and policy restrictions) of the port would be 10.9 Million
TEUs by 2015-16.
As liquid cargo handled by ports consists of products from various industries, the
key industries impacting growth of liquid cargo were studied. The forecast for the
traffic was arrived at 2 levels
National level forecasts for the commodity
JNPT forecasts for the commodity
JNPT liquid cargo traffic was estimated for the categories of crude, POL product,
chemicals and other liquids. JNPT has no crude linkages with existing refineries
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and does not service crude traffic at present. The crude traffic forecast for JNPT
was based on ONGC plans to ship a part of its offshore crude production at
Bombay High via JNPT to the coastal refinery of Mangalore. JNPT POL product
traffic is largely coastal based traffic which follows national trends of coastal
traffic. Exports growth from the increase in refining capacity in Mumbai region
was factored into the forecast. Since the port can handle certain liquid chemicals
these were studied and grown at appropriate growth rates to arrive at liquid
chemical forecast. JNPT's edible oil/molasses traffic is a significant portion of
national traffic and this traffic is expected to continue. The overall forecast of
liquid traffic through JNPT reaches 15.4 Mn tonnes by 2024-25 as seen in
exhibit
Liquid Traffic at JNPT
Vessel forecasts
Using the traffic projections for container and liquid cargo, a vessel forecast was
carried out for JNPT. A number of factors impacted this forecast, including the
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change in profile of ships on the Europe Asia route as well as the gradual increase
expected in parcel sizes. The expected vessel calls at JNPT are tabulated in exhibit.
As seen the number of vessel calls at JNPT reach a peak of 5734 vessels in 2015-
16 and then start gradually decreasing. This is largely due to the expected
continued increase in parcel sizes.
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Developments between 2006- 07 and 2009-10
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JNPT developments
between 2010-11 and 2012-13
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JNPT
developments between 2013-14 and 2015-16
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JNPT
developments between 2016- 17 and 2020-21
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Proposed land usage for port operational area of 670 hectares
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Plan of action to implement Strategy
A detailed plan of action was developed to implement the strategy for the port
over the next 7 years (between 2007- 08 and 2014-15). The action plan attempts to
cover the set of projects/ initiatives to be undertaken by the port in the plan period
across the following areas - � Creation of new infrastructure
Efficiency improvement
Organizational improvements
The major aspects covered in action plan were as follows
Time Lines: An estimate of the timeframe of each project
Dependencies: Indicates linkages and dependencies between projects
highlighting need for focus on parallel development where needed
Critical success factors: This highlights key elements need to be addressed
to ensure success of the strategies. It consists of factors which are
within/beyond the control of the port
An overall implementation schedule for the various projects has been
outlined
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Navigational Facilities
The JNPT access channel which is an extension of Mumbai Harbour channel has a
depth of 11 m below Chart Datum (CD). The water depths in front of the berths at
JNPT are maintained at 13.5 m to CD.
The common main harbour and JNPT channel sectors are presently maintained at
depths 10.8
m - 11.1 m below CD. The total length of the dredged channel upto the end of
Elephanta deep
is about 15.21 Nautical Miles. At present, large size vessels up to 6,000 TEUs and
having a draft up to 12.5 m, navigate through Mumbai Harbour and JNPT
Channels, making use of the tidal window, which occurs twice in 24 hours.
Currently the channel is used for two way navigation of ships.
There are 2 mooring launches and 5 pilot launches to pilot the ships with 7 tugs
for towing the ships.
Channel Limitations
At present, container vessels carrying up to 6000 TEUs having a draft upto 12.5 m,
navigate through Mumbai Harbour and JNPT channels, making use of the tidal
window. Ships having draft larger than this cannot be serviced at JNPT. During
monsoon ships with draft upto 11.8 m can be serviced.
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Navigational Facilities – Mumbai Harbour and JNPT Approach Channel
Berthing Facilities
At present JNPT has three container terminals; JNPCT, NSICT and GTICT. Apart
from this JNPT also has a shallow berth and two captive liquid cargo berths for
BPCL. JNPCT is operated by JNPT and NSICT (set up on BOT basis). The Bulk
cargo terminal comprising the bulk berth and two multipurpose berths are under
conversion as a Third Container Terminal (on BOT basis) by a consortium of
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MAERSK and CONCOR as GTICT. Liquid Chemical Terminal – Bharat
Petroleum Corporation Limited (BPCL) and Indian Oil Limited (IOL) are
operating a liquid bulk terminal on BOT basis to handle bulk liquid chemicals,
POL and edible oil. Shallow Water berth - It can handle 165 m LoA for break bulk
and container purposes
Existing Port Facilities
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Storage Facilities
Container freight stations are the hubs for import and export of more than 80% of
the cargo handled by the port. Presently there are 16 Container Freight Stations
(CFS) in operation outside the port premises; while necessary investments are
being made by few more of them. The total capacity of CFS’s is sufficient to
handle the present container traffic. There are around 20 empty
container yards that have come up near the JNPT area to store empty containers.
The port had originally 6 Transit Sheds / Over Flow Sheds of area 1,10,780 sq. m.
and open storage area of 1,48,850 sq. m. within the port. Most of these have been
decommissioned / dismantled for conversion into container stack yards and other
yard facilities. Additional details on port facilities are in Section 6 of inception
report.
Storage Facilities
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Cargo Handling Equipment at JNPT
Limitations of terminal operation
Internationally container terminals focused on Origin destination traffic maintain
an average ratio of number of RTGCs to each RMQC as 3:1. Unlike NSICT and
GTI (planned) both of which have RTGC to RMQC ratios over 3:1,JNPCT has a
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ratio of 2.25:1. This may be hampering JNPCT crane moves per hour and overall
productivity.
At the liquid chemical jetty, the limited discharge rate of a large number of
pipelines owing to their small diameter vis-àvis the achievable ship discharge rate
is a restriction. This reduces the flow rate of liquid chemicals and increases ship
turnaround time.
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CHAPTER 7
UNIQUE SELLING PROPOSITION
COMPETITIVE RATING OF PORTS
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UNIQUE SELLING PROPOSITION COMPETITIVE RATING OF
PORTS
Competitive Rating of Ports
According to the port users the two most important factors in choice of a port are
- Port Location
- Port Infrastructure
JNPT emerges as the overall port of choice with Mundra and Pipapav perceived to
be the next best ports. Port users believe that in the future Mundra and Pipavav
have the potential to capture JNPTs share of market from the northern regions.
JNPT has high ratings in areas such as shipping frequency and hinterland
connectivity. Mundra and Pipavav are rated highly in terms of ease of paperwork.
It is important to note that the parameters on which JNPT has an advantage over
others are not entirely in JNPTs control These are areas such as frequency and
hinterland connectivity. As frequency and hinterland connectivity of other ports
improve JNPT will face competition. Hence JNPT should plan to develop
sustainable sources of competitive advantage.
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Comparative Ratings from Port Users
The three unique selling points of JNPT over other ports were found to be -
Hinterland Connectivity – Hinterland connectivity has been covered in detail in
the infrastructure section.
Users believe that inspite of congestion problems, in comparison to other ports
JNPT still rates higher on connectivity. JNPT has the maximum number of regular
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trains visiting it. Pipavav and Mundra have a single track diesel connectivity while
JNPT has a double line connectivity.
Frequency – Currently JNPT has the highest frequency of services to major
shipping destinations. As a comparison JNPT had 1772 (977 NSICT and 795
JNPCT) vessel calls while Mundra had 480. Infrastructure – JNPT currently has
the largest infrastructure in comparison to other ports. The closest competitor for
container traffic, in the western region, to JNPT is Mundra. Mundra has 632 metres
quay length and 6 cranes while JNPT has 1280 metre quay length and 16 cranes
(excluding GTIPL). JNPT therefore has an advantage compared to other ports in
Infrastructure. Specific areas of advantage for JNPT are the presence of 16 CFS
operators with 12 new operators scheduled to begin operations shortly. This is far
more than its competitors
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Unique Selling Points
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CHAPTER 8
DEVELOPMENT OF JNPT VISION
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DEVELOPMENT OF JNPT VISION
With the Indian economy currently poised to grow at a significant rate, there are a
number of opportunities that a port can potentially align itself to. However, each
port has its own characteristics that enable it to play a specific role in the country’s
growth. Various factors would impact this positioning including its location and
hinterland, its physical advantages and limitations, its operational strengths and
weaknesses as well as its competitive environment. In this context, the port has to
make careful choices about its key focus areas, such that the port can play its
service-oriented role in the regional context. Our approach to developing the vision
for JNPT was based on a combined assessment of a number of internal and
external factors. On the internal front, an overall assessment of strengths and
weaknesses with respect to its competitors was carried out, which assessed JNPT's
capabilities with respect to competing ports. This clearly indicated that while
JNPT had capabilities in some key areas, it also faced constraints and issues on the
other. On the external front, a view was taken on the overall potential for cargo
growth in the hinterland and the threats that emerged from competition and
changes in the external environment. JNPT faces competition primarily from the
ports in western region. These include the ports of Mundra, Pipavav, Kandla,
Mumbai and Rewas. Apart from this the port also faces
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competition in transshipment cargo from Salalah, Colombo and Karachi.
Activities leading up to vision development
The vision development process for the port was a participative one, where port
senior management and key stakeholders were involved in discussions related to
generation of vision options and finalisation of the eventual vision. The key
activities that were conducted as part of the visioning exercise were:
- Background analysis and opportunity assessment by the consultant
- Conduct of a SWOT workshop with port internal stakeholders
- Discussion of SWOT output and conduct of visioning exercise with port
senior management and key external stakeholders
- Discussion of visioning exercise output with chairperson and senior
management of the port
The approach for vision development
The approach that was followed for developing the vision was a structured one,
which built on the approach and some key observations identified as part of the
inception report. The objective was to systematically develop a positioning for the
port which it can sustain for the next 20 years. It essentially consisted of the
following components:
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- Identification of key drivers and constraints impacting the port
- SWOT analysis - High-level assessment of the strengths, weaknesses and
threats related to the port.
- Opportunity analysis was carried out in detail separately
- Preliminary short-listing of opportunities for the port based on identified
criteria
- Detailed analysis of attractive opportunities, including traffic projections
- Formulation of vision statement
A summary output of each of the above is discussed in the following sections
as a background to development of the vision.
A number of inputs went into the analysis and discussions at each stage of the
vision development process, which included:
- Analysis of macro-economic factors – Key drivers and traffic projections
were derived from macro-economic and industry trends
- Competitive analysis – The growth plans of competitors as well as their
relative positioning have impacted the share of cargo that JNPT is likely to
get.
- Shipping industry analysis – Industry trends in terms of shipping lines, cargo
routes and vessel sizes were used to identify key imperatives for JNPT from
a transhipment and sea side capacity perspective
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IDENTIFICATION OF CONSTRAINTS AND DRIVERS IMPACTING THE
PORT
Any constructive vision exercise has to take into account the key macro-trends
impacting the port and assess the boundaries within which the port operates. A
recognition of these factors allows the port to apply a “reality check” on any
recommendations that are made for its vision. In discussions that were conducted
as part of the key workshops, a number of key points emerged as drivers and
constraints for JNPT, which effectively fell into 4 distinct categories. These have
been detailed in subsequent pages
a. Port and Cargo related factors
Drivers and constraints
- Consolidation of shipping lines and increasing ship sizes
- Increase in trade on Asian routes
- An increasing trend of shipping lines integrating into port operations
- The export import imbalance in India
- The limited area available at JNPT for expansion on the seaside and land-
side in the current location leading to capacity limitations
b. Hinterland factors
Drivers and constraints
- Significant growth in the hinterland economy leading to an increase in traffic
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- The related impact of SEZs and other such initiatives by the Government
leading to additional growth in traffic
- The introduction of VAT which could impact logistics and distribution
- Constraints being faced by the port in road and rail Connectivity
c. Regulatory Factors
Drivers and constraints
- Increased focus on PPP models as a means of rapid port infrastructure
development
- The imperative for major port trusts to operate under MPT act and TAMP
regulations
- Increased security needs across ports and resultant costs at Ports
d. Competitive Environment related factors
Drivers and constraints
- The entry of international and national private players into the port sector by
setting up competing ports
- The impact of international ports such as Salalah, Colombo as competition
to Indian ports
Identification of constraints and drivers impacting the port
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CHAPTER 9
SWOT ANALYSIS – STRENGTHS,
WEAKNESSES AND THREATS
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SWOT ANALYSIS – STRENGTHS, WEAKNESSES AND
THREATS
The identified constraints and drivers were used as inputs to a SWOT analysis for
JNPT, which eventually led to the development of the JNPT vision. In this section,
a summary of the strengths, weaknesses and threats has been provided, while
opportunities have been covered in detail in the next sub-section. Development of
JNPT Vision SWOT Analysis – Strengths, Weaknesses and Threats
Activities in the SWOT Workshop –
• The SWOT analysis was carried out through a SWOT workshop involving
key port stakeholders.
• These stakeholders were divided into groups that individually developed a
SWOT matrix for JNPT.
• Inputs from all groups along with KPMG analysis was used to arrive at a
perspective SWOT for JNPT.
• The participants of the SWOT workshop were representatives of each of the
departments of JNPT in addition
- to stakeholders from NSICT, GTI and BPCL
• The following guidelines were provided to the participants while developing
the SWOT analysis
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Strength
• A port strengths are its resources and capabilities that can be used as a basis
for developing a competitive advantage which the port currently possesses.
Weakness
• A port weakness are resources and capabilities that the port lacks in
comparisons to its competitors currently.
Opportunity
• Opportunities provide prospect of profit and growth. Opportunities arise due
to changes that are occurring or are expected to occur in the external
environment in which the port operates.
Threats
• Threats are events that can lead to reduction of profit and growth. Threats
arise due to changes that are occurring or are expected to occur in the
external environment in which the port operates.
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CHAPTER 10
DEVELOPMENT OF JNPT
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DEVELOPMENT OF JNPT
Based on the above analysis, opportunities were rated as shown below. Cargo
types like Dry Bulk, Break Bulk were observed to lack from a market
attractiveness as well as a JNPT capability perspective. LNG was perceived to be
of uncertain stability and growth potential. Coal as a “dirty” cargo was not aligned
with JNPT's positioning as a general cargo port. The Ro-Ro and Cruise
opportunities seemed attractive financially but were not aligned to the specific
capabilities of JNPT. Container and liquid cargo emerged as attractive
opportunities. Based on the above criteria, detailed analysis was taken up for
specific export import cargo types in the next stage, i.e.-
• Container
• Liquid cargo
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Detailed assessment of opportunities
obtain additional senior management inputs to arrive at the set of opportunities
which JNPT which would focus on from an end-state perspective. The set of
opportunities considered for detailed assessment included the following:
• Export Import Cargo
• Container
• Liquid Cargo
• Transshipment (coastal and regional)
• Distribution Hub (Regional distribution facilities/warehousing)
• Logistics Hub (warehousing, distribution, logistics and packaging)
• These opportunities were analyzed in detail based on four key parameters
• Strength/Weakness of port with respect to the opportunity
• Revenue potential
• Growth potential
• Sustainability/ Stability of revenues
A summary of the analysis of these opportunities has been provided in annexure
1.2 to provide an assessment of the discussions that took place on these
opportunities. The analysis that has been carried out was used primarily to
facilitate discussions from a JNPT perspective.
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A summary of the opportunity landscape was prepared for JNPT based on revenue
potential and growth and sustainability as shown below, which was used for further
discussions during the vision development stage. This landscape is based on the
assessment of opportunities detailed in annexure 1.2. Benchmark figures are based
on JNPT data and industry research as illustrated in annexure
Opportunity Landscape for JNPT
Workshop
Carried out keeping a few key factors in mind - JNPT has limited sea-side and
land-side resources which it must use prudently. The choice of vision has to be
aligned to the activities that are already undergoing at the port. Changing the
priority of the port completely to a different type of cargo form what it is handling
today could be retrogressive, even if the alternative opportunity was attractive
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Value-added opportunities must be aligned with the vision of the port and the
expected priorities in the future. An objective to purely maximize the economic
value of the available land may lead to sub-optimal decisions. Key participants in
the vision development exercise were representatives from the following entities:
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“To be recognized as India's premier container port providing integrated
logistics services to the best interest of trade and customers”
Each of these elements have a impact on the manner in which JNPT executes the
vision over the period of the business plan. The elements of the vision are -
Focus business areas
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Other Cargoes serviced
Geographies of focus
Value Added Services
Guiding Principles
Focus business areas
JNPT will maintain a clear focus on containers as its core business and will attempt
to remain India’s largest container
port providing customers with the best container handling experience in the
country.
Other Cargoes Serviced
JNPT will also serve coastal trans-shipment needs of the Indian sub-continent for
traffic that arrives at the port in its natural course of operations. This cargo is likely
to be trans-shipped coastally from other smaller regional ports. The port may not
actively invest additional resources in seeking transshipment cargo. This
transshipment cargo is likely to be regional or coastal in nature. Since the
infrastructure required for Ro-Ro services is largely similar to that of containers,
JNPT will be ready to service Ro-Ro in the future in case the market for Ro-Ro
expands and the potential for containers falls. Since JNPT has already committed
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resources to liquid cargo it will continue to serve this cargo in the future. It will
also enable JNPT to derisk its cargo profile going forward.
Value Added Services
JNPT will conceptualize and establish a state of the art logistics hub offering -
• Warehousing and forwarding facilities (including storage/stuffing/stripping
of containers)
• Value added services – processing of goods according to specific customer
and country-of-destination requirements, packing and re-packing, labeling
and assembly, sorting and invoicing
• Free trade zones/export processing areas
• State of the art communications infrastructure
• Multimodal transport facilities
JNPT will also attempt to enter into partnerships with various container rail freight
operators so as to develop dedicated services to JNPT from northern hinterland.
This gains importance in light of 13 new licenses for container rail freight handling
operations having been issued by the Government of India. JNPT could enter into
partnerships with one or more of these players to offer a regular service to
exporters/importers. Such a partnership would help in retention of
JNPT traffic from the northern hinterland.
64
Guiding Principles
JNPT's guiding principles are obtained from its current mission statement which
stresses on fulfilling the needs of the
nation as well as ensuring safety and security. The significant guiding principles
derived from the mission statement are
• Enabling Indian trade through JNPT, efficiently and smoothly
• Ensuring safety and security at the port and development in the area around
the port
• Creation of value for customers through value added services
• Expanding capacity and upgrading equipment in line with customer
requirements
65
CHAPTER – 11
VALUE ADDED SERVICES
66
VALUE ADDED SERVICES
JNPT will conceptualize and establish a state of the art logistics hub offering -
• Warehousing and forwarding facilities (including storage/stuffing/stripping of
containers)
• Value added services – processing of goods according to specific customer and
country-of-destination
requirements, packing and re-packing, labeling and assembly, sorting and
invoicing
• Free trade zones/export processing areas
• State of the art communications infrastructure
• Multimodal transport facilities
JNPT will also attempt to enter into partnerships with various container rail freight
operators so as to develop dedicated services to JNPT from northern hinterland.
This gains importance in light of 13 new licenses for container rail freight handling
operations having been issued by the Government of India. JNPT could enter into
partnerships with one or more of these players to offer a regular service to
exporters/importers. Such a partnership would help in retention of
JNPT traffic from the northern hinterland.
67
Guiding Principles
JNPT's guiding principles are obtained from its current mission statement which
stresses on fulfilling the needs of the nation as well as ensuring safety and security.
The significant guiding principles derived from the mission statement are •
Enabling Indian trade through JNPT, efficiently and smoothly
• Ensuring safety and security at the port and development in the area around
the port
• Creation of value for customers through value added services
• Expanding capacity and upgrading equipment in line with customer
requirements
Identification of goals Development of a business plan aimed at achieving the
vision requires that the vision is cascaded to goals and a strategy to achieve those
goals is developed. The goals and strategy are then converted into an action plan
for the organization. It is imperative to understand that goals should be analyzed to
assess the time period within which they can be achieved. This would help in
differentiating between long term goals and short to medium term goals. The short
to medium term goals need to be converted into an actionable plan that can be
implemented and monitored by the port while the long term goals should be
evaluated at a later stage and an action plan for the same should be developed at
that time. This is because an action plan for a long term goal might become
68
irrelevant in light of the changing scenario and emerging trends in the industry
over the long term.
Characteristic of a well defined Goal
KPMG has followed a set of principles to ensure that the
goals developed for JNPT are specific, actionable and time bound
• A goal should be specific and aligned with the vision
• A goal should be relevant to the vision and should address critical aspects of
an organization (capacity, service offering and efficiency etc)
• A goal should be time bound and an immediate or medium term goal should
have a specific time line attached to them
• A goal should be achievable and should not consist of unrealistic aspirations
69
PERSPECTIVE PLAN
Identification of Goals
Each element of the Vision is analyzed to identify the goals that would be required
to achieve the vision
70
Each element of the Vision is analyzed to identify the goals that would be required
to achieve the vision
As can be seen the Goals identified deal with the following critical aspects:
• Capacity
• Achievement of 10Mn TEUs of traffic at JNPT
• To expand JNPT to new locations
• Efficiency
• Improve efficiency across the port to achieve 2200 TEUs/m quay length
• Service offerings
• To develop logistics capabilities and services at JNPT
• Invest into hinterland connectivity ventures
71
PRIORITIZATION OF GOALS
• Achievement of the vision require a sequence of goals to be achieved by
JNPT. KPMG has evaluated these goals on the following parameters to
ascertain their timeframes and to make each goal time bound:
• Ease of implementation – This factor takes into consideration various
aspects that have an impact on the implementation of the goal. These would
include
− Resources required – Each goal would require a different set of resources
for its implementation. An assessment of the availability of resources with
the port vis-à-vis resources required was used to evaluate this parameter
− Capability – JNPT has traditionally been a port operator and off late is
developing into a landlord port. This parameter would evaluate JNPTs
capability in achievement of the goal
− Business Environment – This factor includes factors such as market
demand, competition, entry barriers, regulatory aspects etc to evaluate
whether the environment is conducive to achievement of a particular goal
• Criticality – This parameter measures if a goal is critical to the vision. A
highly critical goal would have to be achieved at the earliest even if it scores
low on ease of implementation
72
Framework to analyze goals
PRIORITIZATION OF GOALS
73
74
75
Short and Long term goals
Expansion to new locations
JNPT can also explore the opportunity to expand into new locations. The new
locations could be in the same region and about 80-100 Km away from the existing
port. The new port can act as a sister port to the existing port and customers can be
provided services across both the ports. The port can explore a number of options
to expand into new locations as listed below:
76
• ublic private partnership to set up a new port : JNPT and a private developer
enter into an MoU to develop the port and enter as equity partners.
• Acting as a development authority for the port :Here the government invests
in the venture and hands over the development activity at the port to JNPT.
JNPT then enters into BOT for terminals with private parties for operations
• Taking up container terminal operations in such a port set up by a 3rd party :
JNPT could enter into a different area by attempting to be a terminal
operator with investments at the new port, in a departure from its role as
development authority A decision on the mode of entry would be based on
those capabilities of JNPT that would help in development of greenfield port
–
• Port Development capabilities (infrastructure, roads etc)
• Marine capabilities
• Terminal operation capabilities
• Experience in forming PPP’s
• Ability to attract private operators to invest
• It is important to mention that the attractiveness of these options would to a
large extent be determined by the business and regulatory environment
prevailing then, which is something that cannot be factored in now It is
expected that the development as port authority has the highest alignment
77
with the port’s capabilities. Its financial benefit would to a large extent be
determined by the agreement entered into between various stakeholders
(Government, port, private players)
The role of JNPT in such an arrangement is envisaged to be that of a port
development authority responsible for development of basic infrastructure. The
operations of the terminal would be handed over to private players on a BOT basis.
Such a PPP model would be an attractive option financially for JNPT and could be
a profitable use of the investible surplus which would be created post 2015-16.
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CHAPTER 12
MARKETING STRATEGY
79
CHAPTER 12
MARKETING STRATEGY
JNPTs marketing strategy would revolve around the levers of price,
customers, geographies, services and communication and would delineate
JNPTs target within each of the levers
Cost – How would JNPT ensure competitive prices for its services and how
would it provide better value to its customers?
Customers – What customers would JNPT focus on?
Geographies – What geographies would be serviced by JNPT?
Communication – What would be JNPTs marketing strategy to attract and
retain customers?
Services - What services would JNPT offer?
80
It is also imperative to realize that the marketing strategy outlined above would be
supported by a financial and
commercial strategy. The aim of the supporting strategies are as follows:
Financial Strategy: The financial strategy of the port focuses on utilization of
financial resources of the port. It delineates the sources of finance, expected
costs and provides a framework for identifying the source of finance for
various development activities.
Commercial Strategy: The commercial strategy deals with the three levers of
customer management, cost management and service offerings of the port. It
is aimed at achieving commercial success within the operating business
environment through effective management of customers and suppliers.
81
The commercial and financial strategy for the port are detailed in the following
sections
The commercial strategy of the port deals with the revenue flow to the port through
the elements of customer management, cost management and service offerings.
The execution of the commercial strategy has to be in complete alignment with the
vision and port development strategy. Key focus areas identified in the port
development strategy would emerge as the revenue drivers of the port and thus
determine the success of the commercial strategy.
Framework of commercial strategy
JNPT's commercial strategy would be influenced by variables in the external
environment such as the business environment, customers and suppliers. The
methods under JNPT's control that can be used to determine its commercial
strategy include services offered, cost management and customer management.
The commercial strategy is illustrated in Exhibit . JNPT’s commercial strategy is
influenced by several external variables as seen below -
• The business environment impacts cost and customer management through
regulatory and other factors.
• JNPT's supplier network impacts the kind of services it can offer as well as
the cost incurred in providing those services.
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• The competitive environment will determine the services that need to be
offered by JNPT and require JNPT to manage its customers
Framework of Commercial strategy
Services Offered
In line with the port development strategy, JNPT has defined certain focus areas
over the next 20 years. These include a strong focus on national export-import
container traffic as well as greater participation in the container handling value
83
chain through creation of logistics and free trade zones. Service offerings that
JNPT is likely to offer over the next few years are listed below -
• Container handling operations
• Liquid cargo handling operations
• Vessel related operations (towage, pilotage etc)
• Logistics/Distribution zone
• Free trade zone
• Container freight operations/ empty depot storage
These service offerings would be influenced significantly by the competitive
environment. In case certain services currently not offered at JNPT were to be
offered by major competitors, JNPT would need to create mechanisms to offer
similar services to prevent diversion of traffic to these competitors.
Cost management
To ensure that its commercial strategy is effective, JNPT would need to effectively
manage its costs. These cost savings could directly translate into value offerings
that could help in attracting customers. Cost management could be attempted at
two broad levels –
Operational Efficiency towards low costs : JNPT will continuously strive to
improve its operational efficiency levels. This could translate into substantial
operational cost savings.
84
Customer management
With increasing competition between ports, the element of customer service would
prove to be a key differentiator for the port. To provide for effective customer
service JNPT would need to develop a culture that supports all customers so that
their needs and specifications are met. JNPT would need to create and develop
strong, positive relationships with key customers by developing and implementing
customer relationship management strategies and best practices.
Customer Acquisition/ retention -
JNPT would need to follow a multi pronged strategy to acquire customers. The
strategy would broadly consist of three aspects which are as follows:
• Provide value added services
• Provide the best value for money
• Marketing activities
Value added services - The port will develop value added services for customers
to increase the attractiveness of port and develop a sustainable competitive
advantage. These value added services would be in the area of logistics and will
enable the port to emerge as an integrated logistics hub in the country.
Best Value for Money - The port will endeavor to optimize its resources to
generate maximum throughput from its current infrastructure. Apart from this the
port will also undertake automation projects to bring down the time and cost
85
required for various processes. This will enable the port in lowering its overall cost
for the customer.
Marketing activities - The port will also develop and expand a marketing team
which will undertake customer management exercises. This would primarily be
aimed at retaining and targeting key customers. The marketing team will take
regular feedback from customers and will have key accounts manager for strategic
customers. These key account managers will resolve customer queries and issues.
Contracts with Suppliers: JNPT would ensure preparation of detailed specifications
for all contracts and orders to ensure that quantities and goods and services
procured are fit for purpose using industry standards as the norm. Focus would be
on optimal match of requirements with order quantities. Contract management will
take on an
increasing importance given the large number of projects likely to be taken up over
the next few years. An example of cost management in internal processes could be
the introduction of automation between CFS operators and terminal gates. A
different illustration of cost management could be training of RMQC operators for
carrying out double moves. This could translate into significant improvements in
operational efficiency and translate
into long term cost savings.
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Marketing at JNPT
JNPT's marketing team will strive toward efficient customer management and
developing the same as a competitive advantage of JNPT over other ports. The role
of the marketing team will be centered around the following four aspects
• Customers
• Price
• Promotion
• Competition
Customers: The marketing team would be divided into key account managers.
Each account manager would be responsible for 2-3 customers and would aim at
maximizing revenues from the customers as well as for resolving any customer
related queries.
Price: The marketing team would constantly study the competitors and would play
a role in developing pricing strategies for the port. These strategies would revolve
around volume discounts, growth discounts as well as route discounts.
Competition: The team would regularly study the environment to develop reports
on competitor plans as well as future scenarios. These would be provided to
various departments of the port for appropriate action. The team would also be
responsible for identifying future opportunities. These can arise from specific
87
routes, specific industries or specific customers. The marketing team would then
develop strategies to exploit the opportunity for the port. These would be
passed to the senior management for review.
Promotion: The marketing team would regularly showcase capabilities of JNPT in
port and logistics to customers to attract new customers and retain strategic
customers.
PORT – HINTERLAND RELATIONSHIP
Port is
• A Transport node where cargo is transferred from vessels to road or rail or
other vessel and vice-versa.
• A place where cargo is stored.
• A safe place to moor ships/vessels.
Port’s Hinterland is
• The area from which the port’s customers are drawn from or also called
market area. Customers are normally send/receive good through ports.
• "Hinterland" was borrowed from German, where it means literally the land
behind (a city, a port or similar). Some ports will have hinterlands that
extend across many states, while other ports will have smaller hinterlands.
88
Ports – Hinterland Relationship and Stakeholder
HINTERLAND REGIONS OF INDIA
• Out of total 28 states in India only 9 states have a coastline and other states
are land-locked.
• India consists of three hinterland regions:
• North – Western Hinterland
• Southern Hinterland
• Eastern Hinterland
89
90
Hinterland Regions of India
91
WESTERN HINTERLAND ANALYSIS
North – Western Hinterland
92
CHAPTER`13
HINTERLAND MAPPING FOR PORTS
93
HINTERLAND MAPPING FOR PORTS
TEU = Twenty feet Equivalent Unit
• A measure used for capacity in container transportation
• Used to describe the capacity of container ships and container terminals.
• A reusable transport and storage unit for moving products and raw materials
between locations or countries; the terms container or box may be used on
their own within the context of shipping.
• A related unit, the Forty-feet Equivalent Unit (often FEU or feu) is defined
as two TEU.
Duration of study: September 2009 to January 2010
Container i.e. Number of TEUs movements are as below for selected ports.
Only loaded containers are considered for the purpose of study. Empty
containers are not included.
Whenever any FEUs movements are observed, it is treated as two TEUs as
per industry norms.
Mundra Port
• State-wise Share of Containers - Mundra Port
94
Source: MICT, MPSEZCT, Port Authority and MPSEZ - Adani
Kandla Port
State-wise Share of Containers - Kandla Port
Source: ABG Kandla Container Ltd., Port Authority and MPSEZ – Adani
95
Pipavav Port State-wise Share of Containers – Pipavav Port
Source: APM Container Terminal Ltd, Port Authority and Customs Department
JNPT State-wise Share of Containers - JNPT
Source: MPSEZ – Adani
96
Calculation for Hinterland Mapping
97
STATE-WISE HINTERLAND MAPPING FOR MUNDRA PORT
Percentage (%) Share of States for Containers – Mundra Port
98
Share of Type of Hinterland – Mundra Port
99
Hinterland Mapping – Mundra Port
100
101
102
103
104
105
106
107
108
109
110
CHAPTER 14
RESEARCH
111
RESEARCH
Port Choice Determinant-wise Score for Ports
Freight Forwarder’s Response based Score for - Vessel Frequency
112
Freight Forwarder’s Response based Score for – Hinterland Connectivity
Freight Forwarder’s Response based Score for – Port Infrastructure
113
Freight Forwarder’s Response based Score for – Port location (Sea-Route)
Freight Forwarder’s Response based Score for – Number of CFS
114
Freight Forwarder’s Response based Score for – All Determinants
115
Finally ranking wise list of port choice determinants are as follows
116
117
CHAPTER 15
SUGGESTIONS
118
SUGGESTIONS
Port location from main sea routes and Port – ICDs rail distance are such
parameters those cannot be changed.
Mundra, Kandla and Pipavav have benefit of Port – ICDs rail distance factor
which they should focus more to attract container cargo from northern
hinterland.
For Mundra and Pipavav, it is easier to serve the potential container cargo as
they have already penetrated in northern region states and they are equipped
with required infrastructure to meet near future demand.
Time to time up gradation of infrastructure is required for Mundra and
Pipavav with strategic vision.
Major issues are Vessel Frequency and Hinterland Connectivity which must
be achieved then first two rank determinants will be strength of both Mundra
and Pipavav to attract more container cargo. Though in last 6-8 months
hinterland connectivity is improved by rail frequency but still it requires
more.
Mundra has to take care of Delhi region as Pipavav is looking at the same
lucratively.
119
Rajasthan is not yet covered as efficiently as it should be even though it is
the nearest neighbour state of Gujarat which can be attracted by road
transportation also from near districts of Rajasthan.
Ensuring availability of cargo is even necessary as vessel frequency and
availability of cargo goes hand by hand and works symbiotically to get
benefit of increment.
Kandla can even focus for neighbouring states with existing facilities. It can
attract container cargo but has to undergo for many improvements.
Customs Clearance should be hassle free, less time consuming and smooth
so more container cargo can be attracted.
Associations should be done with Ship Liners and Industrial clusters to
attract more cargo.
120
CHAPTER 16
CONCLUSION
121
CONCLUSION
All Gujarat ports have rail distance benefit from ICDs which is of important
factor. This is not applicable in case of Madhya Pradesh and Uttar Pradesh.
If Mundra and Pipavav will increase Vessel Frequency and Hinterland
Connectivity then together with 1st and 2nd rank determinants, both can
attract more container cargo.
Mundra has to keep an eye on Pipavav as upcoming competitor because
Pipavav is much closer in terms of Port Infrastructure to Mundra as well as
for Delhi region shippers.
Rajasthan and Gujarat both are potential hinterland for all Gujarat ports due
to proximity.
Haryana and Madhya Pradesh is still under influence of JNPT so long term
efforts are must from all Gujarat ports.
Punjab, Delhi and Uttar Pradesh are required to be maintained with same
level of quality and timely service.
Infrastructure wise JNPT is ahead of all ports but Mundra is also equipped
with modern and adequate infrastructure for coming few years so in future
Mundra can be seen as one of the biggest container handling port in west
coast.
122
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