After surviving two consecutive pandemic waves, ports are well prepared to withstand any disruptions in future. Any more intensification of containment measures can have adverse impact on cargo volumes, feels Sai Krishna, Assistant Vice President & Sector Head, Corporate Ratings, ICRA Limited.
With the new variant Omicron creating ripples, how well are the ports prepared for any exigency?
After witnessing two waves of COVID-19 and related containment measures, the Indian port sector is better prepared to withstand any disruptions caused by the current wave. Port sector being an essential service was allowed to operate during the earlier pandemic waves despite stringent lockdowns.
Although there were issues of labour availability and sharp decline in cargo volumes due to n the first wave and followimng intensive containment measures, however, the volumes gradually picked up and ports aided by digitalisation and automation measures which were already being implemented prior to pandemic outbreak, managed to operate with lower availability of labour.
As the impact of the current wave is expected to be relatively milder, with not so stringent containment measures, the impact on port operations is expected to be limited. However, any intensification of containment measures leading to contraction in economic activity can have an adverse impact on cargo volumes.
Port congestion is a topic most discussed. Any solution for this problem in the near future?
Port congestion problems arise from congestion issues inside the port perimeter. Issues outside the port could pertain to infrastructural constraints or it could be due to disruptions caused in supply chain leading to bottlenecks which can have a cascading effect on other stakeholders, including ports. In Indian ports, congestion inside the port perimeter has witnessed improvement in the last few years due to various measures adopted by the ports, including better yard management, improvement in infrastructure and streamlining of processes supported by the digitization or automation of projects. For congestion outside the ports, infrastructure projects to address bottlenecks such as elevated roads and alternate routes to bypass congested routes and improved connectivity to national highways is being implemented. Ever since pandemic outbreak, supply chain disruption and labour shortage, congestion has been taking place at major ports in China, Europe and US. This has had some impact on Indian ports also, apart from issues such as container shortage and increase in freight rates impacting the trade. However, the impact has been limited on cargo volumes at domestic ports which witnessed a healthy recovery in the current fiscal during FY2022, despite the severe second wave. With the impact of the third wave likely to be relatively moderate, the adverse impact on domestic ports is expected to be limited.
How much does real-time tracking and visibility help?
Real-time tracking and visibility when properly implemented lead to optimisation of assets, reduce transit time, reduce congestion issues and result in cost savings. However, in India, implementation of real-time tracking is still at a nascent stage and the full benefit of the same will happen once the coverage has expanded to include the hinterland and smaller ports and integration of systems between different stakeholders in logistics supply chain, including various government agencies such as Customs to reduce redundancy and duplication.
The use of analytics based on tracking system such as LDB has resulted in reduced dwell time at West Coast Ports such as JNPT. Further, the manpower should also be sufficiently trained to use the facility.
Has digitalisation really helped in making movement of goods swift?
Indian ports have been implementing digitalisation projects in the last few years aimed to improve efficiency, optimise the process, improve security and bring down the cost of logistics in the country by reducing bottlenecks. Some of these projects are being implemented under Sagarmala. Also, an Enterprise Business System (EBS) is being implemented at five major ports — Mumbai, Chennai, Deendayal, Paradip and Kolkata. It is being implemented in a phased manner. While the digitalisation measures have led to reduced dwell time at several ports and other efficiency improvements, the benefits are likely to become visible over time with expanded coverage and integration of systems.