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India ports at sea: Cargo handling sinks as coronavirus scuttles economies

Cargo handling at the country’s ports may fall to 10 per cent-12 per cent of capacity this fiscal as the coronavirus pandemic forces countries to lock down and demand in India’s economy sinks.

Cargo handling at major ports grew 2.8 per cent in FY19, but it grew just 1.4 per cent in FY20 till February end.

Cargo volumes in FY21 will decline primarily because of flagging demand for crude oil during the pandemic. A study by CARE Ratings forecasts a dip of 5.1 per cent in India’s crude oil imports in FY21. Liquid cargo inclusive of crude oil and petroleum products accounted for 38 per cent share of the major ports’ traffic in last fiscal.

Coal imports will fall too, as India’s power demand declines. Electricity demand will contract as a three-week national lockdown to prevent the spread of the coronavirus disrupts industrial and commercial establishments. The demand slump will in turn precipitate fall in coal imports.

Also, demand for steel is poised to be subdued on account of temporary suspension in building and construction activities and sluggish production of automobiles, thus affecting iron ore shipments.

The outlook is unimpressive for container traffic too.

“Container traffic is to be limited as well due to port congestion and increase in turnabout time which has resulted in problems in clearing import containers due to factory closures and migration of factory workers. This can potentially dissuade international container companies in order to avoid their carriers to be stuck at the Indian ports”, the report by CARE Ratings noted.

The Covid-19 pandemic has triggered disruptions in logistics supply chains, leading to delays in clearing of goods from ports, prompting some cargo owners suspending their operations and detaining of containers.

Following the 21-day lockdown, the Directorate General of Shipping (DGS) has imposed a14-day quarantine on shipping vessels arriving from any port in China and any nation affected by COVID-19. The vessels arriving after 14 days of departure from a Coronavirus-infected country are, however, not required to comply with the additional precautionary measures.

Stoppages of a vessel at any port of the affected countries only for refuelling will not be considered for the calculation of 14 days. Ports which are not able to comply with the specified requirements have been told not to allow berthing for vessels arrived within 14 days from the infected countries. In order to ensure delivery of essential goods and commodities like fuel, medical supplies and food grains shipping services are not suspended. The Ministry of Home Affairs has also ordered that each major port shall ensure that no penalties, demurrage, charges, fee, rentals are imposed on any port user for delay in berthing, loading or unloading operations, or evacuation or arrival of cargo caused by the reason attributable to lockdown measures from March 22 to April 14, 2020.

Kolkata Port Trust has declared force majeure at its Haldia Dock Complex, becoming the first state-owned major port trust to invoke the clause in the wake of the outbreak of the Coronavirus. Most of the private ports and terminals operating in the country too have invoked the force majeure clause as most of them are involved in end-to-end contracts.
Source: Business Standard

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