SHORT SEA SHIPPING CONNECTING INDIAN PORTS FOR FINISHED VEHICLE TRANSPORTATION THE VESSEL S MANAGER POINT OF VIEW
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1 Automotive Logistics India Conference Session 3: Keeping the metal moving SHORT SEA SHIPPING CONNECTING INDIAN PORTS FOR FINISHED VEHICLE TRANSPORTATION THE VESSEL S MANAGER POINT OF VIEW 9 November 2016
2 SHORT SEA SHIPPING. CONNECTING INDIA PORTS FOR FINISHED VEHICLE TRANSPORTATION. THE VESSEL s MANAGER POINT OF VIEW. 1. Facts on FVL Transportation in India 2. The Mediterranean Example Through Time 3. Potential Solution for India 4. Factors affecting solution s cost effectiveness 5. How to make SSS solution possible 6. Conclusions 7. Facts on Neptune Lines 2
3 Facts on FVL Transportation in India Automotive Industry Automotive industry production accounts for 7% of the country s GDP Last 10 years, year-to-year growth of car sales in India almost 8% Year to year car sales growth expectations for the next 5 years 10% Chennai and Mumbai served territories consist of both OEM manufacturing facilities, as well as a huge consumer population Almost 97% of vehicles is nowadays transported by road 3
4 Facts on FVL Transportation in India General Industry Government Commitment For a coastline of 7,517 km, India has 12 major ports and 187 non-major ones, covering 95% of India s trade volume. Over the last decade, seaborne trade has increased by 3,3%, i.e twice the global growth rate. $ 2,6 bl invested in ports and shipping sector between 2011 and The Automotive mission plan (AMP 2026): The collective vision of Government of India and the Indian Automotive Industry on where the vehicles, auto-components, and Tractor industries should reach over the next ten years in terms of size, contribution to India s development, global footprint, technological maturity, competitiveness, and institutional structure and capabilities. (source: Society of Indian Automobile Manufacturers) 4
5 AREN T ALL THE ABOVE THE STRONGEST EVIDENCE THAT INDIAN AUTOMOTIVE INDUSRTY WILL CONTINUE ITS SUCCESSFUL ENDEAVOR? 5
6 Facts on FVL Transportation in India Intermodal shipping: why divert? Plans for rail freight transportation from Delhi to Mumbai and to the East expected to materialize in Plans for connecting New Delhi with Chennai and West to South currently under feasibility analysis. Whatever the increase of rail corridors, volumes transported will be limited compared to road transport. Major ocean RoRo carriers call Indian ports, while many times imported volumes are low, producing losses transhipment solutions from Indian or Sri Lanka ports. Serious tracking capacity shortage due to implementation of new CMV rules as from 1st April 2017: limit in the length of car carriers to 18,75 m, speed limiters, rear facing cameras systems, sliding cargo inspection window etc. 6
7 Facts on FVL Transportation in India Traffic congestion in Indian roads 7
8 Facts on FVL Transportation in India Increased fuel usage Huge environmental impact CO2 emissions increase 8
9 Facts on FVL Transportation in India Increase in road accidents: almost 20% of total deaths on the road caused by trucks and trailers 9
10 The Mediterranean Example Through Time Very limited SSS activities in the 80s Ocean carriers were calling every single available port to unload Far East production Establishment of manufacturing centers in Turkey, Central Europe, Romania and lately Morocco. Development of transportation routes 10
11 Our trade routes 11
12
13 WHAT HAPPENED DURING MATURITY PHASE? 13
14 Our trade routes 14
15 SSS did not act as a competitor to deep sea carriers but was rather supplementing their services Out of providing flexible solutions, the total logistics cost of OEMs, LSPSs and deep sea carriers was reduced significantly 15
16 Neptune Lines was the major SSS player in this development Currently holding the biggest quota in the Med
17 Potential Solution for India Coastal service between West, South and East Indian ports Transshipment service in Sri Lanka, in such a way ocean carriers will detour India ports and will create a straight route to their destination to the Gulf, Red Sea, East Africa, West Africa, South America. Deployment of a vessel of such a capacity that will sustain this trade Increase vessel capacity as the volume grows Provide ex works to free on trucks solutions, in cooperation with LSPS, connecting manufacturing facilities and dealers Connect India with Bangladesh market 17
18 Potential Solution for India 18
19 Factors affecting solutions cost effectiveness Optimization of SSS routes in combination with onforwarding routes, as to reduce cost of transportation and total logistics cost in general Costs of bunkers, disbursements, wharfage Cost of positioning a vessel in India 19
20 How to make SSS endeavor possible Positive Developments In an effort to promote its shipping industry, the Indian Ministry of Shipping has decided to offer a discount for coastal transportation of vehicles via RoRo ships at India s major ports. India s major ports introduction offered a discount of 80% for two years on vessel-related charges for coastal vehicle movements Chennai port trust offered competitive wharfage charges of $7.29 per unit, compared to the standard charge of $ The Ministry of Shipping has relaxed cabotage regulations allowing foreign-flagged shipments of finished vehicles to be handled on domestic coastal routes. 20
21 How to make SSS endeavor possible Other Measures Introduction of bunker duty exemption tax free bunkers for coastal shipping Subsidization of coastal shipping at least during its initial phase Reduction of wharfage (shipper cost) at all ports Port dues to be calculated on DWT and not GRT, which heavily penalizes PCTC vessels port dues to drop to one-third of current charge Exemption on India flag, to last longer than 6 months 21
22 Conclusions Indian government, Indian OEMs, ports and all players in the field of FVL have set up the framework for the promotion of SSS. This will eventually help those who have the experience and the know how, and at the same time are willing to invest, to provide flexible and cost effective SSS solutions. Combined with flexible and cost-effective forwarding solutions: reduction of total FVL transportation costs reduction of CO2 and other emissions decongestion of road traffic reduction of accidents on Indian roads 22
23 Facts about Neptune Lines One of the major SSS players Our vision is to further expand to new areas currently exploring opportunities of expansion to India. Recently made our first call in Mumbai buses transportation to Kuwait. July 2016: launch of our new service to the Middle East, connecting 8 countries in the Arabian Gulf. New service supported by NMT shipping, our commercial agent in the region. 23
24 Our new service June 2016: Expanded in the Gulf Headquarters located in Dubai Connecting: Jebel Ali and Khalifa ports (UAE) Shuwaikh (Kuwait) Umm Qasr (Iraq) Bandar Abbas (Iran) Sohar (Oman) Dammam (Saudi Arabia) Hamad (Qatar) Khalifa Bin Salman (Bahrain) NMT Dubai : Commercial Agent in the region More ports are served on inducement basis 24
25
26 Neptune Lines at a Glance About 1 million units a year Passenger and commercial cars High and heavy units Static cargo 10 regular service lines 16 Vessels with capacity ranging between 530-3,800 cars Present in 28 countries Calling 48 ports Near 0% damage ratio 400+ Staff employed (shore and sea) 26
27 Modern Fleet Tailored to Our Clients Needs Differentiated model with emphasis on owned tonnage Approximately 0.5 billion invested in high- specification modern vessels -Built at high quality yards in Europe, South Korea and Japan with Advanced Ship Design Tailored for the ports our clients use Smart Ship Connectivity Can assure quality and control of operations Average Fleet Age 13.2 Industry 7.3 Neptune 100% 80% 60% 40% 20% 0% %Owned 49% Industry 94% Neptune 27
28 Safety Record Actions Focus on safety Rigorous lashing procedures Continuous internal audits Effective stowage planning Own trained personnel for lashing Outcome Near 0% sea transportation damage ratio High level of performance during customer Quality Audits One of the lowest claim levels in the industry 1.40% 1.20% 1.00% 0.80% 0.60% 0.40% 0.20% 0.00% Damage Ratio Evolution 1.21% 1.18% 0.57% 0.39%
29 Thank you for your attention! 5-9 Iasonos Street, GR , Piraeus, Greece neptunelines.com
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