Container Port Performance Index (CPPI) 2023

20-07-2024

India's port development program achieved significant recognition as 9 Indian ports were included in the Global Top 100 for the first time in the Container Port Performance Index (CPPI) 2023.
Credit for this achievement has been given to the Sagarmala programme, which focuses on modernising ports and enhancing their efficiency.

Key Highlights of the CPPI 2023

The CPPI is a global index created by the World Bank and S&P Global Market Intelligence.
It evaluates and compares the performance of container ports worldwide.
The index ranks 405 global container ports based on efficiency, particularly the duration of port stays for container vessels.
The main objective is to identify areas for improvement to benefit stakeholders in the global trading system and supply chains, including ports, shipping lines, national governments, and consumers.

Visakhapatnam Port climbed from 115 in 2022 to 19 in 2023, marking the 1^st time an Indian port reached the Global Top 20.
Mundra Port improved its rank from 48 last year to 27 this year.
Seven other Indian ports in the top 100 are:

Launched in 2015, the Sagarmala programme is a flagship initiative by the Ministry of Ports, Shipping and Waterways.
It aims to transform India's maritime sector by leveraging the country’s extensive coastline, navigable waterways, and strategic trade routes.
The programme seeks to promote port-led development and uplift coastal communities.
It aims to improve logistics performance by reducing costs for domestic and international trade.
By utilizing coastal and waterway transportation, it aims to minimize the need for extensive infrastructure investments, thus enhancing logistics efficiency and boosting the competitiveness of Indian exports.

Maritime Transport: The Ministry of Shipping states that maritime transport handles about 95% of India's trade by volume and 70% by value.
In November 2020, the Ministry of Shipping was renamed the Ministry of Ports, Shipping and Waterways by the Prime Minister.
The Indian Government supports the ports sector by allowing up to 100% Foreign Direct Investment (FDI) under the automatic route for port and harbour construction and maintenance projects.

Classification: Ports in India are classified as Major and Minor based on the jurisdiction of the Central and State governments under the Indian Ports Act, 1908.
Major Ports: There are 13 Major Ports governed under the Major Port Trusts Act, 1963, owned and managed by the Central Government.
Minor Ports: Minor Ports are governed under the Indian Port Act, 1908, and are owned and managed by the State Governments.
National Perspective Plan for Sagarmala: Six new mega ports are planned under this initiative.

The Sagarmala National Perspective Plan identifies specific opportunities for transportation of commodities such as thermal coal, fertilisers, food grains, cement and steel by coastal shipping and inland waterways.

Global Standing: India ranks as the 16^th-largest maritime country with a coastline of 7,516 km.
Economic Impact: The ports and shipping industry is crucial for the growth of India's trade and commerce.
Trade Growth: The Ports sector is driven by high growth in external trade.

In FY23, major ports handled 780 million tonnes of cargo, with a CAGR of 3.26% from FY16-23.
In FY24 (April-January), major ports handled 680 million tonnes of cargo.

Cost-effective Transport: Domestic waterways are recognized as a cost-effective and environmentally sustainable mode of freight transportation.
Future Plans: The government aims to operationalize 23 inland waterways by 2030.

Indian Ports Bill 2023: Proposed to enhance transparency in port tariffs and update penalties.

It empowers the Maritime States Development Council (MSDC) for integrated planning and introduces a three-tier dispute resolution mechanism for conflicts between state maritime boards.

Shipbuilding Financial Assistance Policy (SBFAP): Launched to support the shipbuilding industry under the Make in India initiative.

The policy, operational until March 2026, provides financial aid to Indian shipyards to enhance competitiveness and secure global orders.

Largest Ship Breaking Facilities: India has the largest ship breaking facilities globally, with over 150 yards along its coast.
Annual Scrapping: India scraps approximately 6.2 million GT (Gross Tonnage) each year, accounting for 33% of the world's total scrapped tonnage.
Recycling Statistics: India recycles around 70 lakh GT annually, followed closely by Bangladesh, Pakistan, and China.
Alang Ship Breaking Yard: Located in Gujarat, it is the world's largest ship recycling facility.

Limited Global Presence of Indian Fleet: Despite a vast coastline and strategic location, Indian ships constitute less than 1% of the world's shipping fleet. In contrast, China holds around 19%.

Seafarer Supply: India ranks 3^rd globally in supplying sailors, providing nearly 10% of the world's seafarers, following China and the Philippines.

High Turnaround Times at Indian Ports: High turnaround times at Indian ports reduce efficiency and increase costs for shipping companies.

The average turnaround time at major Indian ports was approximately 2.48 days in 2022, compared to the global average of 0.97 days.
Poor performance at ports disturbs schedules, increases import/export costs, reduces competitiveness, and hampers economic growth.
This particularly affects Landlocked Developing Countries (LLDCs) and Small Island Developing States (SIDS).

Infrastructure and Operational Inefficiencies: Ports face issues like poor road and rail connectivity within the port area and lack of cargo handling equipment and machinery.

Insufficient hinterland (far from port area) connectivity and dredging capacity, along with a shortage of technical expertise, are significant challenges.
Limited access to supporting infrastructure, such as insurance and financing companies predominantly based outside India.
For example, many marine insurance companies are headquartered in London, posing challenges for Indian shipping firms to access cost-effective and reliable services domestically.

Digitalisation: Integrating digital and physical connectivity can enhance port and shipping operations. Technologies like Artificial Intelligence (AI), the Internet of Things (IoT), and blockchain offer significant benefits.
Port Modernisation: Ports need to invest continuously in technological, institutional, and human capacities to provide fast, reliable, and cost-efficient services.

Collaboration between public and private sectors is crucial for achieving modernisation goals.

Widen the Hinterland: Ports should aim to attract cargo from neighbouring countries and domestic production centres.

Investments in corridors, regional trucking markets, and cross-border trade and transit facilitation can help expand ports' hinterlands.

Promote Sustainability: Port stakeholders, including shipping lines, traders, social partners, and the port-city community, demand that ports fulfil their social, economic, and environmental sustainability obligations.