Tuesday, August 26, 2014

The Shipping Industry: Investing Essentials

SOURCE: http://themaritimehub.org/the-shipping-industry-investing-essentials/
The world economy relies on the movement of commodities and goods across oceans, in the air, and over railways and highways. The ceaseless flow of materials and products is often out of sight and far from our attention, but life would be vastly different for most of us without the necessities and conveniences made possible by the shipping industry.

What is the shipping industry?

The shipping industry facilitates domestic and global manufacturing and trade via transportation of commodities and finished products, while also providing for the delivery of goods directly to consumers. A wide variety of commercial transport methods can be found in the shipping industry, from bulk transport of commodities in railcars to highly specialized “intermodal” container shipping. Four major modes of transport exist in this industry: marine, air, rail, and freight (trucking).

How big is the shipping industry?

The shipping industry is a subset of the $9 trillion global trade market for goods and services. According to the U.S. Department of Commerce, spending on the U.S. shipping industry, which encompasses the four major modes of shipping transport and associated logistics, totaled $1.3 trillion in 2012, comprising 8.5% of domestic gross national product. The industry is a substantial employer: the freight segment alone employs 3 million people in the U.S.

How does the shipping industry work?

To understand how this broad industry functions, it’s useful to review each of the four methods of transport individually.
Marine shipping occurs on general cargo ships, container ships, bulk carriers, and tankers. General cargo ships, as their name implies, carry a variety of items, which are often loaded on pallets. Container ships carry stacks of uniform steel containers, each loaded with materials and goods. The container method is noted for its efficiency: According to the World Shipping Council, the cost to transport a kilogram of coffee from Thailand to the U.K. is just $0.15. Bulk shippers primarily convey commodities in large amounts, such as iron ore, coal, grain, and forest products. Finally, tankers carry crude oil, chemicals, and other liquid cargo, including noncrude petroleum products.
Commercial air cargo is flown from one destination to another for further transport to trade or consumer end points. Boeing estimates that 60% of air cargo is transported via dedicated air freighters, with the rest moving within the lower cargo holds (the “belly”) of passenger aircraft. The air cargo sector of the shipping industry includes expedited delivery services such as FedEx, UPS, and DHL.
The rail sector transports cargo via regional and national rail networks. Commodities can be shipped in bulk on open railcars or within secured cars. The rail sector is also instrumental in intermodal transportation, in which specially designed containers are transferred from one mode of shipping to another, often without human intervention. For example, a container might come into port on a ship, then be transferred onto a nearby rail yard car by an automated port transfer system. Commercial rail is an unsung workhorse of U.S. trade: one-third of U.S. exports are transported by rail.
According to the American Trucking Association, an industry trade group, trucks transport approximately 70% of total freight tonnage in the U.S. annually. This sector facilitates movement of goods to and from ports, as well as enabling domestic commerce. Freight is divided into two major categories: full truckload, or FTL, and less than truckload, or LTL. FTL carriers cater to larger corporations that often deal in bulk goods, while LTL carriers enable small businesses to ship goods using a portion of a truck’s capacity, thus paying only for the space needed.
What are the drivers of the shipping industry?
The growth in global manufacturing is one of the most important recent drivers of the shipping industry. Developing economies such as China and South Korea import commodities including iron, steel, and copper. With these and other materials, a wide range of products are manufactured for export, from appliances to phones to automobiles. The purchasing of manufacturing inputs and subsequent need to ship out finished goods by rising economies has propelled the shipping industry.
Consumer end-product demand, in particular the emergence of e-commerce, has also invigorated the industry. Amazon.com, Rakuten in Japan, and MercadoLibre in Latin America are examples of substantial online e-commerce concerns that provide a channel to connect consumer demand to exporters across the globe.
Technological innovation and fuel prices prominently influence shipping. The rail sector is analyzing efficiencies where these two factors intersect. Rail companies have reviewed proposed methods of engine modification to allow fueling by liquefied natural gas in addition to the current primary fuel, diesel. Increased natural gas production has lowered the costs of the fuel by 50%, with long-term implications for the rail sector’s profits.
Finally, as the costs of aircraft, marine vessels, truck fleets, and rail maintenance can be enormous, the efficiency of financing affects the industry’s growth and profitability. Low interest rate environments tend to favor growth, and as we move further away from the recession of 2009, an increased appetite for lending among banks and finance companies may also promote industry expansion.

New Sulfur Emissions Regulations: What’s the Impact on Your Business?

By Sri Laxmana - Director of Ocean Services, C.H. Robinson

Sulfur Emission Regulations
You may have already heard that on January 1, 2015, ocean vessels will face stricter sulfur emissions regulations. While this may seem like it won’t affect you, think again. It’s true that carriers will be responsible for compliance with the change. However, the cost of compliance is often passed on to shippers.

What’s Changing?
To protect the environment and reduce global pollution, the International Maritime Organization (IMO) has regulations in place to control particulate matter emanations, including sulfur emissions. Sulfur—a natural element of the crude oil that ships use as fuel—is a primary cause of air-polluting particles emitted by ships. The new sulfur level regulations are intended to reduce the amount of air pollution generated by the shipping industry to improve air quality. There are two standards carriers must follow—emissions inside an emission control area (ECA) and emissions outside of an ECA. Since 2010, the limit of sulfur emissions inside an ECA was 1.00% m/m by weight. Starting in January, that limit is reduced to 0.10% m/m. [1]
As many ships operate both in and out of these ECAs, it’s already common for ships to operate on different fuel oils for the areas in which they travel. To maintain compliance, carriers will now need to use a different type of fuel inside ECAs—one that is not as readily available.

The Impact on Shippers

Right now there are concerns that refineries cannot produce enough of the marine fuel that meets with the new sulfur emissions standards. In a proactive strategy, carriers and refineries worldwide are in discussions to ensure there will not be a shortage in supply to satisfy the level of demand coming in the near future.
When the regulation goes into effect, it’s likely that carriers will pass the cost difference to shippers. Initial estimates indicate that container costs may rise by $20-30 per TEU in transpacific lanes and $40-50 per TEU in transatlantic lanes. This is a significant price surge to overcome in today’s competitive marketplace, especially for companies who have not budgeted for such an escalation.

What You Can Do

It’s critical to stay up to date on this and other changes to regulations that can impact your business so you aren’t blindsided by them. Whether subscribing to trade magazines, industry blogs, or following reliable sources on social media channels, find a way to stay in the know.
Your transportation provider is also a good source of information. Starting a conversation with your provider can help identify the potential impact the sulfur emissions change (or any change) will have on your business. By understanding a change’s influence on your business, you’ll be better prepared to properly budget for the future.

Still have questions about the new sulfur emissions regulation? Check out the IMO web page about the regulation at http://www.imo.org/ourwork/environment/pollutionprevention/airpollution/pages/sulphur-oxides-(Sox)-–-Regulation-14.aspx

Friday, August 22, 2014

Tamil Nadu Maritime Board needs a spark, GMB shows the way

Source: http://www.portwings.in/articlesinterviews/tamil-nadu-maritime-board-needs-a-spark-gmb-shows-the-way/

Port Wings News Bureau:

With the Tamil Nadu Maritime Board’s (TMB) policies for developing minor ports to become a true “Maritime gateway state of East Coast” shrouded in mystery, experts in Exim sector here feel that the board should learn from its counterpart in West coast, Gujarat Maritime Board (GMB), which has earned laurels from various quarters for playing pivotal role in bringing in sustained revenue for the state as well to the country’s exchequer.
Though Mr Rajeev Ranjan I.A.S., Principal Secretary to Govt for Highways and Minor Ports, while speaking to Port Wings recently asserted that the state government is not lagging behind in promoting it as the maritime gateway to South Asian ports in East Coast, ground reality is totally different and any further delay to capitalize the emerging opportunities in port sector could push the industrially developed state backwards in providing better sea connectivity to other countries.

Tamil Nadu Maritime Board

The Tamil Nadu Maritime Board was formed under the Tamil Nadu Maritime Board Act of 1995 in March 1997, whereby the erstwhile Tamil Nadu Port Department was converted into a Maritime Board for the purpose of administration, management and control of the non-major ports.
The State of Tamil Nadu has a coastline of about 1076 Kms. Along this coastline, there are three Major Ports, namely, Kamarajar (Ennore), Chennai and VOC Port Tuticorin notified under the Major Port Trust Act, 1963 and 23 Non-Major (Minor) Ports notified under the Indian Ports Act 1908. The major ports come under the control of Government of India and the non-major ports come under the control of the state government.
All the minor ports in Tamil Nadu, except Kattupalli Port, are anchorage ports without berthing facilities and hence cargoes are transshipped from the vessels at mid-stream to the shore and vice-versa through barges or submerged pipelines.

Gujarat Maritime Board

On the other hand, Gujarat Maritime Board was created in 1982 under the Gujarat Maritime Board Act, 1981, to manage, control and administer the minor ports of Gujarat.  Since its inception, Gujarat Maritime Board brought all stakeholders under one roof and resolved the then existing issues in the Port sector like obsolete technology, low loading rates, congestion and delays, poor connectivity with the hinterland etc.
Now, the state of Gujarat boasts of four important private ports viz Pipavav (India’s first private port), Mundra Port & SEZ, Dahej and Hazira. Of the 41 non-major ports, 19 are operational. Gujarat has the distinction of handling the maximum non-major port cargo traffic in India. Estimates clearly show the GMB ports are expected to handle cargo traffic to the tune of 324 MMTPA by 2015-16, which is a major chunk in overall cargo movements in the country.
To facilitate and meet the cargo projections, GMB has proposed the development of some new ports at Dholera, Positra, Simar, Vansi-Borsi, Mithivirdi, Bedi, Maroli, Suthrapada, Modhawa, Khambhat and Mahuva. In a nutshell, with its Maritime Board, Gujarat has developed about 40 ports in the last 20 years.
However, the growth and prominence GMB had achieved over the years in establishing the Gujarat state as the maritime gateway in West Coast was missing in TMB.

Appeal to Tamil Nadu Chief Minister Jayalalithaa

According to Exim analysts, TMB, which could have developed the Tamil Nadu state as a maritime gateway in East Coast (like GMB in West Coast) given the phenomenal industrial growth since mid-1990s and a better road and rail connectivity, had miserably failed to turn the state’s minor ports as growth engines.
Speaking to Port Wings on a condition of anonymity, a retired senior official in port sector said that the Maritime Board’s lackadaisical approach in materializing the concrete proposals for promoting minor ports now come back to haunt the whole state.
Though the maritime board has been “planning” development of over 20 minor ports as well as captive ports in Tamil Nadu for years, only three of them were actually materialized in recent times.
“The delay in developing minor ports along the navigationally-suited coastline (of the state) would force shifting of industries and its allied Exim businesses in future to those states, who could provide all hassle-free facilities,” the retired official warned.

Growing Competition from Neighbouring States

Sensing the importance in equipping it port sector to increase its revenue, neighbouring Andhra Pradesh led by its dynamic Chief Minister Mr N. Chandrababu Naidu has decided to constitute the long pending AP Maritime Board to attract over Rs 30,000 crore investments. Andhra has nearly 1,000-km coastline with 14 notified non-major ports and a Major Port (centre-controlled) at Visakhapatnam.
Even without a maritime board, Andhra Pradesh has divided its coastline into five different zones and concentrating on them.
Due to its concerted efforts, today Krishnapatnam and Gangavaram ports in the state are flourishing with heavy cargo movements throughout the year.
Besides, Odisha has also chalked out well-planned strategies to develop minor ports in the state with more emphasis on latest cargo handling facilities.

Ray of Hope from Govt?

If the Tamil Nadu government-controlled Tamil Nadu Maritime Board fails to gauge the abundant opportunity in the port sector now, then it could certainly lag behind other states in the East Coast in providing maritime connectivity.

Thursday, August 21, 2014

Shortage of Customs Officers impediment to EXIM business: Trade

Source: http://www.portwings.in/articlesinterviews/shortage-of-customs-officers-impediment-to-exim-business-trade/

Port Wings News Bureau:

While the Prime Minister Narendra Modi strongly emphasizing on increasing exports from the country on every available forum, shortage of Customs officials, mainly responsible for facilitating the export and import (Exim) sector, is going to be a real impediment to the sustained growth of trade, analyst say.
According to official sources in Central Board of Excise and Customs (CBEC), the shortage of manpower in Customs Department has increased gradually over the years and now stands at about 40%.
Speaking to Port Wings, Mr Murugan, a regular exporter of agricultural products from different East Coast ports, said, “There is a huge shortage of Customs officials at lower, middle and top levels for the last few years in most of the sea ports as well as airports, and it was badly affecting the trade.”
“Shortage of officials in Customs Department is plaguing the sector and most of us like Exim traders are stuck in the middle without any fault of us,” he added.
Shortage of officials have become so acute in the recent weeks when a newly openly CFS in Chennai had to keep its shutter down for about six months for want of regular appointment of Apprising and Examining Officers.
The situation (of shortage) is same in other parts of the country too. Since the continuation of shortage of Customs officials could seriously affect the trade in the longer run, Exim traders have appealed to the new government led by Prime Minister Narendra Modi and Finance Minister Mr Arun Jaitely to look into the issue and take measures on war-footing to set things right before it goes out of hand.
It may be recalled here that the Customs Department had collected over Rs 1.25 lakh crore from Exim trade as various levies in last fiscal and if the shortage of officials is addressed soon, the revenue may go up substantially.

Kamarajar Port aims big in containerized cargo domain: M A Bhaskarachar

Source: http://www.portwings.in/articlesinterviews/kamarajar-port-aims-big-in-containerized-cargo-domain-bhaskarachar/

Port Wings News Bureau:
After a failed first attempt in bringing in containerized cargo handling facility about two years ago at the port, Kamarajar Port Limited (KPL), erstwhile Ennore Port Limited, is treading cautiously now and takes well-measured steps to put everything, like better road and rail connectivity, in place before the commencement of container operations.
“Yes, we are taking systematic steps to put everything in place for smooth commencement of container operations in KPL, which is expected to begin in June 2016,” said Mr M.A. Bhaskarachar, Chairman cum Managing Director, Kamarajar Port Ltd, a Miniratna Category-I Public Sector Undertaking of the Government of India under the Ministry of Shipping.
In an exclusive interview to Port Wings, Mr Bhaskarachar explained about the steps being taken by the port management to create additional infrastructural facilities at the port to woo more businesses to the country’s only Corporate Major Port under the Union government.

Excerpts of the interview…
Q. Tell us about the background of Kamarajar Port?
Mr M A Bhaskarachar: Kamarajar (Ennore) Port was developed from a green field situation in the East Coast of India at a distance of about 20 km to the north of Chennai port. The port was declared as a Major Port in March 1999 and incorporated as a company (Ennore Port Limited) in October, 1999. The Port was commissioned in June, 2001 with two dedicated coal berths with 15m alongside draft and since then handles thermal coal for the power stations of TANGEDCO (formerly TNEB). The Port has since then developed terminals through private sector participation to handle liquids, coal, iron ore and cars. In February 2014, the port was renamed as Kamarajar Port Limited.

Q. Tell us about the status of proposed container terminal at Kamarajar Port?

MAB: During August 2014, KPL would hand over the award of concession to Adani Ports and SEZ Ltd (APSEZ), roped in by KPL for container terminal project after having satisfied with fulfillment of condition precedents by both parties.  After selecting Adani Port’s bid for the terminal, in March 2014, the KPL management signed a concession agreement with them to develop a state-of-the-art container terminal at an estimated cost of Rs 1,270 crore.
For smooth execution of the project, the company has floated a special purpose vehicle named Adani Ennore Container Terminal Pvt Ltd. Adani will have the flexibility to build the 730m berth in stages, starting with a berth-length of 400m in 27 months that can handle eight lakh TEUs a year costing Rs.750 crore and scaling it up to 730m to load 14 lakh TEUs over a period of 75 months.
Given the importance of having a container handling facility (besides other cargoes like coal, cars and petroleum) for sustained revenue in the longer run, the port management seriously pursued the bidding process and finally clinched a deal with Adani Port, who offered a revenue share of 37 per cent.
Once the terminal starts functioning, KPL would become a full-fledged port serving all the verticals of EXIM trade.

Q. Tell us about the other infrastructure ongoing projects in KPL to meet emerging challenges?

MAB: On the dredging front, we have Rs 220 crore project to accommodate larger vessels at Container and Multicargo Terminals. As of now, we are in the stage of floating tender for appointing Project Management Consultant and KPL is hopeful to award the dredging contract by December this year.
Likewise, in improving internal roads inside the port, we have chalked out a Rs 55 crore project, which is also in the final stages of being awarded to a successful bidder. Improvement of internal roads would not only help the seamless movement of container trailers in future, but also help heavy vehicles carrying RORO cargo into the port.
Besides, another project to improve rail connectivity for both Container as well as Multi cargo terminals is also under Tendering stage.
Once all the projects in dredging, rail connectivity and road connectivity in place, KPL can compete with any ports in the East Coast and I am hopeful that we could set new benchmarks in handling different cargoes, from cars to containers.

Q. What are the future plans KPL has to develop the port?

MAB: Though the Ennore Port was primarily developed to handle coal, we have developed gradually from that level and now handle liquid and project cargoes besides car exports.
In the last financial year (2013-14), we achieved more than 50 per cent growth by handling 27.34 million tonnes cargo as against 17.89 million tonnes handled in the previous year. There is no manual handling and it is completely mechanized.
To meet the exim traffic of bulk and project cargos like turbine & generators, windmill etc., and imports of wooden logs, we have planned to develop a terminal on DBFOT basis. The length of the proposed terminal is 270m with an estimated capacity of 2.00 MTPA at an estimated project cost of Rs.151 Crores. The construction work is expected to commence from October 2014.
Considering the expansion of the existing thermal power plants of TNEB and new TNEB - NTPC JV project, TNEB had requested EPL to establish additional coal berths. KPL has awarded the contract for construction of Coal Berth-3 with a capacity of 9 MTPA at a contract value of Rs.198.95 crores in December 2013. The construction work will commence shortly and the scheduled commencement of operations will be from second quarter of 2016. The capacity of existing berths is being enhanced by upgrading mechanization and deepening of the berths.

Tuesday, August 19, 2014

DB Schenker proves its prowess in logistics

Source: http://www.portwings.in/logistics/db-schenker-proves-its-prowess-in-logistics/

Port Wings News Bureau:
For the first time ever, the logistics experts at DB Schenker have combined transportation by rail, road and air across three continents to organize a delivery for an electronics manufacturer from China to South America.
In total, 21 metric tons of cell phone electronics were transported by rail from Chongqing in central China to Duisburg, Germany, via Kazakhstan, Russia, Belarus and Poland, a statement from the company has said.
From Duisburg, it was a truck journey to Frankfurt Airport, from where DB Schenker sent the cargo by plane to Brazil.
Commenting on the first-ever and successful attempt, Mr Daniel Wieland, Head of Rail Logistics & Forwarding at DB Schenker Logistics, said, "This first successful shipment combining rail, road and air freight has shown the growth potential of multimodal logistics."
The combination of rail, truck and air freight shortened the journey time from Asia to South America by almost four weeks compared with using ocean freight alone. The 10,124 kilometer rail trip to Duisburg took 17 days. The goods spent a total of just 24 days in transit before reaching their destination in Brazil. The alternative by ocean would have taken between 50 and 55 days.
The freight was labeled, X-rayed and securely packaged by DB Schenker's central hub at Frankfurt airport, from where it was sent to its final destination in Brazil. DB Schenker in Brazil handled the customs processes and clearance.
Mr Thomas Mack, Head of Global Air Freight at DB Schenker, added: "We are proud to pioneer this interesting transportation option for the market in Latin America." 

Monday, August 11, 2014

PM Modi to lay foundation of SEZ at JNPT

Source: http://www.portwings.in/ports/pm-modi-to-lay-foundation-of-sez-at-jnpt/

Port Wings News Bureau:

The Prime Minister Mr Narendra Modi will lay the foundation of a Port- Based Multi-product Special Economic Zone (SEZ) at the Jawaharlal Nehru Port Trust (JNPT) at Sheva, Navi Mumbai on Saturday, August 16, 2014.
According to a media statement, the infrastructure project is to be established on 277 hectares with a total Public and Private investment of about Rs 4,000 Crore.  Besides, the project, being planned as a Self-Sustainable Integrated Development Project, has a potential of generating over 1.5 lakh direct and indirect jobs.
The ambitious SEZ to be developed through JNPT-SPV (Special Purpose Vehicle) under the Engineering, Procurement & Construction (EPC) mode is scheduled to be completed within three years.
With a focus on the upcoming sectors of India, the SEZ will develop Free Trade Warehousing Zone, Engineering Goods Sector, Electronics and Hardware Sectors, Non- Conventional Energy Sector, Multi Services (IT and Healthcare) Sectors and Apparel and Textiles Sectors.
Mr Modi, who is to arrive in Mumbai on a day’s visit to Maharashtra, is also scheduled to lay the foundation of a Port Connectivity Highway Project at the JNPT and also allot land to the JNPT Project Affected Persons (PAPs) under the 12.5% scheme of Maharastra government implemented by the City and Industrial Development Corporation of Maharastra Ltd.
Various projects have been expedited by the Union Minister of Road Transport, Highways & Shipping & Rural Development, Mr Nitin Gadkari over the last two months. These projects in Mumbai are to be inaugurated as part of these measures.
The Port Connectivity Highway Project with a Cost of about Rs.1927 Crores is to be completed by December 2017. The Ministry of Shipping has decided to execute this Project on (Engineering, Procurement & Construction (EPC) mode through the Special Purpose Vehicle (SPV).
The project has been undertaken under the National Highway Development & Port Connectivity Programme of the union government.

Due to rapid development in the area on account of development of JN Port, JNPT-SEZ, and the proposed International Airport, etc. it was felt necessary to augment the carrying capacity of the existing road network to 6/8 lane configuration by providing improved facilities comprising of flyovers, railway over bridges, interchanges etc for uninterrupted flow of traffic plying on the road network connecting the Port and the National Highways.
Accordingly, it is now proposed to develop this road network to 6/8 lane configuration with service roads. The NH-4B, Amra Marg & SH-54 were earlier developed to a four-lane facility by the National Highways Authority of India (NHAI) through the Special Purpose Vehicle (SPV) comprising of NHAI, JNPT & CIDCO.
Allotment of land under 12.5% scheme to Project Affected Persons (PAPs) of JNPT has also been a long pending issue. Resolution of the dispute was essential for smooth operation and future development of JNPT.
The land owners, whose lands were acquired for JNPT, have been agitating for land allotment under the 12.5% scheme as decided by the Government of Maharashtra in respect of land acquired by CIDCO for the Navi Mumbai Project.

A decision was taken to grant the benefit of 12.5% land allotment scheme on humanitarian grounds to the JNPT PAPs, though legally as per the Supreme Court order the Port was not liable to implement 12.5% scheme.
Based on the decisions taken, a proposal was moved for approval of the Cabinet by the Ministry of Shipping to transfer 12.5% of the 1172 hectares of land to Government of Maharashtra to distribute it to the JNPT PAPs. Though 12.5% of 1172 hectare worked out to 146.5 hectares, 35.5 hectares have already been given to four villages under the Gaothan Extension Scheme of Maharashtra Government by JNPT. Hence, it was proposed to transfer the remaining 111 hectare (146.5 hectares – 35.5 hectares) which was in accordance with the decisions taken at the meeting on 22.3.2011.
The Union Cabinet approved the transfer of 111 hectares of JNPT land to Government of Maharashtra for allotment to PAPs of JNPT in line with the Government of Maharashtra’s scheme for PAPs of Navi Mumbai of CIDCO.
The Cabinet also allowed JNPT to provide CIDCO the cost of development of minimum amenities to be finalized in consultation with CIDCO/Government of Maharashtra. Accordingly, Ministry of Shipping accorded approval to the proposal of JNPT to provide Rs.212.34 crores for development of basic amenities which was worked out in consultation with CIDCO.
Based on the approval of the Union Cabinet, JNPT initiated action to hand over 111 hectares of land to the Government of Maharashtra for distribution to the PAPs.
Meanwhile, Chief Minister of Maharashtra wrote a D.O. letter dated 6.11.2013 to the then Minister of Shipping with a recommendation to consider allotment of total land of 160 hectares instead of 111 hectares allotted as per the Cabinet decision for distribution among the PAPs (12.5% of 1172 hectares private land) for implementation of the 12.5% land scheme and for allotting 40 SQM land to each of the landless labourers in the project affected villages).
It was also submitted by the PAP Sangharsha Samiti as well as by the officials Government of Maharashtra that while computing the land requirements for distribution under 12.5% scheme, the aforesaid 35.5 hectares should have been deducted from the total private land acquired by the Port i.e. 1172 hectares. It was submitted that PAPs are entitled for 12.5% of total land of 1136.5 hectares after such deduction which comes to 142.06 hectares and not 111 hectares as sanctioned by the Ministry of Shipping.
The Ministry of Shipping has recently forwarded a proposal for seeking approval of the Cabinet for sanctioning additional land of 47.20 ha which falls under CRZ-I in addition to 111 ha of land as already approved by the Union Cabinet.
Jawaharlal Nehru Port Trust (formerly NhavaSheva Port Trust) was commissioned on 26th May, 1989. For the construction of the Port, land to the extent of 1172 hectares was acquired through Government of Maharashtra from 12 villages of the UranTaluka, Dist. Raigad, Maharashtra, in the 1980s.
It was done as part of the land acquisition for the Navi Mumbai Project. During the acquisition of land, there was strong resistance from the land owners. However, after a lot of discussions, assurances and promises, the task was completed successfully.
One of the assurances given to the land owners of the Navi Mumbai Project (from which JNPT was given land) at the time of acquisition of the land was that they would be given back developed land to the extent of 12.5% of the land acquired from each of them. This issue of compensating the erstwhile landowners of JNPT warrants a permanent solution, so that the functioning of the Port which handles about half of India’s international trade goes on smoothly and unhindered.
The Maharashtra Governor Mr K. Sankaranarayanan, the State Chief Minister Mr Prithviraj Chauhan, the Union Minister of Heavy Industries & Public Enterprises, Mr Anant Geete, the minister of state for Road Transport, Highways & Shipping Mr Krishan Pal, the Union Minister of State for Coal & Power Mr Piyush Goyal, members of parliament & senior politicians from the State are expected to attend the function .

Saturday, August 9, 2014

Why so many shipowners find Panama's flag convenient

Source: http://www.bbc.com/news/world-latin-america-28558480

Man walking past mural of panama flag :The Panama Canal features prominently in Panamanian life

Panama, a small nation of just three million, has the largest shipping fleet in the world, greater than those of the US and China combined. Aliyya Swaby investigates how this tiny Central American country came to rule the waves.

Thanks to its location and slender shape, Panama enjoys a position as the guardian of one of the world's most important marine trade routes, which connects the Pacific and Atlantic oceans.
For a hundred years the Panama Canal has provided a short cut for ships wishing to avoid the 
more hazardous route via Cape Horn.
Dubbed one of the seven wonders of the modern world, the 77km (48-mile) canal is a feat of engineering that handles 14,000 ships every year along its intricate lock system.
Many of these vessels fly the Panamanian flag yet the country itself has a limited history of trade.
Panama only has one small shipping line as well as a number of companies providing supplementary maritime services around the ports and canal.

Cheaper foreign labour

Most merchant ships flying Panama's flag belong to foreign owners wishing to avoid the stricter marine regulations imposed by their own countries.
Panama operates what is known as an open registry. Its flag offers the advantages of easier registration (often online) and the ability to employ cheaper foreign labour. Furthermore the foreign owners pay no income taxes.
About 8,600 ships fly the Panamanian flag. By comparison, the US has around 3,400 registered vessels and China just over 3,700.
Under international law, every merchant ship must be registered with a country, known as its flag state.
That country has jurisdiction over the vessel and is responsible for inspecting that it is safe to sail and to check on the crew's working conditions.
Open registries, sometimes referred to pejoratively as flags of convenience, have been contentious from the start.
The first transfer of ships to Panama's register in 1922 involved two US passenger ships wishing to serve alcohol to passengers during Prohibition. More followed as shipowners sought to avoid higher wages and improved working conditions secured through US legislation.

After World War Two, Panama's registry grew more rapidly as US shipowners sought to lower overheads while European ones switched flags to avoid high tax rates.
As demand rose for open registration, other countries in the developing world formed their own.
The US used Liberia's registry to build a fleet of neutral ships during the Cold War.
Panama now has the largest registry in the world, followed by Liberia, the Marshall Islands, Hong Kong and Singapore. By last year, almost three quarters of the world's fleet was registered under a flag of a country other than its own.

The registry is lucrative for Panama, bringing in half a billion dollars for the economy in fees, services and taxes.
However, critics of the system point to the ease of hiding the true identity of shipowners and the lax enforcement of rules and regulations.

Allegations of corruption

Luis Fruto, representative of the International Transport Workers' Federation (ITF) in Panama, says the country turns a blind eye to its "responsibilities in order to acquire higher registration".

The ITF has led a campaign against flags of convenience since 1958. It considers that Panamanian registration is better than some "from a safety viewpoint, but it remains seriously flawed in areas such as oversight, accident investigation and crew assistance".
Two years ago, Mr Fruto investigated the death of a woman sailor, 22, on her first voyage. She became trapped in machinery that was reportedly faulty and died.
The ITF says that, rather than heading for the nearest port as rules dictate, the ship continued to sail for more than two weeks with her body in a freezer.
Further investigation by the ITF suggested that some of the shipping certificates had been 
International legal requirements insist that countries operating open registries inspect vessels, comply with international regulations and investigate accidents and corruption.

But critics say that Panama cuts corners in all these tasks, putting maritime workers at risk.
Indeed, accidents involving Panamanian-registered ships are high.

However, Carlos Gonzalez, former executive secretary of the Panamanian Maritime Authority, attributes this to a numbers game.Panama has the most ships and therefore the most incidents, he says.
Since 2008, Panama has cut down on enough offences to move up from the black to the white list of the Paris Memorandum of Understanding, a watchdog comprising 27 maritime administrations from Europe and North America. Yet Panama's registry is consistently beset by allegations of corruption.

In 2000, ITF general secretary David Cockroft was able to buy a Panamanian first officer's certificate for $4,000 to navigate a ship - even though he had no maritime skills or experience.
Despite repeated assurances that the country was cleaning up its act, Roberto Linares, the head of the Panama Maritime Authority, resigned in June after it was discovered that workers were being certified without the proper qualifications.
"The scandal brings us back to the days that Panama was called a 'convenience flag'," said Franklin Castrellon, former spokesman for the Panama Canal Commission, an independent agency operating the waterway until the country took over from the US in 1999.

New leadership plans to turn things around again. Jorge Barakat, the new head of the maritime authority, said: "The Panamanian flag is still robust and secure. Whatever kind of non-compliance there is will be reviewed by the administration."
As a commercial venture, Panama's flag of convenience is a success. But according to the ITF, that comes at a cost.

'Distorted the market'
It believes the world economy could survive a ban on flags of convenience and the higher costs that it says would follow.
ITF secretary Jon Whitlow said: "There would be some reconfiguration. The positive effects would include better protections and safeguards for seafarers who found themselves once again serving on a national flag ship."
Shipping prices would rise, but free competition has extensively distorted the market, he says.

However, defenders of the system say this thinking is outdated and that flags of convenience are here to stay.
"Panama's registry will last for ever," said Jorge Luis Sanchez, professor at the International Maritime University of Panama. "Those who don't like the open registry can opt to do something else with their ships."
Jazmina Rovi, former director of the Panama Maritime Law Association, said unions are better off enforcing uniform standards than eliminating the registry altogether.
With the new maritime administrator sworn in last month, it remains to be seen whether Panama will crack down on corruption and safety breaches or continue to live with the taint that still clings to flags of convenience.

Thursday, August 7, 2014

Risks of Intelligence Pathologies in South Korea

Pic courtesy: http://www.ccny.cuny.edu

Source: http://www.crisisgroup.org

A failure of intelligence on the Korean peninsula – the site of the world’s highest concentration of military personnel with a history of fraught, sometimes violent, sabre-rattling – could have catastrophic consequences. 
Yet the South Korean intelligence community has revealed its susceptibility to three types of pathologies – intelligence failure, the politicisation of intelligence, and intervention in domestic politics by intelligence agencies – which bring into stark relief the potential for grievous miscalculation and policy distortions when addressing the threat from North Korea. Moves by intelligence agencies to recover or bolster their reputations by compromising sensitive information have compounded the problem.
Efforts are needed to reform the South’s intelligence capacities, principally by depoliticising its agencies and ensuring adequate legislative and judicial oversight. Lawmakers and bureaucrats also need to fulfil their responsibilities to protect classified information and refrain from leaking sensitive intelligence for short-term personal political gains.

The Republic of Korea (ROK or South Korea) has been plagued by a series of scandals in its intelligence services since the fall of 2012. Many in the main opposition party, the New Politics Alliance for Democracy (then named the Democratic Party), believe the National Intelligence Service (NIS) swayed the outcome of the December presidential election through an internet smear campaign against opposition candidate Moon Jae-in to ensure a victory by President Park Geun-hye.

The accusations and discord paralysed the National Assembly for much of 2013 and the Park administration’s legislative agenda has been put on hold. NIS employees including former Director Wŏn Se-hun were indicted for violating electoral laws and the NIS Act governing the conduct of staff.

The public’s trust and confidence in the intelligence community has been damaged by the scandals. The ROK government has been unable to implement serious reform because the necessary legislative and executive implementation also is politicised. The secrecy and technical nature of intelligence mean that most citizens – including many lawmakers – have little insight into the intelligence process and its impact on policy. The president, whose ruling Saenuri Party has a majority in the National Assembly, and NIS directors have shown little or no interest in serious reform because it almost certainly would mean a reduction in their powers.

Historical legacies have had a great impact on the structure and organisation of the South Korean intelligence community. Japanese colonialism, liberation, the Korean War and decades of authoritarian rule mean a heavy emphasis on military intelligence, internal security and counter-espionage. Democratisation in the late 1980s led to reform; tremendous progress has been made, but the process is incomplete.

Through separate initiatives, findings by the main opposition party and former NIS Director Nam Jae-jun independently agreed that four broad reforms are necessary:
- ending the practice of embedding NIS officers in South Korean institutions such as political parties, the legislature, ministries and media firms; 
- establishing greater oversight to ensure intelligence officers obey the law; providing greater whistle-blower protections; and 
- restricting cyberspace operations to North Korean entities and not South Korean citizens or institutions. 
These measures should not be difficult to implement given South Korea’s broad consensus, but this is not sufficient.

Institutional changes also are needed. Criminal investigation powers held by the NIS should be transferred to the Supreme Prosecutors Office, and NIS directors should receive confirmation from the National Assembly’s Intelligence Committee after being nominated by the president. Special courts or judges should be selected to provide oversight and prosecution of sensitive national security cases. 
The stakes are high. Were intelligence failure or the politicisation of intelligence to lead to open conflict on the Korean peninsula, the costs would be enormous. The ROK is the world’s seventh largest exporter and ninth largest importer of merchandise. Seoul also has a mutual defence treaty with Washington, so any conflict would draw in the immediate involvement of 28,500 U.S. military personnel deployed in South Korea. North Korea and China likewise have a bilateral treaty that includes a security clause whereby both parties pledge to assist in case the other is attacked.

Quality intelligence is critical for managing the challenges. Pyongyang is committed to increasing its nuclear and missile capabilities and it presents other asymmetric and conventional military threats. 
South Korea, with twice the population, about 40 times the economic output and significant technological advantages, is expanding its counterstrike capabilities and has pledged to deploy its so-called “kill chain” to identify and neutralise any imminent attack. 
High-quality intelligence also is needed for non-conflict scenarios, particularly in anticipation of the North’s state collapse or a massive humanitarian crisis. In the case of a North Korean collapse and sudden unification, Seoul would have to make quick decisions to prevent a rapid deterioration of the situation.

Without accurate intelligence, several types of errors could occur: a failure to perceive an imminent attack; incorrectly assessing that an attack is imminent; or failing to develop effective contingency planning. On the Korean peninsula, given the vulnerabilities in the South’s current intelligence apparatus, any of these scenarios constitute a distinct possibility.