American ports gear up for Panama Canal expansion

The expansion of the Panama Canal is just half complete, but the expected windfall in trading volumes has already spurred billions of dollars of investment in port expansion and associated projects in the US and elsewhere, reports say, as businesses resize to accommodate the much larger ships that will pass through the Canal. Analysts say that the opening, post expansion, of the Panama Canal will be a game changer for maritime trade and the industry.

One of the biggest construction projects in the world, The Third Set of Locks Project will double the capacity of the Panama Canal by 2014 simply by allowing much larger ships to transit. The planning, that started in 2006 after a referendum in Panama overwhelmingly voted for the expansion of the Canal, will result, when the project is completed, in a new set of locks being constructed and a new lane of traffic opened. Two sets of lock complexes at either end of the Canal and the widening or deepening of existing navigational channels are on the cards. Panama expects a windfall in tolls after spending a staggering $5.25 billion or so on the expansion.   

Shipping experts say that the Panama Canal expansion will revolutionise traffic between the East and West coasts of North America and give a new meaning to the term economies of scale, and will result in a major boost to the economies of those countries that are prepared, logistically and otherwise, to handle many of the mammoth ships of tomorrow.  

“A deeper, wider Panama Canal with its two new flights of triple locks will double existing canal capacity and allow transit for vessels with three times the cargo when the upgraded passageway opens for business in early 2015,” says a report in the Washington Post. “So important is the race to be ready for the more voluminous ships that the Port Authority of New York and New Jersey is spending $1 billion to raise the Bayonne Bridge to let the taller vessels pass through.” It adds that US ports may spend up to $8 billion a year to modernise.

It is not just port infrastructure that is being revamped. With the demand for double stacked trains set to spike in the US, in the pipeline are projects such as a $90 million rail transfer facility at Baltimore. Also on the anvil, a $180 million dredging project at Miami. Outside the US, countries in South America are racing against time to modernise their ports to be able to service the new, larger ships. Amongst them are the Jamaica, Brazil, Colombia, Chile and Peru.

The exact outcome and the flow of supply chains are difficult to predict, as nobody is sure how things will pan out. "This is going to take several years to sort out as the shipping industry experiments with new routes and hubs, but it is a very big deal, and there will be some winners and losers," says consultant economist Paul Bingham. Many ports in the region, however, are going full steam ahead, expecting a significant increase in bulk fertilizer, grain and containerised cargoes. No doubt ripples will be felt across the world if trade readjusts.

“Experts stress that the global shipping industry seeks a ruthless, penny-pinching efficiency, and routes and cargo flows will evolve,” concludes the Washington Post, referring to shipping in the post-Canal expansion era.

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DGS tightens manning requirements for foreign ships on Indian coastal trade

India’s maritime regulator, the Directorate General of Shipping (DGS) has tightened the manning  norms for ships operating on the Indian coast, making it mandatory for them to hire more Indian trainees and crew. The move comes as a response to Indian shipping’s longstanding gripe that many more sea berths are needed for trainees graduating from Indian maritime establishments for them to be able to pursue their careers. 

Although it has been mandatory, since 2011, for foreign vessels operating in Indian waters to hire a minimum number of Indian crew, the DGS has shortened the licence period in a ‘shipping development’ circular last week. In that circular, put up on the DGS website, Deputy DG V Rajendran acknowledges the “acute shortage” of on board training slots and says that, with the new rules, foreign ships licenced to operate in India for 30-90 days need to hire Indian crew to the extent of one-third of their complement as per the Safe Manning requirements, or a third of the number of crew deployed, whichever number is higher. If the licence period exceeds 90 days, half the crew should be Indian. The earlier periods for similar licencing were 90 and 180 days respectively.

In a  move that should give heart to the scores of cadets who are unable to find sea berths, the DGS directive says that one third of the crew engaged must be trainee cadets, distributed equally, as far as possible, between deck and engineering cadets.

India licences foreign ships to operate in Indian waters only if Indian ships are unavailable, and after approval from the DGS on a case to case basis. For many years, Indian cadets have struggled to find training berths on ships- a requirement for them to complete their training. Indian Ratings graduating from Pre-Sea training have been similarly hard hit.  At a time when India wants to increase its global market share of shipping manpower by two percentage points to around 9, the DGS move is a step in the right direction. Enforcement of the new rule will be key, however, many observers say.

“Any step taken for improvement of on-board training slots is good,” MD of V Ships India told the newspaper Livemint. “But the practicality of carrying out such a stipulation has to be discussed with people who are actually doing the job.”

The new rule comes into effect immediately from January 18. “A need has been felt to review the earlier rule keeping in view the acute shortage of on-board training slots and the need to create more opportunities for on-board training,” says the circular. The maritime regulator acknowledges that many countries impose crewing requirements on foreign ships licenced to ply in their coastal waters and it is “only appropriate” that similar crewing requirements are imposed on ships engaged in shipping and related activities in Indian coastal waters.

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Pakistan to free all detained Indian fishermen, says Interior Minister

Pic IBNLive

In a goodwill gesture almost certainly meant to de-escalate tensions between the two countries, the Interior Minister of Pakistan Rehman Malik has announced that all Indian fishermen being held in Pakistani jails will be released soon. He was talking to reporters after a meeting with Pakistani President Asif Ali Zardari in Karachi, where many of those detained are incarcerated in the city’s Malir Jail. 

“We have decided to release all Indian fishermen in Pakistani jails and the process of scrutiny to decide how to go about the task will begin soon,” Malik said, adding that he had ordered a review of the cases of all Indian fishermen in Pakistani jails. Other officials from Malik’s Interior Ministry said that all fishing boats seized by Pakistan would be returned along with the fishermen, and that detained fishermen will be asked to sign affidavits stating that they would not violate Pakistan’s maritime boundary in future. 

Both India and Pakistan regularly detain fishermen and their boats that stray into their waters- or are claimed to have done so. The tit-for-tat arrests have been going on for years; the situation has been complicated by the longstanding maritime boundary dispute over Sir Creek and the fact that an Indian fishing boat was hijacked by terrorists and used in the Mumbai attack in 2008. Until recently, the peace process that started three years later had eased the situation somewhat. Nonetheless, it is an accepted fact that hundreds of innocent Indian and Pakistani fishermen still languish in jails, sometimes for years, after inadvertently crossing into neighbouring territorial waters. Just two days before Malik’s announcement, 27 Indian fishermen and six boats were detained by Pakistan’s Maritime Security Agency on these grounds.

The recent string of cease fire violations along the Line of Control has heightened tensions considerably between the two countries. Many on both sides of the border will therefore see this development as a welcome step.  Exact figures are difficult to obtain, but there are said to be about 250 Indian prisoners in Pakistani jails, and about 300 Indian boats have been seized by that country. India is said to be holding around 125 Pakistani fishermen in its prisons.

Some peace activists in India have expressed happiness at the Pakistani announcement. Mumbai based Jatin Desai said immediately after Malik’s announcement that the Indian government should reciprocate and release all Pakistani fishermen held in India. "Both countries need to move forward and work for a No Arrest Policy. Poor fishermen are the victims of such hostility,” he said. 
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Shipping Ministry wants to resurrect subsidies for shipbuilders

Concerned with the Indian shipbuilding industry’s drop in market share in the last five years, the shipping ministry wants to resurrect the subsidy regime for shipbuilders that was scrapped in 2007, reports say.  It is believe that a recommendation has been made to the cabinet committee of secretaries that proposes a subsidy for domestic shipbuilders, who have seen their global market share fall from 1.2 per cent to a puny 0.1 per cent since 2007.

Union Shipping Secretary PK Sinha told the Economic Times, "We are taking a slew of measures to help the domestic shipbuilding sector. We have asked for 15 per cent subsidy for the domestic shipbuilding sector, and in addition, we have also asked the committee of secretaries to exempt the sector from customs duties on capital items imported for shipbuilding."

Although the earlier scheme gave domestic shipbuilders a 30 per cent subsidy on the cost of ocean-going vessels, the imperative to reduce the country’s growing fiscal deficit has prompted the lower 15 per cent number, analysts say. The exemption, if approved, from a 26.85 per cent customs duty on capital items imported for shipbuilding, will also help, they add.

"There is a price difference of 30-35 per cent in the cost of vessels produced in India as compared to China and that has affected us. And in the past few years, there have hardly been any orders coming for Indian shipyards," an official of the Shipyards Association of India rues.

The government’s target- that Indian shipyards reach a 5 per cent global market share- seems very ambitious in present circumstances, given that Indian shipyards face a massive cost disadvantage- of 32 to 37 per cent when compared with yards in Asia, the Far East, Japan and Europe- a 2008 KPMG report said.