CONTAINER TERMINAL OPERATIONS AT JAWAHARLAL NEHRU PORT TRUSTDissertation Submitted to theD.Y. Patil UniversityIn partial fulfillmentof the requirements for theAward of the Degree of MASTERS OF BUSINESS ADMINISTRATIONSubmitted by:AKSHAY REDIJ(Roll.No.013012)

Research Guide:Dr. SUMAN SAURABHAssistant ProfessorD.Y. Patil UniversitySchool of ManagementCBD Belapur, Navi MumbaiDecember 2014

TO STUDY AND ANALYSE CONTAINER TERMINAL OPERATIONS AT JAWAHARLAL NEHRU PORT TRUST(WITH SPECIAL REFERENCE TO NAVI MUMBAI IN MAHARASHTRA)

DECLARATIONI hereby declare that the dissertation TO STUDY AND ANALYSE CONTINER TERMINAL OPERATIONS AT JAWAHARLAL NEHRU PORT TRUST (WITH SPECIAL REFERENCE TO NAVI MUMBAI IN MAHARASHTRA) submitted for the MBA Degree at D.Y. Patil Universitys School of Management is my original work and the dissertation has not formed the basis for the award of any degree, associate ship, fellowship or any other similar titles.

Place: Navi Mumbai Date:

Signature of the StudentAKSHAY REDIJ

CertificateThis is to certify that the dissertation entitled TO STUDY AND ANALYSE CONTAINER TERMINAL OPERATION IN JAWAHARLAL NEHRU PORT TRUST(WITH SPECIAL REFERENCE TO NAVI MUMBAI IN MAHARASHTRA)is the bona fide research work carried out by Mr. AKSHAY REDIJ student of MBA, atD.Y. Patil Universitys School of Management during the year 2013-2015, in partial fulfillment of the requirements for the award of the Degree of Master in Business Management and that the dissertation has not formed the basis for the award previously of any degree, diploma, associate ship, fellowship or any other similar title.

(Dr. R. Gopal) Dr. SUMAN SAURABH Director, Assistant Professor School of Management, (Guide Name) D.Y. Patil University) Place: Navi Mumbai Date:

ACKNOWLEDGEMENTSIn the first place, I thank the D.Y. Patil University, School of Business Management, Navi Mumbai for giving me an opportunity to work on this project. I would also like to thank Assistant Professor Dr. Suman Saurabh , School of Management, D.Y. Patil University, Navi Mumbai for having given me his valuable guidance for the project. Without his help it would have been impossible for me to complete the project.I would also like to thank the various people from the JAWAHARLAL NEHRU PORT TRUST who have provided me with a lot of information and in fact even sharing some of the confidential company documents and data many of which I have used in this report and without which this project could not have been completed.I would be failing in my duty if I do not acknowledge with a deep sense of gratitude the sacrifices made by my parents and thus have helped me in completing the project work successfully.

Place: Navi Mumbai Signature of the student.INDEXSr NoTitlePg No

AList of Tables7

BList of Figures7

CList of Graphs7

1Executive Summary10

2Introduction12

3Literature Review16

4Aims and Objectives20

5Research Methodology44

6Questionnaire 56

7Analysis 58

8Conclusion 118

9Recommendations 123

LIST OF TABLE AND FIGURETABLE

Table No:TitlePage No.

1. Hinterland region of India93

2. State wise share of Container97-110

3. State wise Hinterland Mapping112-115

FIGURE

Table No:TitlePage No.

1Relationship of port Economic and macroscopic9

2Identification of goals84

3Opportunity landscape of JNPT77

4Short & Long term89

GRAPHS

Table No:TitlePage No.

1Share of States for container104

2Share of Type of Hinterland105-107

ABBREVIATIONS BOOT Build Own Operate & Transfer BOT Build Operate Transfer CAGR Compounded Average Growth Rate CFS Container Freight Station CHA Custom House Agent CII Confederation of Indian Industry CONCOR Container Corporation of India DWT Dead Weight Tonnage EDI Electronic Data Interchange FEU Forty feet Equivalent Unit GAPL Gujarat Pipavav Port Limited GDP Gross Domestic Product GMB Gujarat Maritime Board GPS Global Positioning System GRT Gross Registered Tonnage GTIPL Gateway Terminals India Private Limited ICD Inland Container Depot ICT Information and Communication Technology IPA Indian Port Association IPMS Integrated Port Management System JNPT Jawaharlal Nehru Port Trust KPT Kandla Port Trust MICT Mundra International Container Terminal MIS Management Information System MOS Ministry of Shipping MPA Major Ports Act NSICT Nhava Sheva International Container Terminal PPP Public Private Partnership PSA Port of Singapore Authority RFID Radio Frequency Identification DeviceRMGC Rail Mounted Gantry Cranes RMQC Rail Mounted Quay Cranes RTGC Rubber Tyred Gantry Cranes SBM Single Buoy Mooring SEZ Special Economic Zone SPM Single Point Mooring SPV Special Purpose Vehicle TEU Twenty feet Equivalent Unit TOS Terminal Operating System VTMS Vessel Traffic Management System

CHAPTER 1EXECUTIVE SUMMARY

EXECUTIVE SUMMARYThe real growth that Indian GDP has is reflected in its international trade and consequently in the traffic growth that ports have been witnessing over the past few years. This trend in growth is expected to continue, with international trade expected to grow at a rate even higher than at present. The ability of Indian port infrastructure to meet these increasing demands will be critical to the growth of the economy. In this context, it has been recognized that a national plan needs to be developed which wouldidentify in a structured manner, the required investments in port and related infrastructure, while at the same time reducing dependence on government funds. In order to meet this objective, the planning commission and the ministry of shipping, road transport and highways has initiated this business planning exercise for major ports.

CHAPTER 2INTRODUCTON OF JNPT

Introduction of JNPT

Indias increasing international trade necessitated the development of additional facilities to decongest the traffic at the Mumbai Port. The need of an alternative port in the region to handle the increasing traffic led to the development of JNPT in 1989. With its vast back up area JNPT was believed to have a strong potential for the development of additional facilities as per demand and was ideally suited for future maritime requirements.

JNPT Profile

The Jawaharlal Nehru port at Navi Mumbai (JNPT) was established on 26 May 1989. It was dedicated to the nation by former prime minister of India . Late Shri Rajiv Gandhi. The port became operational that day. The main purpose for developing JNPT as a satellite port for Mumbai port to reduce the traffic . With the time it was hard to handle the traffic of MBPT. With the time it was hard to handle the traffic of MBPT. JNPT was constructed in a record time of just 3.5 year with a cost of round Rs 1000 crores , it is only Indian port built to international standard with modern working norms .Because of its high level of automation and computerized functioning it was envised , as the hitech port of the 21st century .certified an ISO 9000:2001 port , it was initial planned to be a satellite port to the Mumbai port with the purpose to decongest the traffic at latter. Today the JNPT port has already established itself as the major port catalyst for the trade and commerce of the country.With its strong commitment to provide seamless service to its customers as Indias prime facilitator of the International trade.JNP strives to be undisputed in the south Asian region in year to come .Gateway terminal India Private Ltd. (GTI) is a joint venture company of A.P Moller and container corporation of india ltd.(CONCAR). GTI came in to existence in year 2006 and has signed license agreement with Jawaharlal Nehru Port Trust(JNPT) to build and operate for the next 30 years . In the short span of time GTI has recorded record break growth . With the latest and automatic equipments,expertise in marketing and experience in the container handling they contributed 99% in container handling growth of 24% during 2012-2013 which was 3rd highest in Asia after two chinese.Liquid cargo jetty was fuctional from march 2002 , foe handling liquid cargo including POL products . It is joint venture of M/S Bharat Petroleum Corporation Limited (BPCL) M/S Indian oil Corporation Limited (IOCL) on BOT basis. Total liquid cargo handled for year 20012-2013 was 5.87 million tones.After success of the government policy of development of container terminals by PPP, In the mean time , JNPT is planning to develop ti its fourth container terminal on BOT (built ,operate and transfer) basis.The fourth container terminal will be developed in two phase and the planned capacity of each phases is 2.4 million TEUSs per annum. The project has an expected investment of RS.6700 cr JNPT is the second youngest port after Ennore. JNPT is located at the eastern end of Mumbai in the Nhava Sheva area and situated at latitude 18 56 43 N and longitude 72 56 24 E. JNPTs approach channel is an extension of the Mumbai Harbour main channel (See Exhibit ) from a location south of Jawahar Dweep Island. In the Nhava Sheva area at the eastern end ofMumbai Bay is located Jawaharlal Nehru Port, approx 33 km inland of the Mumbai Harbour Channel entrance point at sea. The Elephanta Island is on one side, facing the port and Nhava and Sheva Islands are on the other end. JNPT lies towards the east of the Bombay Port.Current designed channel depth of JNPT is 11 metres and depth at berths is 13.5 metres. JNPT can take in vessels having laden draft upto 12.5 metres. A map of JNPT has been included overleaf. The width of the channel is 400 metres at entry point and 460 metres off the berths. Port cargo handling facilities include container terminals, a liquid handling terminal and a shallow water berth which can handle break-bulk and container traffic both.

Port Highlights

Accredited with ISO 9001-2000 Certification Ranks 31st among the top 100 Container Ports in the world Handles 56% of Indias total containerized cargo Highly automated and computerized operations with Single Window System Recipient of Indira Priyadarshini VrikshamitraAward 1996 for the Greenest Port in India Equipped with the latest Vessel Traffic Management System (VTMS) to track /monitorvessel movements ensuring safe navigation Spread over a land area of 2,584 hectares Served by 16 Container Freight Stations and over 23 Inland Container Depots Well connected by National Rail/Road network JNPT has an important place amongst Indian ports due to the kind of traffic that it serves as well as being a pioneer in involving large-scale private sector participation. It is also one of the first ports to initiate this exercise. JNPT consisted of 3 phases Inception stage As-is assessment of the port Interim stage Traffic forecast, vision development & projects Draft final stage Action plan and financial model The as-is assessment identified general port operations, hinterland connectivity and competitive position.

ECONOMIC DEVELOPMENT THROUGH PORTS A port becomes a wheel of economy if it runs efficiently. Presently the function of a port is not only limited but has expanded to a logistical platform. The efficiency of a port is important in international trade since a seaport is the nerve of foreign trade of a country. A seaport is the compulsory transit point for the bulk of this trade, permitting the import of goods, which the country does not itself produce in sufficient quantity and the export of items which the country has a surplus or has a competitive edge to produce contributing to the development of its economy. Besides, a port is also a place for the provision of further services, which add value to the products transported and thus helps the increasing demand of trade. The globalization of world economy has brought about tremendous increase in exchanges of goods across the world. The world trade also accelerated as cost of shipping has increased due to the introduction of economy of scale and the development of technology in shipping. To cope with the ever growing world trade, ports of every country will no doubt continue to play a critical and important role in providing the cheapest mode of transportation. Relationship between macroeconomics, port economics and port performance Port performance and port economics are closely related with macroeconomics hence, any changes in port traffic or operation and port / port organization has an impact on national economy particularly on the hinterland. Indian seaports are today more than just government owned public utilities; they are indeed, focal points of convergence for several contending and competing business interests from shipping lines, port authorities, and individual terminal operators to freight forwarders and inland logistics agencies; not to leave out the shippers (the exporter-importer fraternity) whose cargo is what is being ultimately being transported. They represent what may rightly be considered a complex mosaic of contractual and business relationships, which in turn give rise to maze of regulatory and operating institutions and procedures and ever-changing rules of dynamic inter-play.

Relationship of Port Economics And Macroeconomics Figure 1

Under the impact of first-generation port reforms, initiated since the mid-nineties, following economic liberalisation and globalisation policies, the entire gamut of existing institutional arrangements and underlying transactional and business processes in the port sector have been undergoing a profound transformation. Consequently, conventional port and terminal ownership, management and regulatory frameworks guiding the port operations are undergoing changes in line with broader process of functional evolution of ports and global maritime trade. The critical changes underway in the port sector have many facets that need to be brought under a comprehensive review and research scrutiny from contemporary perspective. Few attempts made in the past have merely focused on the historical and social aspects of Indian port sector, without examining the underlying business and economic processes that make port inalienable part of a larger national and international economy. Not too surprisingly, there are hardly any significant books or research monographs that portray a contemporary emerging picture of the Indian port sector, as the gateways to global trade. This leaves a large gap to be filled and considering that Indian port projects are now increasingly becoming key destinations for strategic business investments and are increasingly becoming key links in the rapidly expanding global trade, understanding of the working of the port sector becomes an urgent and critical task both from the public policy angle and strategic business decisions. Indeed, there have been a number of project-specific and port-specific studies and long-term forecasts on cargo traffic growth made by a number of technical and business consultants to the port and shipping sector. Recently, Rail India Technical and Engineering Services (RITES) have come up with Perspective Plan for Indian Port Sector - Vision 2020 for the Union Ministry of Shipping. Indias Maritime Trade Indias maritime trade comprises of export-import trade in various bulk commodities like crude oil and other petroleum products, iron ore and coal, besides general purpose cargo. Over the last ten years, since the onset of economic liberalization, there has been a significant spurt in handling of value-added goods mainly in form of containerised cargo movement, in several Indian ports. This has given rise to many new dimensions in the development of the port sector in the country. Containerisation of cargo has brought about a significant redefinition of port services and demands for highly sophisticated handling equipment and logistics service efficiencies. The shift away from commodity nature of Indias export trade is particularly, noticeable in the marked shift towards increasing value added exports and drive for global competitiveness.The shift in the pattern of trading is however, yet to find adequate support in terms of a maritime infrastructure. Interestingly, in the past ten years while overall cargo growth (reckoned at about 9-10 per cent) has been quite impressive, new demands have been generated on the port sector for adding on more cargo handling capacity and creation of new-dedicated berths and cargo terminals. Consequently, the port sector is going with considerable business optimism with respect to generation of increasing cargo traffic volumes and of trade in general in the coming years. Considerable future business potential is also seen with respect to generating enhanced earnings from port sector operations through improving efficiencies and other value-added activities contributing also thereby to making countrys external trade competitive in the global market. Economic Survey 2013-14: India has second fastest growing services sector

Last Updated: Wednesday, July 9, 2014, 19:24New Delhi: India has the second fastest growing services sector in the world with a compound annual growth rate at 9 percent, just below China's 10.9 percent, during 2001 to 2012, the Economic Survey said Wednesday.

Among the world's top 15 countries in terms of GDP, India ranked 10th in terms of overall GDP and 12th in terms of services GDP in 2012, it said."India has the second fastest growing services sector with CAGR at 9 percent, just below China?s 10.9 percent, during the last 11-year period from 2001 to 2012," the survey said.It said that services share in world GDP was 65.9 percent but its share in employment was only 44 percent in 2012.In India, the services sector had a high share in income at 56.9 percent in 2012 with a lower share of 28.1 percent in employment, it added.In 2013-14 the growth rate of the services sector at 6.8 percent is marginally lower than in 2012-13. This is due to deceleration in the growth rate of the combined category of trade, hotels, restaurants, transport, storage and communications.The survey, which was tabled in Parliament today, said that services in India are emerging as a prominent sector in terms of contribution to national and states' incomes, trade flows, FDI inflows and employment.

Further, it said that the immediate challenge in this sector is revival of growth.

India's services sector which was growing at a steady rate of over 10 percent since 2005-06 has shown subdued performance in the last three years.Revival, it said, could be achieved through reforms and speeding up of the policy decision making, a targeted approach with focus on big ticket services."Some services like software and telecom were big ticket items that gave India a brand image in services. While further focus on these services is needed to retain and further our lead, the time has come to focus on some other high potential big ticket items that have high manufacturing-sector and employment linkages," it added.

Going forward, it said, 2014-15 seems to augur well for the services sector with expansion in business activity in India."There are also signs of revival in growth of the aviation sector with the announcement of new players like Air Asia and Tata-SIA Airline after a turbulent period of withdrawals and losses by some airlines," it added.Indications of revival in the world GDP and trade growth in general and of developed countries in particular, could help in revival of the tourism and shipping sectors.

"With a stable government in place and growing optimism which could translate into investment and growth, some quick reforms and removal of some barriers and obsolete regulations in the services sector could help. The downside risk however is the fragile global situation," it said.

The survey said many issues including domestic regulations hinder growth prospects of the services sector, which if addressed deftly could help the sector and leads to exponential gains for the company . Listing some general issues, it said that there is an urgent need for a nodal agency and marketing for the sector .Despite having strong growth potential in various services sub-sectors, there is no single nodal department or agency for services.Services activities cover issues beyond trade and a more proactive approach and proper institutional mechanism is needed to weed out unwanted regulations and tap the opportunities in the sector in a coordinated way, it added.There is also need for promotional activities for service exports like setting up a portal, showcasing Indias competence in non-software services in exhibitions, engaging dedicated brand ambassadors and experts.It also said that there is plenty of scope for disinvestment in services PSUs under both central and state governments."Speeding up disinvestment in some services-sector PSUs could not only provide revenue for the government but also speed up the growth of these services," it said.The sector is also facing credit, tax and trade policy related issues."These include use of 'net' instead of 'gross' foreign exchange criteria for export benefit schemes, the issue of retrospective amendments of tax laws like amendment to the definition of royalty to include payment of any rights via any medium for use of computer software, tax administrative measures to tackle delay in refunds, introducing VAT refund for foreign tourists," it said.Further it said that India need to revamp its port services as it does not have world class facilities."Third-generation ships are not able to enter the harbour and goods have to be offloaded outside in smaller ships, adding to costs. Its immediate focus should be on building world class ports providing world class services," it said.On railways, it said that a proposal has been initiated by Indian Railways, for making suitable changes in the existing FDI policy in order to allow foreign investment in railways, to foster creation of world class rail infrastructure."The proposal envisages allowing FDI in all areas of the rail sector except railway operations. Even in railway operations, FDI is proposed in PPP projects, for suburban corridors, high speed train systems, and dedicated freight lines," it said.While privatisation of railways has been successful in some countries like Japan, it has failed in some others like the UK."So this proposal needs to be examined carefully and quickly to allow privatisation/ FDI in areas where it is feasible," it added Indias Foreign Trade (MERCHANDISE): OCTOBER, 2014 EXPORTS (including re-exports) Exports during October, 2014 were valued at US $ 26094.07 million (Rs.160066.25 crore) which was 5.04 per cent lower in Dollar terms (5.47 per cent lower in Rupee terms) than the level of US $ 27480.13 million (Rs. 169320.47 crore) during October, 2013. Cumulative value of exports for the period April-October 2014-15 was US $ 189795.47 million (Rs 1145605.36 crore) as against US $ 181234.98 million (Rs 1080203.41 crore) registering a growth of 4.72 per cent in Dollar terms and growth of 6.05 per cent in Rupee terms over the same period last year. IMPORTSImports during October, 2014 were valued at US $ 39451.53 million (Rs.242003.58 crore) representing a growth of 3.62 per cent in Dollar terms and a growth of 3.16 per cent in Rupee terms over the level of imports valued at US $ 38075.02 million (Rs. 234601.50 crore) in October, 2013. Cumulative value of imports for the period April-October 2014-15 was US $ 273551.51 million (Rs 1651470.41 crore) as against US $ 268554.34 million (Rs 1590363.03 crore) registering a growth of 1.86 per cent in Dollar terms and growth of 3.84 per cent in Rupee terms over the same period last year. CRUDE OIL AND NON-OIL IMPORTS: Oil imports during October, 2014 were valued at US $ 12365.2 million which was 19.2 per cent lower than oil imports valued at US $ 15293.6 million in the corresponding period last year. Oil imports during April-October, 2014-15 were valued at US $ 94841.9 million which was 0.5 per cent lower than the oil imports of US $ 95306.0 million in the corresponding period last year. Non-oil imports during October, 2014 were estimated at US $ 27086.3 million which was 18.9 per cent higher than non-oil imports of US $ 22781.4 million in October, 2013. Non-oil imports during AprilOctober, 2014-15 were valued at US $ 178709.6 million which was 3.2 per cent higher than the level of such imports valued at US $ 173248.3 million in April-October, 2013-14. TRADE BALANCE The trade deficit for April-October, 2014-15 was estimated at US $ 83756.04 million which was lower than the deficit of US $ 87319.36 million during April-October, 2013-14. INDIAS FOREIGN TRADE (SERVICES): SEPTEMBER, 2014 (As per the RBI Press Release dated 14thNovember, 2014) A. EXPORTS (Receipts) Exports during September, 2014 were valued at US $ 12940 Million (Rs.78759.18 Crore). B. IMPORTS (Payments) Imports during September, 2014 were valued at US $ 6174 Million (Rs. 37577.99 Crore). C. TRADE BALANCE The trade balance in Services (i.e. net exports of Services) for September, 2014 was estimated at US $ 6766 Million.

Chapter 3LITERATURE REVIEW

LITERATURE REVIEWVis and de Koster [196] (with some 55 references up to 2001). An overview of relevant literature for problem classes like arrival of the ship, (un)loading of a ship, 14 D. Steenken et al .transport of containers from/to ship to/from stack, stacking of containers, interterminal transport and complete terminals is provided.Kozan discusses major factors for the transfer efficiency of multimodal container terminals. A network model reflecting the logistic structure of a terminal and the progress of containers is shown. Its objective is the minimization of the total throughput time as the sum of handling and travelling times of containers.

Meersmans and Dekker present an overview of the use of operations research models and methods in the field of design and operation of container terminals with its decision problems on strategic, tactical and operational level. Fung presents a three-player oligopoly error-correction model for forecasting demand for Hong Kongs container handling services. Due to increasing demand and necessity of higher throughput, early construction of new terminals is suggested.

Murty et al describe various interrelated complex decision problemsoccurring daily during operations at a container terminal. They work on decisionsupport tools and discuss mathematical models and algorithms.

Steenken presents a comprehensive description of logistics and optimizationsystems in container terminals shown by example of Burchardkai (Hamburg).For an early work on berth assignment and berth investment decisions see[45]. A general discussion of different productivity related objectives regardingtransshipment terminals can be found, e.g., in [49, 62]. Additional works givingmore or less general descriptions of container terminals are, e.g., [34,130]. In [34]the authors view a container terminal as a production system that is representedas a network of complex substructures or platforms. The idea of platform capacityis used to represent operational aspects of a container terminal in a mathematicalmodel for tactical planning. The problem is to allocate resources in each platformin order to minimize the total delay on the overall network and time horizon.

Konings presents a survey of the possibilities for an intermodal transportconcept of high quality. Conditions for best development of centers, that integratetransshipment, storage, collection and distribution of goods, are outlined. The internaltransport system is identified as key element. The topic is discussed in detailfor the harbour of Rotterdam.

Nam and Ha investigate aspects of adoption of advanced technologiessuch as intelligent planning systems, operation systems and automated handlingsystems for container terminals. They set criteria for evaluation of different handlingsystems and apply them to examples in Korea. Results show that automation doesnot always guarantee outperformance (e.g. higher productivity) it depends onterminal characteristics such as labour costs.

Four different types of automated container terminals are designed, analyzedand evaluated in a simulation model with very detailed cost considerations by

Liu et al. [126]. The performance criteria that are used in this study to evaluateand compare different terminal systems are summarized as follows: Throughput:number of moves/hour/quay crane; throughput per acre; ship turnaround time: time it takes for a ship to get loaded/unloaded; truck turna

CHAPTER 4AIMS AND OBECTIVES

Aims And Objectives

Development of action plans for the port requires the vision to be cascaded to a set of actionable goals with a timeframe attached to them. Goals were identified through an analysis of various elements of the vision. JNPT would need to undertake multiple goals to achieve its vision. The goals that were identified for the port are illustrated below: Achievement of 10Mn TEUs of traffic at JNPT Improve efficiency across the port To develop logistics capabilities and services at JNPT To expand JNPT to new locations Invest into hinterland connectivity ventures

Timeframe for GoalsGoals need to be prioritized to ensure planned development at a port. Prioritization of goals also provides timeframes within which the goals should be achieved. To ascertain the timeframe of the goals, KPMG followed a framework of ease of implementation vs. criticality, which was used to evaluate the goals.

Role of the Port

It is envisaged that the port will increasingly play the role of a landlord with limited presence in port terminal operations (JNPCT). JNPT will evolve primarily into a landlord port facilitating services by terminal operating companies and other providers. The solitary terminal will be the responsibility of JNPT over the medium term horizon of the plan period

PERSPECTIVE PLAN

Framework to identify long and short term goals

As part of the business plan development exercise an action plan for the port was developed for the next 7-8 years. This action plan was based on the short term goals identified Reaching 10Mn TEUs of traffic at JNPT by 2015-16 To offer logistic services at JNPT by 2011-12 To improve efficiency in port operations by 2009-10

Strategy to achieve goals

A strategy to achieve the goals was outlined focussing on the following elements Cost: JNPT would endeavour to reduce costs by improving efficiency and thereby ensure competitive services for user. Customers: JNPT would attract and retain customers through addition of core and value added services. Geographies: JNPT would focus on the northern and Maharashtra region and would enable traffic from the regions through planned development within and nearby the port. Services: JNPT would provide value added services and would capture a larger share of the logistics value chain. The strategy for achieving the goals would need to be supported by a financial and commercial strategy. Commercial Strategy: The commercial strategy deals with the three levers of customer management, cost management and service offerings of the port. It is aimed at achieving commercial success within the operating business environment through effective management of customers and suppliers.

National Container Traffic Projections using bottom up approach

JNPTs Container traffic projections

Capacity of the port would be 11.67 Million TEUs at 75% berth occupancy in 2015-16 and 2016-17. At 70% berth occupancy the overall capacity (under the current geographical and policy restrictions) of the port would be 10.9 Million TEUs by 2015-16.

As liquid cargo handled by ports consists of products from various industries, the key industries impacting growth of liquid cargo were studied. The forecast for the traffic was arrived at 2 levels National level forecasts for the commodity JNPT forecasts for the commodity

JNPT liquid cargo traffic was estimated for the categories of crude, POL product, chemicals andother liquids. JNPT has no crude linkages with existing refineries and does not service crude traffic at present. The crude traffic forecast for JNPT was based on ONGC plans to ship a part of its offshore crude production at Bombay High via JNPT to the coastal refinery of Mangalore. JNPT POL product traffic is largely coastal based traffic which follows national trends of coastal traffic. Exports growth from the increase in refining capacity in Mumbai region was factored into the forecast. Since the port can handle certain liquid chemicals these were studied and grown at appropriate growth rates to arrive at liquid chemical forecast. JNPT's edible oil/molasses traffic is a significant portion of national traffic and this traffic is expected to continue. The overall forecast of liquid traffic through JNPT reaches 15.4 Mntonnesby 2024-25 as seen inexhibitLiquid Traffic at JNPT

Vessel forecasts

Using the traffic projections for container and liquid cargo, a vessel forecast was carried out for JNPT. A number of factors impacted this forecast, including the change in profile of ships on the Europe Asia route as well as the gradual increase expected in parcel sizes. The expectedvessel calls at JNPT are tabulated in exhibit. As seen the number ofvessel calls at JNPTreach a peak of 5734 vessels in 2015-16 and then start gradually decreasing. This is largelydue to the expected continued increase in parcel sizes.

Developments between 2006- 07 and 2009-10

JNPT Developments Between 2010-11 and 2012-13

JNPT Developments Between 2013-14 and 2015-16

JNPT Developments Between 2016- 17 and 2020-21

Proposed land usage for port operational area of 670 hectares

CHAPTER 5RESEARCH METHODOLOGY

RESEARCH METHODOLOGY

Objective - To attract more container cargo to JNPT Ports. - To study Western Hinterland Mapping. - To study Port Choice Determinants.

Scope Study includes container cargo for JNPT. Data regarding JNPT is provided . Only loaded containers are considered for the purpose of study. Empty containers are not part of study. Study includes five Port Choice Determinants

i.e. Port Infrastructure, Vessel Frequency, Port Location (From Sea Routes), Hinterland Connectivity and Number of Container Freight station. Assessment of selected ports on the basis of five port choice determinants.

Design Exploratory Research Research Process Hinterland mapping for container cargo.Opinion of freight forwarders for five port choice determinants to derive ranking of the same.Data Collection Source Primary: Port Authorities, Container Terminals, Freight Forwarders, Custom House Agents, Shipping Line Agent and Customs Department Secondary: Indian Ports Association Journal, Times Shipping Journal, Port

Profiles, EXIM Publications Instrument: Personal Interview

Analytical Tools Weighted Mean for ranking of port choice determinants.

Further Scope Detailed analysis of Port Infrastructure with qualitative and efficiency measures. Survey of shippers to understand their willingness for sending their cargo to JNPT ports, issues faced by them and expectations as well as streamlining factors of the process from their side.

SWOT Analysis Strengths, Weaknesses and ThreatsThe identified constraints and drivers were used as inputs to a SWOT analysis for JNPT, which eventually led to thedevelopment of the JNPT vision. In this section, a summary of the strengths, weaknesses and threats has beenprovided, while opportunities have been covered in detail in the next sub-section.Development of JNPT Vision SWOT Analysis Strengths, Weaknesses and ThreatsActivities in the SWOT Workshop The SWOT analysis was carried out through a SWOT workshop involving key port stakeholders. These stakeholders were divided into groups that individually developed a SWOT matrix for JNPT. Inputs from all groups along with KPMG analysis was used to arrive at a perspective SWOT for JNPT. The participants of the SWOT workshop were representatives of each of the departments of JNPT in addition to stakeholders from NSICT, GTI and BPCL The following guidelines were provided to the participants while developing the SWOT analysis

Strength A port strengths are its resources and capabilities that can be used as a basis for developing a competitive advantagewhich the port currently possesses.Weakness A port weakness are resources and capabilities that the port lacks in comparisons to its competitors currently.Opportunity Opportunities provide prospect of profit and growth. Opportunities arise due to changes that are occurring or areexpected to occur in the external environment in which the port operates.Threats Threats are events that can lead to reduction of profit and growth. Threats arise due to changes that are occurringor are expected to occur in the external environment in which the port operates.

Vision DevelopmentFollowing the as-is assessment, the vision of the port was developed. The first step was an understanding of the business environment of JNPT. Constraints and drivers of change in the environment were identified as part of this exercise. An important constraint that emerged was the limited space for terminal side expansion at the current location .This understanding of the business environment was used as the basis to identify strengths, weaknesses, opportunities and threats for JNPT. Key strengths that emerged for JNPT were the frequency of services, available port infrastructure and strong financial position. Weaknesses at JNPT include distance from major shipping routes, limited draft and shortage of staff in key areas. The most significant threat for JNPT is the increasing pressure on road and rail connectivity. Other threats for JNPTinclude developments by private competitors.

For the purpose of assessing opportunities, they were divided into 3 broad categories- Opportunities in export-import traffic (where the origin ordestination is within JNPT's hinterland) Opportunities from trans-shipment and Other value added opportunities

An analysis of potential cargo types for export import(EXIM) traffic on the basis of two parameters, marketattractiveness and alignment to capabilities, indicated thatcontainer and liquid cargo were attractive opportunitiesworth pursuing.

On analyzing the coastal trans-shipment opportunity, itwas found that certain factors impacted its attractiveness,including distances from major shipping routes, othercompeting ports being developed and draft. As a result,the port could look at this option opportunistically ratherthan as a key focus area. Aligned to the export importtraffic focus, other potential value added services wereexamined which could strengthen JNPT's positioning.Potential value added opportunities taken up forassessment included distribution, logistics and free tradeareas. An opportunity assessment for JNPT wasconducted by analyzing opportunities based on four key parameters Strength/Weakness of port with respect to theopportunity Revenue potential Growth potential Sustainability/ Stability of revenues

In the opportunity landscape for JNPT, export-importcontainer traffic, free trade zone, distribution/logisticsemerged as attractive opportunities. In addition, Ro-Rocould be a potential opportunity area for the port, which itcould pursue opportunistically. Based on the assessment as well as the SWOT analysis, the vision was developedthrough a visioning workshop carried out with port.

Marketing strategy JNPTs marketing strategy would revolve around the levers of price, customers, geographies, services andcommunication and would delineate JNPTs target within each of the levers Cost How would JNPT ensure competitive prices for its services and how would it provide better value to itscustomers? Customers What customers would JNPT focus on? Geographies What geographies would be serviced by JNPT? Communication What would be JNPTs marketing strategy to attract and retain customers? Services - What services would JNPT offer?

It is also imperative to realize that the marketing strategy outlined above would be supported by a financial andcommercial strategy. The aim of the supporting strategies are as follows: Financial Strategy: The financial strategy of the port focuses on utilization of financial resources of the port. It delineates the sources of finance, expected costs and provides a framework for identifying the source of finance for various development activities. Commercial Strategy: The commercial strategy deals with the three levers of customer management, cost management and service offerings of the port. It is aimed at achieving commercial success within the operating business environment through effective management of customers and suppliers.The commercial and financial strategy for the port are detailed in the following sectionsThe commercial strategy of the port deals with therevenue flow to the port through the elements ofcustomer management, cost management andservice offerings. The execution of the commercialstrategy has to be in complete alignment with thevision and port development strategy. Key focusareas identified in the port development strategywould emerge as the revenue drivers of the portand thus determine the success of the commercialstrategy.Framework of commercial strategyJNPT's commercial strategy would be influencedby variables in the external environment such asthe business environment, customers andsuppliers. The methods under JNPT's control thatcan be used to determine its commercial strategyinclude services offered, cost management andcustomer management. The commercial strategyis illustrated in Exhibit .JNPTs commercial strategy is influenced byseveral external variables as seen below - The business environment impacts cost andcustomer management through regulatoryand other factors. JNPT's supplier network impacts the kind ofservices it can offer as well as the costincurred in providing those services. The competitive environment will determinethe services that need to be offered byJNPT and require JNPT to manage itscustomers

Framework of Commercial strategy

Services OfferedIn line with the port development strategy, JNPT has defined certain focus areas over the next 20 years. Theseinclude a strong focus on national export-import container traffic as well as greater participation in the containerhandling value chain through creation of logistics and free trade zones. Service offerings that JNPT is likely to offerover the next few years are listed below - Container handling operations Liquid cargo handling operations Vessel related operations (towage, pilotage etc) Logistics/Distribution zone Free trade zone Container freight operations/ empty depot storageThese service offerings would be influenced significantly by the competitive environment. In case certain servicescurrently not offered at JNPT were to be offered by major competitors, JNPT would need to create mechanisms tooffer similar services to prevent diversion of traffic to these competitors.Cost managementTo ensure that its commercial strategy is effective, JNPT would need to effectively manage its costs. These costsavings could directly translate into value offerings that could help in attracting customers. Cost management couldbe attempted at two broad levels Operational Efficiency towards low costs : JNPT will continuously strive to improve its operational efficiency levels.This could translate into substantial operational cost savings.Customer managementWith increasing competition between ports, the element of customer service would prove to be a key differentiator forthe port. To provide for effective customer service JNPT would need to develop a culture that supports all customers sothat their needs and specifications are met. JNPT would need to create and develop strong, positive relationships withkey customers by developing and implementing customer relationship management strategies and best practices.Customer Acquisition/ retention -JNPT would need to follow a multi pronged strategy to acquire customers. The strategy would broadly consist of threeaspects which are as follows: Provide value added services Provide the best value for money Marketing activitiesValue added services - The port will develop value added services for customers to increase the attractiveness of portand develop a sustainable competitive advantage. These value added services would be in the area of logistics and willenable the port to emerge as an integrated logistics hub in the country.Best Value for Money - The port will endeavor to optimize its resources to generate maximum throughput from itscurrent infrastructure. Apart from this the port will also undertake automation projects to bring down the time and costrequired for various processes. This will enable the port in lowering its overall cost for the customer.Marketing activities - The port will also develop and expand a marketing team which will undertake customermanagement exercises. This would primarily be aimed at retaining and targeting key customers. The marketing teamwill take regular feedback from customers and will have key accounts manager for strategic customers. These keyaccount managers will resolve customer queries and issues.Contracts with Suppliers: JNPT would ensure preparation of detailed specifications for all contracts and orders toensure that quantities and goods and services procured are fit for purpose using industry standards as the norm.Focus would be on optimal match of requirements with order quantities. Contract management will take on anincreasing importance given the large number of projects likely to be taken up over the next few years.An example of cost management in internal processes could be the introduction of automation between CFSoperators and terminal gates. A different illustration of cost management could be training of RMQC operators forcarrying out double moves. This could translate into significant improvements in operational efficiency and translateinto long term cost savings.Marketing at JNPTJNPT's marketing team will strive toward efficient customer management and developing the same as a competitiveadvantage of JNPT over other ports. The role of the marketing team will be centered around the following four aspects Customers Price Promotion CompetitionCustomers: The marketing team would be divided into key account managers. Each account manager would beresponsible for 2-3 customers and would aim at maximizing revenues from the customers as well as for resolving anycustomer related queries.Price: The marketing team would constantly study the competitors and would play a role in developing pricingstrategies for the port. These strategies would revolve around volume discounts, growth discounts as well as routediscounts.Competition: The team would regularly study the environment to develop reports on competitor plans as well as futurescenarios. These would be provided to various departments of the port for appropriate action. The team would also beresponsible for identifying future opportunities. These can arise from specific routes, specific industries or specificcustomers. The marketing team would then develop strategies to exploit the opportunity for the port. These would bepassed to the senior management for review.Promotion: The marketing team would regularly showcase capabilities of JNPT in port and logistics to customers toattract new customers and retain strategic customers.

CHAPTER 6QUESTIONARE

QUESTIONARE Finally ranking wise list of port choice determinants are as follows - Shipping agency? Port choice Determinants Analysis scores Shipping agency? Port Choice Determinant-wise Score for Ports shipping agency? Freight Forwarders Response based Score for - Vessel Frequency? Freight Forwarders Response based Score for Hinterland Connectivity ? Freight Forwarders Response based Score for Port Infrastructure? Freight Forwarders Response based Score for Port location (Sea-Route)? Freight Forwarders Response based Score for Number of CFS? Freight Forwarders Response based Score for All Determinants?

CHAPTER 7ANALYSIS

Analysis

Ports in IndiaGlobalization has led to an increase in world trade highlighting the importance of ports as a trade gateway. About 95% by volume and 70% by value of Indias international trade is carriedout through its port. Indias coast line of 7517 km is dotted with 12 Major Ports and 187 nonmajor ports. The Major Ports are under the control of the Central Government and the Nonmajor Ports are under the respective State Governments.Major PortsThe total volume of the traffic handled by all the Indian ports during 2005-06 was around 576 million tonnes, of which 423 million tonnes i.e. around 74 percent was handled by Major Ports and remaining 153 million tonnes by the Nonmajor ports.

Composition of Cargo at Major Port

Major ports of India

Evaluation of Export import cargo opportunities

GENERAL DESCRIPTION HISTORY

Plan of action to implement StrategyA detailed plan of action was developed to implement the strategy for the port over the next 7 years (between 2007- 08 and 2014-15). The action plan attempts to cover the set of projects/ initiatives to be undertaken by the port in the plan period across the following areas - Creation of new infrastructure Efficiency improvement Organizational improvements

The major aspects covered in action plan were as follows Time Lines: An estimate of the timeframe of each project Dependencies: Indicates linkages and dependencies between projects highlighting need for focus on parallel development where needed Critical success factors: This highlights key elements need to be addressed to ensure success of the strategies. It consists of factors which are within/beyond the control of the port An overall implementation schedule for the various projects has been outlinedNavigational FacilitiesThe JNPT access channel which is an extension of Mumbai Harbour channel has a depth of 11 m below Chart Datum (CD). The water depths in front of the berths at JNPT are maintained at 13.5 m to CD.The common main harbour and JNPT channelsectors are presently maintained at depths 10.8m - 11.1 m below CD. The total length of thedredged channel upto the end of Elephanta deepis about 15.21 Nautical Miles.At present, large size vessels up to 6,000 TEUsand having a draft up to 12.5 m, navigate throughMumbai Harbour and JNPT Channels, makinguse of the tidal window, which occurs twice in 24hours. Currently the channel is used for two waynavigation of ships.There are 2 mooring launches and 5 pilotlaunches to pilot the ships with 7 tugs for towingthe ships.Channel LimitationsAt present, container vessels carrying up to 6000TEUs having a draft upto 12.5 m, navigatethrough Mumbai Harbour and JNPT channels,making use of the tidal window. Ships havingdraft larger than this cannot be serviced at JNPT.During monsoon ships with draft upto 11.8 m canbe serviced.Navigational Facilities Mumbai Harbour and JNPT Approach Channel

Berthing FacilitiesAt present JNPT has three container terminals; JNPCT, NSICT and GTICT. Apart from this JNPT also has a shallow berth and two captive liquid cargo berths for BPCL. JNPCT is operated by JNPT and NSICT (set up on BOT basis). The Bulk cargo terminal comprising the bulk berth and two multipurpose berths are under conversion as a Third Container Terminal (on BOTbasis) by a consortium of MAERSK and CONCOR as GTICT. Liquid Chemical Terminal Bharat Petroleum Corporation Limited (BPCL) and Indian Oil Limited (IOL) are operating a liquid bulk terminal on BOT basis to handle bulk liquid chemicals, POL and edible oil. Shallow Water berth - It can handle 165 m LoA for break bulk and container purposesExisting Port Facilities

Storage FacilitiesContainer freight stations are the hubs for import andexport of more than 80% of the cargo handled by theport. Presently there are 16 Container FreightStations (CFS) in operation outside the portpremises; while necessary investments are beingmade by few more of them.The total capacity of CFSs is sufficient to handle thepresent container traffic. There are around 20 emptycontainer yards that have come up near the JNPTarea to store empty containers.The port had originally 6 Transit Sheds / Over FlowSheds of area 1,10,780 sq. m. and open storage areaof 1,48,850 sq. m. within the port. Most of these havebeen decommissioned / dismantled for conversioninto container stack yards and other yard facilities.Additional details on port facilities are in Section 6 ofinception report.

Storage Facilities

Cargo Handling Equipment at JNPT

Limitations of terminal operationInternationally container terminals focused on Origin destination traffic maintain an average ratio of number of RTGCsto each RMQC as 3:1. Unlike NSICT and GTI (planned) both of which have RTGC to RMQC ratios over 3:1,JNPCThas a ratio of 2.25:1. This may be hampering JNPCT crane moves per hour and overall productivity.At the liquid chemical jetty, the limited discharge rate of a large number of pipelines owing to their small diameter vis-visthe achievable ship discharge rate is a restriction. This reduces the flow rate of liquid chemicals and increases shipturnaround time.

Unique Selling Proposition Competitive Rating of portsCompetitive Rating of PortsAccording to the port users the two mostimportant factors in choice of a port are Port Location Port InfrastructureJNPT emerges as the overall port ofchoice with Mundra and Pipapavperceived to be the next best ports.Port users believe that in the futureMundra and Pipavav have the potential tocapture JNPTs share of market from thenorthern regions.JNPT has high ratings in areas such asshipping frequency and hinterlandconnectivity.Mundra and Pipavav are rated highly interms of ease of paperwork.It is important to note that the parameterson which JNPT has an advantage overothers are not entirely in JNPTs controlThese are areas such as frequency andhinterland connectivity.As frequency and hinterland connectivityof other ports improve JNPT will facecompetition. Hence JNPT should plan todevelop sustainable sources ofcompetitive advantage.

Comparative Ratings from Port Users

The three unique selling points of JNPT over other portswere found to be -Hinterland Connectivity Hinterland connectivity has been covered in detail in the infrastructure section.Users believe that inspite of congestion problems, incomparison to other ports JNPT still rates higher on connectivity. JNPT has the maximum number of regulartrains visiting it. Pipavav and Mundra have a single track diesel connectivity while JNPT has a double line connectivity.Frequency Currently JNPT has the highest frequency of services to major shipping destinations. As acomparison JNPT had 1772 (977 NSICT and 795JNPCT) vessel calls while Mundra had 480.Infrastructure JNPT currently has the largest in frastructure in comparison to other ports. The closest competitor for container traffic, in the western region, to JNPT is Mundra. Mundra has 632 metres quay length and 6 cranes while JNPT has 1280 metre quay length and 16 cranes (excluding GTIPL). JNPT therefore hasan advantage compared to other ports in Infrastructure. Specific areas of advantage for JNPT are the presence of 16 CFS operators with 12 new operators scheduled to begin operations shortly. This is far more than itscompetitors

Unique Selling Points

Development of JNPT VisionWith the Indian economy currently poised to grow at a significant rate, there are a number of opportunities that a portcan potentially align itself to. However, each port has its own characteristics that enable it to play a specific role in thecountrys growth. Various factors would impact this positioning including its location and hinterland, its physicaladvantages and limitations, its operational strengths and weaknesses as well as its competitive environment. In thiscontext, the port has to make careful choices about its key focus areas, such that the port can play its service-orientedrole in the regional context.Our approach to developing the vision for JNPT was based on a combined assessment of a number of internal andexternal factors. On the internal front, an overall assessment of strengths and weaknesses with respect to itscompetitors was carried out, which assessed JNPT's capabilities with respect to competing ports. This clearly indicatedthat while JNPT had capabilities in some key areas, it also faced constraints and issues on the other. On the externalfront, a view was taken on the overall potential for cargo growth in the hinterland and the threats that emerged fromcompetition and changes in the external environment. JNPT faces competition primarily from the ports in westernregion. These include the ports of Mundra, Pipavav, Kandla, Mumbai and Rewas. Apart from this the port also facescompetition in transshipment cargo from Salalah, Colombo and Karachi.Activities leading up to vision developmentThe vision development process for the port was a participative one, where port senior management and keystakeholders were involved in discussions related to generation of vision options and finalisation of the eventual vision.The key activities that were conducted as part of the visioning exercise were: Background analysis and opportunity assessment by the consultant Conduct of a SWOT workshop with port internal stakeholders Discussion of SWOT output and conduct of visioning exercise with port senior management and key externalstakeholders Discussion of visioning exercise output with chairperson and senior management of the port

The approach for vision developmentThe approach that was followed for developing the vision was a structured one, which built on the approach and somekey observations identified as part of the inception report. The objective was to systematically develop a positioning forthe port which it can sustain for the next 20 years. It essentially consisted of the following components: Identification of key drivers and constraints impacting the port SWOT analysis - High-level assessment of the strengths, weaknesses and threats related to the port. Opportunity analysis was carried out in detail separately Preliminary short-listing of opportunities for the port based on identified criteria Detailed analysis of attractive opportunities, including traffic projections Formulation of vision statementA summary output of each of the above is discussed in the following sections as a background todevelopment of the vision.A number of inputs went into the analysis and discussions at each stage of the vision development process, whichincluded: Analysis of macro-economic factors Key drivers and traffic projections were derived from macro-economicand industry trends Competitive analysis The growth plans of competitors as well as their relative positioning have impacted theshare of cargo that JNPT is likely to get. Shipping industry analysis Industry trends in terms of shipping lines, cargo routes and vessel sizes were usedto identify key imperatives for JNPT from a transhipment and sea side capacity perspectiveIDENTIFICATION OF CONSTRAINTS AND DRIVERS IMPACTING THE PORTAny constructive vision exercise has to take into account the key macro-trends impacting the port and assess theboundaries within which the port operates. A recognition of these factors allows the port to apply a reality checkon any recommendations that are made for its vision. In discussions that were conducted as part of the keyworkshops, a number of key points emerged as drivers and constraints for JNPT, which effectively fell into 4distinct categories. These have been detailed in subsequent pagesa. Port and Cargo related factorsDrivers and constraints Consolidation of shipping lines and increasing ship sizes Increase in trade on Asian routes An increasing trend of shipping lines integrating into portoperations The export import imbalance in India The limited area available at JNPT for expansion on the seasideand land-side in the current location leading to capacity limitationsb. Hinterland factorsDrivers and constraints Significant growth in the hinterland economy leading to anincrease in traffic The related impact of SEZs and other such initiatives by theGovernment leading to additional growth in traffic The introduction of VAT which could impact logistics anddistribution Constraints being faced by the port in road and railConnectivity

c. Regulatory FactorsDrivers and constraints Increased focus on PPP models as a means of rapid portinfrastructure development The imperative for major port trusts to operate under MPT actand TAMP regulations Increased security needs across ports and resultant costs atPortsd. Competitive Environment related factorsDrivers and constraints The entry of international and national private players into theport sector by setting up competing ports The impact of international ports such as Salalah, Colombo ascompetition to Indian portsIdentification of constraints and drivers impacting the port

Development of JNPT Based on the above analysis, opportunities were rated as shown below. Cargo types like Dry Bulk, Break Bulk wereobserved to lack from a market attractiveness as well as a JNPT capability perspective. LNG was perceived to be ofuncertain stability and growth potential. Coal as a dirty cargo was not aligned with JNPT's positioning as a generalcargo port. The Ro-Ro and Cruise opportunities seemed attractive financially but were not aligned to the specificcapabilities of JNPT. Container and liquid cargo emerged as attractive opportunities. Based on the above criteria,detailed analysis was taken up for specific export import cargo types in the next stage, i.e.- Container Liquid cargo

Detailed assessment of opportunitiesobtain additional senior management inputs to arrive at the set of opportunities which JNPT which would focus on froman end-state perspective. The set of opportunities considered for detailed assessment included the following: Export Import Cargo Container Liquid Cargo Transshipment (coastal and regional) Distribution Hub (Regional distribution facilities/warehousing) Logistics Hub (warehousing, distribution, logistics and packaging) These opportunities were analyzed in detail based on four key parameters Strength/Weakness of port with respect to the opportunity Revenue potential Growth potential Sustainability/ Stability of revenuesA summary of the analysis of these opportunities has been provided in annexure 1.2 to provide an assessment ofthe discussions that took place on these opportunities. The analysis that has been carried out was used primarily tofacilitate discussions from a JNPT perspective.A summary of the opportunity landscape was prepared for JNPT based on revenue potential and growth andsustainability as shown below, which was used for further discussions during the vision development stage. Thislandscape is based on the assessment of opportunities detailed in annexure 1.2. Benchmark figures are based onJNPT data and industry research as illustrated in annexure

Opportunity Landscape for JNPT

Workshop Carried out keeping a few key factors in mind - JNPT has limited sea-side and land-side resources which it must use prudently. The choice of vision has to be aligned to the activities that are already undergoing at the port. Changing the priority of the port completely to a different type of cargo form what it is handling today could be retrogressive, even if the alternative opportunity was attractive Value-added opportunities must be aligned with the vision of the port and the expected priorities in the future. An objective to purely maximize the economic value of the available land may lead to sub-optimal decisions. Key participants in the vision development exercise were representatives from the following entities:

To be recognized as India's premier container port providing integrated logistics services to the best interest of trade and customers

Each of these elements havea impact on the manner in which JNPT executes the vision over the period of the business plan. The elements of the vision are -Focus business areasOther Cargoes servicedGeographies of focusValue Added ServicesGuiding Principles

Focus business areas

JNPT will maintain a clear focus on containers as its core business and will attempt to remain Indias largest containerport providing customers with the best container handling experience in the country.Other Cargoes ServicedJNPT will also serve coastal trans-shipment needs of the Indian sub-continent for traffic that arrives at the port in itsnatural course of operations. This cargo is likely to be trans-shipped coastally from other smaller regional ports. Theport may not actively invest additional resources in seeking transshipment cargo. This transshipment cargo is likely tobe regional or coastal in nature.Since the infrastructure required for Ro-Ro services is largely similar to that of containers, JNPT will be ready to serviceRo-Ro in the future in case the market for Ro-Ro expands and the potential for containers falls.Since JNPT has already committed resources to liquid cargo it will continue to serve this cargo in the future. It will also enable JNPT to derisk its cargo profile going forward.Value Added ServicesJNPT will conceptualize and establish a state of the art logistics hub offering - Warehousing and forwarding facilities (including storage/stuffing/stripping of containers) Value added services processing of goods according to specific customer and country-of-destinationrequirements, packing and re-packing, labeling and assembly, sorting and invoicing Free trade zones/export processing areas State of the art communications infrastructure Multimodal transport facilitiesJNPT will also attempt to enter into partnerships with various container rail freight operators so as to develop dedicatedservices to JNPT from northern hinterland. This gains importance in light of 13 new licenses for container rail freighthandling operations having been issued by the Government of India. JNPT could enter into partnerships with one ormore of these players to offer a regular service to exporters/importers. Such a partnership would help in retention ofJNPT traffic from the northern hinterland.Guiding PrinciplesJNPT's guiding principles are obtained from its current mission statement which stresses on fulfilling the needs of thenation as well as ensuring safety and security. The significant guiding principles derived from the mission statement are Enabling Indian trade through JNPT, efficiently and smoothly Ensuring safety and security at the port and development in the area around the port Creation of value for customers through value added services Expanding capacity and upgrading equipment in line with customer requirements

Value Added Services

JNPT will conceptualize and establish a state of the art logistics hub offering - Warehousing and forwarding facilities (including storage/stuffing/stripping of containers) Value added services processing of goods according to specific customer and country-of-destinationrequirements, packing and re-packing, labeling and assembly, sorting and invoicing Free trade zones/export processing areas State of the art communications infrastructure Multimodal transport facilitiesJNPT will also attempt to enter into partnerships with various container rail freight operators so as to develop dedicatedservices to JNPT from northern hinterland. This gains importance in light of 13 new licenses for container rail freighthandling operations having been issued by the Government of India. JNPT could enter into partnerships with one ormore of these players to offer a regular service to exporters/importers. Such a partnership would help in retention ofJNPT traffic from the northern hinterland.Guiding PrinciplesJNPT's guiding principles are obtained from its current mission statement which stresses on fulfilling the needs of thenation as well as ensuring safety and security. The significant guiding principles derived from the mission statement are Enabling Indian trade through JNPT, efficiently and smoothly Ensuring safety and security at the port and development in the area around the port Creation of value for customers through value added services Expanding capacity and upgrading equipment in line with customer requirements

Identification of goalsDevelopment of a business plan aimed at achieving thevision requires that the vision is cascaded to goals and astrategy to achieve those goals is developed.The goals and strategy are then converted into an actionplan for the organization.It is imperative to understand that goals should beanalyzed to assess the time period within which they canbe achieved. This would help in differentiating betweenlong term goals and short to medium term goals.The short to medium term goals need to be converted intoan actionable plan that can be implemented and monitoredby the port while the long term goals should be evaluatedat a later stage and an action plan for the same should bedeveloped at that time. This is because an action plan for along term goal might become irrelevant in light of thechanging scenario and emerging trends in the industry overthe long term.Characteristic of a well defined GoalKPMG has followed a set of principles to ensure that thegoals developed for JNPT are specific, actionable and timebound A goal should be specific and aligned with the vision A goal should be relevant to the vision and should addresscritical aspects of an organization (capacity, serviceoffering and efficiency etc) A goal should be time bound and an immediate or mediumterm goal should have a specific time line attached to them A goal should be achievable and should not consist ofunrealistic aspirations

PERSPECTIVE PLAN

Identification of Goals

Each element of the Vision is analyzed to identify the goals that would be required to achieve the vision

Each element of the Vision is analyzed to identify the goals that would be required to achieve the vision

As can be seen the Goals identified deal with the following critical aspects: Capacity Achievement of 10Mn TEUs of traffic at JNPT To expand JNPT to new locations Efficiency Improve efficiency across the port to achieve 2200 TEUs/m quay length Service offerings To develop logistics capabilities and services at JNPT Invest into hinterland connectivity ventures

PRIORITIZATION OF GOALS Achievement of the vision require a sequence of goalsto be achieved by JNPT. KPMG has evaluated thesegoals on the following parameters to ascertain theirtimeframes and to make each goal time bound: Ease of implementation This factor takes intoconsideration various aspects that have an impacton the implementation of the goal. These wouldinclude Resources required Each goal would requirea different set of resources for itsimplementation. An assessment of theavailability of resources with the port vis--visresources required was used to evaluate thisparameter Capability JNPT has traditionally been a portoperator and off late is developing into alandlord port. This parameter would evaluateJNPTs capability in achievement of the goal Business Environment This factor includesfactors such as market demand, competition,entry barriers, regulatory aspects etc toevaluate whether the environment is conduciveto achievement of a particular goal Criticality This parameter measures if a goal iscritical to the vision. A highly critical goal wouldhave to be achieved at the earliest even if it scoreslow on ease of implementation

Framework to analyze goals

PRIORITIZATION OF GOALS

Short and Long term goals

Expansion to new locationsJNPT can also explore the opportunity to expand into new locations. The new locations could be in the same regionand about 80-100 Km away from the existing port. The new port can act as a sister port to the existing port andcustomers can be provided services across both the ports. The port can explore a number of options to expand intonew locations as listed below: Public private partnership to set up a new port : JNPT and a private developer enter into an MoU to develop theport and enter as equity partners. Acting as a development authority for the port :Here the government invests in the venture and hands over thedevelopment activity at the port to JNPT. JNPT then enters into BOT for terminals with private parties foroperations Taking up container terminal operations in such a port set up by a 3rd party : JNPT could enter into a differentarea by attempting to be a terminal operator with investments at the new port, in a departure from its role asdevelopment authorityA decision on the mode of entry would be based on those capabilities of JNPT that would help in development ofgreenfield port Port Development capabilities (infrastructure, roads etc) Marine capabilities Terminal operation capabilities Experience in forming PPPs Ability to attract private operators to invest It is important to mention that the attractiveness of these options would to a large extent be determined by thebusiness and regulatory environment prevailing then, which is something that cannot be factored in nowIt is expected that the development as port authority has the highest alignment with the ports capabilities. Its financialbenefit would to a large extent be determined by the agreement entered into between various stakeholders(Government, port, private players)The role of JNPT in such an arrangement is envisaged to be that of a port development authority responsible fordevelopment of basic infrastructure. The operations of the terminal would be handed over to private players on a BOTbasis. Such a PPP model would be an attractive option financially for JNPT and could be a profitable use of theinvestible surplus which would be created post 2015-16.

PORT HINTERLAND RELATIONSHIP Port is A Transport node where cargo is transferred from vessels to road or rail or other vessel and vice-versa. A place where cargo is stored. A safe place to moor ships/vessels.

Ports Hinterland is The area from which the ports customers are drawn from or also called market area. Customers are normally send/receive good through ports. "Hinterland" was borrowed from German, where it means literally the land behind (a city, a port or similar). Some ports will have hinterlands that extend across many states, while other ports will have smaller hinterlands.

Ports Hinterland Relationship and Stakeholder

HINTERLAND REGIONS OF INDIA Out of total 28 states in India only 9 states have a coastline and other states are land-locked. India consists of three hinterland regions: North Western Hinterland Southern Hinterland Eastern Hinterland

Hinterland Regions of India

WESTERN HINTERLAND ANALYSISNorth Western Hinterland

HINTERLAND MAPPING FOR PORTS TEU = Twenty feet Equivalent Unit A measure used for capacity in container transportation Used to describe the capacity of container ships and container terminals. A reusable transport and storage unit for moving products and raw materials between locations or countries; the terms container or box may be used on their own within the context of shipping. A related unit, the Forty-feet Equivalent Unit (often FEU or feu) is defined as two TEU. Container i.e. Number of TEUs movements are as below for selected ports. Only loaded containers are considered for the purpose of study. Empty containers are not included. Whenever any FEUs movements are observed, it is treated as two TEUs as per industry norms. Mundra Port State-wise Share of Containers - Mundra Port

Source: MICT, MPSEZCT, Port Authority and MPSEZ - Adani

Kandla Port

State-wise Share of Containers - Kandla Port

Source: ABG Kandla Container Ltd., Port Authority and MPSEZ Adani

PipavavPort State-wise Share of Containers Pipavav Port

Source: APM Container Terminal Ltd, Port Authority and Customs Department

JNPT State-wise Share of Containers - JNPT

Source: MPSEZ Adani

Calculation for Hinterland Mapping

STATE-WISE HINTERLAND MAPPING FOR MUNDRA PORT

Percentage (%) Share of States for Containers Mundra Port

Share of Type of Hinterland Mundra Port

Hinterland Mapping Mundra Port

Finally ranking wise list of port choice determinants are as follows

Port Choice Determinant-wise Score for Ports

Freight Forwarders Response based Score for - Vessel Frequency

Freight Forwarders Response based Score for Hinterland Connectivity

Freight Forwarders Response based Score for Port Infrastructure

Freight Forwarders Response based Score for Port location (Sea-Route)

Freight Forwarders Response based Score for Number of CFS

Freight Forwarders Response based Score for All Determinants

CHAPTER 8CONCLUSION

CONCLUSION

All Gujarat ports have rail distance benefit from ICDs which is of important factor. This is not applicable in case of Madhya Pradesh and Uttar Pradesh. If Mundra and Pipavav will increase Vessel Frequency and Hinterland Connectivity then together with 1st and 2nd rank determinants, both can attract more container cargo. Mundra has to keep an eye on Pipavav as upcoming competitor because Pipavav is much closer in terms of Port Infrastructure to Mundra as well as for Delhi region shippers. Rajasthan and Gujarat both are potential hinterland for all Gujarat ports due to proximity. Haryana and Madhya Pradesh is still under influence of JNPT so long term efforts are must from all Gujarat ports. Punjab, Delhi and Uttar Pradesh are required to be maintained with same level of quality and timely service. Infrastructure wise JNPT is ahead of all ports but Mundra is also equipped with modern and adequate infrastructure for coming few years so in future Mundra can be seen as one of the biggest container handling port in west coast.

CHAPTER 10RECOMMENDATION

RECOMMENDATION Port location from main sea routes and Port ICDs rail distance are such parameters those cannot be changed. Mundra, Kandla and Pipavav have benefit of Port ICDs rail distance factor which they should focus more to attract container cargo from northern hinterland. For Mundra and Pipavav, it is easier to serve the potential container cargo as they have already penetrated in northern region states and they are equipped with required infrastructure to meet near future demand. Time to time up gradation of infrastructure is required for Mundra and Pipavav with strategic vision. Major issues are Vessel Frequency and Hinterland Connectivity which must be achieved then first two rank determinants will be strength of both Mundra and Pipavav to attract more container cargo. Though in last 6-8 months hinterland connectivity is improved by rail frequency but still it requires more. Mundra has to take care of Delhi region as Pipavav is looking at the same lucratively. Rajasthan is not yet covered as efficiently as it should be even though it is the nearest neighbour state of Gujarat which can be attracted by road transportation also from near districts of Rajasthan. Ensuring availability of cargo is even necessary as vessel frequency and availability of cargo goes hand by hand and works symbiotically to get benefit of increment. Kandla can even focus for neighbouring states with existing facilities. It can attract container cargo but has to undergo for many improvements. Customs Clearance should be hassle free, less time consuming and smooth so more container cargo can be attracted. Associations should be done with Ship Liners and Industrial clusters to attract more cargo.

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