cargo handling and profitability introduction

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CARGO HANDLING AND PROFITABILITYA study of Visakhapatnam Port Trust

Project report submitted in partial fulfillment of the requirements

for the award of the degree of

MASTER OF COMMERCE

By

TADIKONDA SANTOSH

Regd.No.2055655085

Under the Guidance of

Dr.A.NARASIMHA RAO

M.com, Ph.D, AICWA

Associate Professor

DEPARTMENT OF COMMERCE AND MANAGENT STUDIES

ANDHRA UNIVERSITY

VISAKHAPATNAM

2005 2007


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DECLARATION

I hereby declare that the project report entitled Cargo Handling and

Profitability: A study of Visakhapatnam Port Trust submitted by me is a

bonafide work done by me and is not submitted earlier to any other

university / institution for the award of any degree / diploma.

Visakhapatnam (T.SANTOSH)

Date:


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ACKNOWLEDGEMENTS

With immense pleasure and deep sense of gratitude, I express myindebtedness to my project guide Dr. A. Narasimha Rao, for giving valuable

guidance in completing this project. I also express my thanks to Prof. D.

Prabhakara Rao, Head of the department, DCMS, A.U. for permitting me to

carry out this project wok.

I express my deep sense of obligation to the management of the

Visakhapatnam Port Trust for giving me an opportunity to under go field

training in their esteemed organization. In this regard I express my heartful

thanks to K.Rathna Kishore, Chairman, VPT. K.Venkata Swamy, ATM,

Visakhapatnam Port Trust for their kind cooperation to complete my project

work.

I say heartful thanks to Mr.Ramalingeswara rao, AQF, for giving his

cooperation and help to complete my project work.

Finally, I thank all the office staff of DCMS, A.U. Parents, Family members

and friends for giving time-to-time information and help in doing this work.

TADIKONDA SANTOSH


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CONTENTS

CHAPTER I: - IntroductionA. Need and importance of foreign trade in Indian

economyB. Need and importance of portsC. Classification of portsD. Role of portsE. Development of ports

CHAPTER II:- The present studyA. Visakhapatnam Port Trust ProfileB. GenesisC. Details of fishing harbourD. Other important details of VPTE. Business goals and Aims of VPTF. Need for the studyG. Objective of the studyH. MethodologyI. Limitations

CHAPTER III:- Cargo Handling and ProfitabilityA. Cargo HandlingB. Traffic information systemC. Traffic growthD. ExportsE. ImportsF. Profitability

CHAPTER IV:- Summary and SuggestionsA. SummaryB. Suggestions


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Bibliography

CHAPTER - I


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CHAPTER - I

INTRODUCTION

Cargo handling means exports, imports and transshipment of Agro, food grains, liquid

bulk and others. After the advent of liberalization, privatization and globalization of

Indian economy, external trade is the buzzword in the economic scenario. Since 90% of

the world trade is done through sea route, ports are the major channels for exports and

imports in India Visakhapatnam Port trust is standing number one in cargo handling.

In international trade as in all other economic activities, it is the individual economic

subject who buys and sells, pays and is paid, grants and receives loans, and in short

carries on the activities which taken as a whole constitute international trade.

In foreign trade some countries are linked together much more closely than others. There

are countries exchange only commodities. The inter dependence between debtor and

creditor countries is appreciably closer with a common currency or a common banking

system. The best example of countries having common currency, customs union,

common monetary policy, and common policy of mobility of factors of production is the

European economic council(EEC). There are various other economic unions, which

enable the member countries to over come the trade restrictions, trade barriers and to

have effective foreign trade. Finally international trade is the exchange of goods and

services between two or more countries.


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A. NEED AND IMPORTANCE OF FOREIGN TRADE IN INDIAN

ECONOMY

In the pre-independence regime, in the period of British rule, the pattern of foreign

trade was typically colonial. India was a suppliers of foodstuffs and raw materials to the

industrialized nations particularly England. To the large extent the imports are

manufactured goods.

After the independence, the colonial pattern of trade had to be changed to suit the

needs of a development economy which decided to embark on a programmed of

development is required to extent its productive capacity at a fast rate. For this imports

of machinery and equipment that cant be produced in the initial stages at home are

Essential. Such imports that either help to create new capacity in some lines of

production or enlarge capacity in other liner production are called developmental imports.

There are the imports required for setting up of the steel plants, the locomotive factory,

the hydroelectric projects etc.,

A developing country like India that sets in motion the process of

industrialization at home requires the import of raw materials and intermediate

goods so as to properly utilize the capacity created in the Country. These imports

which are made in order to make a full use of the productive capacity. These

imports are virtual for a developing economy. Heisted, these imports a developing

country is also required to import consumer goods, which are in short, supply at


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home. Such imports are anti-inflationary because they reduce the scarcity of

consumer foods. India has imported food grains in post independence period,

which helped to arrest the rise of prices at home.

There fore, it is inevitable that during the early years of development. Imports

have to be increased at a very faster rate. It is natural that the balance of trade in

such a situation will turn heavily against the developing country. This necessitates

the enlargement of exports to meet the growing foreign debt in view of inelastic

imports; a developing country must increase its exports. Traditionally India has

been the exporter of foodstuffs and raw materials. As economic development

precedes the raw materials exports generally decline because their demand

increases at home to meet the requirements of growing domestic industries. With

fast growing population, the surplus of food grains available for exports either

dwindles, or is turned into a deficit. Consequently a developing economy is

required to find new commodities and new market in which it can sell its

manufactures. Foreign aid is important for an under developed country but trade is

more significant.

B. NEED& IMPORTENCE OF PORTS:

The oceans and seas present on the earth. Through called with different names are

nothing but a single / solid mass of water in the medieval times. The different continents

have no connections what so ever as was evident from history. But the existence of sea


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traffic for transport purpose was also evident from the history itself. During the changed

times, man became more interested about the other lands and began exploring through the

available mode of transports viz., bats etc., and started journeys on sea. Thus, after

finding new settlements, etc. thus only the Dutch, Portuguese, French and British people

have entered our country for business initially and later established their regime in our

country.

But for the sea routes, the aforesaid nations could not have entered India. Although in the

beginning, the places where boats and other mode of sea transport touch the land were

primitive and in the changed scenario, provision of better amenities started that was the

beginning of establishment of ports.

As of now, though the importance of passenger traffic through sea route had diminished

to some extent, for cargo movement, sea routes are only alternative between the

continents / countries. A countrys economy is more or less dependent on import / export

and to maintain the economy, sea trade is essential. For developing sea trade, ports are

very essential to handle the imports /exports. The facilities available will help the ports

grew and in turn through this growth the hinterland of the particular port will grow. Thus,

the port had pivotal role in a nations economical development.

C. CLASSIFICATION OF PORTS

Port of India is classified into three categories: -


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Major ports in India:

1. Mumbai

2. JNPT

3. Mormugao

4. Cochin

5. Kandala

6. Chennai

7. Encore

8. Visakhapatnam

9. Paradeep

10. Kolkata

11. Tuticorn

12. New mangalore

D. ROLE OF PORTS:


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The port industry plays a major role in the nations economy. After the advent of

liberalization, privatization and globalization of India economy, external trade in the

buzzword in the economic scenario. The exports and imports shoe the favorable and

unfavorable trend in the economy by way of balance of trade..

When the exports are greater than imports it results in favorable balance of trade or if the

vice versa occurs, it results in unfavorable balance of deficit. Indias balance of trade has

always been in deficit. This is because imports are increasing because of pressure from

development plans and requirements on the other hand cost of production, pressure of

domestic demand, supply constraints, low quality.

In order to strike a balance of trade the government implements the imports substitution

and export promotion strategy. That is why the present trade policy is known as export

led strategy or export and production oriented import j- export policy.

The number of export houses has increased tremendously in the recent years. The main

reason for the mushroom growth of export houses does the government of India provide

the various facilities to them. They generally collect orders in foreign markets, purchase

the goods in India market, process them in accordance with the standards and supply

them to the imports. Thus, they deal in various lines and on large scale.

Therefore, they also enjoy various advantages of large-scale economies.

Such as:


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control, non adherences to delivery, manufacturing specifications and standards by the

industrial units, high prices, absolute designs, desire of units to exporter directly.

Preference to sell goods in domestic market, as prices in deistic markets are higher, lack

of technical experts etc.

Export houses and small scale industrial units must establish on enduring relationship, so

that the small units may concentrate on the problems of production and the exporting

houses on the problems of exporting marketing. Export house should provide package of

assistance to their supporting manufacturers in respect of market surveys supply of raw

materials, quality control and product development and acceptance.

E. DEVELOPMENT OF PORTS

Shipping companies are the major victims of this bottleneck. Delayed

clearing at the at the ports leads to increase in cost for the, affected bottom-line of the

company. The problems associated with Indian Ports are lack of adequate capacity

compared to the traffic growth (against a traffic of 25 line tons in 1997-98 capacity stood

at 215 Mt), port labor productivity leading to poor turnaround of ships, lack of

modernization and lack of adequate drafts to receive ships of large size.

The capacity requirement of ports at the end of the ninth plant (2001-02) is

estimated to be 424 million-ton. This indicates a huge gap to be bridge. Apart of that Gap

is expected to be met by increasing productivity. Hence to improve Productivity the up


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gradation of the easing cargo handling equipment is Necessary; ports can be turned into

specific commodity handling centers. To make such ports operationally efficient,

corporation of major ports is expected to be undertaken. The new encore port, JNPT and

halide ports are expected to be run on this basis. Similarly it is considered important to

firm joint Venture with foreign ports or between Indian ports.

Apart from improving productivity, mechanization, training of port Personnel,

the multiplication of agencies at port has to be eliminated for unified cargo handling

labor. The beginning has already been made at Mumbai and Some other ports by merging

dock labor board with port trusts. Development of minor ports is also considered

essential. The central government will provide technical assistance to the state

government for development of minor ports.

Finally, attempts are made to attract private investment for development of

ports. The government has issued detailed guidelines to ensure transparency and

uniformity in private sector participation.

Visakhapatnam port is one of the major ports in the Eastern Sea Ports situated in

between Calcutta and Madras ports it has acted as a catalyst in the process of

industrialization of its hinterland along with other ancillary industries. The port plays a

dynamic role in fostering, accelerated development in the region and has contributed

significantly to the national development.


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The Visakhapatnam Port situated to Degrees and the port was created by nature of

Dolphin nose will and well protect the port from cyclones. Since the port is 10 neautic

mails in side the coastline.

So, keeping in view the importance of imports & exports through sea- route and the role

played by the ports, Ive chosen this topic entitled cargo handling and profitability for

my study as Visakhapatnam port trust stands number one in India in cargo handling.


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CHAPTER - II


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CHAPTER II

A. VISAKHAPATNAM PORT TRUST PROFILE

Visakhapatnam port trust, safe in the protective shadow of the dolphins nose hill and

the rose hill promontories, and located almost midway between Calcutta and Chennai, on

the east cost of India in Andhra Pradesh, has been serving a vast rich hinterland since

1933. One of the 11 major ports in the country, the port which lies at a latitude of 17 N

and longitude of 83 18E had had a long tradition of maritime trade with Europe and the

Middle East since the beginning of this century.

The port today services the export and import requirements of six steel plants

Bhilai, Bokaro, Rourkela, Durgapur, and Visakhapatnam in the public sector and the

TISCO plant in the private sector. It also serves a host of public and private sector

companies in the field of fertilizers, aluminium, heavy machinery besides export of

petroleum, manganese ore, crude oil, food grains etc. the port, which will handle

34.50milliontones by the year 2002.

B. GENESIS:

Before the construction of the madras harbor there was no part of the hole of the East

Cost of India offering shelter for shipping Visakhapatnam his in the center of the Cost

line.


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Following its contact with a large productive area, rich in minerals in the center of

India, the proposal for a port in this part of country was noted as early as in 1858 in a

report of a British survey party. This was underlined is an 1877 report titled Vizag the

port of Central Provinces (1877).

However it was only in 1914 that the Bengal Nagpur Railway initiated a plan for

utilizing the extensive area of swamp divided from the sea by the spit of land on which

the Visakhapatnam town stands. The waterways were to be dredged out and rocks were to

be removed to serve for the entry of the ships. The credit of first putting forward this

scheme goes to Sir.John Wolfe Barry and partners, consulting engineers of the

railways. The construction of the harbor at the month of River Meghadrigedda was

adopted in 1922. It was decided that the work should be carried out by the government of

India, through the Railway Board, the connection with the Bengal Nagpur Railway

being maintained by the appointment of the agent of the railways as ex-office

administration officer of the harbor.

The port was opened to ocean going vessels in 1933. The port was built as a mono

commodity port mainly for manganese ore exports. The first commercial vessel S.S.Jala

Durga Of the India steam Navigation Company entered the port in October 1933.

Meanwhile the port administrative, which was under the Bengal Nagpur Railway in

1933 padded through different department and ministries of the Government of India till

its transfer to the port trust in February 1961 under the major port, trust Act, 1963.


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Planned development of port began with the five-year plans introduced by pundit

Jawaharlal Nehru. Substantial investments were made in the successive years and the port

facilities were expanded and modernized to meet the requirements of the trade.

C. DETAILS OF FISHING HARBOR:

The Visakhapatnam fishing harbor occupies a prime place in marine exports. This

modern fishing harbor was constructed in an area of 24 hectares with a draft of 7.5 meters

was commissioned during April 1978. Initially it was designed for landing and berthing

of 15 fishing trawlers and 160 mechanized Boats. At present it can accommodate about

56 trawlers and 300mechanized boats.

D. Other Important Details of VPT:

i.. Environmental protection:

Visakhapatnam port, while achieving highest traffic growth is maintaining harmony

between development and environmental protection. The port has initiated several

measures for environmental protection. The measures are as follows: construction of a

sewage treatment plant and tree plantation. In coordination with the department of

inorganic and analytical chemistry, AU, VPT monitors air and water environments in and

around port area monitoring quality of drinking water, harbor water quality.


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ii. Environmental Cell.

a.. VPT-Committed to human welfare:

The Visakhapatnam port trust is an organization with a human heart. It believes that

people are its most valuable assets. This corporate philosophy has enabled it to extend a

helping hand to the general public in times of need. Some of the welfare activities

undertaken by the port are as follows:

Housing-2083 housing quarters to its employees 220 quarters to CISF, Police and Audit

personnel.

Schools, Colleges

Recreation clubs

Visakhapatnam sports council

Medical facilities

b. Social Welfare Measures:

VDLB is one of the tops most organization providing maximum social welfare measures

to the workers.

General provident fund

Pension

Gratuity

Free medical treatment

688 Quarters have been constructed in kailasapuram housing colony.


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Housing building advances

Nine holidays in a year

Advance for purchase of vehicles

Productivity linked bonus

Subsidized canteen

Uniforms

Recreational facilities

Sponsorship to different games and sports.

c. Co-operate objective:

To fulfill its role in the promotion of international trade, particularly of export trade

and of economic and industrial development of the hinterland.

To anticipate and respond to the economic, trading and technological developments

and provide the necessary port and harbor facilities in time.

To provide efficient and safe services on water and on shore at optimum cost and

ensure quick turn around of ships, rail wagons and road vehicles.

To simplify systems, roles and procedures in respect of all port activities leading to

optimum utilization of capital, men, material and time.

To develop human resources with a view to acquire attitudes and skills required

meeting managerial, operational and technological needs.

To maintain optimum requirements of human and material resources.


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F.NEED FOR THE STUDY:

In the process of liberalization, Indian economy has represented it self to the global as

ever before. Particularly in exports there was a tremendous rate since 1991. As our

foreign trade is increasing from year to year there are many agencies or organizations,

which become more active as ever before because off increasing, trade with foreign

countries. Ports are one of the Organizations in this process.

Increased demand for shipping cargo for exports as well as for imports made the port

busier. This was because of the liberal import export policies. At the same time the

competition between the ports has increased. This cause, improved technologies of ports,

expansion of the capacity of ports, etc and in turn there have been and increase in cargo

handling or traffic handling from one period to other.

At the same time the profitability on handling of various cargoes emerged a need to

the low cost operations or full capacity utilization of the available services, and to

optimize the cost of handling per ton in one hand the increasing the profitability in other

hand. To retain existing users as well as to attract, prospectus users in the keen

competition of the port sector.


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G. OBJECTIVE OF THE STUDY

Realizing the importance of cargo handling I have done my project work keeping in view

the following objectives.

1. To Study the Organization Profile.

2. To Study Cargo Handling Function in Visakhapatnam Port Trust.

3. To study the Cargo Handling procedure of VPT.

4. To examine the problems of cargo handling in VPT.

5. To examine Cost of Handling Vis a- Vis profitability in cargo handling per

ton.


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H. METHODOLOGY

The methodology of study explains the process of exports and imports in VPT

sources of data are of two types:

(1) Primary Data

(2) Secondary Data

This study is of both primary and secondary data. Primary data refers to the first hand

information and secondary data refers to the information about industry and already

collected data.

Primary data is collected through:

1. Interview various authorities like traffic departments.

2. Interviewing the labour at dock area for finding the problems in cargo handling.

3. Interviewing custom officials.

4. Interviewing various parties associated with exports and imports.

a) Exports and imports agencies

b) Stevedores etc.

The secondary data is collected from various magazines of port trust. Newspapers

and other company published materials.


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I. LIMITATIONS

1. The period of the study is only for about 2 months, which is a major

constraint.

2. Some of the shipping companys executives had been busy due to their vessels

being at the port and they could not provide adequate information.

3. Some of the respondents rejected to disclose relevant information regarding

the survey.

4. Some of the officials were in their meetings and busy attending their work and

that resulted in loss of time.

5. The perceptual bias or attitudes of the respondents may also act as hurdles to

the study.

6. To conformation furnished were taken from the administrative reports of

the VPT, which is subject to the adequacy of source documents Vs actuals.


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CHAPTER - III

cargo handling and profitability introduction

Documents