chapters port performance and port...
TRANSCRIPT
CHAPTERS
PORT PERFORMANCE AND PORT PRODUCTIVITY
5.1 Performance of Indian Ports
5.2 Measurement of Port Performance
5.3 Rank Variability of Major Ports in terms of Port
Performance
5.4 Conclusions
143
5.1 Performance of Indian Ports
The seaports of the developing countries are going through a process of
rejuvenation and change in recent years triggered by the competition among the nations
to capture the world market, by the introduction of sophisticated cargo handling
techniques and innovations in the shipping vessels. The organisational set up and the
work climate in the ports are also undergoing phenomenal changes. Studies on ports in
India have not captured the impact of these changes on the performance of Indian ports.
Most of these studies have been in the form of reports or inquiries undertaken by
committees appointed to review some specific aspects of port activities. These reports are
mostly technical in nature dealing with specific issues and rarely look into the entire
process of port functioning. In this context, an assessment of the performance of major
Indian ports during the 1990s has been attempted in this chapter. An attempt has been
made to assess performance and productivity among the Indian major ports, both in terms
of physical and financial indicators. It must be admitted at the onset that this exercise has
limitations of covering only some indicators of port performance. Nevertheless, both
intra-port and inter-port comparisons and contrasts do indicate the changes in
performance among the major Indian ports. Performance or productivity of a port is a
function of the interplay of a number of variables and is not a matter of chance. Newer
ports perform better than older ports. This hypothesis has been put to test in this chapter.
5.1.1 The Port as a link in the transport chain
A port is essentially the point a~ which sea-borne cargo is transferred from one
mode of transport to another. On the seaward side, the port is concerned with a flow of
ships, which bring in cargo for discharge, and load cargo aggregated at the port and then
depart to deliver at different destinations. On the land ward side cargo is brought by road
or by inland water transport to the port and is transferred into ships and vice-versa. In
order that the entire operation should be smooth, both aspects of the port operation must
be efficient. Between land transport and sea transport lie the storage and handling
facilities of a port and a degree of efficiency must be attained if the whole port is to
operate as an efficient unit.
144
Origin
Sea voyage
The Transport Chain
Fig . 5.1
Hinterland transport
Port of discharge
Port of loading
Hinterland transport Destination
LAYOUT OF THE PORT FIG. 7.1
I . - [-----··- -- --------~
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• ~- ) ... · ···--··~~-· tl' ,., A.,..,; ~· .. ,'t'll• ~-~ "' . ....... ~'t··t 1 (t .·~• ' "'"' ' •·• ··l'..>J .>1 o o!N·~' .-;-.., ,..,, ,r o;!( h', ""
• • • ,. ;:. ~-,, .. ,,,·~ n. ,1'"" · ···~-.., r ,.
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mechanised boats today. The third stage development was commissioned recently at
a cost of Rs. 4.54 crore to accommodate 34 more trawlers.
• Slipway: The unique feature of the fishing harbour is the construction of a modem
slipway. The slipway provides six repair tracks facilitating repairs to six trawlers or
12 boats at a time. It can accommodate the trawlers with LOA of 30 mtrs., beam of
7 mtrs. and draft of 3.5 mtrs. This is the only one kind on the eastern coast of India
offering full-fledged repairing facilities to the different crafts engaged in modem
fishing.
• Dry Dock: The dry dock with the length of 65.4 mtrs., breadth of 21.6 mtrs. and
depth of 6 mtrs. was constructed in February 1990 to cater to the repairs of trawlers.
Today, the fishing harbour has transformed itself into a most modem buzzling
harbour with 24 hectares of tranquil water basin and infrastructure facilities.
7.1 Planned Development of the Port
In the First five-year Plan (1951-56), four alongside berths were constructed and
cargo-handling facilities were improved. During the Second Five Year Plan (1956-61 ),
two oil berths were commissioned to meet the requirements of Hindustan Petroleum
Corporation (Caltex Oil Refinery), procurement of port euipment and laying of BG
railway tracks were undertaken.
The third Five-Year Plan (1961-66), Animal Plans (1966-69) and the Fourth
Five-Year Plan (1969-74), witnessed significant growth of the Port. During this period,
two west ore berths for export of iron ore and mechanised iron ore handling plant
facilities were provided. In addition two more multipurpose berths to handle bulk a)
break-bulk cargo and b) a specialised fertiliser berth for Coromandel Fertilisers Ltd. to
import fertiliser raw materials were commissioned. Construction of warehouses and
storage sheds, reclamation of land and development of open storage area, construction
of fly-over bridge, construction of administrative office building, procurement of
forklift trucks and 150 tonne floating crane (Bheema) were undertaken.
During the Fifth Plan period ( 197 4-78), the most prestigious and the deepest
Outer Harbour was commissioned in 1976 at a cost of Rs. 110 crores to accommodate
large size vessels upto 1,50,000 DWT for export of iron ore to Japan. The Iron Ore
248
handling facilities were augmented and a modem Mechanical Ore Handling Complex
came into existence in place of an ore handling plant. This period also saw the
procurement of tugs and one dredger of 4,000 TPH capacity and 6110 tonne electric
wharf crane. During the Annual Plan ( 1978-80) port railway system was improved and
additional floor in transit shed and construction of storage shed was undertaken.
In the Sixth Five Year Plan (1980-85), an Off-shore Tanker Terminal (OSTT) in
the Outer Harbour was commissioned in 1985 for accommodating large crude carriers
of size 1,50,000 DWT with direct discharge facility to the refinery at 5500 TPH. An Oil
Mooring was also developed in the Outer Harbour to accommodate deep draft tankers.
A General-Cum-Bulk Cargo Berth to accommodate vessels of 65,000 DWT was also
commissioned in the Outer Harbour in 1985 and a warehouse of 15,000 tonne capacity
near GCB was constructed.
During the Seventh Five-Year Plan (1985-90), the oil terminal in the outer
harbour was commissioned. High capacity tugs, electrical cranes, mobile cranes, locos
etc. were procured. Development of stacking areas and railway lines were undertaken.
During the Annual Plans (1990-92), two quay berths (W. Q-2 and W. Q-3) were
constructed by dismantling old jetties. The port railway system was developed and high
capacity tugs were procured.
During the Eighth Five Year Plan (1992-97), several development programmes
were undertaken with an investment of Rs. 197 crores. This period saw the development
of stacking space, development of roads and construction of two multipurpose berths in
inner harbour (W. Q. 1. and E. Q. 7). Office buildings came up in the dock area; an
integrated sports complex and an institute for port and dockworkers were setup.
Activities like deepening of outer and inner harbour, widening of entrance channel,
procurement of higher capacity locos and cranes, computerisation of port operations and
upgradation of communication facilities were undertaken.
249
Table 7.1
Plan-wise investment at Visakhapatnam and other Major Ports
Plans Visakhapatnam All Ports
Rs. in crores Rs. in crores
First Five Year Plan (1951-56) 1.36 26.32
Second Five Year Plan (1956-61) 4.31 45.50
Third Five Year Plan (1961-66) 9.07 92.95
Annual plans ( 1966-67, 67-68 and 68-69) 6.54 88.82
Fourth Five Year Plan (1969-74) 62.6 265.16
Fifuth Five Year Plan (1974-78) 55.8 359.35
Annual Plans (1978-80) 7.40 101.20
Sixth Five Year Plan (1980-85) 57.34 568.15
Seventh Five Year Plan (1985-90) 56.81 1273.39
Annual Plans (1990-91 and 91-92) 42.43
Eighth Five Year Plans ( 1992-97) 197.00 1884.13
Ninth Five Year Plan (proposed) (1997- 1178.00
2002)
Source: The Lmk- Global Trade and Freight Review- "VIsakhapatnam Port
Excellence an on-going Quest" -Special Issue, Vol. III. No.4, 1998.
Ninth Plan Outlay
Vishakhapatnam Port Trust (VPT) has proposed an outlay of Rs. 1,180 crore for
various development activities that it hopes to undertake during the Ninth Plan period,
to achieve a target of handling 45 million tonnes of cargo by the end of the year 2001-
02. Some of the projects that are to be carried out during the Plan period include an
exclusive jetty for unloading liquefied natural/petroleum gas at a cost of Rs. 24.12
crores; a deep draft multipurpose berth in the outer harbour to handle 60,000 DWT
ships (Rs. 41.27 crores); four additional multipurpose berths in the inner harbour- two
by VPT and two on BOT (build, operate, transfer) basis, for receiving vessels of 35,000
DWT (Rs. 120 crores).
250
The Plan also envisages modernisation of the cargo transfer system by procuring
14 higher capacity electric wharf cranes and a number of mobile cranes, forklift trucks,
top lift trucks, a bucket wheel reclaimer and two 50-tonne Ballard pull tugs from
Hindustan Shipyard Limited. Some infrastructural development programmes like
revamping the port rail system, overbridges, roads etc. would also be taken up during
the period. The Port railway system would be developed at an estimated cost of Rs. 75
lakh and road system with about Rs. 50-60 crore by the end of the Plan period. Also, the
second railway line would be laid for usage of general cargo berth
7.2 Hinterland and Transport Links
It can be seen from Table 7.2, that out of a total cargo traffic of 34.25 million
tonnes, 6.7 million tonnes does not require land transport leaving 27.55 million tonnes
to be transferred by land. Out of this, 18.27 million tonnes forming 66.3 percent is
moved by railways, and 5.61 million tonnes forming 20.4 percent is moved by pipiline,
leaving only 3.67 million tonnes of cargo forming 13.3 percent for road movement.
Even out of this, the cargo of Coromondal Fertilisers which is 0.79 million tonnes is
moved on a short dedicated road. Therefore road based cargo for/from outstations is
only 2.88 million tonnes.
Table 7.2
Distribution of cargo on different modes reaching Visakhapatnam Port
(In '000 tonnes)
Cargo 1996-97 Quantity
Total Quantity Quantity by Other
Quantity by by Road Modes
Railways I. Export A. Dry Bulk Iron Ore 5740 5740 Other Ores 110 110 Thermal Coal 3710 3710 Alumina 466 466 Soyabean Extract 188 188 Foodgrains 129 129
251
Cargo 1996-97 Quantity
Total Quantity Quantity by Other
Quantity by by Road Modes
Railways Iron ore pellets 271 271 Feldspar, Illeminite 60 60 Cement Clinker, !bentonite B. Liquid Bulk Petroleum and POL 613 613 products Molasses, Ethyl Alcohol 215 150 65 C. Break Bulk Pig Iron 487 487 Iron and Steel 900 900 Other Miscellaneous 285 - 285 D. Containers 111 - 111 Total Export 13285 11751 921 613 II. Import A. Dry Bulk Fertiliser and raw materials 1390 360 1030 Coking Coal and Coke 5315 5315 Other Miscellaneous 638 - 638 B. Liquid Bulk Petroleum and Products 6222 730 492 5000 Caustic Soda 111 111 Phosphoric Acid/ Ammonia 347 347 C. Break Bulk Total 184 184 D. Containers 56 56 Total Import 14263 6516 2747 5000 E. Transshipment 6700 - 5613 Grand Total (I+II) 34248 18267 3668
.. Source: Perspective Plan for Indian Port Sector- VIsion 2020'- Part IV, By RITES,
MOST (GOI), January 1998.
7.3.1 Roads
The POL products are transferred to tank farms of oil companies through
pipeline from where it is moved by railways and roadways. The fertiliser raw materials
are moved by dedicated roadway to the fertiliser factory, which is close to the port. Port
roads to the National Highway No. 5 link the refinery and the fertiliser plant. All the
252
berths (twelve) have proper roads laid close to the berths. These roads combine near the
port gate and independently join the link to NH-5 from the northern side. The Outer
Harbour has a separate road access through the Visakhapatnam Town. The Port Trust
has about 50 km of roads varying in widths from 3.6 metres to 9.0 metres. An important
feature of this port is that since it is criss crossed by several railway systems, these
roads have to cross them at several locations. The port has therefore constructed several
Rail Over Bridges and a subway so that the road traffic can move smoothly. There is
also a major river bridge to cross Megadrigedda.
7 .3.2 Railways
The Port railway system consists basically of a broad gauge section with 64 km
of track which handles all traffic to and from the Indian Railways and a narrow gauge
section with a track length of 9 km meant purely for internal movement of manganese
ore from the stockyards to the two quay berths. The main linkage of the railway system
to the hinterland of the port is through the main Chennai-Howrah line. Visakhapatnam
has the most extensive railway system and it links all berths, storages, workshops etc.
Separate sidings are provided for cargoes like iron and steel, foodgrains, minor ores,
fertilisers etc.
The iron ore trains from Bailadilla-Kiriburu mmes through South Eastern
Railway reach the Ore Exchange Yard. From there they go to the tippling yard and the
empties come back to Ore Exchange yard, where the rakes are gathered for return to
mines. All other trains reach the R and D yard. Fro~ here the coking coal and the
thermal coal trains go to the Visakhapatnam Steel Plant through the southwestern
boundary of the port. Thermal coal trains are linked to the mines through main Chennai
Howrah line of the Indian Railways.
For alumina and caustic soda, a separate NALCO yard is provided which is
linked to the Rand D yard. The oil cargo reaching the storages of HPCL and IOC have
their own loading/unloading sidings and are linked to the Chennai-Howrah line through
the R and D yard.
253
Broadly, the ports of Madras, Bombay, Paradip and Kandla are considered ports
in competition to Visakhapatnam. The competition between Visakhapatnam and Madras
Port over the movement of cargo through Railway can be considered via these routes :
• Waltair- Vijayawada- Madras
• Waltair- Guntur- Guntakal-Madras; and
• Waltair-Vijaywada-Kazipet
• Dronachalarn- Guntakal - Madras routes.
For marking off, the hinterland between Visakhapatnam and Calcutta route has
been considered less important because of Paradip Port coming in between. Rather the
Waltair-Jharsuguda-Titlagarh- Calcutta route has been considered. The possibility of
competition between Visakhapatnam and Calcutta Ports is temporary because the
economic hinterland of Paradip Port is yet to be exploited by it. Once Paradip Port is
suitably linked to its economic hinterland, the point equidistant from Visakhapatnam
and Calcutta Ports will fall in the economic hinterland of Paradip Port. In case of
Visakhapatnam and Bombay Ports, five railway routes have been considered. These
routes are:
1. Waltair- Secunderabad-Poona-Bombay;
2. Waltair-Secunderabad-Marmad-Bombay;
3. Waltair-Kazipet-Wardha-Marmad-Bombay;
4. Waltair-Raipur-Nagpur-Manmad-Bombay;and
5. Waltair-Jharsuguda-Katni-Bomb~y routes.
In so far as Visakhapatnam and Mormugao Ports are concerned, the possibility
of direct competition is very little. The equidistant points between the Visakhapatnam
and Mormugao Ports fall near Gaupalli station on the Waltair-Guntur-Guntakal
Mormugao routes (644 Krns. away from the Visakhapatnam Port) and Balanagar station
on the Waltiar-Khazipet-Dronachalam-Mormugao route (778 Krns. from the
Visakhapatnam Port)? As both these points fall in the economic hinterland of Madras
Port, the chances of direct competition between Visakhapatnam and Murmugao Ports
"Traffic Analysis and Forecast -Master Plan Study(l986-2002A.D.)- Visakhapatnam Port", Volume II, , IPA, New Delhi, June 1988
254
are remote. The railway distance between Visakhapatnam and Kandla Ports and
Visakhapatnam Cochin ports have not been considered because the Visakhapatnam Port
is not likely to face any competition from either Kandla or Cochin Port.
In all, therefore, ten railway routes linking Visakhapatnam Port to the other
Major Indian Ports (in this case Madras, Bombay, Paradip and Calcutta) from which it
is likely to face competition have been considered and points equidistant from the
Visakhapatnam Port and these Ports marked off. Calculation regarding the marking off
these points is presented in the Table 7.43
Based on the Railway links and economic advantages available for the use of
this mode of transport, the hinterland for the Visakhapatnam Port has been determined
(Refer Table 7.3). The spatial extent of this economic advantage zone consists of 36
districts spreading over four states as given below.
Ibid.
255
Table 7.3
Hinterland Demarcation of Visakhapatnam port by Railway Connection
State/District
Andhra Pradesh 19. Ganjam
1. Srikakulam 20. Phulbani
2. Viziangram 21. Kalahandi
3. Visakhapatnam 22. Bolangir
4. East Godavari 23. Sambalpur
5. West Godavari Madhya Pradesh
6. Krishna 24. Raigarh
7. Guntur 25. Raipur
8. Kurnool 26. Bastar
9. Mahabubnagar 27. Durg
10. Nalgonda 28. Bilaspur
11. Hyderabad 29. Jabalpur
12. Medak 30. Shadol
13. Nizamabad 31. Mandla
14. Adilabad 32. Seoni
15. Karimnagar 3 3. Balaghat
16. Warangal Maharashtra
17. Khammam 34. Chandrapur
Orissa 35. Nagpur
18. Koraput 36. Bhandra
Source: Traffic Analysis and Forecast, Volume II, Master Plan Study(1986
2002A.D.)- Visakhapatnam Port, IPA, New Delhi, June 1988.
256
Table 7.4
Points equi-distant from the Visakhapatnam Port and the nearest Indian Major Ports on various Railway Routes
Hinterland boundary point on the railway Other Major Port Total chargeable distance in Chargeable rail Other nearest line nearest to the Kms. By rail between distance in Km from Major Port
boundary point Visakhapatnam and other Visakhapatnam Port Major Port
I. 7 Kms South of Tenali on the Vijawada Madras 780 390 390 Madras Section 2. I Km. West ofChelimation on the Guntur Madras 1250 625 625 Guntakal Section 3. II Kms. South ofTimarpur on the Madras 1518 759 759 Secunderabad- Dronachalam- Guntakal Section 4. 5 Kms West of Sharkarpali on the Bombay 1504 752 752 Secunderabad Poona Section 5. Akanapet Station on the Secunderabad- Bombay 1586 793 793 Manmad Section 6. 6 Kms South of Tadali on the Kazipet Bombay 1698 849 849 Wardha Section 7. 4 Kms. South ofNagpur on the Nagpur- Bombay 1668 834 834 Wardha Section 8. I 0 Kms. South-West of Gosalpur on the Bombay 2038 1019 1019 Bilaspur Kantni- Jabalpur Section 9. 5 Kms. South of Lapanga on the Titlagarh- Calcutta 1070 535 535 Jharsuguda Section I 0. 2 Kms. North of Golanthra on the Waltair Paradip* 562 281 281 Cuttack Section
• The rml distance between Cuttack and Parad1p has been taken as 96 Kms.
Source: Traffic Analysis and Forecast, Volume II, Master Plan Study(1986-2002A.D.)- Visakhapatnam Port, IPA, New Delhi, June 1988
Based on the definition and extent of hinterland explained earlier, the immediate
and primary hinterland for incoming and outgoing traffic for Visakhapatnam Port will
comprise of the State of Andhra Pradesh. The district mentioned above of Orissa,
Madhya Pradesh and Maharashtra will form the secondary and economic hinterland.
Though, it is true that some of the items originating from Andhra Pradesh are presently
exported through Madras and Bombay ports, they will come back once full scale
container handling facilities are available at Visakhapatnam Port. The Port is better
known for its efficiency now, and will certainly have an economic advantage over the/
neighbouring ports once the infrastructural facilities are developed.
7.3.3 Pipelines
The Port has major pipelines to serve the import of crude and import/export of
POL products - the main oil berth is located at the Outer Harbour. This is linked by
pipeline through the Lova garden area to the HPCL refinery loacted within the port
area. Recently an LPG berth was commissioned at the Outer Harbour which is linked to
HPCL storage area by a pipeline. All the pipelines in the port connect to storage within
the port area. From this storage the cargo moves by road or rail. There is a proposal to
have a long distance pipeline for POL products linking Visakhapatnam to Vijaywada.
7.3 Extent of the Hinterland
The hinterland of Visakhapatnam Port has been determined by taking into
account
•
•
•
the commodity composition of traffic available,
the changes in the traffic pattern that will arise once industrialisation matures in its
hinterland,
consequential changes which will ultimately take place at the point of origin and
destination of cargo passing through the port due to technological development and
expansion in transport linkages and finally,
• the impact of competing ports.
258
Based on these criteria, the delineated hinterland of Vishakhapatnam is fairly large.
It covers Bailadilla iron-ore mines in Madhya Pradesh as well as sources of thermal coal
and alumina in Orissa. Coking coal is imported through this port to serve
Visakhapatnam, Bhilai and Durgapur Steel Plants. However, the liquid cargo is mostly
for the refinery located in the port area itself and for the areas close to the port. All the
origins/destinations of major cargo are well connected through railways. In order to
transport other break-bulk cargo like grains, fertiliser etc., good road system exists
within the port and outside through its link to NH-5.
Since the major quantum of cargo handled at Visakhapatnam is rail borne, great
emphasis has been given to analyse the rail transport linking the port and its hinterland.
This is because bulk commodities account for major portion of the port's traffic for
which rail transport is regarded as the most suitable mode of transport for their
movement over long distances.
Port and hinterlands are interactive, both have an effect on each other but the
success and future of a port is the product of its hinterland. An agriculturally and
industrially rich hinterland lying close to the port is an additional favourable factor for
port development. In this context, first, a comprehensive study of Visakhapatnam
District is essential to assess the present and future growth of the port. The VEPZ also
falls in the immediate or primary hinterland of the Visakhapatnam port. The extended
hinterland of the port crosses state boundaries and covers adjoining states of Orissa,
Madhya Pradesh, Karnataka and Maharashtra.
7.3.1 Immediate/Primary hinterland of Vishakhapatnam Port (Vishakhapatnam
District)
The district has a population of 3 2. 72 lakhs as per 1991 census, which
constitutes 4.95 percent of the population of the State. The density of population of the
district is 294 per sq. km. The district has a working force of 12.89 lakhs constituting
about 38.92 percent of the population besides 10.05 lakhs marginal workers. According
to 1991 census, there are 12.63 lakh literates in the district forming 3 8.49 percent of the
total population of the district, male literates constitute 62.15 percent and female
literates (37.84 percent).
259
• Resources:
Agricultural Resources
Agriculture is the main occupation of around 70 percent of the households.
Though Viaskhapatnam is industrially developing, the rural areas continue to be
backward due to lack of adequate irrigation facilities. The important crops grown in the
district are paddy, ragi, sugarcane, groundnut, vegetables and fruits and chilies.
According to the statistics available cultivated area and annual production in
tonnes is as follows:
Table 7.5
Agriculture in Vishakhapatnam District (1991)
Item Area in hectares Annual production in tonnes Paddy 85,150 183000 Ragi 32,792 38000 Sugarcane 24,458 1637000 Groundnut 29,980 37000 Vegetable and Fruits 36259 NA Chillies 5669 15000
Source: Industnal Scenar10 of Vtsakhapatnam Dtstnct, The Vtsakhapatnam Estate
Industrialists' Association, Silver Jubilee Celebrations, 6th December 1997,
Visakhapatnam.
Quite a good number of agro based industries have come up in the district. Still
there is vast scope for establishing these types of industries in the district.
Live Stock Resources
Visakhapatnam district has a total live stock population of 12.26 lakhs and 22.77
lakh poultry population respectively. As per the statistics available, the breakup of live
stock population is as follows:
260
Table 7.6
Livestock Resources in Visakhapatnam District (1991)
Live Stock Population in Lakhs
Cattle (white) 4.59
Buffaloes 4.21
Sheep 1.84
Goats 2.39
Pigs 0.90
Source: Industnal Scenano of V1sakhapatnam D1stnct, The V1sakhapatnam Estate
Industrialists' Association, silver Jubilee Celebrations, 6 th December 1997,
Visakhapatnam.
There are no organised units for the manufacture of leather goods even though
tiny leather based units are existing. There is scope for establishment of a couple of
units for the manufacturing of leather goods. Scope exists for establishment of
bonemeal factories, meat processing units and one or two tanneries.
Marine Resources
The district has the advantage of having a long coastline of about 160 km, which
helped development of salt, and marine based industries. Salt fields are concentrated at
Bhimunipatnam, Karasa, Balacheruvu, Vada Cheepurupalli and Pudimadaka villages.
Since salt fields are abundant, there is scope for establishment of few iodised salt
manufacturing units. Huge quantities of prawns and fish catch helped setting up of
eleven large and medium scale industries besides twenty in small scale.
Forest Resources
About 41.8 percent of the total geographical area of the district ( 4.67 lakh
hectares) is covered under forests. The major forest produce are timber (6,537 hectares),
fuel and bamboo (1.48 lakh hectares), while minor produce are tamarind, myrobalan,
ginger, turmeric, shekakai, honey, soap nuts etc. Coffee plantation is also being
encouraged in the agency area in about 7,225 hectares. The Girijan Cooperative
261
Corporation is the main agency that is collecting many of the forest produce in the
agency areas.
Mineral Resources
The district is mostly covered with hilly terrain and has huge deposits of
limestone and bauxite. Due to the establishment of the Visakhapatnam Steel Plant, 15
industries for the manufacture of Cement based on slag available with the plant have
been encouraged by the district administration, out of which 12 have already been
established excluding the Andhra Cement Company and 3 are under implementation. In
addition to these, about 6 units in Visakhapatnam district, 4 units in Vizainagram
district, and 4 in Srikakulam district have come up on their own.
• Industries
Large and Medium Scale Industries
53 Large and Medium Scale Industries are existing in the district. Out of this,
there are 7 industries in the Public Sector, 5 in Cooperative Sector and 41 in Private
Sector. The total investment in these industries adds upto Rs.9324.53 crores. There are
46573 persons employed in these industries.
The Public Sector units include the prestigious Visakhapatnam Steel Plant, The
Hindustan Shipyard, Hindustan Zinc Ltd., Hindustan Petroleum Corporation and the B.
H. P. V. Ltd. The units in Cooperative sector are four sugar factories at Dariapudi,
Anakapalli, Govada, and Tummapala. The other one is the Visakha Cooperative Dairy.
Among the units in Private sector, 11 are engaged in the processing of f\'Iarine products,
the L. G. Polymers (India) Ltd., Pragathi Fertilisers Ltd., Coastal Chemicals Ltd.,
Oxygen and Acetylene Gas manufacturing units, The Andhra Petro Chemicals, Essar
Gujarat Ltd., Dairy Units, Coke briquettes and also a Korean joint venture
manufacturing fish, meat and paste.
Besides the above, 24 Large and Medium scale industries are in advanced stage
of implementation among the units awaiting implementation. There are also 15098
Small Scale Industrial units in the district. There are 140593 persons employed in these
industries. Total investments in SSI unit's amount to 11571.52lakhs.
262
Ancillary Industries
There are 5, 716 small scale industrial units in the district. Efforts are still going
on to encourage some more ancillary/downstream industries to come to the
Visakhapatnam Steel Plant.
Small Scale Industries
The Agro and Food processing industry has shown dominance in the region due
to the fact that the region is basically such as Modern Rice Mills, Sea food processing,
Bakery, Pulse grinding, Confectionery, Masala Grinding Pickles, Papad making,
descicated coconut, coir fibre extraction, cashew processing are the important agro-food
processing units in the districts. The other industries in this region comprise of
Engineering industries, Glass and Ceramic products, Chemical products, leather and
leather products, electrical and electronic items, hosiery products, automobile spares,
agriculture implements etc. The breakup of SSI industries is as under:
Table 7.7
Small Scale Industries in Visakhapatnam District (as on 30/4/1997)
Category of Number of Number of Investment in Industry Units Persons Employed Rs. Lakhs Agro based 1427 2110.62 13842
Forest based 3675 850.38 30081
Mineral based 498 1132.42 10414
Textile based 234 352.42 5514
Engg. Based 5047 3031.36 35722
Chemical based 656 1598.62 3737
Live Stock based 378 178.41 3552
Building materials 251 353.39 5287
Other industries 2932 1963.56 30444
Total 15098 11571.52 140593
Source: Industnal Scenano of V1sakhapatnam D1stnct, The V1sakhapatnam Estate
Industrialists' Association, silver Jubilee Celebrations, 6 th December 1997,
Visakhapatnam.
263
• Infrastructure:
The infrastructure facilities already created in the Industrial Estates/Industrial
Development Areas in and around Visakhapatnam attracted quite a good number of
industries. Only about 95 plots/sheds are still available for allotment to the SSI units
coming up. As such the A. P. I. I. C. Ltd. Has already taken action to procure about
3500 acres of land near Parrawada to cater to the needs of industries. Since
Visakhapatnam is an ideal location for starting industries with its existing facilities like
Port, Rail, Road and Air links the following mega projects are likely to come up near
Parawada in this district.
Indorama Synthetics - PTA Project
Mahindra and Mahindra- Tractors assembling project
Proton Cars Project
Hinduja Power Plant
NTPC Thermal Projects
The implementation of the above mega projects will g1ve tremendous
encouragement to more upstream and downstream industries. As such the Industries
Department is planning to identify sites for the development of new industrial area in
the surrounding areas of Parawada, to cater to the needs of Small Scale Industries.
Besides the above about 1800 units are being encouraged every year under tiny and
small- scale sector with an addition of 10 percent every year.
By making full use of the resources like production of cashew, pineapple,
mangoes, other agricultural produce, live stock, marine products, mineral deposits there
is vast scope of development of resource based industries.
• Industrial Estates and Industrial Development Areas in the Immediate
Hinterland of the Port
To assess the extent of the industrial activity in the primary hinterland of the port,
a glance at the following data is useful. As on 31. 03. 1994, the number of factories
registered under Factories Act in the Visakhapatnam district was around 558,
employing about 50982 workers. Though not all the factories have direct export and
264
import potential but most of them were ancillary to port-based industries like
manufacture of machinery and equipment, manufacture of non-metallic mineral
products, repair of capital goods etc. These are industries, which have developed in the
hinterland because ofthe existence of port, and other port-related industries.
The Andhra Pradesh Industrial Infrastructure Corporation has so far established
seven Industrial Estates at Visakhapatnam, Gajuwaka, Pedagantyada, Anakapalli,
Paderu and Chinthapalli. An Autonagar, an assisted Private Industrial estate and an
Engineering Entrepreneurs Industrial Estates are among them which are developed near
Bharat Heavy Plates and Vessels Ltd., Visakhapatnam. One Industrial development
Area with A, B, C and D Blocks is also developed in close proximity to the above area,
and another in Pedagantyada.
The Corporation has taken up expansion programme of the Industrial Estates
and proposes to expand the existing Industrial Development Areas. Visakhapatnam for
50 acres, exten3ion of the Industrial Development Areas at Gurrampalem for 200 acres,
Aganampudi for 250 acres and Autonagar at Narsipatnam (8 acres), Chodavaram (50
acres) besides land (200 acres) for Petro Chemical Complex at Vada Cheepurupalli.
• Visakhapatnam Export Processing Zone (VEPZ)
The Government of India has set up an Export Processing Zone 4 at
Visakhapatnam in March 1989 encouraged by the overall performance of the
functioning of EPZs. Visakhapatnam being a major growth centre on the East Coast
with an impressive array of heavy engineering industries including an integrated steel
plant, a fertiliser factory and commercial infrastructure like banking, insurance and port
facilities was considered relevant for the establishment of the EPZ.
In order to meet the requirements of export oriented industries the
Visakhapatnam Export Processing Zone was set up at a strategic location very close to
Export Processing Zones constitute an important element of export promotion policy in developing countries and thus it is considered as an effective instrument for promotion of exports and thereby earn foreign exchange. An export Processing Zone is a separate enclave for setting up of industries for manufacture of products exclusively for exports. The first EPZ in India was established in Kandla in Gujarat State in 1965, which also happens to be the first in Asia. A decade later another EPZ came up at Mumbai, followed by four more in 1983 at Chennai, Cochin, Falta and NOIDA respectively. The Seventh one is set up in Visakhapatnam. Thus, in all there are seven EPZs in India as in 2000.
265
the Duvada railway Station where excellent infrastructural and communication facilities
are provided. It also has in house customs/excise facilities. Visakhapatnam was chosen
for establishing the Export Processing Zone because
1. It is an important port on the East Coast of India
11. It is one of the fastest growing cities oflndia and Asia
iii. It is well connected to the rest of the world
iv. It is close to an important industrial belt of Andhra Pradesh.
An extent of 360.51 acres of land was acquired in Duvada village,
Visakhapatnam district through the Government of A. P. Out of this, 163.0 acres were
developed in the Phase - I at an estimated cost of Rs. 20.0 crores. Various facilities are
provided to set up Export Oriented Industrial Units in the Zone. The most important of
them are the basic infrastructure facilities, supportive services and utilities necessary for
the units. These may be summarised as follows:
Land : Developed plots are made available on lease basis for a period of 15 years to
begin with and renewable thereafter. The sizes of these developed plots are of varying
sizes ranging from half acre and above and the lease rent charged is Rs. 16/- per sq. mtr.
per annum with a concession of 75 percent, 50 percent and 25 percent in the first,
second and third years respectively.
Ready-built Area : Built-up area is also available in the SDF building in a modular
form. Units of sizes ranging from 467 sq. mtr. To 1100 sq. mtr. are available on lease
basis for a period of 5 years and renewable thereafter. The lease rent charged is Rs.
300/- per sq. mtr. Per annum with a concession of 50 percent, 40 percent and 25 percent
in the first, second and third years respectively.
Power : A 33 KV sub-station is exclusively functioning for the zone units. The Central
and State Governments meet the infrastructure cost of providing power. The unit
holders will have to pay the actual consumption charges only. Hence, power to any
extent can be supplied to the units in VEPZ.
Water : Provision has been made to supply water to the units in VEPZ by sinking
infiltration wells in Meghadrigedda reservoir in addition to 4 nos. borewells in the zone
premises.
266
Utilities : Apart from the basic infrastructure facilities, common utilities such as
telephone and telex connections are also provided. A 100-lines telephone exchange is
installed in the Zone to provide telephone connections to the units on out-of-turn
priority basis.
Banking : Essential supportive such as banking, postal and telecom services, canteen
etc., are also provided.
Custom Facilities : A Customs Wing forms part of the Zone administration. As such,
all customs and central excise clearances required by the unit are provided within the
zone premises. Hence, no separate registration with Central Excise is required for
obtaining CT 3 Forms etc.
Port Facilities : Visakhapatnam Port, one of the major Ports in the country is equipped
with most modern berthing, handling and storage facilities. Facilities for safe anchorage
of ship upto 50,000 DWT and regular feeder service in container traffic to all major
Ports in the world are available. ·
Single Window System : In addition to the above, a unique Single Window System is
in operation m VEPZ to guide and assist entrepreneurs m obtaining
permissions/clearances from various agencies. Once the application for setting up the
unit is received in VEPZ, the Single Window System takes care of all the requirements
of the unit by helping and assisting them in obtaining permissions/clearances from
various government agencies etc. Hence, the unit-holders need not go around different
offices for permissions/clearances and, thus, can save lot of time.
Incentives/Concessions offered : The present economic policy of the Government lays
greater stress on export-oriented industries. Both the Central and State Government are
offering a wide range of incentives/concessions made available to the units in VEPZ.
Incentives from Government oflndia:
• Total exemption from Custom Duty on both capital goods and raw materials and no
Import License is required for imports under OGL.
• Full reimbursement of Central Excise Duty on capital goods and manufactured
items. Besides, full reimbursement of Central Sales Tax is permitted on supplies
made by the DT A units.
• Tax Holiday on profits earned by the units for a period of 5 years.
267
• Foreign investment permitted upto 100 percent equity and full and free repatriation
of profits allowed after payment of taxes.
• Liberal sanction of foreign exchange including blanket permits for business visits
abroad.
• Eligible for DT A sale to the extent of 25 percent of production in value terms .
•
• Incentives from the Government of Andhra Pradesh :
• Investment Subsidy- Investment Subsidy of 20 percent of the fixed capital invested
subject to a maximum of Rs. 20 lakhs.
• Sales Tax- Sales Tax Deferment Limited to 135 percent of fixed capital investment
in a period of 14 years.
• Exemption of SSI Units- SSI units are granted Sales Tax Holiday for a period of 15
years subject to a maximum of Rs. 35 lakhs or the total fixed capital investment,
whichever is less.
• Power Tariff- Rebate of 25 percent on power bills (both demand and energy) for a
period of three years from the date of commencement of commercial production
subject to a maximum of Rs. 50 lakhs in the case of medium and large, and Rs. 30
lakhs in the case of small and tiny sector.
7.3.2 The extended hinterland
An attempt has been made to establish the extended hinterland of the
Visakhapatnam port comprising of the States of Madhya Pradesh, Orissa and
Maharashtra which form the primary and economic hinterland for the port of
Visakhapatnam.
268
Table 7.8
Extended Hinterland Districts ofVisakhapatnam Port Area and Population (1991)
State Districts Area Population District H.Q. (in sq. (1991 Km.) Census)
Andhra Srikakulam 5387 2321126 Srikakulam Pradesh
Viziangram 6539 2110993 Viziangram
Visakhapatnam 11161 3285092 Visakhapatnam
East Godavari 10440 4541222 Kakinda
West Godavari 7780 3517568 Eluru
Krishna 8734 3698833 Machilli patnam
Guntur 11377 4106999 Guntur
Kurnool 18799 2973024 Kurnool
Mahabubnagar 18419 3077050 Mahabubnagar
Nalgonda 14242 2852092 Nalgonda
Hyderabad 217 3145939 Hyderabad
Medak 9865 2269800 Sangareddy
Nizamabad 7969 2037621 Nizamabad
Adilabad 10133 2082479 Adilabad
Karimnagar 11824 3037486 Karimnagar
Warangal 12875 2818832 Warangal
Khammam 15866 2215809 Khammam
Orissa Koraput 27020 3012546 Koraput
Ganjam 12527 3158764 Chhatrapur
Phulbani 11070 863903 Phulbani
Kalahandi 11835 1600385 Bhawanipatna
Bolangir 8903 1707753 Bolangir
Sambalpur 17570 2697153 Sambalpur
269
State Districts Area Population District H.Q. (in sq. (1991 Km.) Census)
Madhya Raigarh 12924 2697153 Raigarh Pradesh
Raipur 21258 3908042 Raipur
Bas tar 39114 2271314 Jagdalpur
Durg 8537 2397134 Durg
Bilaspur 19897 3793566 Bilaspur
Jabal pur 10160 2649962 Jabal pur
Shadol 14028 1743869 Shadol
Mandla 12269 1291263 Mandl a
Seoni 8758 1000831 Seoni
Balaghat 9229 1365870 Balaghat
Maharashtra · Chandrapur 10490 1771994 Chandrapur
Nagpur 9931 3287139 Nagpur
Bhandra 9213 2107629 Bhandra
Total 4633310 93420226
3287263
Percentage to 14 percent 11 percent Total of India
Source: Traffic Analysis and Forecast, Volume II, Master Plan Study, Penod: 1986-
2002 A.D. Visakhapatnam Port, VPT, June 1988, IPA, New Delhi.
7.4 Growth of Port Traffic
A review of the cargo throughput and its composition during the past 45 years
suggest how Visakhapatnam port blossomed from a mono-commodity port in 1933 into
a multi-commodity port with a variegated cargo mix. An interesting observation is how
Visakhapatnam always exceeded the targets set by the Ministry, much ahead of
schedule, on almost every occasion:
270
Table 7.9
Traffic Growth at Visakhaptnam Port -Target and Actual (1988-1996)
Year Target Actual cargo Date of realisation of the throughput target
1988-89 15.50 20.37 17.1.1989
1989-90 18.95 21.12 2.3.1990
1990-91 19.20 19.42 27.3.1991
1991-92 19.84 21.52 5.3.1992
1992-93 20.83 22.77 4.3.1993
1993-94 21.67 25.60 12.2.1994
1994-95 24.00 30.03 3.2.1995
1995-96 29.90 32.81 1.3.1996 Sl (Note. Year ends on 31 March for every year)
Source: Perspective Plan For Visakhapatnarn Port, 1996-2020, Research and Planning
Department, Visakhapatnarn Port Trust, VPT.
The cargo throughput at the port recorded a phenomenal growth from 0.8
million tonnes in 1950-51 to 34.5 million tonnes in 1996-97. In the decade of 70's,
Visakhapatnam's annual growth rate of traffic was over 10 percent while in the next
decade, it rose to about 13 percent in 1984-85. In the present decade, it is around 11
percent. From 21.5m tonnes in 1991-92, the volume of cargo increased to 34.5 m tonnes
during 1996-97, when it was adjudged as the 'premier port of the country'.
Table 7.10
Traffic Growth Rate (Commodity-wise) at Visakhapatnam Port (1951-1997)
Commodity Traffic in Million Tonnes 1991-92 1996-97
Iron Ore 6.2 5.7 POL 6.4 13.4 Fertiliser and Raw 1.4 1.3 Materials Coal (Coking and 5.6 8.9 thermal) Others 1.9 5.2 Total 21.5 34.5
Source: Art1cle by Y. Jayanth1, 'Plans and Perspectives Of V1sakhapatnam Port w1th reference to Modernisation and Development', October 1997
271
The growth rate in cargo throughput, particularly during the past few years was
spectacular, owing to the setting up of the first port-based Steel plant of the country
(VSP) and rapid industrialisation of the service area. Traditionally, Visakhapatnam port
has been providing dedicated facilities for various ores, fertiliser, fertiliser raw
materials, petroleum crude, POL products etc. Very recently, the port has started
handling containers though of a modest volume. In 1996-97, out of a total throughput of
34.50 m tonnes, 5.70 m tonnes comprised of iron-ore and other ores. 3.71 m tonnes of
thermal coal, 1.3 m tonnes of fertiliser and fertiliser raw materials, 1.39 m tonnes of pig
iron and iron and steel products. A study of the composition of the cargo throughput
shows that mineral oil (crude and petroleum products) under the category of liquid bulk
accounts for more than 3 7 percent of the total cargo throughput. A recent addition to
this cargo is import of LPG. The dry bulk category consists of iron-ore, coking coal,
thermal coal, fertilisers, foodgrains and other bulk cargo like manganese ore, alumina,
limestone, scrap etc .. This group accounts for 54 percent of the total cargo throughput.
The break-bulk though small in volume, comprise of several heterogeneous
merchandise. At present, this accounts for 6 percent of the total cargo throughput and
the major thrust of growth is anticipated in this category.
Table 7.11
Traffic Growth Rate (1950-51 to 1996-97)
Year Growth Rate Year Growth Rate
1950-51 1987-88 2.23
1960-61 34.32 1988-89 32.54
1970-71 35.50 1989-90 3.66
1980-81 87.55 1990-91 - 8.03
1981-82 8.61 1991-92 10.82
1982-83 -7.09 1992-93 5.78
1983-84 -3.27 1993-94 12.43
1984-85 12.14 1994-95 17.32
1985-86 43.58 1995-96 9.28
1986-87 - 5.51 1996-97 5.12
Source: Basic Port Statistics Of India, 1997-98, Transport Research Wmg, MOST, GOI, New Delhi.
272
The total cargo traffic growth rate is extremely fluctuating, 1982-83, 1983-84,
1986-87 and 1990-91 are the years which recorded negative growth rate, where total
traffic figures fell compared to the corresponding previous years. But from 1991-92, the
trend has always been positive, but fluctuating from 5.12 percent (96-97) to 17.32
percent (94-95). This table, however, gives an average picture of Cargo growth rate.
Individual commodity-wise, the picture is more interesting (Refer to Table
3.4c). For POL and products growth rate is most fluctuating from 1950-51 to 1990-91.
While it increased at 2.~3 percent from 1950-51 to 1960-61, and 94.58 percent from
1960-61 to 1970-71, it dropped to 72.38 percent in the next decade, i.e., 1970-71 to
1980-81. The decade of 1980s witnessed variations in POL traffic growth and this trend
became steady only after 1991-92.
This fluctuating growth rate was true for other commodities as well, like
fertiliser, fertiliser raw materials, iron-ore and foodgrains. Coal, however, maintained a
more or less steady positive growth rate, ranging from 5 percent · 17 percent annual
average growth rates in the 90's. As regards, container traffic, Visakhapatnam has less
number of containers as compared to other types of cargo but in recent years stress is
being given to developing a container terminal.
The port was opened for sea-going traffic in 1933 and during the first year of its
operation the traffic was only 1.29 lakh tonnes. The export/import traffic has steadily
grown year to year and the above table indicates the general growth of the traffic. It is
evident that the Bulk cargo exports account for about 43 percent and bulk imports- 45
percent.
Due to rapid industrialisation and economic growth in the hinterland of the port
and the developmental activity undertaken by the Port Trust, like extra berths,
development of stockyards, connected railway infrastructure - all are efforts to work in
unison for movement of smooth traffic flow. In the decade of the 1990s, traffic has gone
up from 21.5 m tonnes (1991-92) to 35m tonnes (1996-97), an increase of about 14m
tonnes. In other words, the growth of the traffic during the last 6 years is about 60
percent.
One of the major factors that contributed for this outstanding performance is the
Port's locational advantage with its naturally sheltered waters with deep draft. The port
273
is the main economic outlet for the States of Madhya Pradesh, Bihar, Orissa, Uttar
Pradesh and Andhra Pradesh. Secondly, it is well connected to its hinterland by a
national highway and owns, operates and maintains 228 kms of railway networks,
acting as a terminal for South Eastern Railways. Also, the location of core sector
industries in the Primary and Secondary Service areas have stimulated traffic growth in
the past decades.
7.5 Performance of the Port
Performance of Visakhapatnam port has been gauged on the basis of following
indicators:
• Average Berth Occupancy (percent)
Berth occupancy is a measure of the facility utilisation of a port. The gross berth
occupancy is considered to be more useful and is generally adopted. According to the
UNCTAD rule, the berth occupancy should be 70 percent for a berth group of 6 berths
or more. The overall berth occupancy of the Visakhapatnam port is given in the table
above. Over the years, the percentage has increased, crossing the 70 percent mark (in
the 1990s) which indicates inefficiency due to congestion and other factors.
Table 7.12
Average Berth Occupancy at Visakhapatnam Port (1980- 1996)
(In%)
Year Berth Occupancy Year Berth Occupancy
1980-81 55.81 1989-90 77.90
1981-82 58.83 1990-91 81.90
1982-83 53.59 1991-92 91.00
1983-84 58.94 1992-93 87.5
1984-85 63.99 1993-94 92.7
1985-86 69.69 1994-95
1986-87 54.47 1995-96
1987-88 56.90 1996-97
1988-89 63.30 ..
Source: Baste Port Statlstlcs Oflndta, 1997-98, Transport Research Wmg, MOST, GOI, New Delhi.
274
Average Output per Ship Berth Day (Tonnes)
Average output per ship berth day figs. Are given commodity-wise as rate of
handling differs with various types of cargo. For eg. it is maximum for liquid bulk (POL
and products) and less for break bulk and minimum for containers (See table above).
The (total) average output per ship berth day however is increasing which is a positive
trend showing the output per day is on the rise for a ship at berth at Viazg port (5688
tonnes in 1993-94 to 6553 tonnes in 96-97). The output per berth day of this port in case
of certain bulk commodities is high compared to other similar ports.
Table 7.13
Average Output per Ship Berth Day (commodity-wise) at Visakhapatnam Port
(1980-1986)
Type 1980-81 1981-82 1982-83 1983-84 1984-85 1985-86
Foodgrain 543 572 922 778 395 461
Fertilisers 464 518 912 898 510 329
Iron-ore 17976 44856 36840 21120 20925 9552
General 632 666 669 650 432 415 Cargo Oil 5132 6029 4761 3994 3847 6490 (mineral)
.. Source: Basic Port Statistics Oflndia, 1997-98, Transport Research Wmg, MOST, GOI,
New Delhi.
Table 7.14
Average Output per Ship Berth Day (cargo category-wise) at
Visakhapatnam Port (1986-1997)
Type 1986-87 1993-94 1994-95 1995-96 1996-97
Dry Bulk 403 19724 19854 42281 4143
Liquid Bulk 769 14570 14844 19903 19306
Break Bulk 17869 1431 1321 1173 1633
Containers 638 1073 1432 1095 1601
Total 7621 5688 6089 5341 6553 ..
Source: Compiled from Basic Port Statistics, MOST, GOI.
275
• Percentage of Idle Time at Berth to Time at Working Berth
The above table shows a healthy trend. For all categories of cargo, percent of
idle time at berth is on the decline, which is nodoubt impressive. This shows nothing
but less wastage of time when a ship is at berth. More time utilisation or less of idle
time shows efficiency of the port.
Table 7.15
Percentage of idle time at berth to time at working berth at
Visakhapatnam Port (1993-1997)
Type 1993-9~ 1994-95 1995-96 1996-97
Container 21 18 17.98 15.78
Break-Bulk 27 24 21.20 18.62
Dry Bulk 28 21.5 23.88 19.61
Liquid Bulk 35 32 31.08 29.68
All Types 26 23 24.22 24.54
Source: Compiled from Basic Port Statistics, MOST, GOI.
• Average Turn Round Time (Days)
By definition, Average TRT (days) shows the total time ship spent by a ship
after reaching sandhead, proceeding towards the harbour, pre-berthing detention, if any,
time at berth, return passage to sandhead after loading/unloading. TR T entails the total
time for all these activities. Any delay in any of these activities due to any reason may
cause ship delay, thus increasing the TRT. More the TRT, less the efficiency of the port
and vice-versa. From the Table 7.16, it is evident that Average TRT for all types of
cargo in Visakhapatnam port is fluctuating from year to year so there is no fixed trend.
This indicator shows the overall performance of any port. Faster TRT, means faster
disposal of cargo indicating better performance. Compared to 1995-96, TRT has
improved in 1996-97 for all categories of cargo.
276
Table 7.16
Average turn around time at Visakhapatnam Port (1993-1997)
Type 1993-94 1994-95 1995-96 1996-97
Container 1.8 2.6 2.79 2.32
Break-Bulk 8.4 8.7 I 0.11 6.84
Dry Bulk 7.05 6.65 11.56 8.79
Liquid Bulk 2.5 2.2 3.09 2.96
All Types 6.0 5.6 7.78 5.73
Source: Compiled from Basic Port Statistics, MOST, GOI.
• Number of Vessels
If number of vessels by any standard is an indication of how a port is performing
then Visakhapatnam port's performance is easy to judge from the table below:
Table 7.17
Number of vessels at Visakhapatnam Port (1975- 1998)
Year No. of Year No. of Year No. of vessels vessels vessels
1975-76 547 1983-84 579 1991-92 870
1976-77 529 1984-85 625 1992-93 951
1977-78 458 1985-86 754 1993-94 1043
1978-79 492 1986-87 642 1994-95 1209
1979-80 564 1987-88 1995-96 1390
1980-81 563 1988-89 699 1996-97 1471
1981-82 557 1989-90 788 1997-98 1529
1982-83 589 1990-91 813
Source: Compiled from Basic Port Statistics, MOST, GOI.
Efficient financial management is important for all public undertaking including
ports. A sound financial management would enable a port administration to keep all
port facilities at a high technical and operating level and to render efficient and
277
economically viable services to its users. 5 Visakhapatnam port has passed through a
precarious financial position with deficits reaching menacing proportions since the
commissioning of outer harbour in 1976-77. Deficits in such menacing proportions
result in colossal waste of limited national resources. But the port has come of that
situation successfully and today can claim itself to be in a financially comfortable
position.
• Operating Ratio (in percent) and Operating Surplus (crores)
The operating ratio figures show operating expenditure to operating income as a
percentage. Lower the share of operating expenditure, better is the financial condition of
the port as it indicates that the port concerned spends less out of its operating income
over the reporting period. Visakhapatnam's financial performance is improving
compared to 1991-92 (operating ratio 72.63 percent). Operating surplus gives the actual
surplus figures which show a consistent rise - no doubt a healthy sign for a port.
Table 7.18
Operating Ratio and Operating Surplus at Visakhapatnam Port (1984-1997)
Year Operating Operating Year Operating Operating Ratio Surplus Ratio Surplus
(percent) (crores) (percent) (crores) 1984-85 68.01 19.08 1991-92 72.63 36.93
1985-86 66.64 23.05 1992-93 64.76 57.75
1986-87 69.68 23.66 1993-94 61.04 70.50
1987-88 76.87 18.73 1994-95 62.35 78.71
1988-89 67.87 34.47 1995-96 60.17 97.18
1989-90 57.00 52.65 1996-97 61.41 104.55
1990-91 68.15 37.67
Source: MaJor Ports Of India: A profile: 1991-1998, Indian Ports AssociatiOn, New
Delhi.
Y. Gouthama Rao, Financial Management in Public Undertaings.
278
Human Resource Productivity
It is interesting to note that the importance of 'Human Resource' has been
recognised. Productivity or performance level of a port can be improved by better
training (mainly technical) of manpower and also by encouraging the workforce by
introducing work oriented incentives. Basic economic principle recognises that labour is
one of the factors of production along with land, capital and entrepreneurship or
organisation. With mechanisation, productivity improves replacing labour intensive
technology with capital intensive ones. But, even then importance of manpower exists,
not in terms of quantity or number but in terms of quality. By proper training,
productivity of labour increases by improving the quality of manpower. It is to fulfill
this particular aim that the 'Port Technical Institute' at Visakhapatnam port under the
VPT was established in the late 70's. The principal objective is to train the employees
and apprentices selected by the port.
The principal objective is to train the employees and apprentices selected by the
port. The aims of the training programmes would be as under:
•
•
•
•
•
•
•
•
to improve the skills and efficiency of the worker;
to help the worker to understand the working environment and appreciate the
importance of the work;
to widen the horizon of understanding and comprehension;
to inculcate greater sense of identification with work and the organisation in the
worker;
to generate. a sense of participation in the worker;
to break the traditional ideas imbibed in the mind of the worker and imbibed in him
a scientific approach and outlook.
to expose the worker to the technological advances in the field of his work;
to make the worker a better worker.
Techniques for Determining Training Needs : The following 11 Techniques can be
used for determining training needs. They include observations, management requests,
interviews, group conferences, job or activity analysis, questionnaires surveys, tests or
279
examinations, merit or performance ratings, personnel records, business and production
reports, long-range organisational planning.
Year
1977-78
1978-79
1979-80
1980-81
1981-82
1982-83
1983-84
1984-85
1985-86
1986-87
1987-88
1988-89
1989-90
1990-91
1991-92
1992-93
1993-94
1994-95
1995-96
1996-97
1997-98
Table 7.19
Employees trained at Port Technical Institute -
Visakhapatnam Port (1977- 1998)
Officers Supervisions Ministerial
17 36
13 112
35 104
26 200
55 ' 66
134 119
106 178 81
118 166 146
450 195 100
170 185 121
40 116 252
255 69 266
377 189 216
408 400 147
412 686 187
317 612 432
828 615 313
413 545 405
516 344 468
187 266 350 ..
Source: Port Trammg Institute, VPT
280
Workers
709
826
667
422
290
233
191
182
112
245
472
324
446
337
152
141
322
304
931
1375
1528
Table 7.20
Sample training programme conducted at Port Technical Institute
Visakhapatnam (1997-98)
Title of the course Number of Number of Batches Participants
Refresher Courses For Electricians 4 40
Refresher Courses For Fitters 4 77
Cleanliness of the Deck on the Dredger 2 31
Quality Circles Review Classes 20 858
Coordination between Deck and Engine 3 46
Room Personnel
Supervisory Development Programme 3 78
Health Awareness 7 127
Training Programme On Sanitation 6 109
Personal Computer 6 76
Capsule Course for Non-fired CISF 2 60
Personnel
Serangs and Tug Master Gr.II 1 7
Disciplinary Proceedings and Domestic 1 20
Enquiries
Two Days need based seminar for Woman 1 20
Employees
Source. Port Trammg Institute, VPT, 1998
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Part II - Visakhapatnam Port : Information from the Field Study
7.6 Current Problems, Corrective Measures and Growth Prospect
To discuss the issues relating to current problems and prospect of this bulk port,
a field survey was undertaken at Visakhapatnam Port, in August, 1998. An open-ended
questionnaire was prepared keeping in mind the target group (Users, Management and
Unions) for conducting in depth interviews. Accordingly, three sets of questionnaires
were administered to the three identified groups, associated with port functioning. Wide
cross-sections of people were interviewed mainly from the user side, as it is the port
user who actually has the final say in choosing a port of call. Going by the logic that
traffic in a port is dependent upon consumers/user's choice, a port has to satisfy its
customers or users in order to attract traffic and remain competitive. In other words, in
economic terms, the port sector is a buyer's market, where the port user is the buyer and
seller is the port authority offering services to be availed of. The current problems of the
port were assessed from the users as well as from the port's point of view. The port
management, in spite of good intentions, fails to achieve much as it has serious
limitations within which it has to work. Since a port has different activities, the
problems are of various dimensions. Corrective measures to tackle such problems and
future growth prospects of the port were the common issues discussed with all
interviewees. Last, but not the least, the port workers, who are an integral part of proper
port functioning, were taken into consideration. The contribution of the training
.institute, one of its kind in Visakhapatnam Port, which claims to have positively
changed the attitude of port workers through various training programmes, was also
assessed. In this regard, the Director of Port Training Institute (PTI) was interviewed.
Moreover, opinion of the Worker's Union was noted which represented the viewpoint
of the port workers, on different aspects of port functioning.
It is important at this juncture to mention the relevance of this qualitative survey
undertaken at Visakhapatnam Port. Data analysis, literature survey, document scanning,
etc. - all are tools, which do throw light on various aspects of port functioning but
certain gaps still exist which need proper explanation. To compliment the documented
material, a need was felt for a qualitative survey over and above a quantitative analysis.
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It should be admitted at the outset that the opinions expressed on different aspects of
port functioning are those of a few selected port users'. Since, opinions within Unions
and Management might differ, interviewees were selected with utmost caution after a
background study so that a true unbiased picture emerged out of the survey. It must be
mentioned in this context that except on few vital issues, like Gangavaram, opinions
differed from person to person. Care has been taken to respect individual viewpoints but
even then some issues might have remained unexplained.
The rationale for the selection of interviewees has been as follows:
Port Users- Defined as those who have been using the services of the port for more
than fifteen years (active both in pre and post liberalisation phase) in various capacities
included Stevedores, C & F agents, exporters, importers, etc. Also attempt had been
made to contact those users who have been the Trustees of the Viaskhapatnam Port and
knowledgeable enough to comment on various issues concerning the port especially in
the present fast changing maritime world scenario.
Port Management - Key persons at all hierarchical levels and from vanous
departments of the port management such as Chairman - in charge, Deputy Director
Planning, Traffic Manager and Manager (Operations) - were selected for the
interviews.
Port Unions- The oldest and numerically the most powerful Union was contacted. The
General Secretary was interviewed with regard to issues concerning labour. Also at
random a few dock and port workers were asked a few basic questions on labour
welfare issues, port functioning and rel~ted problems.
Interview was conducted to cover the following aspects of training of
manpower, port performance, user opinion, union opinion, port problems, corrective
measures and future growth prospect.
7.6.1 Training
Training of manpower has been one strong point in Visakhaptnam port. It boasts
of a unique port training institute, one of its kind in the country which has made
cardinal contribution towards training of port persons in various categories, from
administrative to technical. Port Training Institute (PTI) was established in 1977 in a
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single room with one assistant to the Director. Over the years PTI has grown and today
owns a separate building to conduct its round the year training programmes. Though
meant basically for the Visakhapatnam port employees and workers, it hosts training
programmes for employees of other ports as well as for the staff of the Ministry of
Surface Transport. The employees are given 'in-service training' in this Institute
through the 'bottom-up' approach. The demand for such programmes comes from the
employees who feel the need of the training assistance. Therefore, an area where
training is needed is first identified along with those in need of the training. In the
second stage an appropriate training programme is formulated and the resource persons
identified from other ports or from the two national institutes, viz. NIPM, (Chennai) and
IIPM (Calcutta). Similarly, such programmes for vari<?us other areas of cargo handling
and port related activities are fixed and a year calendar is prepared which is then
circulated to different sections of the port. Employees interested in such programmes
send their consent two months in advance so that proper co-ordination is possible.
During the training, besides free food and accessories such as bags, no other incentive,
(cash or otherwise) is provided except a citation of their participation at the end of the
programme as a token of recognition. But if any worker loses monetarily on account of
attending the programme, instead of continuing with their regular duty (like piece rate
emoluments earned by cargo and shore handling workers over and above their fixed
salary) -they are compensated. At the end of the training, the attending workers prepare
an evaluation report, highlighting their individual viewpoints. These are taken care of
by the PTI so as ~o organise future programmes on such lines, which would be more to
the satisfaction of the employees. The whole process, therefore, is scientifically framed
with the ultimate objective to benefit the port.
One important point to note is that there is no parameter to measure whether
labour productivity has improved with such training programmes. Indirectly, however,
it may be said that if total cargo throughput of the port has increased significantly over
time, then labour or manpower being an important component of port functioning must
have improved its performance too. But qualitatively, impact of training programmes
has been positive mainly in terms of the 'attitude' of the workers. It is through the
training programmes that they are educated to accept changed circumstances of port
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operations over time like mechanization, computerization, etc. They are enlightened on
the fact that all these changes are aids to facilitate faster and efficient performance and
not to replace human resources. Workers are also made to realize that the port is a
multi-functioning operational system and entire cargo handling process is like one chain
and any disruption at any time would halt the entire process and the port would suffer.
Each one's sincere participation is pertinent to the smooth functioning of the port
system. This concept has gained ground among the employees over the last 1 0 years.
PTI, therefore, performs a three-fold duty, viz. skill development, knowledge
enrichment and finally changing the attitude of those who undergo training.
The 'quality circle' concept is yet another instance of the 'bottom-up' approach.
There are 51 such 'quality circles', in different departments, each consisting of 15-20
members who voluntarily participate and meet once a week to identify daily problems.
After the problems are listed out, they prioritise them and find possible solutions. To
give it a final shape, once a month a meeting with the Steering Committee (the
Chairman of the port heads the committee) is arranged by the PTI where they discuss
the problems with 'cause and ef~ect' approach. Through 'quality circle', the workers
can have direct access to the management to discuss work-related problems. PTI here
acts as the facilitator or coordinator of such meetings. 'Quality circle' is a method of
involving each worker's active participation in the cargo handling activity of the port,
which is multi-functionary and complicated.
Not all ports have such training institutes and devices of workers' participation
like 'quality circle'. For example, Kandla, one of the premier ports, does not have any
such training programmes or institute. But its cargo traffic remains unaffected; rather it
has progressively grown over the years. Therefore, it cannot be said with certainty that
training improves labour productivity which inturn positively affects cargo traffic. How
does one explain such an anomaly? With Kandla's example, one can apparently
conclude that human resource training has nothing to do with cargo throughput at a
port. A port can prosper without such human resource training. But it is really not the
case. The catch here is the cargo mix of a particular port. Visakhapatnam handles a
variety of cargo, predominant being bulk cargo - both dry and liquid. For efficient
handling of such cargo, proper training of manpower is essential. Whereas, Kandla
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handles predominantly liquid bulk (POL and products) where involvement of
manpower is minimum, as the whole process of cargo transfer is rather simple and
mechanical. Therefore, keeping in view the cargo-mix of a port, human resource
management needs to be planned. Some ports need them urgently, some do not, to that
extent. Visakhapatnam and Kandla represent the two extremes of this scale.
It has been widely recognised that incentives do boost up the labour spirit. To
encourage the workforce, productivity-linked bonus, piece rate/incentive payments,
merit certificates and citations as recognition for good work, etc. are given at
Visakhapatnam port. In fact the port has worked on this aspect and has a definite policy
on 'incentive scheme'. One must remember here that incentive scheme for each
individual port is different, as no two ports are the same as regards type of cargo,
natural location, mechanization status, etc.
7.6.2 Port performance evaluation
There are several practical instances of excellent port performance which have
been discussed in here. In case of Visakhapatnam port, no major plan after
implementation proved to be redundant. This is mainly because of the judicious
decisions taken by the Port Authority at the right time. An example of this is the
aftermath of outer harbour construction. The port ran into financial crisis in 1983, when
the annual loss was Rs. 3.5 crores. To make the situation worse, there was no cargo
traffic at all during 1985-87 at the Outer Harbour which was designed to handle 4
million tonnes. This was because ch;:trges of handling at the Outer Harbour were fixed
at higher rates than the Inner Harbour with the intention of recovering the cost. It was
envisaged that deeper draft and modem handling facilities at Outer Harbour would
attract traffic and reduce congestion at the Inner Harbour. But the economic
consideration was perhaps underestimated. Unexpectedly, the outer harbour with a huge
investment remained unutilized, while the Inner Harbour faced traffic congestion. This
was, however, only for a short period. In 1988, the authorities sensed the pulse of the
trade. The handling rates at the Outer Harbour were brought at par with the Inner
Harbour. Within no time traffic picked up so much so that the return on investment was
realised within 4 years and the Outer Harbour designed to handle 4 lakh tonne, was
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handling 1.22 million tonnes. Before construction, the internal rate of return (IRR)
calculated based on experience was 12 percent. But within 6 years, post construction
IRR was as high as 25 percent.
Another case is that of iron ore exports. Initially MMTC - the canalising agent
was expected to export 8 million tonnes of iron ore via Visakhapatnam port. Following
worldwide recession of iron and steel, iron ore exports dropped and Visakhapatnam port
lost a substantial volume of iron ore traffic as well. Essar' s pellets plant near the port is
now using the iron ore berth for moving iron pellets to Hazira by coastal movement.
Yet another instance of an appropriate step at an appropriate time is the abolition
of DLB levy on cargoes. Within one year, cargo throughput increased by 5 million
tonnes (from 15 to 20 million tonnes) eroding the loss caused by levy abolition.
Visakhapatnam port, therefore, has always acted according. to the situation. As
Visakhapatnam has less of a containerized general cargo, the threat of losing traffic to
other competing ports is less too. This is because, being a predominantly bulk cargo
port, it has dedicated cargo like POL (Refinery is at the hinterland - HPCL), Fertilizer
(Coromandel Fertilizer), iron ore and alumina which in future would hardly move to
other ports. Keeping this in mind, the rates are hiked varying from 50 percent to 100
percent -- higher for dedicated cargoes and minimum or no hike for general cargo which
is sensitive to hike in rate. This is yet another example of Visakhapatnam's practical
strategy.
Port capacity can be augmented by two methods. Firstly, optimum utilisation of
the current capacity by better equipment facility, proper manpower training etc.. and
secondly, a more obvious capacity addition in the form of new berths or may be a new
port altogether to handle extra traffic. In a resource crunch state like India, the first
option should be worked out first before embarking on massive irifrastructure
investment so that more traffic can be handled on existing ports. As far as capacity
augmentation in Visakhapatnam is concerned, it has almost reached a saturation point.
Action has already been taken for the construction of 4 berths in the Inner Harbour and
2 berths in the Outer Harbours. No further extension of berth is possible in future as
both waterfront and back-up land to install mechanised facility is limited. To optimise
the existing port capacity, 2 grab loaders and higher capacity cranes have been
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sanctioned, which would increase cargo handling capacity by another 5 to 6 million
tonnes. The port to handle other cargo when not in use can use captive berth of
Coromandel Fertilizer. By accommodating one oil berth in the Inner Harbour through
some structural adjustment and marginal investment, another additional 2 to 3 million
tonnes of cargo can be handled.
To increase port capacity means either construction of another harbour or
satellite port. The deciding factor would be economic viability to embark on such
projects. The estimated construction cost of outer to outer harbour is Rs. 2500 crores but
it is quite uncertain whether it would attract sufficient cargo traffic to cover the cost.
Here lies the dilemma. Moreover, Gangavaram's position has to be assessed before
launching such a costly project. Gangavaram's status is still somewhat uncertain, as it
has been notified as a state port and not a satellite port to Visakhapatnam. But one thing
is certain, privatization would be necessary, be it a new port or extension of berthing
capacity at the present port of Visakhapatnam. To solve most of the present ailments
and to run the port on commercial and corporate lines, privatization is perhaps the
answer. Social objectives like guaranteed employment opportunity cannot over ride
interests of international trade. There is overstaffing at Visakhapatnam like any other
port and retrenchment of labour by half would put the port on a healthier path. At
present, Visakhapatnam port (including DLB) has 13,000 workers to handle 36 million
tonnes. In Gangavaram, as per the plans, 22 million tonnes of cargo will be handled by
only 11,00 people as it will handle would be a modern mechanized port in tune with the
present demands. Privatization would also reduce hug~ demurrage losses (Rs. 645
million in 1995 for all major ports) which would ultimately benefit the nation as a
whole. IRR for projects offered for private participation has been calculated at 20
percent-24 percent under the BOT principle, but since the privatization guidelines are
not clearly spelled out, the investor is still not confident in investing in massive port
projects. Today, Visakhapatnam has the dual objectives of optimisation and
modernization and is trying to maintain its position as a premier port of the country.
Traffic projection till 2020 AD has been done for Visakhapatnam. But a point of
caution has to be noted here. Traffic may be diverted if any port comes up as a
competitor in the hinterland. In case of Visakhapatnam port, Gangavaram in the south
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and Dhamra (Orissa) in the north might pose such a threat in future. Kakinada, the state
port is, however, in no way a competitor for Visakhapatnam's cargo traffic. Similar is
the case with Krishnapatnam. Since Gangavaram and Dhamra are 'green field sites'
today, their influence has not been taken into consideration for traffic projection.
Moreover, change in international scenario may affect cargo trade in certain
commodities. These are certain limitations in traffic projection.
A 1 7 -member team constitutes the Board of Trustees, which has representation
from the management, union, stevedores, clearing agents and major users. The
Chairman of the Port heads the Port Trust Board. This board finally approves any
project after carefully studying the project proposal. One major yardstick of project
viability is the internal rate of return. More the IRR, better it is for the port. The other
consideration is the positive increase in delegated financial power for the individual
Port Trusts from 1996. Previously, for taking up any project proposal costing more than
Rs. 5 crores, prior sanction was necessary. Now, Visakhapatnam Port Trust Board can
sanction up to Rs. 50 crore for any modernization process and Rs. 100 crores for
replacement projects.
7.6.3 Opinion of users'
The opinions of several port users have been crystallised in this section.
Visakhapatnam has congestion problems and TRT of vessels is high, more specifically
the PBD component of TRT is more. In other words, vessels wait in queues for berth,
but once they get a berth, cargo discharging is fast. So, vessels prefer to wait for days
rather than go to other neighbouring ports. The bunching of vessels, as port officials
say, is beyond their control and is not a regular feature. This is because of the random
arrival pattern of vessels over which the port has no control. Investigations revealed that
if the importers/shippers or agents plan the correct timing for chartering vessels in
advance, then vessel queuing may be avoided to some extent. Today, this co-ordination
among the user agencies on one side and the port authority on the other is sadly
missing, causing unnecessary delay and thereby loss of time and money. For measuring
the loss due to pre-berthing detention of vessels, the standing charges of the vessels are
to be estimated which varies from Rs. 3 lakhs to Rs. 8 lakhs depending on the size and
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type ofthe ship. It sounds quite illogical that a Rs. 150 crore ship should wait for a berth
worth 45 to 50 crore. It should rather be the other way round. A berth should wait for
the ship and not ship for a berth, which is the case now
It has been widely agreed that today there does exist a shortage of berths.
Capacity wise, Visakhapatnam has reached a plateau stage. Extension of berthing
facility is not feasible because of natural limitations. In an attempt to acquire more
water front area, the port authority decided to shift the fishil').g harbour from its present
location to Bheemunipatnam. Though the idea was good, but its practical application
was difficult, as implementing the proposal was not easy. Besides, dealing with the
resistance put up by the local fishermen, the port had the responsibility to rehabilitate
them, which is not a simple task.
Capacity-wise too, Visakhapatnam is saturated and over-utilized. All possible
measures of increasing productivity, so as to reduce the cost of handling have already
been tried. For instance, cranes have been provided with matching slings, whereby
productivity increases. Earlier, a 10 tonne crane had 3 tonne slings. By a simple
innovative method of replacing the 3 tonne sling by large size sling, productivity of that
particular crane nearly tripled. Similarly, a lot of time was earlier wasted in transferring
railroute cargo because of lack of proper sidings. Now, by simply constructing sidings
at appropriate locations the railway wagons are loaded or unloaded without difficulties.
Another example is shifting the maintenance staff quarters and building a stockyard
behind the berth, which was 10 kms away. This made cargo loading/unloading
convenient. Again gang strength was reduced without any negative effect on cargo
handling. Such adjustments in machinery and port planning have improved present port
productivity.
As future traffic projections show, Visakhapatnam has to augment its capacity.
Since the present port capacity is already over-stretched and dusty cargoes have to be
shifted from Visakhapatnam, the only alternative seems to be the idea of a satellite port.
Gangavaram is a possible location but only if it has required draft, back-up space and
infrastructurallinks.
Privatisation is picking up in Visakhapatnam port, but privatisation in isolation
is of no use. For privatisation policies to be successful, certain things are important.
290
Firstly, the guidelines should be very clear, as the investor must be aware of his duties
and be confident of the returns on his investment. Secondly, regulatory mechanism by
various authorities should be reduced to the minimum and the private investor be
allowed to charge according to his own wish. Thirdly, manpower strength would be
reduced as this would relieve the port of its cost burden on account of salaries and
wages. Visakhapatnam's cargo is more or less assured, as it is dedicated bulk cargo like
coal, iron-ore, POL etc.
Visakhapatnam does have a bright prospect for containerization only if it caters
more to general cargo, in future. Bulk cargo hardly gets unitized or containerised.
Therefore, if the cargo mix changes in future, Visakhapatnam might have substantial
container traffic, posing competition to Chennai.
Certain advantages make Visakhapatnam a frequent port of call like peaceful
labour situation, fast disposal of cargo once the vessel is berthed, quick customs
• clearance within a few hours etc. Emphasis today should be on modernisation and
capacity augmentation backed by proper prior planning. A little planning and co
ordination among the port users and the port authorities can solve a lot of the problems
faced by a user today. A good planner should foresee problems and know his
limitations. Visakhapatnam port should follow this in order to remain one of the
important ports of the country.
7.6.4 Unions
The opinion of the port workers organised into unions is important to understand
the complete picture of the Visakhapatnam port. There are 13 registered unions in
Visakhapatnam port of which five are most prominent. The first union, which was
formed in 1936, three years after the Visakhapatnam port started its operation is called
Visakhapatnam Harbour and Port Workers Union, affiliated to AITUC. The next union
came up only in 1964. Visakhapatnam Harbour and Port Workers Union is heavily
tipped on the dockside as about 65 percent of the dockworkers are members of this
union. i.e. about 13,000 workers. 3,000 workers are from the port side. Besides these,
there exists a large section of unorganised labour force who are engaged as private
291
contract labour in various cargo handling activities. 90 percent of this category of
workers are registered with this union, adding to a total strength of 4,000.
The most important function of the Workers Union has been to look after the
interests of the workers and the management and maintain a cordial and healthy relation
between the two. The union believes in the overall prosperity of the port, as it would
benefit them too. The union voices the demands of the workers like wage revision,
welfare benefits, revision of incentives, promotional policy, etc. and raise the problems
of the workers to the management. Strikes are the last option that they opt for to express
their unhappiness and the unions resort to it only when all other methods of negotiations
fail. Before going on strikes, all other avenues are explored for convincing the
management. This stems from the realisation that if the workers go on strike, it is the
port as a whole, which suffers. Strikes, therefore, are not frequent in Visakhapatnam
port. This is evident from the fact that the last strike in which they participated was in
1984, which was an all India strike lasting for 26 days.
The union feels it is accountable to the management for its actions. If there is
laxity on the part of workers, they should be held responsible. But, if on the other hand,
they work well, workers should be rewarded as a mark of recognition and
encouragement. If the management feels concerned and looks into the interests of the
workers, it is not a social obligation rather they do it for self-interest. To get the work
done properly and on time, workers should be satisfied, because it is they who actually
work. This philosophy of the management is well understood by the union, but what is
commendable is that in Visakhapatnam port, the Union does not take undue ad~antage
of this situation and make unreasonable demands, which are absolutely unacceptable to
the management, though this happens in other ports. The Union claims it never preaches
the workers to compromise on work. The workers are advised to do their work well and
the union would take care of their demands. The union has a positive constructive
approach and adopts the philosophy of hard work.
Among the achievements, which the union claims, the most noteworthy is the
pay hike in 1986 and wage fixation of the private contract workers which made them at
par with the regular workers. The Union fought the case for the workers who were
working in the ore-handling plant for twenty years and yet were getting less pay than
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regular workers. The demand was raised in the Dock Labour Board to regularize those
2000 workers. A further demand has been put forward for other benefits like leave,
medical facility etc. This is a major achievement in the history of port union movement.
There is yet another example, which substantiates the fact that the Union looks
into the interests of the management as well. In 1986, the Visakhapatnam Dock Labour
Board was in a financial crunch and one possible solution was retrenching the
manpower. At that time, thermal coal wagons were handled manually by a gang of 16
workers. The Union intervened and convinced the workers and reduced the gang
strength to 10 thereby reducing the manning scale by 6 per gang. As a result, the cost of
handling was reduced. The union introduced interchangeability of work for optimal
utilisation of manpower by work adjustments. Workers released from one form of work
were engaged somewhere else. This was the turning point in the history of
Visakhapatnam Dock Labour Board and today it is one of the richest and a pioneer
organisation. The Union takes the credit for this turning point in the history of the Dock
Labour Board.
Among the failures of the union, the most disturbing factor has been the decline
in the morale of trade union leaders. The philosophy of trade unionism has undergone
drastic change so much so that today there exist only trade and no union as one leader
subtly remarked. Most of the senior leaders are not port employees but paid by the
unions. Moreover, inter-union rivalry is another unfortunate factor, which hinders the
strength of the union movement. Yet another factor is the division of trade union
workers on communal lines rather than on the basis of work. The union strongly feels
that these hindrances have put limitations on the functioning of the union.
Union opinion on modernisation of the port is positive. They believe that the
gain of modernisation would acquire to them also and that port modernisation is for the
betterment of the nation. At the same time, modernisation, automation must not lead to
retrenchment of labour or forced retirement of workers. Interchangeability or alternative
employment opportunity should be offered in such a case. The union raised an
interesting issue here. Machines not always work faster and efficiently. For example, at
the ore handling plant at Visakhapatnam, it has been proved surprisingly that manual
handling of ore is faster than mechanical handling. This is however, nothing but a
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manifestation of the improper maintenance and inefficiency of the plant, which faces
frequent equipment breakdown.
The Union's opinion on privatisation is critical. They insist that privatisation is
nothing new. It existed since long time as the exporters, importers, stevedore, Clearing
and Forwarding and Steamer agents, are all private parties on whom trade depends.
Private owners sometimes own equipment too. One of the major objectives of
privatisation however, is bringing in private investment for development of port
infrastructure. The union strongly stands by the opinion that privatisation should not be
adopted for the sake of privatisation as it is considered fashionable today to go 'private'.
But, a port should encourage privatisation only when it is absolutely necessary. In case
of Visakhapatnam, when the port is fulfilling its targets, earning profits and is running
efficiently, the need for private participation does not arise. The union feels that
Gangavaram should develop as a satellite port to Visakhapatnam port and should not be
declared as a private or state port as both the latter have their respective disadvantages.
The fate of Kakinada over all these years as a state port is not quite encouraging. The
union feels that from employment perspective, Gangavaram would not be ideal as it
would develop as a mechanical modem port involving less labour. Visakhapatnam
would lose a substantial cargo to Gangavaram but this would pose no problem if it is an
extension of the former port. But the counter argument is that Visakhapatnam does not
have enough funds to develop Gangavaram on its own. So, if developed in the private
sector in a green field area, the ills of restrictive practices is not likely to affect the new
port.
7.6.5 Problems faced by the port
Port problems have been summarised here after discussions were held with all
interviewees.
• Perhaps the single most important problem faced at Visakhapatnam port today is
that of port congestion. The port facilities are not adequate to handle the unexpected
increase in cargo traffic volume, especially in the last 10 years. In the 80s, a few
extra berths were constructed in the Inner Harbour, open land were converted into
stockyard, rail sidings were built, Outer Harbour was constructed. All these
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developments attracted so much cargo that the port capacity created for next 15
years were consumed within 5 years! Cargo traffic increased beyond expectation,
surpassing all capacity arrangements. The net result was congestion at the port.
• The problem is expected to grow more acute in future as more industrial activity and
increase in population in the hinterland is expected, which would mean more cargo
traffic for Visakhapatnam port to handle.
• The port has certain limitations like channel and draft restriction, scarcity of
waterfront, etc. Keeping all these in mind, commensurate with increased traffic, port
capacity has to be augmented. This is precisely the need of the hour. A ship waiting
for a berth at Visakhapatnam port costs the nation a fortune Rs. 3 lakh to Rs. 8 lakh
per day, depending on the 'size and type of ship.
• The bunching of vessels is unavoidable as individual port users have different self
interest, which would never match with each other. Since the ultimate aim of a port
user is to saw time and money, by calling at Visakhapatnam, he is comparatively
better off than any other east coast port. Other possible choices are ruled out like
Chennai which is congested, Ennore- is only a green field site today, Paradip --once
completes its coal loading terminal may ease the pressure of thermal coal handling
at Visakhapatnam. Moreover, Visakhapatnam has dedicated bulk cargo like coking
coal, POL, iron-ore, fertiliser, etc. which hardly can move away. In addition, it is a
peaceful port with no labour trouble. Visakhapatnam as a frequent port of call on the
east coast is therefore justified.
• It was widely agreed upon that the expansion facilities at the present port are
limited. The logical option seems to go for a satellite port at Gangavaram. The
proposal for Gangavaram, still a green field site today was put up 1 0 years back.
Due to indecision on the status of the port, it is still lying idle. This delay in
implementation of the port would prove costly because of huge cost escalation.
There is a need to develop Gangavaram immediately.
• Another problem that the port face is delay in project approval and thereby cost
escalation. The proposal for LPG berth at Outer Harbour was delayed at the
Ministry level by one year. This delay resulted in 25 percent extra cost. Moreover,
faster the implementation of projects, more economic cycles can be adjusted within
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the same time frame which would lead to more trade. More trade means more cargo
traffic for the port to handle and the port prospers.
• After the liberalisation of the economy in the 1990s, the trade pattern changed.
Indian ports should modernise so as to remain competitive in the international
maritime scenario. The Indian ports should upgrade themselves to international
standards so that the multinationals invest and automatically traffic flow will
increase as a natural process. Matching infrastructure facilities should be created
and the government's intervention should be reduced to a minimum. The ports
should be allowed to exercise their autonomy in financial and policy matters so that
delay caused in seeking Central Government's approval can be avoided. Unlike in
the past, today hinterland is not captive. If a port does not perform well, cargo
moves to another port following purely economic considerations. This threat would
make the ports perform tothe best of their ability.
• The reason for slow containerization at Visakhapatnam is the lack of sufficient
general cargo traffic that can be containerised. It is expected that if modern
container facilities were developed at Visakhapatnam port, then container traffic
would automatically flow in. Ports should develop facilities, following which
industries and ancillary activities would automatically follow. There is a
misconception that if a satellite port comes up, then the traffic of the original port
suffers. No two ports should develop close to each other, as they would have
overlapping hinterland and eat into other's traffic. But this is an apparent fear. In
Germany Bremen and Bremer Haven are just 45 kms. apart and both the ports are
prosperous and performing well. There is similar example in Holland where
Rotterdam and Amsterdam are only 40 kms. distant.
• So, to combat the problems of port congestion, lack of infrastructural facilities,
unnecessary delays in project implementation etc. the approach should be practical
and quick. The planners must have a vision and be aware of the problems too.
Solutions should be implemented fast. Governmental intervention should be
minimum, allowing the ports to act apace according to their requirements. One
should learn from past experiences and keep abreast with latest information from the
outside world. The basic philosophy should be understood by all - if trade prospers
296
due to faster circulation of economic cycles, then port flourishes and the nation as a
whole benefit. If, there is delay, we lose on two counts- demurrage on ship side and
cost escalation on project side. In both the cases, port suffers and the burden
ultimately percolates down to each single user. Port functioning is just like a chain,
and any break or delay in the process, disturbs the whole linkage. Any corrective
measure undertaken should, therefore be cost effective and time saving. Future
projections are necessary to plan. Without proper planning, there are chances of
either under utilisation or over utilisation of port capacity.
7.6.6 Corrective measures
What could be the possible corrective measures to combat the present problems
that the port faces today? Answer to this question varied from one person to the other.
Summarising all, the following discussion is revealing. As a bulk cargo port,
Visakhapatnam is perhaps the best possible choice on the east coast because it has
natural protection, comparitively less labour related problems and a flourishing
industrial hinterland. Yet, Visakhapatnam faces port congestion and needs extra berths.
At present, there is a sanction for the construction of 4 berths in the Inner Harbour and
two berths in the Outer Harbour. Any further extension of berthing facility at the port is
not possible. The port is already running on over capacity (134 percent capacity
utilisation). The only alternative solution seems to develop Gangavaram port.
Gangavaram port is still on conception stage, as there has been unnecessary
shunting between the state and the centre as to the status of the port. Political indecision
is one of the reasons causing unnecessary delay. Gangavaram port is expected to handle
all the dirty and dusty cargo of Visakhapatnam port. This is of utmost importance as the
city of Visakhapatnam is suffering from extreme air pollution. The conveyor belt
carrying iron-ore passes right across the town. The pollution problem has urged the
citizens of Visakhapatnam to appeal to the port authority and VUDA to undertake some
measure so as to curb further pollution. Some people have shifted to safer places like
Srikakulam, a few kms away. Since the port is adjoining the Visakhapatnam City,
certain considerations have to be looked into so that the city can also grow as the port
prospers. It is an excellent idea to shift thermal coal, coking coal, etc.--the dusty cargoes
297
to Gangavaram-which can infact be an extension of Visakhapatnam port. Moreover, the
entire belt from Visakhapatnam to Kakinada port- can be developed as an 'industrial
corridor'. With several industries taking advantage of common infrastructure and port
facility. Gangavaram therefore, can act as a catalyst in the development of this future
industrial hinterland.
Besides increasing capacity, in the form of berths or a separate satellite port,
certain considerations can be made by the present port authority to encourage the port
users without much investment or policy changes. What is needed is a corporate
attitude. For example, privatisation can be introduced in equipment supply and
maintenance. By this, the port can have access to modern equipment and machines and
at the same time be relieved from the responsibility of maintenance. The port users
often complain of poor maintenance of equipment and also that machine is out-dated.
Productivity levels would surely then improve under the present circumstances if the
Port go.es for equipment and machine privatisation. Even tugs can be hired from the
private parties. If computerised, 'single window' operation is introduced in the ports,
paper work and time can both be saved. Since, individual ports toady can take
investment decisions upto Rs. 50 crores for modernisation process and Rs. 100 crores
for replacement project without Central Government intervention, this power should be
exercised to the maximum. It is important to note here that Visakhapatnam port, which
had a surplus of Rs.73 crores in 1999, has its own funds. This surplus has to be
judiciously used to bring overall improvement in port productivity. Privatisation has to
be encouraged wherever needed to usher in healthy competition. Visakhapatnam has a
good work culture compared to other ports like Calcutta or Paradip on the east coast. It
has the advantage of being a natural port backed by a resourceful well-connected
hinterland and has excellent labour-management relations. It is also generating a
financial surplus. Though the port faces some problems, it has grown over the years and
today it meets its cargo throughput targets before deadlines.
298
7.6.7. Containerisation
Visakhapatnam has no specialised container terminal and has very little
container traffic. It is predominantly a bulk port and the container traffic generated in
the hinterland (like tobacco) passes through the Chennai port which has specialised
container-handling facility. Through Visakhapatnam, aluminium ingots, reefer cargo
like shrimps and other marine products are moved out in containers. At present,
container vessels are berthed at multi-purpose berths in the absence of dedicated
container terminal at Visakhapatnam.
Though the port has plans to install modern container handling facility to
facilitate better handling of container traffic, nothing has come up as yet. Since the
earnings from container traffic are comparatively low as compared to bulk, the port is
not too keen to invest substantially in developing a full-fledged container terminal.
Chennai is already a successful container port with matching infrastructure and
developing Visakhapatnam into one might not be a profitable proposition. But, to
remain in trade, some container traffic atleast that meant for the hinterland of the port,
has to be handled. The port users are willing to engage their own labour who are trained
to handle containers and who could perhaps also support the port workers. There is no
dearth of land for staking the containers and the hinterland has potential for container
traffic. What is needed therefore is matching container facility at the Visakhapatnam
port. Realisation of investment/cost for developing modern container terminal would be
easy since freight charges for handling containers are more compared to bulk.
Moreover, manpower needed would be minimum as the facilities would be mostly
mechanised and automated. Raw material for power projects are imported today in
containers. From Visakhapatnam to Kakinada - the entire stretch would house a few
new power projects, which would need import of raw material. Therefore, container
traffic has a somewhat bright future in Visakhapatnam. If only, it is well equipped to
handle so. At present, however there is no plan underway for a dedicated container
terminal.
299
7.6.8 Future growth prospect of the port
An assessment has been made here of the future growth prospects of the port
based on primary sources and personal interviews.
The cargo throughput from the Port by 2020 is anticipated to reach 140 million
tonnes. To enable efficient and smooth transfer of this cargo, it is assumed that the port
capacity has to be enhanced to 148 million tonnes per annum by that time. The Port
capacity primarily consists of the 'Berth Capacity' which means the berth, the cargo
transfer system, the storage and the transportation facilities. There are also several other
supporting and auxiliary services (road and rail network, functional structures, water,
electricity, etc.) which together form the Port capacity.
The first task is to estimate the number of berths that would be required to meet
the demand. The berth requirements depend on
1. the nature of cargo
u. the parcel size
u1. the cargo transfer system and
IV. the berth occupancy
In order to benefit from the economies of scale, deployment of large size ships is
envisaged in case of cargo with substantial volume and where deep draft facility is
provided. Accordingly, corresponding parcel size (the quantity/volume of cargo
intended for loading or unloading at the Port) is assumed. It is proposed to take full
advantage of the developments in port technology and install cargo transfer systems,
which use the 'state-of-art' technology. Thus, it is assumed that the output rates will be
much higher than at present, particularly in case of crude, dry bulk cargo (mechanised)
and container cargo. It is also assumed that the cargo transfer systems will be fully
mechanised and automated in case of liquid bulk, dry bulk and containerised cargo,
wherever the cargo volumes are sizable and the economics permits.
It may be mentioned that care has been taken to ensure that the assumed output
rates are reasonable and attainable. It is necessary to mention that the rates assumed are
those, which one port or the other has achieved. With the induction of better technology
300
and improvisation of the systems, these rates are bound to be higher by 2020 - a time
span of25 years from now.
Development Options for the Port
In view of the position explained, the port is left with two options :
1. to explore the scope to expand the Port in and around its present
location, or
u. to identify possible new suitable locations, as near as possible to the
present location.
The first option does not seem either possible or advantageous. Presently, the
Indian Navy, Coast Guards, Hindustan Shipyard and the Department of Agriculture
utilise some of the waterfront of the Port. One way is to release this area for commercial
shipping. In addition, an Outer Harbour to the Outer Harbour may be built for additional
water-front. These propositions involve either dislocation of established institutions of
national importance or huge investment. Apart from the inconvenience, their relocation
would entail enormous costs. Similarly, converting the fishing harbour for commercial
shipping and construction of an Outer Harbour requires huge capital investment. Its
technical feasibility has to be studied. This option may still not be advantageous since,
the draft limitation continues in the case of Inner Harbour taking away
the competitive edge ofthe Port;
the single entrance channel to access the harbour still remains a threat
to commercial shipping at times of eventualities;
adding berths without the desired back up land area creates several
severe bottlenecks to the cargo operations;
the enormous capital investment may not be commensurate with the
development;
the staunch opposition from the established institutions of national
importance definitely delay and block the process; and
further, environmental degradation, may increase the public resentment
beyond the ability of the Port to contain it.
301
The 1st proposition is not advantageous to the Port. Thus, the second option
seems feasible and advantageous. A cursory study of the coast to the north and south of
the Port suggests that expansion of the Port to the south side will be preferable since the
access to the expanding industry will be more and the required land area could be
acquired, more easily. At the same time, it is easier to link the selected locations with
the national rail and road network. The Master Plan of the port identified suggests
'Gangavaram', near the 'Steel Plant' as a satellite harbour. In recent times,
'Mutyalammapalem', a place further south to 'Gangavaram', was under consideration
by some private investors. As such, these two locations are referred as the probable
locations for considerations. It is expected that satellite ports would
• relieve the port from the present pressure with diversion of thermal and coking coal;
berths now handling those cargo will be available for other cargo.
• provide a competitive edge to the Port through economies of scale on account of
deep draft provisions;
•
•
•
•
•
•
•
•
•
•
•
enable a systematic redistribution of service facilities for their optimum utilisation;
elimination of transportation bottlenecks to lower transportation cost to users;
easy linkage to the national rail and road network;
easing the pressure on the urban road and rail transportation systems;
improved environment at the present Port thereby mitigating the public resentment;
adequate land at economical cost;
promoting regional development arresting shift in natural cargo flows;
Discourage the growth of small sized cost-ineffective Port facilities;
uninterrupted service even if an outlet is closed due to unforeseen eventualities;
greater maneuverability to navy at time of war; and
scope to expand the Port facilities further and beyond 2020 .
Thus, opening one or two or more satellite harbours, in a phased manner and
extending the present Port limits, depending on the requirements from time to time, will
be the right solution to meet the demand of the anticipated cargo throughput for Port
servtces
302
The following distribution of berths has been suggested:
Table 7.21
Suggested berth distribution at Visakhapatnam Port
Cargo Type Existing Oulet- I Outlet -11, Total Port (Gangavaram) (Mutyalammapalem)
Dry bulk 4 11 15
Break bulk 9 9
Steel 6 6 products Container 8 8
Liquid bulk 3 8 11
Passenger 1 1 berth Berth for 1 1 explosives Total 25 17 9 51
Source: Article by Y. Jayanth1 from VPT.
Based on this allocation by 2020, a restructuring of the berth configuration at the
present Port is suggested as under :
• 3 Deep Draft Container Berths for 5th Generation Container Ships-( depending on
the container traffic generation)
• •
•
•
• •
•
•
•
•
1 Crude Oil Jetty for 1,50,000 DWT Tankers (OSTT)
1 Jetty for LPG Carriers of 20,000 DWT and LNG Carriers of 80,000 DWT (LPG
Jetty)
1 Mooring Berth for Transshipment (NOM)- ( may not be required now with the
setting up of the FSO terminal at sandhead)
1 Fertliser Berth (FB)
1 Alumina Berth (WQ. 5)
1 Berth for Export of Oilseed Extracts (EQ-6)
1 Iron Pellet Berth
1 Passenger/Luxury Cruise Berth (OR1/0R2)
9 Break-bulk Berths (EQ1 to EQ5, 7, WQ- 2, 3, 4)
5 Container Berths (Extended N. Arm)
303
The first pre-requisite of establishing the new harbours will be the creation of a
sheltered, tranquil water basin for berthing the ships. It is suggested that a water basin
of about 400 hectares may be envisaged at Gangavaram for the bulk. Similarly, a water
basin of about 450 hectares may be built to accommodate tankers. To build these
satellite harbours and to construct the additional berths, a minimum of 1600 hectares at
the first outlet and 1200 hectares at the second outlet will be required. Acquiring land
more than the minimum is desirable and there can be no norms for this purpose. The
next step, is to estimate the facilities associated with the berth system. These are the
cargo transfer system, the storage (covered and open) space and the facilities for the two
modes of cargo transport.
For this purpose, five types of cargo transfer systems are visualised as under:
• The conventional wharf/mobile crane system with supporting ground fleet in case of
break-bulk;
• The fully automated and mechanised system with ship loader/grab/marine unloader
and conveyors, etc., for dry bulk;
• The conventional-cum-semi mechanised system for minor bulk and steel produces;
• The marine arms and pipelines for liquid bulk; and
• Quay Gantry Cranes, RMGs and RTGs, etc., as in full-fledged container terminals,
for containers.
Today, the situation is different. The policy of economic reforms and liberalisation
opened the gates for international exchange and free flow of state-of-art technology and
expertise. The general environ is conducive to radical experiments and endeavour for
better performance. It is believed whatever may be the general environ, the internal
developments of the industry itself propel the change. The most significant factors,
which may provide the impetus for the changes, are:
Privatisation;
Multimodal transport and
Electronic Data Interchange (EDI).
While the last two are in different stages of implementation, much progress have
been achieved with regard to private sector participation.
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Part III- Visakhapatnam : A Port City
"A port-city is an urban settlement which has a set of specific characteristics
derived from the maritime functions of exchange, enterprise and transport that, firstly,
set the settlement apart from its surrounding region and, secondly, determine the
physical, economic and social configuration of the settlement............ When a city
outgrows by the port it is no longer a port-city. Its port may remain important to it; but
if its character changes ..... then it moves beyond the port-city stage."- Dr. Frank Broeze,
Professor Peter Reeves and Kenneth McPherson. 6
7.7 Development of the Port Town
The metamorphosis of Visakhapatnam which was once a small & sleepy
fisherman's village into an industrial beehive toady, is not an event that occurred
overnight. The driving force behind this transformation is undoubtedly the
"Visakhapatnam Port'. Strategically located on the East Coast, the Port has been
playing a catalyst role for rapid industrialisation of the hinterland.
The first reliable census of the town was taken in 1881 when the town recorded
30,291 persons. The first two decades of the last century recorded a moderate rate of
increase while the following two decades were marked by quite a slow rate of growth.
But during the subsequent fifty years, a rapid increase has been noticed on account of
the various developments. In 1971, the city's population was about 3.5 lakhs which
increased to 5.65 lakh and 7.52lakh in 1981 and 1991 respectively. The large numbers
of immigrants and increased birth rate have been important in the growth of population.
The development of the port is perhaps the stimulus behind the growth of the town. See
Map 7.2- "The Port City-Visakhapatnam".
6 Frank Broeze, Peter Reeves and Kenneth Me Pherson in ' Port Cities in the Indian Ocean Region: 1815-1939: Functional and methodological issues', Paper for the 2 nd International Conference on Indian Ocean Studies held in Perth, Western Australia, 5-12 December, 1984.
305
VISAKHAPATNAM PORT CITY FIG. 7.2
Table 7.22
The chronology of major events in the history of the town
1068 Visakhapatnam referred to in an inscription.
1650 The settlement of a branch of the East Indian Company.
1803 Visakhapatnam became a Collectorate.
1858 Miniciapal Board started.
1893 Madras-Waltair Railway line opened.
1910 Madras-Waltair-Calcutta Railway line opened.
1923 King George Hospital established.
1931 Andhra University shifted to Waltair.
1932 Completion ofVisakhapatnam-Raipur Railway line.
1941 Opening of Hindustan Shipyard.
1942 I. N. S. Circars (Naval Base) commissioned.
1943 Bombing ofthe Harbour in World War II.
1946 Commencement of Civil Aerodrome and Civil Offices.
1947 Independence.
1948 'Jala Usha' the first ship was launched.
1957 Caltex Oil Refinery commissioned.
1962 Constitution of the Town Planning Trust.
1964 Constitution of the Port Trust.
1966 Ore Handling Plant in the Port started.
1967 Coromandal Fertilisers commissioned.
1967 Bharat Heavy Plate and vessels Limited started.
1967 Hindustan Polymers started.
1967 Graving Dry Dock Project started.
1968 "Kalvari" the first sub-marine of the Indian Navy cruised into the harbour.
Source: Visakha Mahanagar, Comprehensive Development Plan, 1969-1986, Town
Planning Trust, Visakhapatnam.
306
Broadly speaking, four geographical zones may be recognised in the town : the
Inner Zone, Middle Zone, Outer zone and the Suburban Zone. The Inner zone is
characterised by fully built-up areas with old type of architecture. It covers the older
part of the town south of the Sand Hill. The Middle Zone shows a transitional character
between the fully built-up Inner Zone and the partly built-up Outer Zone. The Outer
Zone of the town is extensive, covering the Waltair, Alipuram and the Port areas. The
suburban zone has not yet developed as an integrated unit in the town. The external
transport system is confined to three roads coming from Bhimunipatnam, Vijaynagram
and Ankapalli. The Coastal Railway and Vijaynagaram-Raipur railway are the only
direct railway links. The port provides proper facilities for overseas and coastal
relations. The air transport is insignificant. The condition of the essential services like
water supply, drainage and conservancy, is not satisfactory. In the absence of a
perennial source for water supply, the city faces a serious problem.
7.8 Port led Industrialisation
Visakhapatnam is a multi-functional port town. Although the establishment of
industries in Visakhapatnam city dates back to the seventeenth century, the present
industrial landscape has been shaped only after the establishment of the Visakhapatnam
Port. According to a report on the Visakhapatnam Municipalit/, the East India
Company established the first factory in Visakhapatnam town in the year 1682 to
produce some consumer goods. No large scale units were established during the next
two centuries. The only large and medium scale industry established in the district prior
to the establishment of the Port was Chittivalasa Jute Mills ( 1926) and Etikoppaka Co
operative Sugar and Agricultural factory (1933).
The commissioning of Visaskhapatnam as a mono-commodity Port, with three
berths was the starting point of the industrial development of the region. Most of the
capital-based industries have sprung up only after the commissioning of Visakhapatnam
Port. The industries like Hindustan Shipyard, Hindustan Petroleum Corporation,
Hindustan Zinc, Bharat Heavy Plates and Vessels Ltd., Coromandal Fertilizers Ltd. and
Jayanthi, Y., "Role ofViaskhapatnam Port in the Industrial Development", VPT, 23. 3. 1996.
307
the latest in the list, the first port-based integrated Steel Plant (VSP), - all owe their birth
to Visakhapatnam port.
The first phase of industrialisation of the city began after the Second World
War, with the setting up of Hindustan Shipyard in 1946- the first ship building yard of
the country. This shipbuilding unit has further led to the installation of many ancillary
industries connected with Shipbuilding. When the need to set up a grass-root refinery in
the hinterland was identified in the early fifties, the natural choice of location was
Visakhapatnam - the prime reason being the vicinity of a natural harbour with deep
water. Accordingly, Caltex Oil Refinery with an annual refinery capacity of 1.5 million
tonnes per annum was established way back. in 1957. In order to cater to the
requirement of this refinery, the Port constructed 2 Specialised Oil Berths, OR-I and
OR-2, during 1957-58, connecting the berths directly to the storage tanks of the
refinery.
The period of 1967-70, marked the beginning of rapid industrialisation of the
city. Industries like BHPV, Coromandal Fertilisers Ltd., Hindustan Zinc have been
attracted to Viaskhaptnam, primarily because of the Port and the facility it offers. The
Port responded to this industrial activity ofthe region by upgrading and augmenting the
cargo handling facilities. It also provided immense employment opportunities for the
citizens in and around the city. The number of persons employed by the Port directly
increased from 5000 in 1964, to 15,000 in 1993-94. In addition to this, the existence of
fishing harbour, ancillary industries to the basic & heavy industries mentioned above,
also helped in promoting the employment opportunities in this region. Industries like
ship building, oil refinery, fertiliser factory, Zinc smelter plant, Bharat Heavy Plates
& Vessels industries, Export Processing Zone (VEPZ) & the first integrated steel plant
vow their birth at the city to the Port. The large scale industries employ more than 80
percent of the industrial workers of the town and have kept the place distinctively on the
industrial map of the country. The small scale industries employ 18 percent of industrial
workers of Visakhapatnam. The newly developed small scale industries show a marked
influence of modernity while the old ones are in poor state of progress. The condition of
Cottage industries is the worst.
308
The Visakhapatnam city's economic structure is chiefly guided by the public
investment by the Government at various levels and the con-committed development on
account of the public sector undertakings and private enterprises to some extent. The
Visakhapatnam Port undoubtedly catalysed the development ofVisakhapatnam city and
was responsible for the establishment of major public sector undertakings like
Hindustan Shipyard, HPCL, BHPV, HZL and of late the Steel Plant complex. Private
undertakings like Coromandal Fertilisers, Hindustan Polymers etc., large and medium
industries were also established.
7.9 Changes in Land-use
To assess the functional topography of the port town, a land-use pattern is of
great relevance.
7.9.1 Land-use in 1970
From the Table 7.23 the general pattern of urban land use in 1970 at
Visakhapatnam is clear. The industrial use of the land was quite significant.
Proportionately the area under residences was not as important considering the size of
the population. The roads covered only 5.5 percent of the total area which was below
the average. Due to tidal swamp and newly extended areas in the municipal limit ,the
percentage of vacant land was very high (42 percent).
309
Land-uses
Residential
Commercial Public Offices Industrial Recreational Educational Hospitals Railways Roadways Agriculture Hills & Geddas Vacant Total
Table 7.23
Land Use Pattern in Visakhapatnam, 1970
Total area 4684 hectares,
Built-up area 2052 hectares
Area in percent to the percent of the built hectares total area up area
854.2 18.00 41.90
34.3 0.70 1.80 42.0 1.00 2.00
514.0 11.00 24.60 29.5 0.60 1.50 104.7 2.30 5.20 117.1 2.60 6.00 100.0 2.20 5.00 252.0 5.50 12.0 27.5 0.60
631.1 13.50 1971.5 42.00 4684 100 100
Source: Urban Morphology, Chap V, Vtsakhapatnam Port Town, Dr. V.S. Knshna
Memorial Library, Andhra University, Visakhapatnam.
The growth of the port as well the industrial base of the city led to the
development of its hinterland and changes in the land use. Viaskhapatnam Development
Area and its vicinity today termed as Visakhapatnam Metropolitan Region (VMR.)
consists of Visakhapatnam city, Anakapalli, Vizainagaram, Gajuwaka, Bheemili towns
and 287 rural settlements comprising an area of 1721 Sq. Kms. The VMR is set for
increased economic activity due to the establishment of major industrial complexes in
the city and its environs. The main focus in the region is on Visakhapatnam Urban
Agglomeration which contains the major share of the region's population and economic
activities; including large number of large and medium industries like Hindustan
Shipyard, HPCL, HZL, Hindustan Polymers with their activities central around the port.
The steel Plant complex in the immediate vicinity of the city with its huge investment,
is the unique feature of this region. The Eastern Naval Command, Naval Dock Yard and
the Divisional Headquarters of S. E. Railway, Andhra University accompanied by
310
scores small scale industries, business, trade and commerce have contributed to the fast
growth of Visakhapatnam Urban Region.
7.9.2 Land-use in 1990
The topography and the transport network converging on the port area are the
major structuring elements in the evolution of land use pattern in the Visakhapatnam
urban area. The land under different land uses in the city is as follows :
Table 7.24
Land-use pattern in 1990
Description Extent in Extent in Percentage Percent to Hectares acres contiguous built
up area (11330 acres)
Residential 1803.92 4464.58 23.43 39.40
Commercial 105.09 259.69 1.36 2.29
Industrial 633.33 1565.03 8.23 13.81
Public and semi 528.06 1304.89 6.86 12.01
public utilities
Recreational 117.13 289.43 1.52 2.55
Transportation
a. Roads 387.66 957.94 5.03 8.45
b. Railways 110.94 249.43 1.32 2.20
c. Port 2934.39 7250.43 38.11 Port area not calculated
Agricultural 0.45 1.12 0.01
Hills/Forests 385.52 5.00 3.91
Water bodies 71.50 176.68 0.93 1.56
Vacant land 632.01 1562.75 8.21 13.82
Total area 19027.48 19027.48 100.00 100.00
Note: Bmlt-up area (11330 acres).excludmg Port Areas, Defense Areas,
Air Port area etc.
Source: Visakhapatnam City, Zonal Development Plan- Synopsis, VUDA Report, 1991.
311
The Municipal area covers 77 sq.kms. (19027.48 acres.) due to the deletion of
zone in Dolphins' nose village which has been merged into Gajuwaka Municipality.
The extent merged in Gajuwaka Municipality area is 329 Acs. (1.33 sq.kms.).
Considering port swamp areas, defense, N.A.D., Air port etc., the contiguous built-up
area is 11330 acres. This area includes all the 37 detailed town planning scheme areas
and the industrial belt. Vacant land of about 1563 acres is still available for
development, out of which about 798 has already been committed for development by
various agencies like VUDA, Railways, Port etc. The density of population in the city
ranges from 30 to 473 persons per acres. The lowest density areas are the port and
extended areas while the highest density is registered in the old city area. The gross
residential density of the city is 40 persons per acre while it is 66 persons per acre when
calculated for the contiguous built-up area.
7.9.3 Changes in the land use pattern since 1970
There have been distinctive changes in the land use pattern of Visakhapatnam
from 1970 to 1990. The total area almost doubled in absolute terms, from 4684 hectares
in 1970 to 7700 hectares in 1990. The landuse pattern has also undergone changes as is
evident from the Tables 7.23 and 7.24.The total built-up area has doubled over the time
and a substantial area which was lying vacant (1971 hectare) has been included within
the built-up area in 1990. Excepting agriculture, all other types of activities have grown
over the years. In absolute terms, spatial extent has increased under all types of landuse
as in 1990. As a ratio to total area in the Visakhapatnam city, the Port has the lion's
share (38 percent), followed by area occupied by residential houses (23 percent). Not
only has proportion of land under agriculture declined, forested areas have also
registered a decline over the last two decades. It is interesting to note that proportion of
land under roadways have registered only a marginal increase while percentage of land
under railways has in fact gone down in relation to others.
7.10 Changes in Occupational Structure
The occupational structure of the city underwent changes as is evident from
1961 and 1991 data. The participation rate/ratio has declined marginally by about 2
percent from 1961 to 1991. (The proportion of total workers as percentage of total
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population is termed as work participation rate). This is because as urbanisation grows,
the non-working population like students, those engaged in household activities, retired
persons, beggars etc., also grow-putting pressure on the working age group. This is
reflected in the declining participation rates in growing metropolises. Important changes
in the occupational structure ofVisakhapatnam are the following:
• With the rapid pace of urbanisation, ratio of cultivators, agricultural labourers,
mining and quarrying and livestock population has declined.
• Though household industry has lost importance, proportion of industrial workers
has remained static over the years.
•
•
Proportion of workers in other services also has not changed .
The ratio of construction workers and those engaged in trade and commerce have
increased substantially. With more residential and public buildings coming up,
construction workers have flocked to the city in huge numbers. As the port has
prospered and the city has grown, trade and commerce have become the lifeline of
the metropolis and is infact an outcome of the successful export and import
activities of the port. A port generates trade and commerce and is only natural that a
prospering port will encourage a trade 'boom'. Visakhapatnam follows the general
rule as is evident from the Table 7.25
Table 7.25
Changes of occupational structure 1961 to 1991
Occupation 1961 1971 1981 1991 Worker Worker Worker Worker
Cultivators 318 1093 4942 2579 (0.15 %)
Agrl. Labour (1.70 %) (4.93 %) (1.67 %) 1460 (0.67 %)
Live Stock 5605 (2.56 %)
Mining & 2784 458 quarrymg (4.35 %) (0.21 %) Household 1268 1272 8172 1232 industry (1.98 %) (1.27 %) (5.28 %) (0.56 %) Industrial 9587 15753 31809 workers (14.97 %) (15.71%) (14.54 %)
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Occupation 1961 1971 1981 1991 Worker Worker Worker Worker
Construction 2840 7483 16614
workers (4.45%) (7.46%) (7.60%)
Trade & 7211 13365 38309 commerce (11.27%) (13.33%) (17.52 %) Transport 14188 26169 143917 36611
(22.16%) (26.09%) (93.05%) (16.74%) Other services 25045 31298 86279
(39.12%) (31.21 %) (39.45%) Total 64016 100282 154668 218695 Participation (30.31 %) (27.59%) (26.03%) (28.99%) ratio
Note: Figures m bracket md1cate percentage of populatiOn m each category.
Source: Visakhapatnam City, Zonal Development Plan- Synopsis, VUDA Report,1991.
The industrialization over a period of time has changed the occupational
structure of the city from 1961 onwards significantly. The establishment of Steel Plant
complex near Visakhapatnam city may have also radically changed the occupation
structure of the Visakhapatnam city. The industrial working force of 31 ,809 are
employed in major and medium and small scale industries. There are 675 small scale
industrial units in the city and in its vicinity employing around 7000 workers. The city's
industrial employment is more than 32,000 with a capital investment ofRs. 7420 crores.
The Table 7.25 shows the changes in the occupational structure of the Visakhapatnam
city from 1961 to 1991.
a) Agriculture :
The agricultural activity marginally increased in 1971, because additional land was
included in the Municipal area which increased from 11.25 Sq. miles to 29.47 Sq. miles.
There was a decline of this sector between 1981 and 1991.
b) House Hold Industry:
The house hold industry registered a steep fall from 5.28 percent to 0.56 percent in
1991. This may be due to the classification of the workers adopted in 1981 and 1991 by
the Census Department. The industrial work force which registered 15.71 percent has
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come down to 14.54 percent, whereas by the absolute figure in 1971 it was 15753
while in 1991 the industrial work force 31809. The comparative analysis of 1981
figures cannot be presented in view of the 3 fold classification by the Census in 1981. It
can be seen that industrial work force has not increased in terms of the percentage share
in 1991.
c) Construction :
The share of construction workers was 4.45 percent in 1961,7.46 percent in 1971 and
it was 7.6 percent in 1991. No decline was registered in this sector.
d) Trade and Commerce :
The percentage share of this sector was 16.47 percent in 1991 while it was 13.33
percent in 1971 and 11.2 7 percent in 1961. There has been a gradual increase registered
in this sector.
e) Transport Sector:
In 1991 the transport sector employed 17.52 percent of total workers. When compared
to 1961, 1971 there has been a decline in the percentage share of transport sector
workers also.
f) Other Services :
Other services were significant in 1991 with 86,279 persons working in this sector
(39.45 percent). This sector has experienced a sharp increase since 1971. Though the
secondary sector i.e., manufacturing and construction workers shared 22.14 percent of
the workforce in the total economy (48423), other services have dominated the city's
functional pattern.
7.11 Simultaneous Growth of the Port and the City
The Visakhapatnam Port was declared as a major port in 1933. Since then,
traffic mainly bulk cargo increased manifold. The port activities and facilities too
increased over time like construction of berths, commissioning of ore handling plant in
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1965, commencement of night navigation in 1966. Commissioning of Outer harbour in
1976 and commissioning of multi-purpose berths recently (1995). As the Port grew,
Visakhapatnam town also grew along with the Port-both in terms of spatial extent and
population but of course not at the same pace. Population growth rate always had an
upward trend until the 1980s but in the last decade, the growth rate slowed down
compared to previous decades. One interesting feature to be noted is that during the
same decade (1980-90). Urban Agglomeration (UA) population growth rate was more
than the city's population growth rate. This was probably because of the huge land
acquisition scheme and the development of two major townships in the UA area. The
U A recorded population growth rate of 63 percent during 1971-81 and 7 5 percent
during the following decade (1981-91). See Table 7.26.
7.6 Conclusions
1. Visakhapatnam handles the widest range of cargo among all major ports of India
which makes it unique. First and foremost, it handles the widest range of cargo
among all major ports of India. Next,the sheer location of the Port - midway
between the two major ports of Calcutta- Haldia and Chennai on the east coast of
India. The vast mineral and industrial rich hinterland of the port stretching as far
as Madhya Pradesh and Uttar Pradesh in the north to Tamil Nadu in the south. In
addition, a fishing harbour and dry dock also functions. Today, Vishakhapatnan!
Port is preferred for trade especially in Eastern and South Eastern India.
2. Today, Visa~apatnam is characterised by the following features: Inner Harbour,
Outer Harbour, Mechanical Ore Handling Plant, Dry Dock, Fishing Harbour and
Slipway.
3. Based on this, the hinterland of Vishakhapatnam is fairly large. It covers
Bailadilla iron-ore mines in Madhya Pradesh as well as sources of thermal coal
and alumina in Orissa. Coking coal is imported through this port to serve
Visakhapatnam, Bhilai and Durgapur Steel Plants. However, the liquid cargo is
mostly for the refinery located in port area itself and for the areas close to the port
location. All the major cargo origins/destinations are well connected through
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Table No. 7.26
Growth of the Visakhapatnam Port and the City (1951-91)
Year Traffic in Traffic Million Growth
Density/ Sq. Population in Population Tonnes Rate
Km Lakhs Growth Rate
1950-51 1.14 1.08
1960-61 2.74 34.32 2.11
1970-71 8.73 35.50 3.55
1980-81 11.81 87.55 5.65
1990-91 19.42 2827 7.52 Source : Compiled from Bas1c Port Statistics and VUDA Report. NB: UA- Urabn Agglomeration
in%
68.50
93.70
60.40
33.00
Visakhapatnam City
Growth of Population No. of in Lakhs Household
City UA
1.08 1.08
2.11 2.11
3.55 3.63
5.65 6.04 I, 13,580
7.52 10.57 1,60,678
No. of Participation Residential Ratio
Houses
30.31
27.59
1,12,272 26.03
1,57,889 28.99
railways. In order to transport other break-bulk cargo like grains, fertiliser's etc.,
good road system exists within the port and outside through its link to NH-5.
4. Based on the broad classification of the extent of hinterland, the immediate and
primary hinterland for incoming and outgoing traffic for Visakhapatnam Port will
comprise of the State of Andhra Pradesh The districts of the states of Orissa,
Madhya Pradesh and Maharashtra will form the secondary and economic
hinterland.
5. Traditionally, Visakhapatnam port has been providing dedicated facilities for
various ores, fertiliser, fertiliser raw materials, petroleum crude, POL products etc.
Very recently, the port has started handling containers though of a modest volume.
A recent addition to this cargo is import of LPG. The dry bulk category consists of
iron-ore, coking coal, thermal coal, fertilisers, foodgrains and other bulk cargo like
manganese ore, alumina, limestone, scrap etc.
6. Due to rapid industrialisation and economic growth in the hinterland of the port
the developmental activity undertaken by the Port Trust, particularly during the
last 10 years to meet the increased traffic, like extra berths, development of
stockyards, connected railway infrastructure- all are efforts to work in unison for
movement of smooth traffic flow.
7. Traffic may be diverted if any port comes up as a competitor in the hinterland of
Visakhapatnam port. In case of Visakhapatnam port, Gangavaram in the south and
Dhamra (Orissa) in the north might pose such a threat in future. Kakinada, the
state port is, however, in no way a competitor for Visakhapatnam's cargo traffic.
Similar is the case with Krishnapatnam. Since Gangavaram and Dhamra are
'green field sites' today, their influence has not been taken into consideration for
traffic projection. Moreover, change in international scenario may affect cargo
trade in certain commodities.
8. Capacity-wise Visakhapatnam is both saturated and over-utilized. Action has
already been taken for construction of 4 berths in the Inner Harbour and 2 berths
in the Outer Harbours. No further extension of berth is possible in future as both
waterfront and back-up land to install mechanised facility is limited. To optimise
the existing port capacity, 2 grab loaders and higher capacity cranes have been
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sanctioned, which would increase cargo handling capacity by another 5 to 6
million tonnes. In an attempt to acquire more water front area, the port authority
decided to shift the fishing harbour from its present location to Bheemunipatnam.
Though the idea was good, but its practical application was difficult, as
implementing the proposal was not an easy one. Besides, dealing with the
resistance put up by the local fishermen, the port had the responsibility to
rehabilitate them, which is not a simple task.
9. Perhaps the single most important problem faced at Visakhapatnam port today is
that of port congestion. The port facilities are not adequate to handle the
unexpected increase in cargo traffic volume, especially in the last 10 years. The
problem is expected to grow more acute in future as more industrial activity and
increase in population in the hinterland is expected, which would mean more
cargo traffic for Visakhapatnam port to handle. The port has certain limitations
like channel and draft restriction, scarcity of waterfront, etc. Keeping all these in
mind, commensurate with increased traffic, port capacity has to be augmented.
10. Despite the problem of waiting vessels, a port user prefers Visakhapatnam port
among all the ports on the East Coast. The reasons for the choice of
Visakhapatnam are that once at berth, cargo loading/unloading takes place very
fast reducing the overall TRT. Since the ultimate aim of a port user is to save time
and money, by calling at Visakhapatnam, he is comparatively better off than any
other East Coast port. Other possible choices are ruled out like Chennai which is
congested, Ennore- is only a green field site today, Paradip -once completes its
coal loading terminal may ease the pressure of thermal coal handling at
Visakhapatnam. Moreover, Visakhapatnam has dedicated bulk cargo like coking
coal, POL, iron-ore, fertiliser, etc. that hardly can move away. In addition, it is a
peaceful port with no labour trouble. Visakhapatnam as a frequent port of call on
the east coast is therefore justified.
11. Visakhapatnam has no specialised container terminal and has very little container
traffic. It is predominantly a bulk port and the container traffic generated in the
hinterland (like tobacco) passes through the Chennai port which has specialised
container-handling facility. Though the port has plans to install modern container
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handling facility to facilitate better handling of container traffic, nothing has come
up as yet. Since the earnings from container traffic are comparatively low as
compared to bulk, the port is not too keen to invest substantially in developing a
full-fledged container terminal.
12. The scenario at Visakhapatnam Port in the context of privatisation may be
different. The scope for large induction of private investment particularly for
building berths does not exist since the Port will be able to fund the feasible
expansion of its area. However, in case of Container Berths and equipment,
private participation may arise. Opening one or two or more satellite harbours, in a
phased manner and extending the present Port limits, depending on the
requirements from time to time, will be the right solution to meet the demand for
Port services from the anticipated cargo throughput.
13. Gangavaram port is still in the conception stage as there has been unnecessary
shunting between the state and the centre as to the status of the port. Political
indecision is causing unnecessary delay. Gangavaram port is expected to handle
all the dirty and dusty cargo of Visakhapatnam port. This is of utmost importance
as the city ofVisakhapatnam is suffering from extreme air pollution.
14. In case of the present Port, the scope for large induction of private investment
particularly for building berths may not be there since the Port will be able to fund
the feasible expansion of the Port. However, in case of Container Berths and
equipment, private participation may arise. The prominent feature may be leasing
the facilities for short periods rather than the BOT concept. As a result, the
dominance of the Port as an owner and operator is expected to continue though in
a modified and enlightened form. However, the position may be entirely different
in opening the new outlets as a part of its expansion programme. In this case, the
Port may contend with building the basic facilities leaving the construction of
berths, provision of cargo transfer system etc., and their operation to the private
investor for a longer period (say 25 to 30 years) on BOT or similar methods.
15. As has been discussed earlier, Vishakhapatnam town grew along with the port. As
traffic increased over time, more industries were set up in the vicinity of the port
which further led to the development of ancillary industries. Not all found place
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within city limits. Population grew around these industrial nodes and
Vishakhapatnam became a bustling port city. Without hesitation, it may be safely
concluded that the city drew sustenance from the expanding port and similarly the
port prospered because of a growing hinterland and the city.
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