Coastal Trade and Trade of Uttar Pradesh11th February 2020
The transporting of goods or passengers by a ship registered in one country that takes place solely from port to port of another country (along the coast) and usually governed by that country’s national law. Laws granting permission to conduct coastal trade are generally restrictive in every country. Also called cabotage.
India has a long coastline, spanning 7516.6 kilometres, forming one of the biggest peninsulas in the world. It is serviced by 13 major ports (12 government and 1 corporate) and 187 notified minor and intermediate ports. These ports account for nearly 90% (by volume) of India’s international trade. Yet, coastal shipping accounts for only 6 per cent of the country’s total domestic freight (on a tonne-km basis).
The explosive economic growth as seen in India over the past decade has led to congested roads and over burned railway network. India has 4 million kms of roads, accounting for nearly 60% of the domestic traffic of which the National Highways’, which are 1.7% of the network, carry as much as 40% of the road freight. The Indian Railway network, one of the largest in the world is overburdened and operating at over 100% utilization. While there are numerous projects for up gradation are under way. These projects are unlikely to keep pace and meet the future demand
Coastal shipping / short sea shipping – is an alternate mode for transportation that can help address the challenges faced through use of road and rail. World over use of sea/waterways for transportation is a much more prevalent mode. From the chart below it is apparent that India as a very significant dependence on road to move cargo. In the case of China, waterways have a larger share than that of road. There are many inherent advantages of this mode of transportation. Coastal shipping or use of water as a mode of transportation is much safer, more economical and less polluting. It is clearly evident from the numbers represented in the chart. Waterways are 50% cheaper than road and nearly 30% cheaper than rail. The coastal leg, apart from being more fuel efficient, can also carry larger parcel sizes and provides a great opportunity for consolidation of loads
- Costs – Very competitive compared to road
- Speed – Quick compared to road (after a volume of a couple of container loads) if city is near the coast
- Customs formalities – No need to worry about state borders and state permits, but process customs formalities at destination port etc. Simpler than EXIM cargo.
- India has a rule akin to Jones Act a.k.a Merchant Marine Act of 1920 (which limits competition along coastal shipping) and flag restrictions (ownership domicile)
Trade of Uttar Pradesh