PSA, a leading global player in port operations, is based out of Singapore which has been ranked the maritime capital of the world since 2015. PSA has port presence across Asia, Europe and both American continents. The Indian subsidiary, PSA India Pte, has operations across all four corners of the country.
Mike Formoso, the managing director of the Indian arm, briefly explains the company’s scale of operations and their views on the current sector position in an interview with Pankaj Joshi.
How has PSA progressed in Indian operations and how is it placed in the Indian market?
This year, PSA celebrates its 20th year in India. Since our first investment in Tuticorin in 1998, we are now well placed in key consumption and cargo production centres across the country – Navi Mumbai in the West, Tuticorin in the South, Chennai in the East and Kolkata in the Northeast. In 2017, PSA handled about 14 per cent of India’s total container port volume. Our consolidated capacity in India will reach approximately 8.0 million twenty-foot equivalent units (TEUs) when our Bharat Mumbai Container Terminals (BMCT) Phase 2 is completed in 2022, making it India’s largest container terminal with an annual capacity of 4.8 million TEUs. The landmark project is also an important addition to PSA’s current portfolio of ports across the world.
From a sector perspective, what are the areas where India can raise their game, as well as any regulatory changes that could facilitate growth?
Whilst India is well connected by its marine ports to the rest of the world, the country’s internal connectivity, especially by rail freight, needs significant improvement. In Mumbai for example, the government’s widely touted Dedicated Freight Corridor (DFC) needs to be fully completed and connected to Jawaharlal Nehru Port. This will enhance the transit efficiency and reduce the overall logistics cost of moving a container to the National Central Region (NCR) on the DFC. The train capacities increase from 90 TEU to 360 TEU and transit times to NCR will be cut, from three-four days to one-one and half days. BMCT’s railyard is already fully equipped to handle DFC trains.
The DFC is also a key component of the Delhi Mumbai Industrial Corridor (DMIC) for which BMCT will be the maritime gateway. Until the DFC is completed, issues of road congestion, delays and the relatively high cost of domestic transportation will continue to hinder the trade and cargo growth potential in this sector. Tariff regulation continues to be a major issue. We believe that the earlier rationale for regulation is no longer valid: deregulation should take place and market forces be allowed to work. This argument is especially relevant given the non-level playing field existing in a number of regions.
Terminals can today have an environment where one is subjected to fixed container and vessel tariffs set by the government, whilst another is free to set its own tariffs. Though we are aware of initiatives under discussion, as of today the inequality between private terminals and public terminals remains and so continues to result in an uneven playing field which ultimately creates inefficiencies. The relaxation of cabotage regulations in June 2018 was certainly a very welcome move and one that will stimulate both container terminal volumes in India as well as the coastal trade. We are already seeing volumes previously transhipped outside India, now being handled at Indian terminals, and are working towards developing transhipment volumes on both the East and West coasts.
Where does PSA see Indian operations in a strategic sense? What would be the expansion activities in the coming years?
In India, we intend to play a key role in ‘Sagarmala’, India’s port-focused development programme to enhance port capacity and connectivity, reduce the cost of logistics and promote trade in the country. In addition to our Phase 2 expansion in BMCT, we will continue to invest in the areas of cargo solutions, technology and innovation, operational capabilities, and most importantly, our people.We see opportunities to extend our service offerings far beyond marine terminal operations and are actively developing solutions for cargo owners as well as evaluating entries into suitable landside logistics opportunities. In locations where we have a presence, we also seek to be a positive influence on the local community through our Corporate Social Responsibility programmes and play our role in supporting the rapid development of India’s people, trade and economy.