Ports - another sector moving from deficit to surplus

Ports is another sector that has transformed significantly in the last two decades. And another sector where India has moved from supply being the bottleneck to demand not being there. And the Private sector again has had a major role to play.

One of the biggest changes in the Ports sector is the rise of the Private sector. In the last two decades, commodity traffic at India’s ports has increased by 3.4x or 6.3% Cagr. However, there is a significant divergence in growth between the major ports and the non-major ports. The major ports are the ports managed by the Port Trust of India (essentially government-owned) while the non-major ports are the ports regulated by the respective state maritime board – these are largely private ports. The commodity traffic at the major ports has grown by 4.5% Cagr in the last two decades while that at the non-major ports has grown by almost 10% Cagr. Consequently, the share of non-major ports has almost doubled during this period – from 24% in 2001 to 46% in 2021. The two largest ports in the country – Mundra Port and the Sikka Port – belong to the private sector.

The other big transformation in the port sector is the increase in capacity. Total capacity at India’s ports has expanded substantially faster than the traffic growth. In the 12 major ports for example, while traffic rose 4.5% Cagr, capacity has grown at almost twice the rate or 8.7% Cagr. Consequently, the major ports which used to operate at over 100% in the 1990s, are operating at less than 50% capacity currently. The non-major ports too have expanded capacity significantly (the largest Indian port – Mundra – was set up itself in the late 1990s) and operated at less than 60% utilisation in FY21.

A consequence of expanded capacity has been productivity improvement. Thus, for example, the average time spent by ships in the major ports has fallen from a peak of over 5 days in 2011 to just over 2 days in the last two years. This is the lowest in over two decades.