Coastal Shipping (2)

 

Cost Of Ships For The Coast:

 

Looking at the Indian coastal landscape of coastal shipping, the most defining asset involved is the ship – assuming other elements like conducive port facilities, regulatory regimes, connectivity, tax laws, & fuel costs as clear givens. The cost of the ships or trucks (including usage cost of the paved roads) or railways (including the usage costs of the laid tracks) needs to be substantially low to justify lower cost of usage or hire. In the recent past, the hire for ships was abnormally high. Today, it is low. Such fluctuations shall shake & destabilize our economy, assuming coastal shipping carried domestic volumes as high as the railways. Imagine what would happen if railways increase freight by 50% across the board. There could be civil unrest! Therefore, we need the value of ships not only to be the lowest possible, but also relatively stable.

 

The reasons of high cost of our coastal ships – (1) IMO, STCW, IACS & other International regulations are being perceived & implemented as inviolably sacrosanct (2) Complex Bureaucratic Processes (3) Unionism (4) Unimaginative Taxations

 

IMO, STCW, IACS, & the Hague Rules are phrased & designed by the ship-owning countries of the world – Western Europe, USA, & Japan - an obvious attempt of self protection. Their ship-owning interests are not necessarily congruent with our nation's interests. Indian ship owning is infantile in contrast. Asking Indian Coastal Ships to comply with such rules (with hardly any substantive modifications) is like asking a child to wear his father's shoes. The child cannot walk. We need an affordable coastal shipping to support the economy of a country of more than a billion. Majority of this billion, live in dehumanizing poverty. Therefore, this country needs its own desi rules or at least the international rules need indigenization for it to be practical. I know, of one small ship owner, who converted his ship to home flag. He had his ship stuck in the repair yard for nearly three months. Heaps of correspondences, tons of steel, loads of hire losses, and innumerable telephone calls of person-hours, were sacrificed – not to mention greasing a few palms too as we call it under the table. The poor guy was pushed to near-bankruptcy, for daring to flag in. Can we not be less wasteful with out meager resources? In a coastal trade, where the vessel is not even 20 miles from the coast any time, do we have to be such a stickler for international rules! The coastal vessel is no 'Titanic' in northern Atlantic with surreptitious icebergs around! In extreme event, our Coast Guard could reach it in hours. If we can decolonize our heads, we could make our coastal ships more affordable – simplifying rules and making them practical. Flag rules & IRS – their actions are further demonized by the lethargic Dry Docks & work shops (Refer to Unionism). Delays & greasing costs due to bureaucratic procedures, duties on importation of spares and multiple taxations at various checkpoints, have no less a role to play in this drama. I know that the terrors of Unionism & Customs rules shall crumble in the end, when there is more awareness in the society – until then we need to align our maritime rules to our realities, not to the realities of the west. Sooner the better.

 

If STCW is devilish due its hidden agenda, our Unions are no less. It is easier to kill the devil from the outside, but the devil within is more painstaking to deal with. The answer lies in contracting out navigation & pilotage, maintenance, and cargo operations of coastal ships to specialized private companies. Doing away with STCW is like killing another form of License Raj: imported after independence. In fact, any graduate or engineer with only 3 months on-board experience should be allowed to do maintenance, operations, & assistance to navigation. Navigation is done on a GPS & a marine engine is not so different from any combustion engine. A private pilot could bring the coastal vessel from the berth in Kandla & hand over the vessel alongside in Nhava Sheva and from Nhava Sheva he could bring another vessel back again – as an example. A few crews & engineers are needed to operate & maintain during these short voyages. The specialized private companies shall bring in high standards of vessel operations, safety & maintenance at a fraction of the present cost.

 

I do not subscribe to complete waiver of duties and taxes as a means to help the industry grow, as suggested by many. However, the duties & taxes need to be rational, so as not to kill the market. If the taxes were kept small & procedures simple, the businesses would thrive – driving up the volume of tax collections.

 

Last but not the least – when there is a global meltdown pushing the asset values of ships to its historical lows, the government should encourage buying as many ships as the Indian Coast would need in next ten years. These cheap ships, if also run most economically as suggested above, shall add a few numbers to our national GDP and force the Indian railways excel further.

 

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