BACKGROUND OF THE STUDY:

Sea Ports are planned to serve the country’s strategic needs on one hand and international trade on the other. They are a critical and inextricable part of the country’s economic and social growth process. The importance of efficient ports for the growth of the foreign trade stems from the chain linkages between production, performance of individual ports and overseas transportation leading to exports. Ports alone handle over 80% of the country’s merchandise trade. Recent trends in international trade have led to the increasing importance of ports as prime nodes in transportation (Haralambides et al, 2001). Standing at the interface of sea and inland transportation, ports play a pivotal role in the transportation process. Sea Trade started on the Chennai Coast in year 1639. Initial piers were built in 1861, but the sea storms made them inoperative. Therefore an artificial harbour was built in 1881 and port operations were started. In first couple of years port handled 3 lakh tones of cargo through 600 ships. The Port was an artificial harbor and therefore faced problem of recurring cyclones and accumulation of sand in the port basin. Sir Francis Spring, a visionary drafted the first plan to develop the port and to overcome the natural problems faced by the port. The entrance of port was shifted from eastern side to North eastern side. By 1970 port was equipped with four quays, transit sheds, warehouses, and a marshalling yard. Chennai Port is 2^nd largest Port in India in terms of cargo handled and is the gateway port for the eastern coast and handled 52.54 million tones of cargo in year 2014-15. The quay length of Port is 5.5 k.m. It has three docks, with 24 berths and a draft ranging from 12 metres to 16 metres and has became a hub port for containers, cars and project cargo on the East Coast. The Port plans to develop the four Containers, Cars, Cruise and Clean Cargo. Chennai Port premiered the handling of Containers Cargo Business in 1983. The Port itself has a multitude of facilities for handling different types of cargo. Chennai Port is one of the preferred ports due to its location in close proximity to various industries and servicing the hinterland of Tamil Nadu, Pondicherry, South Andhra Pradesh and ports of Karnataka. It concentrates on the various cargoes such as Automobiles, Coal, fertilisers, coal, ores oil and project cargo. The Port itself is well equipped for handling the variety of cargo with facilities available in terms of oil terminals, ore terminals, RORO terminals and container terminals. There are further major developments planned for Chennai Port that envisages development of an additional multiple cargo terminals and deepening of the draft at Chennai Port. The Chennai Port is currently a major contributor to the economy of Tamil Nadu port and further development of Chennai Port will ensure even stronger contribution to economic growth of Tamil Nadu.

OBJECTIVES OF THE STUDY:

The study has three objectives. They are as follows.

i) To measures the growth of container traffic in TEU (Twenty Foot Equivalent Unit) during the selected time period 1994-95 to 2014-15.

ii) To find out the impact of container traffic handled by Chennai port on the development of the state of Tamil Nadu.

iii) SWOT analysis of the Chennai Port.

LITERATURE REVIEW FOR THE STUDY:

There are many studies in the areas of container port performance and economic growth, but the selected relevant literatures are explored for the study. Li and Li (2008)¹ argued in their study that infrastructure investment is very important to boost national economic growth and prove this with the results of infrastructure investment and the GDP in China from 1997 to 2006. De Langen (2004)² stated that ports can be considered as important clusters of economic activities which include value added logistics activities. . Love and Chandra (2004)³suggested that trade and economic growth exhibits a feedback relationship. Lim (1996)⁴ stated that for ensuring fast connection, gateway ports which employ single or common user terminal will have advantage over there that require interterminals transfers. Martin and Rogers (1995)⁵argue that local industries may be crowded out by international competition, so that economic development may be enhanced by temporarily worsening transport costs. Goss (1990)⁶ stated that the transport economics literature, however, has stressed that ports drive economic development because they increase competition through enlargement of the market areas of firms, thereby reducing prices for consumers. Clark et al. (2004)⁷ stated that port efficiency has been found to be of key importance in determining transport costs and, hence, international trade among countries. De (2003)⁸, De and Ghosh (2002)⁹, Ghosh and De (2000)¹⁰ concluded in their studies that the importance of efficient ports for the growth of the foreign sector stems from the chain linkages between production, performance of individual ports and overseas transportation leading to exports. Mentolio and Sole-Olle (2009)¹¹ concluded in their study that public investments in transport infrastructure (particular-roads) positively affect productivity of a region. Chen (2008)¹² concluded in their study that Guangzhau Port and other small and medium ports in China should develop policies to adapt the ever growing container transport demand and economic growth of the surrounding areas. Zou, Zhang, Zhuang and Song (2008)¹³ analyzed data from China and found that higher economic growth level comes to a greater extent from better transport infrastructure and that public investment on road construction in poor areas is crucial to growth and poverty alleviation. Mamatzakis (2008)¹⁴ provided evidence that justifies recent scientific trends in infrastructure investment, as it is a crucial component of economic performance in Greece. The estimations show that public infrastructure is a cost saving input in most manufacturing industries, as it enhances their productivity growth. Seethepalli, Baramati, Veredas (2008)¹⁵ concluded that infrastructure is important for promoting growth. Wilmsmeier et al. (2006)¹⁶, Sayreh and Lewarn (2006)¹⁷ concluded in his study that port efficiency’s impact on gateway logistic is positive and significant. Kuroda (2006)¹⁸ concluded in his study that physical connectivity through cross-border infrastructure development in crucial for enhancing the regional cooperation and economic integration. Fujita and Mori (1996)¹⁹ proposed a model based on new economic geography assumptions and argue that the construction of a port in a relatively backward region may deteriorate local economic conditions. Martin and Rogers (1995)²⁰ argue that local industries may be crowded out by international competition, so that economic development may be enhanced by temporarily worsening transport costs. Michaely (1977)²¹ found a strong positive correlation between economic growth and international trade. Balassa (1978)²² applied simple regression analysis to a sample of 10 countries and found trade export volume were positively related to a country’s rate of economic growth. Feder (1983)²³ and Ram (1985)²⁴ have analysed the export led economic growth hypothesis where they argued that exports are likely to alleviate foreign exchange constraints and thereby facilitate importation of better technologies and production methods. Grossman (1991) and Helpman (1991)²⁵ said in their study that open trade regimes go hand in hand with good investment climate, technology externalities and learning effects and leads to economic development of a country. Ahmad and Harnhirun (1996)²⁶ examined causality between exports and economic growth for five countries of the Association of Southeast Asian Nations (ASEAN). Dutt and Ghosh (1996)²⁷ studied causality between exports and economic growth for a relatively large sample of countries using the Error Correction Model (ECM) for the countries in which they found Co-integration. After that Vector Error Correction (VEC) model was estimated, and tests for Granger Causality were performed. Love and Chandra (2004)²⁸ suggested that trade and economic growth exhibits a feedback relationship.

The interrelated relationship between cargo/container traffic (volume of trade) and economic growth has always been considered as an important topic for discussion since the era of import liberalization policies to the era of openness and economic growth; however the empirical work on the relationship is relatively limited, especially in Indian context.

METHODOLOGY OF THE STUDY:

The study is based on empirical data and the basic purpose is to examine the flow pattern of container traffic in TEU (Twenty Foot Equivalent Unit) during the selected time period 1994-95 to 2014-15 handled by the Chennai ports. It includes both exports and imports. The data have been collected from ‘Major Ports of India - A Profile: 2013-2014’, published by Indian Port Association, New Delhi; Operational Detail published by ‘Indian Ports Association’, 24^th Anniversary special publication named ‘Surging Ahead Towards Greater Heights’ by Jawaharlal Nehru Port Trust, ‘Administration report’ and ‘Emerging Hub port of the Indian Sub Continent’, by Port of Chennai, websites of Chennai Port, Shipping Corporation of India and World Bank. Statistical packages of SPSS and EVIEWS are used for data analysis.

a. Linear Trend Analysis

For measuring the flow pattern of container traffic in TEU (Twenty Foot Equivalent Unit) during the selected time period 1994-95 to 2014-15 handled by the Chennai ports, the study incorporates the Linear Time Trend Analysis as follows.

CONTRA_Chennai= α + β T----------------------------------------------------------------------------(1)

Where,

CONTRA_Chennaiis the container traffic in TEU (Twenty Foot Equivalent Unit) during the selected time period 1994-95 to 2014-15 handled by the Chennai ports.

α and β are the intercept and slope coefficient.

T is the time variable in years.

b. Regression Analysis

GDP_TN= α₁ + β₁ CONTRA_Chennai ---------------------------------------------------------------------(2)

Here, GDP_TN,the gross domestic product of Tamil Nadu in crore rupees is the dependent variable and CONTRA_Chennai,the container traffic in TEU (Twenty Foot Equivalent Unit) is the explanatory variable.

Where, α₁ and β₁ are the intercept and slope coefficient of the regression equation.

STATISTICAL ANALYSIS AND RESULTS DISCUSSIONS:

Result of Linear Trend Analysis

The trend means a sustained upward or downward movement of the dependent variables. If the slope coefficient of the trend equation is positive then there is an upward trend in the dependent variable and in case of negative slope coefficient, there is a downward trend of the dependent variable. The time (T) is independent variable. The container traffic in TEU (Twenty Foot Equivalent Unit) during the selected time period 1994-95 to 2014-15 handled by the Chennai ports (CONTRA_Chennai) is explanatory variable.

CONTRA_Chennai= 0.69 + 0.84 T----------------------------------------------------------------------------(3)

SE = 0.2524; t statistic = 3.3280

p value = 0.00; level of significance 1 %

According to the estimated values of slope coefficient, it is found that the container traffic in TEU (Twenty Foot Equivalent Unit) during the selected time period 1994-95 to 2014-15 handled by the Chennai ports (CONTRA_Chennai) has increased. The estimated coefficient is significant at 1 % level (two tailed test) means the result is highly significant.

Result of regression analysis:

The estimated multiple regression equation is as follows.

GDP_TN= 0.8823 + 0.75 CONTRA_Chennai ----------------------------------------------------------------------(4)

Dependent Variable: GDP_TN
Method: Least Squares
Variable	Coefficient	Std. Error	t-Statistic	Prob.
C	0.8823	0.3214	2.7451	0.0000
CONTRA_Chennai	0.7539	0.2513	3.0000	0.000
R-squared	0.5101	Durbin-Watson stat		1.9872
Adjusted R-squared	0.5002	F-statistic		5.8734
S.E. of regression	13.4356	Prob(F-statistic)		0.000000

The estimated coefficient of explanatory variable of CONTRA_Chennai is individually highly significant, as its t-statistics is very high and corresponding p value is very small [significant at 1 % level (two tail test)]. The sign of the coefficient is positive, which indicates the supporting and constructive role of container traffic in TEU (Twenty Foot Equivalent Unit) during the selected time period 1994-95 to 2014-15 handled by the Chennai ports to the gross domestic product of the state Tamil Nadu. The value of R-squared is 0.51, which means that the explanatory variable is able to explain the dependent variable near about 51 %. The Durbin-Watson Statistic is 1.99, which indicates that there is no autocorrelation in the data set.

SORT Analysis of Chennai Port:

Strengths of the Chennai Port:

· Chennai Port is considered as one of the preferred Ports for trade, due to its location, proximity to industries, competitive pricing, safe and secure operations.

· There is 7.0 km of entrance channel with the depth of outer channel being 19.2 m and that of the inner channel being 18.6 m. The Port has a total land area of 240 ha (approx.).

· The planned terminal capacity is 1.50 Million TEUs. PSA International is one of the leading global port groups.

· Dedicated Elevated Expressway from Chennai Port to Maduravoyal upto NH4 has been approved by the Government to enhance the hinterland connectivity.

· Development of Ro-Ro Terminal and a Multi level car parking facility with a capacity of 5000 cars. Chennai Mega Container Terminal with a continuous quay length of 2 km with 18-22m side along draft.

· Capable of handling ultra large container ships carrying over 15000 TEU’s.

· The break water extension from existing outer arm will be utilized to develop deep draft oil berth for handling VLCCs.

· Navigation Channel (Entrance Channel)

Soil: Predominantly sandy and silt; Length of Channel: About 7 kilometres; Depth of Inner Channel: 18.6m at chart datum; Depth of Outer Channel: 19.2m at chart datum; Swell Allowance: 3.00 Metres;

Width of Channel: The width of channel gradually increases from 244m to 410m at the bent portion and then maintains a constant width of 305m.

· Total Length of Breakwater

Inner Harbour:- Eastern Breakwater: 1325m; Northern Breakwater: 575m;

Outer Harbour:- Eastern Breakwater: 590m; Northern Breakwater: 460m;

Outer Arm: 1000m; Upper Pitch Revetment: 950m; Port Entrances:- Entrance in Bharathi Dock: 350m; Entrance in Dr. Ambedkar Dock: 125m; Storage Facilities:- Transit Shed: 7 Nos. – 30,693 sq.mts; Warehouse: 5 Nos. -30,138 sq.mts. Container Freight Station: 3 Nos. - 40,644 sq.mts; Open space: 3,84,611 sq.mts; Container parking Yard: 2,50,600 sq.mts.

· Oil Terminals (BD1 & BD3)

First Oil berth at Bharathi Dock-I commissioned in 1972 can handle tankers up to 100,000 DWT; Second Oil Berth at Bharathi Dock-III commissioned in 1986 can handle tankers up to 140,000 DWT; Maximum LOA of Tankers Berthed at BD -I & BD - III - 280.4m (920 ft); Minimum LOA of the ship so far Berthed at BD - I - 108.15m; Minimum LOA of the ships berthed at BD - III - 149M. or 488 ft; Capacity - 13 Million Tonnes Per Annum.

· Modernisation of Chennai Port

Stage I work: Realigning of rail and road network inside the Harbour at an estimated cost of'40 crores was taken up and work completed; Stage II works will be taken up after lying of 3rd and 4th railway line by Southern Railway which the process of Transfer of land is under progress; Creation of Additional Storage Open Area by Reclamation.

· The work was awarded on 26.07.12, and the physical progress of Maintenance Dredging is 100% & Capital Dredging is 71%.

Weaknesses of the Chennai Port:

· Congested approach road.

· Traffic evacuation not allowed during the day time.

· Restricted land availability.

· Higher tariffs for use of plants & equipments.

· Sub-optimal usage of rail connectivity.

· Exposure to dust & saline environment, requiring higher maintenance expense.

· Perceived need for improvement in service levels to retain existing clients, avoid them being lost to other ports and for developing new ones.

· Efficiencies lower and tariffs levels higher than those in international ports in the region like Singapore, Colombo, Hong Kong and Dubai.

· Ageing workforce.

· Need for additional environment / pollution management.

· Surplus labour of about 600 in different departments.

· Restriction on investment of surplus fund to government securities and nationalized banks fixed deposits.

· High turnover among skilled staff in marine department like pilots and marine engineers.

· Inadequate manpower to operate the dredgers round the clock resulting in lower utilization of dredgers and higher fixed costs thereby increasing overall cost of dredging.

· Port does not have fully computerized management accounting system.

· Lack of systematic marketing and Customer Relationship Management skills / systems.

Opportunities of the Chennai Port:

· The Port serves the geographical regions of Tamil Nadu, Pondicherry, South Andhra Pradesh and parts of Karnataka and has now emerged as a hub on the east coast of India.

· Major cargo being handled at the Port are Containers, Automobiles Exports, POL, Iron Ore, Coal, Fertilizers (products and raw materials), and general cargo items.

· The Chennai port is one among the major ports having Terminal Shunting Yard and running their own Railway operations inside the harbour on the East Coast.

· To cater to the latest generation of vessels and to exploit the steep increase in containerized cargo the port is planning to welcome the future with a Mega Container Terminal, capable of handling 5 Million TEUs.

· Positive economic environment in the years to come with an anticipated 7% GDP growth rate, stable inflation and foreign exchange rates and rising international trade.

· Increasing containerisation and good forecasted demand with strong business potential.

· Strong forecasted growth in automobile exports.

· Increased ship sizes.

· Increasing automation.

· Possibility to tap other sources of revenue:

· Ship Repair facilities and services to Ship Owners.

· Engineering Consultancy Services to Other Ports.

· Provision of Marine Services/BOT services to other Ports.

· Management & Technical consultancy & training services to other smaller ports.

· JV or strategic investment with minor / intermediate ports.

· Potential to attract main line vessels.

· Better road connectivity after construction of proposed road projects.

· To facilitate cruise tourism by construction of a cruise terminal and marina.

· Increased focus on private-public-partnerships and the landlord model of port operations.

Threats of the Chennai Port:

· Threats analyse the competitiveness required in the light of developing neighbouring ports. (Ennore, Karaikal, Tuticorin, Katupalli, Krishnapatnam, Kakinada, and Visakhapatnam Ports).

· The elevated four lane link road from Chennai Port to Maduravoyal is under court litigation.

· Competition from major ports especially from Ennore and Tuticorin port.

· Competition from minor ports mainly from Krishnapatnam.

· Expected ban on export of minerals.

· Loss of lucrative cargo like coal & iron ore.

· Increase in awareness among common public about environmental issues.

· There are too many gates providing access to port, increasing vulnerability and efforts to maintain security.

· High possibility of reduction in government funding.

CONCLUSION:

The container traffic flow in TEU (Twenty Foot Equivalent Unit) during the time period 1994-95 to 2014-15 handled by the Chennai ports (CONTRA_Chennai) has increased significantly. The result of regression equation established the positive impact of Chennai port’s container traffic flow on state economic growth during the selected time period. The value of R-squared (0.51) indicates that the explanatory variable is able to explain the dependent variable near about 51 %. The Durbin-Watson Statistic (1.99) indicates that there is no autocorrelation in the data set. The main strengths of Chennai Port is due to proximity to large number of industries including automobiles coal cargo, fertilizers, ores & oil and project cargo and business opportunity provided by the large hinterland. However in terms of development of Port it has weakness in its lower efficiency compared to the geographical parts in the vicinity such as Singapore, Dubai and Colombo. Also road & rail congestion and higher tariffs’ charged by the port affects the Business of both exporters & importers in the region. The future development plans of the port and removal of problem areas shall lead to an even stronger role in contribution of Chennai Port to economic development of Tamil Nadu.

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Received on 10.10.2015 Accepted on 10.12.2015

Int. J. Tech. 5(2): July-Dec., 2015; Page 263-268

DOI: 10.5958/2231-3915.2015.00033.4