A

A REPORT WRITING ON

COASTAL SHIPPING – AN ALTERNATIVE TO SOLVE CHALLENGES

IN DOMESTIC TRANSPORTATION IN INDIA

In Partial Fulfilment of Master of Business

Administration Degree Program

Submitted By

Mr. BIBIN M MUHAMMED

(MITU21MBPS0002)

Submitted to

MIT College of Management

(MITCOM) 2021-23
 ACKNOWLEDGEMENT

A Seminar and Report Writing on “(COASTAL SHIPPING)” has been a

fruit of hard work and support of many individuals.

It is indeed a great pleasure to express our gratitude to all who have been
instrumental in making our training a rich experience.

I would like to thank our institute MIT College of Management

(MITCOM), our Dean Management and Director ICT, Prof Dr Sunita
M Karad for giving me a platform to work on this project.

Sincere gratitude to my mentor Dr. Prabhat Kumar for his constant support and
guidance.

Mr.BIBIN
MUHAMMED
(MITU21MBPS0
008) MBA– PSM
(2021-23)
 DECLARATION BY THE STUDENT

I, hereby declare that the project work titled “(COASTAL SHIPPING)”,

which has been submitted to MIT ADT University of Pune, is an original work

of the undersigned and not has been reproduced from any other source.

Mr. BIBIN MUHAMMED

(MITU21MBPS0008)
MBA–PSM (2021-23)
 Certificate

This is to certify that Mr. BIBIN MUHAMMED(MITU21MBPS0002) has submitted a

Report on “COASTAL SHIPPING” to MIT-ADT University, Pune for the partial fulfillment
Master in Business Administration (M.B.A.).
I further certify that to the best of my knowledge and belief, the
matter presented in this project has not been submitted to any other
Degree or
Diploma course.

Dr. Prabhat Kumar Dr. Vijaya Gondhane

Internal Guide Head ofDepartment

External Examiner
 Table of Contents

 Introduction

 Coastal of the shipping

 Review of literature

 Statement of problem

 Objectives of study

 Result analysis

 Finding and suggestions

 conclusion
 Introduction

Transportation is the major component of logistics segment. Transportation cost consists

around 56 % in the total logistics cost (Samuel, 2014). Major modes of transport are Sea,
Road, Rail and Air.
Source - Deloitte Touche Tohmatsu India Pvt. Ltd.
Coastal shipping in India

India has a long coast line of 7500 KM with 12 major port and 200 minor and
intermediate ports. Coastal shipping is the most commercial, environment
friendly and energy efficient mode of transportation. In India, coastal shipping
is used to transport both cargo and passengers. It is also used for oilfield
services and the transportation of port flotillas. The primary originating and
destination hubs include the Pipavav and Mundra in Gujarat, Calicut district of
Kerala, South Tamilnadu covered through Tuticorin and the Cuttack district of
Orissa. The key

commodities transported through coastal shipping include bulk cargo such as

petroleum products, minerals, coal, food grains and cement, and containerized
cargo, including cotton yarn, automobiles, automotive spare parts and steel.
Coastal shipping offers several advantages over other modes of transportation in
terms of cost and relibility. However, it cannot operate in isolation and it needs
the support of road and rail services to transport cargo from factories and
warehouses to ports and then deliver it to customers from destination ports.
Major challenges in domestic transportation are high cost in transportation,
inadequate infrastructure, Availability of truck and wagon as per the
requirement of shippers, weight restriction in roads.
Review of Literature

Mr.Souresh in his report mentioned, cost of logistics remains high due to

various factors including lack of large specialized, integrated logistics firms
(third party logistics - 3PL) (Souresh Bhattacharya, 2014). Mr. Hemant
Bhattbhatt (Mr. Hemant Bhattbhatt, 2009) in his report mentioned that timely
delivery is Key determinants of choice for selecting a Logistics service
provider. Dr. Maximilian Rothkopf (Rothkopf, 2015) in their report on Pathway
to value creation have mentioned that consumer demand for transportation and
logistics services is highly price sensitive. Mr. Hemant in his report Logistics
and infrastructure Exploring Opportunities mentions about Bad quality of roads,
Inadequate lanes / lack of maintenance which leads to poor speeds, accidents
and high vehicle maintenance (Mr. Hemant Bhattbhatt, 2009). Mr. Hemant in
his report Logistics and infrastructure Exploring Opportunities mentions
Inadequate hinterland connectivity causes limited access to neighboring ports
(Mr. Hemant Bhattbhatt, 2009). Dr. Dietrich in his report Business
Opportunities: Maritime Industry, Infrastructure and Logistics – The Indian
Point of View mentions Lack of Port Infrastructure and poor hinterland
connectivity are the main reasons why containers as a % of overall tonnage
volume handled is low in India ( Dr. Dietrich Kebschull , 2012).
Statement of the Problem

Lot of studies were done on the infrastructure challenges in India which resulted
in high logistics cost in India. There were reviews done by lot of people about
the potential of coastal shipping, various benefits of coastal shipping including
cost, environment and social factor. But there is no study to understand what are
the requirement of shipper / consignee in domestic transport, whether coastal

shipping will be an alternative to solve the current challenges in domestic

transport, what are the measures to strengthen the coastal shipping in India in
order to divert the major portion of their volume from other modes like Rail and
Road.

Objectives of the study

To Study the coastal shipping with specific reference to containers and to

understand its impact on current challenges faced in Indian domestic
transportation the researcher has taken the below objectives.
1) To study the requirement of domestic transportation.
2) To explore the opinion from Shipper/ Consignee on whether coastal
shipping will be an alternative to the current challenges.
3) Measures to strengthen the coastal shipping in India.
Research Method

The study analyses the association between the profile of the shipper /

consignee

and the requirement of domestic transportation and bottlenecks associated with

coastal shipping, it is both descriptive and diagnostic in nature.

Selection of Study Area

The researcher selected Shipper/ Consignee as the study area because the
Shipper / Consignee are the end users of coastal shipping and it is imperative to
get their opinion on the requirements of coastal shipping.

Sampling Framework – Snowball method

Collection of Data

Since the study is completely based on the primary data, the questionnaire is
developed based on the objectives that have been formulated. The relevant
details on requirement of domestic transportation, Challenges faced in domestic
transportation, bottleneck and infrastructural requirement to strengthen the
coastal shipping, benefits of coastal shipping have been developed with the help
of the previous studies and experts views. The questionnaire consists of various
variables related to each aspect of domestic transportation. Essential steps have
been taken up to distribute the questionnaire and collect the filled in
questionnaire
 Communalities
Factor 1

Factor 2
Factor 2
17. Price and on time delivery becomes a
.913 .954
very critical factor
13. Holding large amounts of inventory
allows a company or an entire supply chain .886 .925
to be very responsive to fluctuation
7. Development of Third Party Logistics
.877 .885
(3PL)
8. Cash tied to inventory and cost tied up in
.822 .771
inventories in Supply chain
4. Large specialized, integrated logistics
.814 .867
firms who has strong and skilled manpower
9. Lower investment in inventory and
.692 .942
Improve working capital flow
14. Weigh the costs of carrying extra
inventory against the cost of losing sales .843 .883
due to insufficient inventory
5. E-commerce in procurement and
.798 .720
distribution
16.Price of the product influence buying
.795 .908
decision.
11. Focus on sourcing from low cost
country / location and reduce number of .715 .934
suppliers
6. Mass commoditization of products .708 .954
10. Reduction in cash flow cycle time and
.703 .864
lower material acquisition cost
12. Modes of transport basis cost efficient .96
.850
and speed 7
3. Mode of transport is often found by
trading off cost of using a particular mode .91
.961
with the indirect cost of inventory 9
associated with that mode
 1. Product life cycle is short, Hence
.82
manufacturer / producer wants to take the .499 .903
2
profit at the earliest.
Cronbach's Alpha 0.81 0.76
Eigen value 9.289 2.701 1.331
% of Variance 61.929 18.005 8.873
Total % of Variance 88.807

The Total Variance Explained rows present the number of column factors

extracted, the eigen values associated with these factors, the percentage of total

variance accounted for by each factors, and the cumulative percentage of total

variance accounted by the factors. Using the criterion of retaining only factors

with eigen values of 1 or greater, three factors were retained for rotation. These

three factors accounted for 61.929%, 18.005% and 8.873% of the total

variance, respectively, for a total of 88.807%.

The variables constituting components 1 are:

 Price and on time delivery becomes a very critical factor

 Holding large amounts of inventory allows a company or an entire
supply chain to be very responsive to fluctuation
 Development of Third Party Logistics (3PL)
 Cash tied to inventory and cost tied up in inventories in Supply
chain
 Large specialized, integrated logistics firms who has strong and
skilled manpower
 Lower investment in inventory and Improve working capital flow

The variables constituting component 2 are:

 Weigh the costs of carrying extra inventory against the cost of

losing sales due to insufficient inventory
  E-commerce in procurement and distribution
 Price of the product influence buying decision.

 Focus on sourcing from low cost country / location and reduce

number of suppliers

 Mass commoditization of products
 Reduction in cash flow cycle time and lower material acquisition
cost

The variables constituting component 3 are:

 Modes of transport basis cost efficient and speed

 Mode of transport is often found by trading off cost of using a
particular mode with the indirect cost of inventory associated with
that mode
 Product life cycle is short, Hence manufacturer / producer wants
to take the profit at the earliest.

The result of principal Component Analysis reveals that three

requirements are in domestic transportation especially by containers. They are

1. Reduction in Inventory and supply Chain Cost

2. Reduction in cost on Raw material Sourcing
3. Appropriate usage of mode of transport

1. Kruskal -Wallis (H) test to Compare the commodities and

the requirement in domestic transport.
 Tiles Cotton Wheat Chi Asymp.
  Square Sig
Inventory & Supply 19.33 45.00 78.50 88.590 .000
chain cost
Raw material sourcing 24.76 49.10 72.19 56.880 .000
Mode of transport 47.40 54.13 51.39 .830 .660

The above table shows about the requirement in domestic transport based on the
various commodities. There is a significant difference in the mean rank score
with various commodities with regard to Inventory & Supply chain Cost and
Raw material sourcing. But there is not significant difference in mode of
transport.
With regard to Inventory & supply chain cost transport Wheat has high
mean rank value of 78.50 the others have lesser value. Regarding Raw material
sourcing Wheat has high mean rank value of 72.19 the others have lesser value.
Regarding mode of transport Cotton has the high mean rank value of 54.13.

1. Coastal shipping an alternative

This table is to understand whether coastal shipping will be an alternative to

solve the current challenges in domestic transportation. This is based on the
opinion of the shippers and it has nine sections.

S.N Coastal shipping as alternative Mea SD

o n
1 Cost of transport in Coastal shipping compared to Road 5.00 0.00
and Rail 0
2 Transit time in Coastal shipping compared to Rail and 2.56 1.04
Road 8
3 Reliability of coastal movement compared to Road and 3.84 .581
Rail
4 Incentive given by government encourages coastal 2.53 .758
 shipping
5 Availability of transport capacity in first mile and last 3.20 .841
mile connectivity in Coastal transport
6 Services from Terminal and Customs 3.17 1.03
5
7 Visibility / Marketing efforts of coastal vessel operators 3.80 .426
in domestic transportation
8 Relaxation of Cabotage 2.85 .869
9 Entry of global players in Coastal shipping in India 3.37 .485

Source – Primary data

Based on the above data, cost of transport in coastal shipping is much better
compared to road and rail. It has the mean value of 5. Reliability of coastal
movement is better compared to rail and road and it has the mean value of 3.84.
Marketing efforts of coastal vessel operators are better and it has the mean value
of 3.80. Entry of global players in coastal shipping in India will be good as it
will increase the capacity and reliability. It has the mean value of 3.37.
Availability of transport capacity in first mile and last mile is ok in coastal
transport. It has the mean value of 3.2
 1. Exploratory factor analysis to understand the,

infrastructure requirement and the measure to strengthen

the coastal shipping in India.

Communalities
Factor 1

Factor 2
Factor 2
6. Customs procedure in port .907 .942
2. Parcel size of the cargo in coastal
.884 .940
movement
7. Handling costs both origin & destination .829 .852
13. Handling costs both origin &
.808 .948
destination
8. Availability of free days in the
.808 .948
destination port
10. Restriction of Move count for the
.530 .964
vessel
11. Longer free days for coastal cargo in
.919 .929
terminal
9. Availability of berthing window for
.902 .400
coastal vessel in key corridors
12. Separate stake for coastal cargo in
.811 .822
terminal
1. Inland connectivity ( Rail / Road) from
.930 .932
Port
 3 Distance of land / rail movement to /
.853 .903
from port
4 First mile and last mile connectivity. .730 .965
5 First mile and last mile distance .643 .882
Cronbach's Alpha 7.779 2.270 1.37
Eigen value 9.289 2.701 1.331
59.84 10.589
% of Variance 1 17.464
Total % of Variance 87.894

The Total Variance Explained rows present the number of column factors

extracted, the eigen values associated with these factors, the percentage of total

variance accounted for by each factors, and the cumulative percentage of total

variance accounted by the factors. Using the criterion of retaining only factors

with eigen values of 1 or greater, three factors were retained for rotation.

These three factors accounted for 59.841%, 17.464% and 10.589% of the total

variance, respectively, for a total of 87.894%.

The variables constituting components 1 are:

 Customs procedure in port

 Parcel size of the cargo in coastal movement
 Handling costs both origin & destination
 Handling costs both origin & destination
 Availability of free days in the destination port
 Restriction of Move count for the vesse

l
The variables constituting component 2 are:

 Longer free days for coastal cargo in terminal

  Availability of berthing window for coastal vessel in key
corridors
 Separate stake for coastal cargo in terminal

The variables constituting component 3 are:

 Inland connectivity ( Rail / Road) from Port

 Distance of land / rail movement to / from port
 First mile and last mile connectivity.
 First mile and last mile distance

The result of principal Component Analysis reveals that there are three types of

measures to strengthen the coastal shipping in India. Such as

1. Reduction in Handling cost

2. Improving Facilities in terminal
3. Develop Inland connectivity

Findings and suggestions

1. Requirement of Shipper / Consignee are a) reduction in Inventory and

supply chain cost b) reduction in cost in raw material sourcing c)
appropriate usage in the mode of transport based on the requirement.

2. Based on the opinion of shipper / Consignee, Coastal shipping will be an

alternative as Cost of transport in coastal shipping is much better
 compared to road and rail. Reliability of coastal movement is better
compared to rail and road.

3. Measure to strengthen coastal shipping are a) reduce the handling cost in

terminal, b) Improve the facilities in terminals c) Develop inland
connectivity

Conclusion

The key requirements for shipper / consignee are low cost and reliable transport

which coastal shipping can provide. Usage of Coastal shipping in containers can

help to solve the current challenges as the Cost of transport and reliability is

better in coastal shipping compared to other mode of transport and it will help to

enhance the supply chain management system in India

References:

Bhattbhatt, H. (2009). Logistics and Infrastructure . Deloitte.

Economy of India. (n.d.). Retrieved July 2016, from Wikipedia:
https://en.wikipedia.org/wiki/Economy_of_India
ndian Railways. (n.d.). Retrieved July 2017, from India Brand Equity
Foundation: http://www.ibef.org/industry/indian-railways.aspx
Ports in India. (n.d.). Retrieved July 2016, from India Brand Equity Foundation:
http://www.ibef.org/industry/ports-india-shipping.aspx
Road Infrastructure in India. (n.d.). Retrieved July 2017, from India Brand
Equity Foundation: http://www.ibef.org/industry/roads-india.aspx
Samuel, S. M. (2014). Coastal Shipping - A Viable Alternative to Enhance
Supply Chain Management In India. 1 (4).