Way Of The Water: How India’s Port Infrastructure Can Optimize the Cost of Carbon Emissions Reduction

The Indian economy is on a growth trajectory, and its logistics sector is playing a crucial role in fueling this economic expansion. However, the progress has a hidden cost: greenhouse gas (GHG) emissions. Enterprises in India face a dual challenge: optimizing their carbon footprint while keeping freight costs under control. The ideal solution must ensure cost-effective freight movement which will facilitate competitiveness and affordability in the long run for Indian businesses. There should also be minimal GHG emissions, aligning with India’s commitment to environmental sustainability and achieving net zero goals. It may sound like an impossible balance to find, leaving businesses all at sea. However, that is exactly where the ideal solution exists.

An Ocean of Savings

When it comes to freight movement, waterways offer a distinct advantage that translates to significant cost savings for businesses and the economy as a whole.

Seafaring vessels typically have a capacity of 2000 MT, a colossal amount of cargo. The cost of transporting each metric ton of cargo over a kilometer (MT-km) on such vessels is a mere ₹1.06. This incredibly low operating cost stands in stark contrast to traditional modes of transportation.

Consider a typical 16 MT truck rumbling down a highway. While it offers some flexibility in reaching specific destinations, its carrying capacity pales in comparison to sea vessels. More importantly, the operational cost per MT-km for a truck shoots up to a significantly higher ₹2. This translates to a near doubling in transportation expenditure for the same amount of cargo compared to waterways.

Even railways, often lauded for their efficiency, aren’t quite as cost-effective as waterways in this scenario. While a dedicated railway rake consisting of 40 wagons can haul a staggering 2200 MT, the operating cost per MT-km comes in at ₹1.41. This may seem like a minor difference compared to trucks, but for bulk cargo movement over long distances, these seemingly small cost variations can significantly impact profitability.

This cost advantage, coupled with the inherently lower fuel consumption of waterborne vessels, makes waterways an incredibly attractive and cost-competitive option for businesses across various sectors.

Sailing Through Sustainability Protocols

Beyond the undeniable economic benefits, waterways also offer a significant edge when it comes to Environmental, Social, and Governance (ESG) parameters. This translates to a more sustainable and responsible approach to logistics.

Air pollution, a major public health concern in India, is significantly lower with water transport.  Waterways generate a mere 0.03 units of air pollution per MT-km compared to a staggering 0.202 units for roadways. This translates to a nearly seven-fold reduction in harmful emissions like nitrogen oxides and particulate matter, which contribute to respiratory problems and smog. By embracing waterways, businesses can significantly reduce their environmental footprint and contribute to cleaner air for Indian cities.

Noise pollution is another area where waterways excel. Traffic congestion and heavy vehicles on roads are major contributors to noise pollution, with roadways registering a score of 0.00322 units per MT-km. Railways, while quieter, still generate a reading of 0.0012 units. In contrast, waterways boast a near-zero noise pollution rating, creating a quieter and more peaceful environment for communities residing near transportation corridors. This is particularly beneficial for sensitive ecosystems and wildlife habitats that can be disturbed by excessive noise.

Waterways also shine in terms of surface occupation. Unlike roads and railways, which require extensive land acquisition and construction, waterways leverage existing natural resources. They score a negligible value on both soil / water pollution and surface occupation, minimizing their impact on the environment. This makes them a clear winner for sustainable development, especially in ecologically sensitive areas.

Safety is another crucial factor where waterways hold an edge. While accidents can occur on any mode of transport, roadways have a significantly higher accident rate compared to waterways, registering a concerning 0.062 units per MT-km.  Railways, with their established tracks and safety protocols, have a much lower accident rate of 0.001 units. However, waterways boast a near-zero accident rating, making them the safest option for transporting cargo.

Waterways also offer a significant advantage over roadways in terms of GHG emissions (0.0006 units per MT-km compared to 0.0031 units per MT-km). This advantage stems from the fuel efficiency of waterborne vessels and their ability to transport larger volumes of cargo per trip, reducing overall emissions per unit moved.

Cruise Control for the Steel Industry

Embracing waterways will be a boon across sectors in the Indian economy. However, the industry that stands to gain the most is perhaps the steel industry.

Eastern India boasts a dense network of steel plants in Bokaro, Jamshedpur, Durgapur, Rourkela, Kalinganagar, Dhankanal, and Angul. Luckily, this region is also well-served by national waterways like NW-1, NW-2, NW-86, NW-16, NW-97, NW-37, and NW-58.

Waterways unlock new market opportunities for the steel industry. They provide access to the burgeoning steel demand in the Northeast, estimated at a sizable 1.5 million metric tons per annum (MMPTA). East coast ports like Gangavaram (RINL), Paradeep, and Dhamra offer a gateway to export markets via the Indo-Bangladesh Protocol Route.

By adopting a hub-and-spoke model, where waterways serve as the primary mode for bulk movement and connect to existing road and rail networks for last-mile delivery, the steel industry can achieve significant cost savings and environmental benefits.

Conclusion

The ‘Way of the Water’ presents a unique opportunity for India to achieve the delicate balance it craves – optimizing logistics costs while minimizing environmental impact. By embracing this approach, India can not only empower its businesses but also fulfill its commitment to a cleaner future.

Realizing this vision requires a collaborative effort. The government can play a pivotal role by investing in infrastructure development, streamlining regulations, and incentivizing cargo movement through waterways. Businesses need to adopt innovative practices and integrate waterways into their supply chains. Public-private partnerships can further accelerate progress by creating a robust ecosystem for inland water transport.

The journey towards a sustainable future is a collective one. By harnessing the potential of waterways, India can set sail towards a brighter tomorrow – one where economic prosperity coexists with environmental responsibility.


This article has been authored by Partha Dash, Managing Director – New Business and Growth, Moglix. All views are personal and do not necessarily represent those of Logistics Insider.

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