Draft constraints haunt FAP terminal at Port Qasim

KARACHI – The recently inaugurated advanced grain and storage terminal at Port Qasim is operating at almost half of its cargo and ship handling capacity due to insufficient dredging and therefore inadequate draft constraints at the 45-kilometer long navigational channel of the country’s second largest seaport.
A joint venture completed on a Built-Operate-Transfer basis, the Fauji Akbar Portia Terminals Limited (FAP) at Port Qasim was constructed at a cost of $135 million and is the country’s first fully automated grain, fertiliser storage terminal and was commissioned by Prime Minister Yousuf Raza Gilani in October last year.
The dedicated dry bulk cargo terminal was set up by FAP in a short timeframe of 24 months and was a bid to allow the fund-starved government to save at least Rs 6.0 billion annually on account of logistics expenditure.
The terminal, using modern US and Belgian cargo handling tools like steel silos, a dedicated jetty and other automated equipment, has indeed revolutionised the pace of cargo handling in the country’s ports and shipping industry that recently saw the dedicated facility breaking all previous records by discharging 16,500 tonnes of oilseed in a single day.
FAP CEO Ahmed Rana said the automated machinery at the terminal was helping the funds-starved government save an average $2.0 per tonne on account of bonus dispatch. If the average $2.0 saving can serve as any valid benchmark, the accumulative saving under the head of bonus dispatch at the terminal stands beyond $300,000 for the four vessels carrying accumulatively 0.15 million tonnes of wheat and oilseed.
The FAP chief said the newly constructed terminal has so far handled vessels including SD Glory, Panaeintis D, Laenanda and Yon Phung Ho, carrying 49,000 and 55,000 oilseed and 27,000 and 12,000 tonnes of exportable wheat, respectively. He went on to say that the automated plants at the advanced facility have trimmed ship and cargo handling time to a large degree. This has had a massive impact on shipping freight and logistics costs.
The maiden facility, having four million tons of annual throughput capacity also has the ability to accommodate panamax vessels of 80,000 DWT, is said to have the capacity to handle bigger ships so swiftly that the freight rates will automatically come down. Given such efficient cargo handling capacity, local exporters and international ship brokers from the US, Canada, Australia and the European region started contacting the FAP within months of the terminal’s commissioning.
The government of Pakistan has also started exporting its wheat consignments through the grain terminal to Bangladesh. It is pertinent to mention that seaborne trade it is often the traders who have to pay ship and port demurrages in cases of delay in the handling of cargo and chartered ships. “The exporters are focusing on FAP with its storage facilities, dedicated jetty, silos and automation; a distinct edge for exporters,” Rana said. He said the terminal had the capacity to reduce the cost of imports by between $6,000 and $7,000 on average on account of dispatch bonus.
Such incentives would certainly save considerable costs for the government which, Rana said, would be exporting some 354,000 tonnes of wheat through FAP until March this year. The terminal, a joint venture of the Akbar Group, Fauji Foundation and National Bank of Pakistan, has a normal capacity to handle some 5,000 tonnes of cargo per day along with a 120,000 ton storage facility.
The FAP chief, however, expressed fears that draft constraints at the dedicated facility might adversely impact on the cargo handling efficiency of the terminal. While the present declared draught at the navigational channel of Port Qasim stands at 11.5 meters, the operators of grain terminal require the Port Qasim Authority (PQA) to dredge the channel at least by 15 meters.
“They should give us the 15 meters draft as soon as possible so that we could use our targeted capacity to bring a 80,000 DWT ship requiring 14-meter draft at least,” Rana noted. The chief executive stressed that designed annual capacity of the terminal was four million tonnes or 0.35 million tonnes during a month.
The PQA is currently performing maintenance and partial capital dredging at the port which, the authority claims once completed, would ensure 12-meter depth at the turning basin. “PQA has said it would ensure 12 meters draft by March after maintenance dredging is completed,” he added. But, even this would not be adequate for FAP which aims to attract deeper draft vessels to the highly efficient terminal to enable port users to generate economies of scale.
Touching on the ongoing employment controversy at PQA, the port operator said his terminal had nothing to do with the dispute between the labourers and the port authority. “FAP is at liberty to employ its own labour, staff and management,” he explained.
Briefly speaking on the dispute, the executive questioned the utility of fully automated terminals like FAP of employing over 1,750 dock workers who would serve no useful purpose. “On our part, we have not done anything to violate the concession agreement with PQA,” he clarified.
Under the 30-year concession agreement, the FAP would be giving a 10 percent royalty to the PQA on the three million tonnes annual throughput. “If the throughput is beyond three million tons, an additional 2.5 percent would be paid on the differential.” Rana said. He said the cargo terminal would also be annually contributing in excess of Rs 500 million in the national exchequer on account of various applicable taxes.
The FAP CEO was positive when asked about an expansion plan and said: “Yes we have left space for the expansion through bringing more silos, handling equipment depending on the volume” of cargo. Rana elaborated that the terminal was functioning smoothly and assuring product quality, reducing discharge time of cargo by a huge margin, providing secure and transparent storage with automated bagging facilities and almost eliminating wastage according to the best international standards and practices.
He said the facility was developed after the reclamation of an area of 100,000 square meters of seawater.