Coastal Shipment PDF

SAKSHAM: IL6 WEBINAR for Logistics “Group Shipping and Coastal Shipment ” 1 Sequence of the session 1. Introduction to Group Shipping i) Relevance of Shipping in supply chain of Tata Steel and its key deliverables ii) Organizational Structure...

SAKSHAM: IL6 WEBINAR for Logistics “Group Shipping and Coastal Shipment ” 1 Sequence of the session 1. Introduction to Group Shipping i) Relevance of Shipping in supply chain of Tata Steel and its key deliverables ii) Organizational Structure, Sections and their processes iii) Overview of port operations 2. Coastal shipment i) Outbound Shipping and operations ii) Coastal shipment as a key driver of supply chain of Tata Steel a) What is coastal shipment? Need for coastal shipment and its enablers b) Challenges, solutions and benefits c) Way Forward 2 Group Shipping footprint across upstream and downstream Supply Chain RM Locations/ Plant Outbound Procurement Inbound Transit Loading point Stockyard 2nd leg (intra-works) 1st leg Total import volume – 22 MnT Total export volume - 1 MnT IBMD to customers Mines Rail Logistics RM Stockpiles Steel to customers Steel export Coastal to customers Discharge Port Dhamra, Haldia & Plant 2nd Leg Paradip Stockyards Road Loading Point Ocean Logistics Mode Distribution, FY 24 2% 36% 62% 1st Leg Road Rail Road Coastal Load Port Limestone: Oman & UAE Steel customers Coal: Australia, Indonesia, Canada, USA, South Africa IBMD directly to customers Inbound Supply chain Outbound Supply chain Group Shipping Outbound 3 Group Shipping Inbound Group Shipping – Key Deliverables Group Shipping, the global shipping & logistics arm of Tata Steel Group (setup in FY11) - operates a strategic, value creating and customer centric inbound and outbound supply chain for Tata Steel Group across all its geographies ▪ Key deliverables: 1. Strategy development & deployment in the following verticals: Inbound & Outbound ocean transportation Planning & Scheduling of import cargo Coastal shipping Ports and related land side logistics Containers Exports Planning & Documentation 2. Securing current & future logistics and infrastructure capacity 3. Construct & management of large size shipping & logistics contracts 4. Serve businesses on “value creation & lowest cost to serve” principles 4 Group Shipping - Organization structure Vice President TQM, GSP & Supply Chain Chief Procurement Officer Group Head Chartering & Operations* Chief Chartering Operations and Chief Port Services and Container Management Maritime Sustainability Head Head Port Head Outbound Head Export Head Planning Head, Ports & Head Inbound Container and Logistics Shipping & Shipping Planning & & Scheduling & Logistics Services Shipping Management Strategy Operations Documentation + 2 Reportees + 4 Reportees + 5 Reportees No Reportees + 5 Reportees + 8 Reportees + 5 Reportees * In addition, Inbound and Outbound team of TSE also reports to Group Head (not included above as above structure is for Indian operations) 5 Group Shipping – Activity Details 6 Group Shipping Inbound Outbound & Planning & Export Planning & Container Port Ports & Logistics Shipping Operation Scheduling Documentation Management Strategy Activities: Activities: Activities: Activities: Activities: Activities: Activities: Shipping Supply chain Network Exports Logistics strategy Supply chain Devising strategy & design design & Flow planning and development design long term portfolio Exports & Planning coordination Commercial deal Container port allocation coastal Synergize & Pre and post structuring management strategy Chartering management Optimize shipment Port & rail planning strategy commensur Vessel planning Logistics tariff Shipping & documentatio & scheduling Container ate to TSL’s & scheduling management Logistics n Sourcing, tender planning & future plan Ship operations Safety & operations to Negotiation management & Scheduling Vessel environment fulfill customer with Banks contracting Container inspection & Post fixture demand Coordination Port contract & operations monitoring activities Vessel for export wharf Safety & Safety & planning & benefits management environment environment scheduling Port Buffer Commercial Post fixture management deal activities Safety & structuring environment 6 Group Shipping Sea borne flows - spread across Atlantic and Pacific basins Coal Iron Ore Limestone Steel Export Baltic Nations Canada USA Production facilities Persian Gulf Discharge Ports RBCT Brazil Saldanah Australia Fleet Sector Definition Vessel Type Carrying Capacity Capesize 130-200 KT Baby Cape 100-130 KT Kamsarmax 79-84 KT Supramax 50-60 KT 7 Group Shipping – Timelines ~22 mtpa of RM imports (3x) ~6 mtpa of RM imports + ~20 mtpa a/c TSE* Haldia and Paradip 2024 + Dhamra + Capesize (200+ a/c TSI + 200 a/c TSE*) Panamax and Supramax (~70 vessels) 0.016 t CO2 emission per ton of RM imports Not measured ~40 mtpa of RM imports (2x)~a/c TSI 2030 + New Castle max (350 - 400 vessels) 0.010 t CO2 emission per ton of RM imports (40% reduction) 8 Bulk carrier classification basis size of the vessel Less than 10 K DWT vessels are generally called mini bulkers Max steel cargo that can be loaded on a vessel depends on DWT of vessel Tank top strength Cargo loading guideline advised by class Deadweight tonnage (DWT) or tons deadweight (DWT) is a measure of how much weight a ship can carry. It is the sum of the weights of cargo, fuel, fresh water, ballast water, provisions, passengers, and crew. 9 Overview of Discharge Ports being used by TSL Jharia Haldia Port WB +ve: JSR Haldia port Lowest rail freight to TSJ & HMC Good rake availability -ve: Noamundi Can only handle partly unloaded Kamsarmax/Supramax Joda HMC (two port discharge comes at higher ship freight) Dhamra port Dhamra Port KPO +ve: Can handle Capesize vessels/Mechanised handling Close to TSK Paradip port -ve: Limited rake availability Unloading infrastructure for Capsize Iron Ore NMDC Gopalpur (Bacheli and Kirandul) Paradip Port & KICT +ve: Close to TSK & TSA Can handle ships upto Babycapes, under loaded capes at 16M draft can be handled at KICT -ve: Vizag port Rake availability to SER zones Gangavaram port Higher rail freight to HMC and TSJ Crisis Handling In times of rail shortage at Dhamra, other Legend Ports Kolkata, Gopalpur & Gangavaram are used to Plant ensure Supply Chain reliability Port Krishnapatnam port Captive Iron Ore mines Captive Coal mines Purchased domestic Iron Ore 10 Port Infrastructure SHIP UNLOADER GRAB UNLOADER HARBOUR MOBILE CRANE 11 AERIAL VIEW – Dhamra Port 12 Steel cargo loading operation 13 Sequence of the session 1. Introduction to Group Shipping i) Relevance of Shipping in supply chain of Tata Steel and its key deliverables ii) Organizational Structure, Sections and their processes iii) Overview of port operations 2. Coastal shipment i) Outbound Shipping and operations ii) Coastal shipment as a key driver of supply chain of Tata Steel a) What is coastal shipment? Need for coastal shipment and its enablers b) Challenges, solutions and benefits c) Way Forward 14 Outbound Shipping and Shipping Operations Slabs and HRC for TSUK plant Synergy between TSE and TSI Internal Tata Steel Europe teams for seamless shipment Exports to TSUK ~80KT-95KT volumes/month Shipping team ~26KT /vessel Documentation Team Integrated operations Finance Team (BAG & FY’25 ABP-480 MTPA KGSSL) Coastal Shipment for West coast and southern customers M&S-SPA and CAMs domestic customers ~ Rs. 500-800/ton benefit per shipment Planning and Logistics Customers Overseas shipment for Opportunity based steel trade Mainly HRC and Slabs to Europe and Americas External Shippers and operators Japan – Ferrochrome Shipment (3.3KT /Shipment) for FAMD division –through TSGP TMILL SE Asia Shipment Vietnam and Thailand –Need Based Ports and their operation teams * In addition, Inbound and Outbound team of TSE also reports to Group Head (not included above as above structure is for Indian operations) 15 Outbound steel movement- Milestones FY20 FY21 FY22 FY23 FY24 Highest coastal Highest annual export Time charter trip (TCT) Highest parcel of CRC Annual contract for volumes done – 410kt volumes of 3.3mn vessels introduced in (21kt) loaded along barges to Agartala tons export vessel portfolio with HRC Coastal movement Part cargo loading 5-port strategy to handle Electronic Bills of Lading Part-cargo loading of started for direct sales of export cargo with 6X monthly growth in introduced for full coastal steel in cellular (IPPE) to Kandla based other charterers export volumes shipment in exports container vessel customers Vessel triangulation Execution of 3kt Tubes Bills of Lading issuance in Contracts of with export and import exports from Khopoli. places other than loading Operationalisation of Affreightment introduced cargoes of TSL ports for ease of L/C 2nd discharging in exports and coastal discounting Introduction of shipments terminal at Mumbai vessel portfolio Coastal movement of Barge movement to through Inland waterways steel started for South Bangladesh re-started to Guwahati and Agartala India 16 Outbound Shipping and Coastal Shipment as its enabler What is Coastal Shipment : Coastal shipping in India is defined as the movement of goods between ports located along the Indian coastline. The scope includes transportation within the territorial waters, extending up to 12 nautical miles from the baseline. In context of tata steel, it is defined as a trans-shipment of steel finished goods (mainly) from production units on ECI (East coast of India) to customers located in southern and western part of India, while ensuring the financial viability,sustainance and quality of the product across the shipment. Coastal shipping is often carried out by smaller vessels, such as barges, ferries, and coasters/Handies Need for Coastal Shipment :Since start of 2022, India has seen strong post-pandemic recovery, which has resulted in shortage of rakes. Indian railways has also brought back the Busy season surcharge regime (15%) from Oct’22 after a 3-year hiatus. To ensure reliable supply of steel to downstream and customer units in the West and South India in a sustainable and economical mode of transport, coastal multi-modal became essential. Key Take away: Dependency on rail/road for FG movement can lead to reliability issues. Additionally, land movement also entails high GHG emissions. Coastal multi-modal is an effective, economical and greener alternate mode of transportation of FG. 17  Need For Coastal - Flat Products Coastal steel movement to increase 4X by FY30 (Necessitating dedicated coastal berth at Paradip and Mumbai ) FP Crude Steel Capacity from TSM/TSK and coastal co-efficient (Million tons) TSM TSK 2.0 2.0 1.2 0.8 10% 0.8 10% 0.8 8% 0.5 6% 6% 6% 19.5 19.5 6% 13.0 13.0 13.0 14.5 6.5 6.5 8.0 5.0 5.0 5.0 6.5 5.0 13.0 13.0 8.0 8.0 8.0 8.0 3.0 FY24 FY25 FY26 FY27 FY28 FY29 FY30 Assumptions: Only TSK and TSM cargoes considered for coastal movement till FY30, similar to current plans Coastal co-efficient progressively increased from FY28 as rail/road insufficiency may arise due to surge in steel volumes from ECI (competition+Tata Steel) Operational Parameters Parcel Size No. of vessels at Paradip No. of vessels at Dhamra Total no. of vessels FY25, FY26, FY27 West:15kt; South: 7kt ~45 per annum ~17 per annum ~62 FY28 West: 15kt; South: 7kt ~68 ~25 ~93 FY29, FY30 West:20kt, 15kt; South: 7kt,10kt ~100 ~36 ~136 (50% proportion) Assumptions: 18 18 15% of coastal volumes considered for South  Coastal Shipment –Process Explained FG gets So how to Approach the solution: transferred from Review of past shipment and Key support functions for ports to plan for current month coastal customers shipment : a) volumes b) Ports coastal shipments through c) Laycans d) other constraints road/rail. Key Enablers to facilitate Internal Coastal shipment Documentation Team Finance Team (BAG & KGSSL) Availability of appropriately Vessel sails off M&S-SPA and CAMs sized vessel that can get all after loading and Finalization and Planning discharges loads nomination of a valid DG Shipping clearances. at various vessel basis COA/ Spot as Logistics discharge ports per syndicated volumes Consolidation of cargo from as per schedule External TSK and TSM to form Shippers/Owners and operators optimum parcel size. TMILL Buy-in of BPR and IPPE M&S Ports and their operation teams teams for direct sales’ cargo including stevedores destined for West and South Customers Loading of FG in Cargo starts arriving at different holds of the designated load port vessel as per before Laycan* stowage plan** Vessel Arrives as per pre decided Laycan Coastal Movement 1st Leg Transportation 3rd Leg Transportation 2nd Leg Transportation (Rail/Road) (Rail/Road) Plant (TSM/TSK) Load port (Seaway) Discharge ports End Customer (Dhamra/Paradeep,…) (Katupalli/Mumbai/Kandla) 1. FG: Finished goods 2. Laycan : The window in days over which the vessel arrives, cargo get loaded all documentations completed and vessel sails off.This is also valid for discharge ports with constraints like draft,tide etc. 19 3. Stowage plan: The detailed loading plan inside the vessel across the holds based on weight of the coils, discharge ports, design of the vessel etc. Coastal Shipment- Challenges and Strategic Enablers to mitigate them Vessel Portfolio Dedicated sub-10k vessel (coaster) deployment Multi-purpose vessels for steel in front-haul and scrap in back-haul Cabotage Vessel Age Vessels on Continuous voyage charter/Time charter laws restrictions Back-haul cargo availability Strategic Enablers Tie up with Tata Steel Group (Tata Chemicals) for West coastal Vessel Conversion/ Reversion of Scrap from Chennai for coastal to the South. INSA Chartering clearances foreign- flagged Infrastructure preparedness Challenges vessels Haldia to be opened up for coastal movement for long products Dedicated coastal berth Limited Bunkering and covered cargo storage facilities at Dhamra, Paradip and Haldia Lack of availability back-haul Enhancing hinterland transport infrastructure of small cargoes vessels Digital Preparedness Smart warehouse ISOP for data management systems Migrate to RPA based documentation processes 20 Coastal Shipment- Benefits Benefits Savings /ton vis a vis Ocean Freight 1. Financial : 2000 Coastal shipment presents a strong saving option vis a 1632 1545 1500 vis traditional routes of transportation. TSL incurred a 1344 1225 1328 saving of Rs.16.9 Cr. in FY’24 and about Rs. 3.5 Cr. till 1000 921 Q1,FY’25. The per ton saving ranges from Rs. 200-900 500 454 571 544 depending on the nature of product shipped (BPRS/ 123 0 IPPE) Apr'24 May'24 June'24 July'24 Aug'24 Key factors that impacts savings :- Ocean Freight Saving-Rs/ton 1. Ocean freight (COA /Spot rate) 2. Kind of marketing product shipped (BPRS/ IPPE) Snapshot of a trend of saving with respect to ocean freight 3. Choice of ports (Port DA Charges, Availability of berthing, Distance of ports from plants,.Road conditions etc.) 4. Delays ( Loading /Discharging/Berthing) 5. Lead time of trans-shipment 2. Sustainability (FY’24) : ~10kg (~30%) of CO2 emission reduction in per ton of coastal multi-modal movement vs rail-road movement to West. Net reduction in CO2 emission in FY23 : ~3433 tons Savings (@ US$40 per ton of CO2) – INR 1Cr 3. Other Advantages:- Coils upto 34 Tons handled with ease Alternative supply chain Mitigates rake shortage crises (if any) effectively. Large Volume transfer of FG in one go. 21 Coastal Shipment – Gearing up for the future 2 2 New routes/ New products/ New Plants Extensive COAs with parties at optimal freights Higher Rake FY19 FY20 FY21 FY22 FY23 FY’24 FY25 Availability and FY30 417KT quick material 30kt 410kt 74kt 175kt 342kt 480kt evacuation 2000 kt Over 300% volume growth Business Units Innovative solutions Served implemented CRC-West Khopoli Deployment of mini-bulk carriers (sub 10k BPR-West (Maharashtra, Gujarat vessels) for Kandla discharge region) Continuous voyage charter for South India BPR-South (Tamil Nadu region) coastal IPPE (Gujarat region till 2020) Omnibus contract for handling and port IPPE-South (Tamil Nadu region in charges with Adanis for Dhamra+Kattupalli 2021) Medium term contracts for West coastal Co-loading in cellular container vessel Slide2222 Thank You 23 Back up 24 Coastal Shipment- FY’25 Product Volumes Saving (Rs. Cr) Discharge Savings Month Vessel Load Port Type port/s TSK TSM Total TSK TSM Total (INR/ton) MV Vantage Mumbai April'24 PICT HRC 5049 20415 25464 -0.26 -0.03 -0.30 -117 Dream (NSDT) Mumbai May'24 MV Caravel PICT HRC 3384 18214 21598 -0.36 -0.52 -0.87 -405 (NSDT) Dhamra Kandla HRC (IPPE) 15263 0 15263 -1.52 0.00 -1.52 -996 June'24 MV Evanthia Mumbai Dhamra HRC+Slabs 3624 5692 9316 -0.45 -0.29 -0.74 -794 (NSDT) PICT Kattupalli HRC 3454 2528 5982 -0.05 -0.03 -0.08 -134 MV July'24 Mumbai Delphinus PICT HRC 5347 9893 15240 -0.59 -0.55 -1.14 -748 (NSDT) PICT Kandla HRC 1530 4690 6220 -0.02 0.09 0.07 113 Aug'24 MV Infinity Mumbai PICT HRC+Slabs 3681 14378 18059 -0.47 -0.88 -1.35 -748 (NSDT) Year Till Date (FY'25) 41032 76111 117143 -3.73 -2.24 -5.97 -510 Key Takeaways:- 1. Kandla port – It is favorable for us to ship FG from TSK via coastal and only marginally off for TSM (due to skewed rail coefficient in traditional transportation mode). 2. Overall coastal shipment- It is a very strong positive correlation (R² ~0.97) between volumes and savings from TSK indicating a potentially higher saving with increase in coastal volumes. 25