Indo-China border tension: PPP cargo terminal operators jittery over ordering Chinese cranes

Public private partnership (PPP) projects for cargo terminals, particularly those handling containers, at Centre-owned major port trusts are in a dilemma over ordering Chinese cranes for their facilities after the government placed restrictions in July on vendors and service providers in China for public procurement tenders.

The decision aimed at strengthening defence and national security after skirmishes with China along the border is applicable to autonomous bodies, central public sector enterprises and PPP projects receiving financial support from the government or its undertakings.

PPP operators have taken the stand, backed by legal advice, that they are exempt from the new rule. Yet, they are jittery recalling instances where Chinese cranes were denied security clearances at some major ports even before the new rules were imposed.

There are reasons why operators prefer cranes from China, the top supplier of cargo handling gear. “Chinese port equipment are competitive in pricing and lead times,” said an executive heading the terminal operations at a private terminal. European gear is not only expensive but crane makers also take a much longer lead time to supply the equipment after the order is placed, he said.

For cargo terminals which have configured their operations to suit Chinese gear, the restriction on buying cranes from that country would pose a stiff challenge. This is more so when a terminal operator is looking to replace only a few cranes to comply with the terms of an agreement it has with the government-owned port authority. This would result in a situation where there are cranes of different makes in one terminal functioning simultaneously, rendering operations difficult. “At the crane operator level, they have to operate different equipment which reduces productivity, increases cost and complexity,” the managing director of a Mumbai-based terminal operating company said. Terminals will also have to depend on multi-skilled engineers for different equipment, he stated.

PPP operators are also concerned about sourcing parts for Chinese cranes already operational from other suppliers. There are more than 250 Chinese-made cranes operating at ports across India.