Coastal Shipping and Inland Waterways: India’s Forgotten Freight Decarbonisation Lever
India’s coastal shipping carries freight at 10–15 gCO₂/tkm — comparable to electrified rail and 7–9× better than diesel road. India’s inland waterways, particularly NW-1 on the Ganga, have been operational since 2017 with terminals at Varanasi, Prayagraj, Patna, and Kolkata. For fertiliser distributors, coastal steel logistics, and aluminium export chains, these are the lowest-carbon and often lowest-cost freight modes available — and they are chronically underused.
Key Takeaways
- India has 7,516 km of coastline connecting every major industrial cluster — the west coast (Gujarat, Maharashtra, Goa, Karnataka, Kerala) and the east coast (Andhra Pradesh, Tamil Nadu, Odisha, West Bengal) — to each other and to international ports. Coastal shipping moves freight between Indian ports using Indian-flagged vessels, subject to cabotage regulations that restrict this trade to Indian-registered ships. The freight intensity of coastal shipping — approximately 10 to 15 gCO₂ per tonne-kilometre, depending on vessel type, load factor, and fuel — makes it among the lowest-carbon freight modes available for bulk cargo movement in India, alongside electrified rail.
- Coastal shipping is chronically underutilised relative to its infrastructure potential. India moved approximately 275 billion tonne-kilometres of coastal cargo in FY2024-25 — approximately 12 to 13 percent of total freight tonne-kilometres, against a national freight policy target of 20 to 25 percent. The primary barriers to coastal shipping growth are the cabotage restriction limiting competition (reducing vessel availability and frequency), port turnaround times that are 3 to 5 days for coastal vessels versus 24 to 48 hours for trucks at road terminals, and the lack of dedicated coastal shipping berths at major ports that must share capacity with international shipping.
- National Waterway 1 (NW-1) — the Ganga-Bhagirathi-Hooghly river system from Prayagraj to Haldia — was declared a National Waterway in 2016 and has been progressively developed under IWAI (Inland Waterways Authority of India) with barge terminals at Varanasi, Prayagraj, Patna, Bhagalpur, and Kolkata. The freight emission intensity of river barge transport is approximately 14 to 20 gCO₂/tkm — slightly higher than coastal shipping but 5 to 7× lower than diesel road. NW-1 is particularly relevant for fertiliser distribution from ports into the eastern Gangetic Plain (UP, Bihar), which is India’s highest fertiliser consumption region.
- For Indian industrial companies with coastal locations or proximity to navigable rivers, coastal shipping and inland waterways represent the third modal shift option alongside DFC rail — and often the lowest-cost option for specific bulk commodity movements. Coastal shipping of fertiliser from Kandla (Gujarat) to Kolkata or Paradip (Odisha) for distribution into eastern India moves at approximately Rs 0.80 to 1.20 per tonne-km — well below DFC rail rates and dramatically below diesel road. Coastal shipping of flat steel products from Hajira (Gujarat, JSW port) to southern Indian ports is commercially viable for volumes above 100,000 tonnes per year per route.
- The CCTS Scope 1 boundary implication of coastal shipping and inland waterways is the same as for other third-party carrier freight — these modes operate outside the gate-to-gate CCTS measurement boundary for the cargo owner. The Scope 1 benefit is realised by the vessel operator (for whom the switch from diesel to LNG or methanol reduces Scope 1 emissions) rather than by the cargo owner. For cargo owners, the benefit is Scope 3 voluntary reporting — a supply chain GHG reduction that increasingly matters for customer sustainability due diligence but does not directly affect CCTS GEI compliance. The CCTS Scope 1 benefit from modal shift applies only to captive company vehicles on company premises — a point covered in the rail versus road article and equally applicable to coastal and waterway freight.
- The Sagarmala Programme — India’s port-led development initiative managed by the Ministry of Ports, Shipping, and Waterways — has committed Rs 5.48 lakh crore in infrastructure investment across port modernisation, connectivity improvement, coastal economic zones, and coastal community development. Within Sagarmala, the coastal shipping component targets adding 100 to 150 million tonnes of additional cargo throughput per year — with priority on coal, steel, fertiliser, and container movements. The programme’s progress has been slower than originally targeted but the infrastructure commitment is genuine, and the improved port turnaround times and coastal berth availability that Sagarmala infrastructure delivers will directly improve the commercial competitiveness of coastal shipping for industrial cargo.
Every freight decarbonisation discussion in India focuses on three options: electrified rail (primarily the Dedicated Freight Corridors), electric trucks (PM e-DRIVE and the EV fleet transition), and green hydrogen trucks (for heavy long-haul routes beyond electric range). Coastal shipping and inland waterways — despite being available today, already commercially competitive for specific routes, and among the lowest-carbon freight modes on earth — receive almost no attention in the industrial decarbonisation literature. This is a significant analytical blind spot. For India’s coastal industrial clusters — the aluminium smelters and steel plants of Odisha and Andhra Pradesh, the fertiliser plants of Gujarat and Maharashtra, the chemical industry of Tamil Nadu and Kerala — coastal shipping is a viable, low-carbon, low-cost alternative for inter-regional freight movements that is available without any new infrastructure investment at the cargo owner’s end.
The neglect of coastal shipping in India’s logistics planning partly reflects institutional history — road freight has historically been more politically powerful as a constituency, rail is managed by a separate ministry with competing priorities, and the Ministry of Ports has been a smaller voice in logistics policy than the Ministry of Road Transport. But it also reflects genuine commercial barriers — the cabotage restriction limiting competition, port turnaround time inefficiencies, and the lower frequency and flexibility of coastal services compared to road. The Sagarmala Programme is designed to address these barriers systematically, and its progress — while slower than originally planned — is creating real improvements in coastal shipping competitiveness.
Sector-specific coastal and waterway freight opportunities
Industrial Freight — Coastal Shipping and Inland Waterway Opportunities by Sector
| Sector and Freight Flow | Current Mode | Coastal/Waterway Alternative | Carbon Saving vs Road | Cost Comparison | Infrastructure Required |
|---|---|---|---|---|---|
| Fertiliser: Kandla to Eastern India (Kolkata, Paradip) | Road freight (1,800–2,000 km), diesel | Coastal: Kandla → Paradip/Kolkata via coastal vessel | ~88–93% reduction (10 vs 101 gCO₂/tkm) | Rs 0.90–1.10/tkm vs Rs 2.80–3.20/tkm road | Port storage and bagging facility at Paradip/Haldia; existing coastal berths at Kandla |
| Steel: JSW Dolvi/Hajira to South India customers | Rail + road combination; some coastal | Coastal: Hajira → Chennai/Krishnapatnam direct | ~85–90% reduction vs road; similar to rail | Competitive with rail for port-to-port; cheaper for coastal plant customers | Dedicated coastal berth at Hajira (JSW port); buyer-side jetty access needed |
| Aluminium: Angul (NALCO/Hindalco) to western India fabricators | Road freight (1,200–1,500 km), diesel | Coastal via Paradip port → Mumbai/Nhava Sheva | ~85% reduction vs road | Rail competitive on this distance; coastal viable for Paradip-served cargoes | Improved rail connectivity Angul-Paradip (32 km); coastal berth capacity at Paradip |
| Fertiliser: NW-1 (Ganga) for UP-Bihar distribution | Road freight from Kolkata/Paradip ports into Gangetic Plain | Barge: Haldia → Varanasi/Patna terminals via NW-1 | ~86% reduction vs road (14 vs 101 gCO₂/tkm) | Rs 0.80–1.00/tkm barge vs Rs 3.00–3.50/tkm road | IWAI terminal capacity expansion at Varanasi; last-mile road from terminal to warehouse |
| Iron ore: Odisha mines to coastal steel plants | Rail (existing) + some road | Coastal: Paradip port → coastal steel plants (if applicable) | ~85% vs road baseline | Rail competitive; coastal viable for port-adjacent plants | Paradip port ore handling improvement; minor for existing coastal connectivity |
The green methanol and LNG transition in coastal shipping: why the mode may get greener faster than rail. India’s coastal shipping fleet is smaller and younger than the road freight fleet, making fleet electrification and fuel transition faster and less capital-intensive than the diesel truck transition. India’s Sagarmala Programme has earmarked Rs 1,200 crore for alternative fuels infrastructure at major ports — including LNG bunkering facilities at Kandla, JNPT, Paradip, and Vizag, and piloting green methanol bunkering at Chennai. An LNG-fuelled coastal vessel emits approximately 25 to 30 percent less CO₂ per tonne-km than a diesel-fuelled equivalent — and green methanol or ammonia-fuelled vessels could approach near-zero emission intensity. For industrial shippers committed to supply chain decarbonisation reporting under BRSR Core and EU supply chain due diligence regulations, choosing a coastal carrier that operates LNG or green-fuel vessels provides a verifiable Scope 3 emission reduction that rail and road carriers cannot yet match at scale. The transition timelines in coastal shipping, where vessel lifecycle replacement cycles are 15 to 25 years, are actually shorter than the diesel truck fleet replacement cycle for India’s total goods vehicle fleet.
Frequently Asked Questions
What is the cabotage restriction and does it apply to industrial coastal freight?
India’s cabotage policy restricts the carriage of cargo between Indian ports to Indian-flagged, Indian-crewed vessels — preventing foreign ships from competing in India’s domestic coastal trade. This restriction was introduced to protect India’s shipping industry and has historically limited the number of vessels and services available for coastal freight, keeping costs higher than they would be in a fully open market. The Ministry of Shipping has progressively relaxed cabotage restrictions over the past decade — first allowing foreign-flagged vessels to operate on certain feeder routes and container services, and more recently creating a permit system for foreign-flagged vessels on specific cargo categories and routes where Indian capacity is insufficient. For bulk industrial cargo (fertilisers, steel, aluminium) moving between major Indian ports, Indian-flagged capacity is generally sufficient for current demand levels, making full cabotage relaxation less urgent for bulk freight than for container or specialised cargo.
What is the current state of NW-1 (Ganga) for commercial freight?
NW-1 has been commercially operational for bulk cargo since 2017, with IWAI-operated multi-modal terminals at Varanasi, Prayagraj, Patna, and Bhagalpur, and private terminal facilities at Haldia (ONGC terminal) and Kolkata (Kolkata Port Trust berths). The primary cargoes moved on NW-1 are fertilisers, food grains, coal, sand, and construction aggregates. Commercial freight volumes have grown from approximately 0.3 million tonnes in FY2017-18 to approximately 1.7 to 2.0 million tonnes in FY2024-25 — significant growth but still a small fraction of the cargo moving by road in the same corridor. The primary constraints on NW-1 freight growth are the limited depth channel availability during low-water seasons (October to February, when the Ganga’s level drops), the need for transhipment from large vessels to smaller flat-bottom barges at Patna for the upper-river section, and the last-mile connectivity from IWAI terminals to warehouse and distribution points.
Does using coastal shipping or inland waterways help a company’s CCTS compliance?
For third-party carrier freight — the vast majority of industrial logistics — switching to coastal shipping or inland waterways does not reduce CCTS GEI. The CCTS gate-to-gate measurement boundary covers the industrial facility, not the logistics supply chain. The carrier’s fuel use and emission are outside the scope of the CCTS GEI calculation for the cargo owner. Coastal and waterway freight are Scope 3 emission categories for the cargo owner — they reduce Scope 3 supply chain emissions, which matters for voluntary sustainability reporting and EU supply chain due diligence (CSDD) but not for mandatory CCTS compliance. The commercial advantage of coastal and waterway shipping for industrial companies is primarily operational cost (lower freight rate) and logistics carbon footprint reporting — not CCTS GEI compliance.
Sources
- Ministry of Ports, Shipping, and Waterways — Sagarmala Programme — coastal freight targets and investment commitments
- Inland Waterways Authority of India — National Waterway 1 — terminal locations, freight volumes, depth availability
- Ministry of Ports — Coastal shipping freight statistics FY2024-25 — tonne-km and cargo data
- NITI Aayog — National Logistics Policy 2022 — freight modal mix targets and coastal shipping role
- International Maritime Organisation — GHG emission intensity of shipping modes — 4th IMO GHG Study 2020