In yet another shot at ‘Atmanirbhar Bharat’ (self-reliant India), the Shipping Ministry will designate a port as a transshipment hub, making a renewed bid to cut India’s dependence on overseas hubs to send and receive container cargo.
The Ministry will pick the port based on the report submitted by a committee formed for the purpose of deciding the criteria for declaring a port and developing it as a transshipment hub, a government official said.
Container volumes handled at Indian ports in FY19 hit 16.5 million twenty-foot equivalent units (TEUs), with the Central government-owned major ports handling 9.8 million TEUs and private ports handling 6.7 million TEUs, according to the Ministry of Shipping.
Of this, 4.1 million TEUs, or 25 per cent, of Indian originating and destined container traffic were transshipped in foreign hubs such as Colombo, Singapore, Port Kelang and Jebel Ali, benefiting foreign government coffers at the expense of cost and time inefficiencies for Indian exporters and importers.
Colombo Port dominated the market for transshipment of Indian containers, catering to 2.5 million TEUs or 60 per cent of the 4.1 million TEUs. In fact, Indian transshipment containers account for 45 per cent of Colombo’s total container transshipment volume of 5.6 million TEUs. Other transshipment hubs such as Singapore, Port Kelang, Jebel Ali accounted for the balance 1.6 million TEUs.
Of the 2.5 million TEUs transshipped through Colombo in FY19, East Coast ports such as VOC Port, Chennai, Kolkata, Vizag and Haldia ports accounted for 1.15 million TEUs, while Western Coast ports such as Cochin, Mormugao, New Mangalore and JNPT accounted for 0.50 million TEUs. The non-major private ports send 0.85 million TEUs through Colombo.
Indian exporters and importers stand to gain by $40-50 per TEU, translating into an annual saving of as much as ₹800 crore, if the entire 2.5 million Indian containers get transshipped at VOCPT instead of through Colombo Port, according to consultancy firm Drewry.
Based on the modalities recommended by the Committee, Cochin Port Trust and VO Chidambaranar Port Trust (VOCPT) are the potential candidates vying for a transshipment tag.
Dubai’s DP World Ltd runs India’s only container transshipment terminal at Vallarpadam in Cochin Port but it has not delivered on the stated objective of reducing India’s dependence on Colombo for a variety of reasons, trade source said.
VOCPT currently has two container terminals run separately by PSA SICAL Terminals Ltd and Dakshin Bharat Gateway Terminal Pvt Ltd with a capacity to handle 1.17 million TEUs. The two terminals handled 803,719 TEUs in FY20, recording a strong 9 per cent YoY growth in container traffic, setting itself up as a strong candidate to be declared as India’s transshipment hub.
VOCPT is just 113 nautical miles or eight hours deviation from the east west mainline shipping route.
VOCPT has shared a road map with the Shipping Ministry for the port’s transition into a transshipment hub within 2025, on the directions of Shipping Minister Mansukh Mandaviya.
The road map involves converting berth No 9 into a PPP run container terminal to handle 0.6 million TEUs with an investment of ₹480 crore. Further, berths 1,2,3 and 4 are planned to be converted into container terminals to handle 1.76 million TEUs with an investment of ₹2,696 crore.
Another 4.1 million TEUs capacity will be created in the port’s outer harbour with an investment of ₹3,744 crore.
Development of VOCPT as a transshipment hub is also one of the thrust areas of the ‘Maritime India Vision 2030’ blueprint, currently being drafted by the Shipping Ministry with the help of Boston Consulting Group.
Source: The Hindu Business Line