The recent policy initiatives taken by the Ministry of Shipping (MoS) to increase transshipment volumes at Indian ports is expected to add a new dimension to the maritime sector. Speaking at the 16th annual conference on Ports in India, Gopal Krishna, secretary, MoS, shares his views on the ministry’s plans for developing India into a transshipment hub. Excerpts…
The maritime sector plays a vital role in sustaining growth and is one of the key contributors to the country’s total export-import trade. Cargo traffic at Indian ports has been consistently increasing over the past decade, from 723 million tonnes (mt) in 2007-08 to 1,208 mt in 2017-18, registering a compound annual growth rate (CAGR) of over 5 per cent. Over the same period, container traffic increased from 7.6 million twenty-foot equivalent units (TEUs) to 15.1 million TEUs, a CAGR of over 7 per cent. State-wise, Gujarat (5.2 million TEUs), Maharashtra (4.9 million TEUs) and Tamil Nadu (2.6 million TEUs) have been the top three container handling states.
The MoS has been taking several initiatives to increase the transshipment volume handled at Indian ports and to develop a global transshipment hub. However, since the Indian ports are located on the traffic-intensive Europe to East Asia shipping route, they compete fiercely with the ports of Colombo, Jebel Ali, Port Klang, Tanjung Pelepas, etc., for mainline traffic. Also, the upcoming port in Singapore (Tuas port), that has a planned capacity of 65 million TEUs, is expected to offer stiff competition to the Indian ports competing for transshipment volumes. In order to develop a transshipment hub in the country, there is an urgent need to provide better infrastructure and adequate connectivity, besides providing competitive tariff rates to compete with the established transshipment hubs.
Transshipment traffic: Present scenario
Of the total container traffic handled at Indian ports in 2017-18, over 60 per cent (9.1 million TEUs) was handled by the major ports. Of this, 5.2 million TEUs was direct destination traffic, 3.1 million TEUs was transshipped traffic and the remaining 0.8 million TEUs was coastal traffic. The key foreign ports that account for a significant share in Indian transshipped cargo at the major ports are the ports of Sri Lanka (Colombo), Singapore, Malaysia (Port Klang) and the United Arab Emirates (Jebel Ali). Of these, Colombo accounts for the maximum share of 43 per cent in the total transshipped cargo at the major ports. This is followed by the Port of Singapore, which accounts for a share of 15 per cent.
Key positives: Factors favouring the development of a global transshipment hub in India
There exists a plethora of factors favouring the development of a global transshipment hub in the country. These include its suitable geographic location, availability of local origin-destination cargo and various policy initiatives for the transshipment segment.
With respect to the country’s west coast, the ports of Mundra, Deendayal (erstwhile Kandla) and the Jawaharlal Nehru Port Trust have considerable potential to serve as regional transshipment hubs for cargo from the Middle East and Africa. On the other hand, ports on the east coast can serve as regional transshipment hubs for cargo from Myanmar, Bangladesh, Kolkata and Nepal. Thus, the country’s favourable location on the main east-west trade route presents considerable opportunity for the development of a transshipment hub.
One of the prerequisites for handling transshipment traffic and vessels of 16,000-18,000 TEUs is maintaining a draught level of 18-20 metres. At present, one major port and four non-major ports in the country have a draught of 18 metres and above. These are Visakhapatnam (18 metres), Krishnapatnam (18 metres), Mundra (18 metres), Dhamra (18 metres) and Gangavaram (21 metres). With a view to increasing draught levels at other ports, capital dredging works are presently being undertaken. In addition, Adani Ports and Special Economic Zone Limited is developing a greenfield port at Vizhinjam as an international deepwater multi-purpose seaport to cater primarily to the transshipment business. Meanwhile, the country’s first transshipment terminal, the International Container Transshipment Terminal at Vallarpadam (Cochin) handled 317,000 TEUs of transshipment traffic in 2017-18, witnessing a year-on-year growth of over 18 per cent over the previous year.
Another factor which is expected to provide an impetus to transshipment volumes handled at Indian ports is the upward trend in the overall traffic volumes. The overall traffic at Indian ports is expected to reach 2,500 mt by 2025. With respect to containers, the traffic volume is estimated to increase from 15.1 million TEUs (208 million tonnes per annum [mtpa]) in 2017-18 to 27 million TEUs (375 mtpa) by 2025.
The key to success: Infrastructure development is a key priority area
Over the past two to three years, the MoS has taken a number of initiatives to promote coastal shipping and transshipment in the country. Some of the initiatives taken under the Coastal Berth Scheme include the provision of grant-in-aid assistance to develop berths and the associated infrastructure for the exclusive use of coastal shipping and promotion of shipping routes for domestic movement of goods. In addition, other policy initiatives for promoting coastal shipping and transshipment are relaxation of licensing requirements to foreign flag vessels for movement of containers meant for transshipment, empty containers, fertilizers, agricultural, fisheries, animal husbandry and horticultural commodities, priority berthing for coastal vessels at ports.
The volume of containers transshipped from Indian ports has been growing faster than the containers transshipped from foreign ports. With respect to the foreign ports, the volume of containers transshipped increased from 2 million TEUs during April-December 2015 to 2.2 million TEUs during April-December 2017, registering a CAGR of 4.8 per cent. During the same period, the volume of containers transshipped through Indian ports increased from 0.3 million TEUs to 0.6 million TEUs, registering a CAGR of 41 per cent. Further, the volume of containers transshipped through foreign ports increased from 2.2 million TEUs during April-December 2017 to 2.3 million TEUs during April-December 2018, recording a growth of 4.5 per cent. During the same period, the volume of containers transshipped through Indian ports increased from 0.6 million TEUs to 0.8 million TEUs, registering a growth of 33 per cent. The figures are indicative of the fact that over the past four years, there has been a shift in transshipment volumes from foreign ports to Indian ports.
The way forward
The growth in transshipment volumes at Indian ports has been reasonable, if not outstanding. Certainly, the policy initiatives taken by the ministry have been successful in garnering interest from all the stakeholders. Other than adequate policy support, factors determining the evolution of a transshipment hub are proximity to trade routes, availability of deep draught levels, consolidated container volumes and increasing the existing port capacity.
Going forward, there is a need to create a favourable environment for the development of transshipment hubs (both regional and global) and increase the share of cargo moved through coastal shipping. Further, there is also a need to relax laws and procedures to facilitate container movement through transshipment as well as rationalise vessel- and port-related charges.