A significant amount of noise has been created for the need of a container terminal which can serve as international transshipment hub for container volumes destined for India. It is driven more by the fact that, overseas ports of Colombo (closest one) and Singapore share more than two-thirds of Indian transshipped volumes.
As if it is the only savior of Indian ports and proposed economics, every other port with a container terminal has aspiration of transshipment hub. Terminals like Chennai container terminal, container terminal at Vigaz, Krishnapatnam, Ganagvaram , Dhamra etc. on east coast, terminals including DP World run container terminal at Vallarpadam, terminals at Adani run Mundra Port on west coast have voiced similar aspirations. In September, 2012, Vallarpadam which was promoted as India’s answer to rival Colombo & as first transshipment terminal in the country was granted relaxation from cabotage restrictions. Other ports and terminals have joined the chorus for demand of relaxation in cabotage restriction for their terminals since then.
Indian Cabotage laws restrict the coastal shipping in India to Indian flagged vessels, which means that foreign vessels coming to Indian ports cannot transship container between one Indian port to other destination Indian ports. This is often cited as one of the main reason for limited interest of international liners in Indian shipping story.
Beyond the strategic intent to rival growing ports in neighboring countries, there is need to look at economics, infrastructure and other strategic parameters when considering a transshipment port development. There are certain specific requirements for a port to turn into an international transshipment hub, some of them include:
Proximity to international shipping routes
Liners are opting for larger vessels to gain from economy of scale and competitive cost terms. They return to drawing board with larger vessel size on their mind each time. Going by this trend, we will see a few operators running these large vessels and the on the main routes and feeding being done by smaller vessels. Hence to retain the cost advantage, these liners are unlikely to make large detours from shipping routes, unless provoked by large volumes to compensate the cost.
Faster vessel turnaround time
Even for a terminal in close proximity to liner routes, it is their operational efficiency that will drive the port calls. Consider case of two adjoining port A & port B with similar infrastructure and hinterland connectivity and port B has better operational parameters and lesser vessel turnaround time. In principle, even if every element of port infrastructure is same, it is economical for a liner to call an efficient port.
Enhanced multimodal connectivity
Transshipment includes ship to ship and ship to shore transfers which may or may not require temporary storage. An aspiring port need to have a robust multimodal connectivity to enable faster accumulation as well as evacuation of cargo through different modes.
Better port infrastructure
Better port infrastructure includes larger berth lengths, deeper drafts, sufficient quayside equipments, enough areas for storage and yard services, etc. to facilitate larger vessels.
Port costs and tariffs
Given everything in orders, like the operational efficiency, the cost parameters and other duties and charges applicable should be restricted to keep it economical for stakeholder’s compared to rival ports in vicinity.
Most essential is the availability of local or origination destination cargo. In Indian context, there is a need to have a viable catchment of smaller terminals to act as terminals ports in hub-spoke system.
With strong growth of some of the terminals on both coasts supported with deep drafts, better infrastructure facilities and improved operation, there is likely growth of these ports into direct port of call for the liners. For this to happen in an accelerated way, it is required that along with other things, cargo volumes either increases or consolidates on these ports. Factoring in the above parameters, it is essential to give due analysis when considering a hub container port development. Decisions should be backed by evaluation on these parameters, rather than a populist measure or pet political project.