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India is planning to develop Visakhapatnam in Andhra Pradesh as a second transhipment port, even as operations at the first, at Vallarpadam near Kochi, are yet to pick up pace. With sustained growth in container traffic and continued dependency on Colombo or Singapore for transhipment, the government sees an investment potential of about Rs 13,000 crore in the project.
At a transhipment hub, large mother vessels disaggregate cargo and send it on feeder vessels to other ports, or vice-versa. For such hubs to be viable, these should be located close to international shipping routes.
Though the International Container Transhipment Terminal (ICTT) at Vallarpadam is running at less than 40 per cent of its overall capacity, its location is closer to international shipping routes, enabling it to serve traffic that is West-bound or coming from the West.
“With Visakhapatnam’s distance from international shipping routes, shipping lines will be averse to taking a detour, as it makes no business sense,” says Michael Pinto, former shipping secretary. Besides, as the facilities at Colombo and Singapore offer many facilities, it would be a challenge to garner their market share, he adds.
“However, there is huge untapped potential for the eastern coastline in terms of container traffic and the Visakhapatnam hub could turn out to have a niche audience of exports and imports,” he says. Exports from Andhra Pradesh and other neighbouring states, as well as large mother vessels destined for Visakhapatnam could use the transhipment hub.
The dearth of container traffic on the eastern coastline, however, undermines the need for a dedicated transhipment hub. As of now, the coastline attracts only 30 per cent of India’s container traffic. Indian ports handle about 11 million twenty-foot equivalent units.
“Unless the point of origin or destination is Visakhapatnam, the hub will be of less significance. Even with that argument, the Chennai, Cochin or Colombo ports would be closer to international shipping routes. The hub at Visakhapatnam would have to offer priority berthing, lower costs and faster turnaround time for shipping companies to consider that trade-off,” says Hemant Bhattbhatt, chief executive of HMSA Consultancy Services.
Patronage from shipping lines is possible only if the cost is economical and the turnaround time is short. Major container shipping lines such as Maersk, APL, K Line and MOL berth at Visakhapatnam, though these will have to scale up operations there.
“The success of the proposed transhipment hub would be a factor of the maritime, customs and tax legislation. The cost-benefit equation is immensely important for any shipping line. So, it’s all about economies of scale,” says Julian Michael Bevis, senior director (South Asia), AP Moller-Maersk.
Also, cabotage regulations governing the movement of cargo from one domestic port to another have to be eased. Currently, shipping lines have to transport containers from one Indian port to another through an international transhipment hub, raising costs.
Earlier, export-import cargo regulations were relaxed for ICTT. This might have to be replicated and extended to domestic cargo, too, for Visakhapatnam’s proposed transhipment hub. “Cabotage relaxation for Export-import and domestic cargo will need a re-look,” says former shipping secretary Vishwapati Trivedi.
