The recent inauguration of the Vizhinjam International Transhipment Deepwater Multipurpose Seaport in Kerala by India’s Prime Minister marks a significant development in enhancing India’s capacity to handle container transshipment. This seaport, designated as India’s first deep-water container transshipment port, is enacted under a Public Private Partnership (PPP) model, fostering collaboration between the government and private entities in its design, construction, financing, operation, and transfer.
Key Features of the Vizhinjam Port
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Strategic Location: Situated just 10 nautical miles from a crucial international shipping route linking Europe, the Persian Gulf, and the Far East, Vizhinjam is positioned to serve as a prime hub for global maritime logistics.
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Deep-Water Capability: The port boasts natural depths sufficient to accommodate ultra-large container ships, which require drafts of over 20 meters, a significant advantage over many existing ports.
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Scalable Infrastructure: With the capacity to handle vessels carrying over 18,000 TEUs (Twenty-Foot Equivalent Units), Vizhinjam can scale its infrastructure in alignment with anticipated cargo growth, along with minimal siltation issues.
Importance of Transshipment Hubs
Transshipment is the process of transferring cargo from one vessel to another during transit, crucial for streamlining and optimizing global shipping routes. Currently, India relies heavily on foreign ports for transshipment, with approximately 75% of its transshipped cargo being handled outside the country—most notably at ports in Colombo, Singapore, and Klang. This dependency results in a revenue loss estimated at $200-220 million annually for Indian ports.
Challenges and Opportunities
India faces several hurdles in developing as a transshipment hub:
- High Costs: Transshipment charges at Indian ports are considerably higher—43% more than Colombo, driven by vessel-related fees.
- Distance from Major Trade Routes: Indian ports are often located more than five hours away from international maritime trade routes, whereas Colombo provides proximity of just 30-60 minutes.
- Inadequate Infrastructure: To compete globally, Indian ports need substantial upgrades, including a sufficient number of cranes and improved customs processes that are currently viewed as complex and time-consuming.
There are also promising initiatives, like the International Container Transhipment Port at Galathea Bay and the Kochi International Transhipment Terminal, which can handle significant volumes of cargo and capitalize on strategic routes near the Malacca Strait.
Strategic Vision
The “Amrit Kaal Vision 2047,” an extension of the Maritime India Vision 2030, outlines plans to develop world-class ports and enhance coastal shipping and inland water transport. Moreover, the relaxation of cabotage laws is intended to facilitate greater participation of foreign flagged vessels in Indian waters, potentially boosting local transshipment activities.
The Way Forward
To achieve the vision of becoming a competitive transshipment hub, India must focus on:
- Reducing Costs: Aim for price points that are 15-20% lower than competitors like Colombo.
- Government Support: The state could partially cover dredging costs to enhance global competitiveness.
- Infrastructure Modernization: A shift toward a landlord model at major ports can help increase private sector involvement and operational efficiency.
- Simplifying Customs Processes: Streamlining customs for transshipment cargo is essential to fostering ease of business.
In conclusion, the Vizhinjam port presents a valuable opportunity for India to establish itself as a significant player in the global maritime economy. Through strategic investments, policy reforms, and infrastructure development, India can reclaim transshipment activities and generate much-needed revenue.
