Mumbai: The Dubai government-owned DP World Pvt. Ltd and state-run Cochin Port Trust have begun talks with global shipping companies to start operations from the Vallarpadam transshipment terminal at Cochin port.
The move follows the easing of cabotage rules by the Indian government on 6 September for export containers transhipped to and from the terminal. Cabotage is the transport of goods between two points in the same country by a vessel registered in another country.
Till now, no foreign ship could ferry cargo between ports in India except under a licence from the Directorate General of Shipping, the maritime regulator.
The relaxation in the cabotage policy, however, will be reviewed after three years and is applicable only to the international container transshipment terminal, or ICTT, which is run by India Gateway Terminal Pvt. Ltd, owned by DP World, the world’s fourth biggest container port operator.
The relaxation is expected to benefit global container carriers such as Maersk Line, the world’s biggest container ship operator, Mediterranean Shipping Co. SA, CMA CGM SA and Hapag-Lloyd AG.
Anil Singh, senior vice-president and managing director (subcontinent) at DP World, said dredging of the shipping channel at Cochin port and relaxation of the cabotage policy were critical aspects for a successful transshipment terminal.
“Cochin port is expected to complete dredging in next two months and that will give a channel depth of 14.5 metres to handle bigger vessels. We are also talking to leading international shipping lines and feeder operators,” said Singh.
The transshipment terminal offers concessions to shipping lines in terms of cash discounts, volume discounts and value-added services, including a faster turnaround of ships to meet international standards, Singh added.
Indian container traffic has grown steadily over the years but more than half of the country’s container traffic is transshipped or diverted at ports outside India, mainly in Colombo, Singapore, Salalah and Jebel Ali. This is because India had no port near international sea routes to handle large mainline vessels.
Consequently, India’s exporters and importers incur costs in excess of Rs.1,000 crore a year on transshipping containers through overseas ports, according to the shipping ministry. They pay an additional Rs.600 crore every year to ship their containers via Colombo alone.
Cochin port has a locational advantage as the Colombo port is a mere 76 nautical miles deviation from the main East West shipping route.
The landlord port, Cochin Port Trust, has introduced a special tariff in vessel-related charges matching Colombo for bigger vessels with international ports of call in America, Europe, Africa, Australia and any port in China. These concessions are applicable up to 30 September 2013.
C. Unnikrishnan Nair, traffic manager at Cochin Port Trust, said the port is offering up to 86% discount on vessel-related charges.
“We are offering 30% discount on ships plying between our port and Colombo. For vessels sailing to South East Asia from Cochin Port, we are offering a 50% discount. And for the feeder vessels plying among Indian ports, we are offering a 40% discount,” said Nair. A container transshipment terminal is a hub where smaller vessels transport cargo to and from larger ships. As the economies of scale lower the cost of operations for shipping lines, it results in lower freight rates.
DP World won a 30-year contract to build and operate the Vallarpadam terminal in a public auction in 2004. The first phase of the terminal, built at an investment of Rs.3,000 crore, can handle one million standard containers a year. It began operations in February 2011 and loaded 337,053 containers in the year ended March.
Former shipping secretary D.T. Joseph said there were no studies to prove that the relaxation will bring in the desired benefits as India had eased the same rules in early 1990s to all ports unlike, this time, when it has been done exclusively for one port.
Another port consultant pointed out that other ports would also now lobby for cabotage relaxations. “We will also apply for cabotage relaxation at our port. Certainly not now, but at a later stage,” said Vinita Venkatesh, adviser to Krishnapatnam Port Container Terminal in Andhra Pradesh.