Indian ports won’t be able to handle the world’s biggest cargo ships when they start sailing because facilities in this country aren’t capable of handling the vessels or the volume of containers they carry.
The Triple-E, which at 400m would fill a football field and is about as long as an Airbus SAS A380 superjumbo, is being built for the AP Moller-Maersk Group, the world’s largest container shipping company, by Daewoo Shipbuilding and Marine Engineering Co. Ltd.
The South Korean shipyard is contracted to build 10 such ships, which will be delivered between 2013 and 2015. Maersk has an option to buy 20 more of the vessels, each of which can carry 18,000 twenty- foot containers.
Even the Emma Maersk, currently the largest at 396m and with a capacity of 12,500 containers, can’t berth at Indian ports.
With India’s shipping channels being too shallow, much of the containers destined for the country and carried by such large vessels have to be trans-shipped at ports in Colombo, Singapore or Dubai.
Backup infrastructure such as connecting roads, railway lines and storage space at ports and at warehouses are also inadequate.
Besides missing out on economies of scale, the trans-shipment involved results in additional port fees and delays, all adding to costs on India’s trade, said former shipping secretary D.T. Joseph.
The threefold increase in logistics infrastructure won’t be able to cope as freight movement trebles in the coming decade, putting growth at risk, according to a September 2010 study by global consulting firm McKinsey and Co.
Ports in India can’t accommodate vessels longer than 305m, said Rizwan Soomar, managing director, Maersk India Pvt. Ltd. The Triple-E vessels will help his company take advantage of the 5-8% growth in the Asia-Europe trade that it expects and maintain market leadership.
“The 35% less fuel consumed per container will further ensure that we boost profitability,” he said.
At $190 million per Triple-E vessel, Maersk will spend as much as $5.7 billion if the firm exercises its options fully.
The economics dictate that the biggest container vessels will be used only on a few routes with extremely large volumes of container traffic, such as Singapore to Rotterdam and back again, said Marc Levinson, economist and author of The Box, which explains how the shipping container made the world smaller and the world economy bigger.
“It is quite possible that such huge vessels, while efficient at sea, will contribute to delays and confusion on land, making total shipping times longer rather than shorter,” said Levinson.
Mundra Port and Special Economic Zone Ltd in Gujarat can handle the Emma Maersk, but not when it’s fully loaded, said Rajeeva Sinha, director.
“Indian ports may be ready, but the support infrastructure is not ready to handle such big ships,” Sinha said.
With none of India’s ports being among the world’s 20 largest, the volume of containerized cargo each week is not much,Levinson said.
“Moreover, India’s trade flows in diverse directions, so there may not be enough cargo to fill a huge ship on any particular route,” he said. “These facts suggest that shipping lines may find it more profitable to serve India with smaller vessels, at least for the next few years.”