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Bengaluru: Gautam Adani is turning his flagship port and India’s biggest commercial port at Mundra in Gujarat into a regional transhipment hub by partnering with Terminal Investment Ltd S A, the container terminal operating company majority owned by Geneva-based Mediterranean Shipping Co. SA (MSC), the world’s second biggest container shipping line.

Adani Ports and Special Economic Zone Ltd (APSEZ) said on Wednesday that it was expanding the terminal it runs with Terminal Investment at Mundra from 2013 to load 3.1 million twenty-foot equivalent units (TEUs) a year from 1.5 million TEUs.

A TEU is the standard size of a container and a common measure of capacity in the container business.

Post-expansion, the terminal will have 15 cranes, capable of handling 18,000 TEU-capacity container vessels.

The expansion will create a container transhipment hub for the West Asia, South Asia, Pakistan and Africa region which is currently handled at the terminal, APSEZ said in a statement. About 40,000 transhipment containers are handled at the terminal in a month.

“The terminal does not tranship containers originating and destined for India due to cabotage restrictions," said an executive at MSC.

The cabotage rule restricts foreign registered container shipping lines from operating along India’s coast. Global container carriers claim that the rule prevents transhipment of Indian containers from India given the limited number of Indian registered container ships to carry the cargo to and from the transhipment hub.

Smaller feeder ships bring containers to a transshipment hub from where they are loaded onto larger ships for transportation to final destinations. Larger vessels bring about economies of scale, and lower the cost of operations for shipping lines, which then translates into lower freight rates for exporters and importers.

The expansion of the container terminal run by the APSEZ-Terminal Investment joint venture and a new terminal, the fifth at Mundra, being constructed by APSEZ will increase the overall container loading capacity at the port to 7.8 million TEUs, helping it overtake union government-owned Jawaharlal Nehru port near Mumbai as India’s biggest container port.

Jawaharlal Nehru port is currently India’s biggest container gateway with a capacity to handle 4.2 million TEUs a year from four facilities. In the year ended 31, March 2015, the port handled a combined 4.46 million TEUs, operating at more than 100% capacity.

Mundra currently has three operating terminals—one run by APSEZ itself, another by Dubai’s DP World Ltd and the third by an equal joint venture between APSEZ and Mediterranean Shipping Co. SA.

The three terminals handled a combined 2.72 million TEUs in the year ended March 2015.

A fourth terminal with a capacity to load 1.3 million TEUs is currently being developed by an equal joint venture between APSEZ and French container line CMA-CGM SA. It is slated to start operations in May 2016.

When the fifth terminal starts operations in December 2016, Mundra will become India’s biggest container port with a capacity to handle 7.8 million TEUs a year, surpassing Jawaharlal Nehru port.

Jawaharlal Nehru port is also building a fifth container terminal with a capacity to load 4.8 million TEUs a year. The first phase of the new terminal with a capacity to load 2.4 million TEUs is expected to start operations in 2017. At this stage, Jawaharlal Nehru port will have a capacity of 6.6 million TEUs.

Mundra has been consistently clocking double-digit growth in containers for many years, while volume at Jawaharlal Nehru port has been increasing in single digits.

The Mundra terminal helps MSC get priority berthing at the facility while APSEZ gain from guaranteed volumes.

India’s bid to end its dependence on neighbouring transhipment hubs at Colombo, Singapore and Dubai to send and receive containers by setting up a transhipment hub at Cochin port in Kerala has not been successful. About 2 million TEUs continue to be routed through the neighbouring hubs every year even after the transhipment hub at Cochin started operations in 2011.

In December, APSEZ started work on a new container transhipment hub at Vizhinjam near Thiruvananthapuram in Kerala.

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