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i-maritime news letter

India losing out for lack of hub ports - 2012-01-02

In the backdrop of the tremendous growth in container traffic in the past few years, there seems to be immense scope to augment the transhipment hub and feeder operations in India, possibly one each on the East and West coast, according to a study by IIM Ahmedabad. “Given the reality of transhipment and feedering, it is important to focus on a few ports on both the coasts with deep draft” points out the study. The key requirements of a transhipment terminal are its strategic location, potential to reduce total transport cost using „hub and spoke' arrangement, financial savings in terms of lower land values, less need for dredging and the facility to receive higher-capacity vessels to reduce overall fleet costs. In the absence of a hub port in India, a majority of the country's containers are currently transshipped through other ports such as Colombo (just south of India), Singapore (east), Dubai and Salalah (west). Handling these cargoes through an Indian transshipment terminal would result in savings of between Rs 6,000 and Rs 16,000 per TEU for the Indian exporter. According to the study, the reasons for a hub port not evolving in India are insufficient traffic, prohibitive provisions of the Cabotage Law and inadequate infrastructure, including draft requirements for a mainline ship. The main advantages of having a hub port would be the reduced feedering time to other ports, the revenue from the transhipment and marine side traffic from and to the hub port moving faster and cheaper.
According to conservative estimates, 9 million TEUs (43 per cent) of the Indian traffic of 21 million TEUs will be hubbed in 2015-16. Of the hubbed traffic, 0.95 million TEUs (11 per cent) will be hubbed in India, implying a transhipment of 1.9 million TEUs. Hence, it goes without saying that Indian can and should develop hubbing operations in a major way. If 50 per cent of the hubbing were to take place in India, then 4.5 million TEUs will be hubbed in the country, implying transhipment handling of 9 million TEUs. About 7 million more TEUs will need to be handled at hub ports. This requires port handling capacity of 30 million TEUs, with 9 million TEUs as transhipment at hub ports. The Cabotage rules of not allowing foreign flag vessels for coastal shipping need to be reviewed. The main trade of is between protection for Indian flags versus more competition and supply. In today's world of liberalisation-led growth, it would appear that Cabotage must be lifted as a matter of long-term policy, points out the study. An attendant measure would be to provide the same concessions to coastal shipping as international shipping. Looking at the current as well as future shipping trends that are likely to emerge, it would be the era of large mother vessels with a minimum of 6,000-8,000 teus and few as big as 12,000-14,000 teus. These ships would make only a few calls at mega hub ports to and from where cargo movement would be by transport and feedering through the present age ships of 4,000 teus and below. These future generation vessels will require drafts of 13-15.5 metres. These ports will need such infrastructure as wide berths, high crane-handling capacity, quicker and safer loading and unloading capabilities and direct shift of containers to feeder vessels. Colombo Port, one of the main hubs for transhipping Indian container cargo, has a draft of 15 metres. This is proposed to be increased further to 17 metres and eventually to 20 metres.
Despite handling a higher volume of traffic than Colombo, JNPT the largest container port in the country, is constrained, by its deficient draft, from offering cheaper and high quality services such as high frequency and lower transit times. Other ports in the region, such as Singapore, Dubai, Port Kelang, etc., have drafts of at least 15 metres and can accommodate vessels up to 11,000 TEUs. Based on the commercial criteria, JNPT would be the logical choice for a hub port on the west coast. However, from an infrastructure perspective, the port does not have the draft to accommodate future generation vessels. Mundra is better placed as far as draft is concerned. Visakhapatnam is the most viable port for hub operations on the eastern coast. It is in the centre of India's eastern coast and can service Bangladesh and Myanmar. It has a natural water draft of 20 metres, within a nautical mile from the coast, due to which there is minimal capital dredging requirement. The sea drift there is such that maintenance dredging requirements are also less. The study pointed out that ports such as JNPT, Mumbai and Pipavav, on the West coast; Kochi and Chennai in the South and Visakhapatnam in the East, offer high potential in their readiness levels to start hub operations.

Source: Hindu Business Line