The dismal performance of Kerala?s first deepwater container terminal seems not have affected the clamour for a second one. With the Ministry of Environment and Forests (MoEF) giving the nod for an Environment Impact Assessment (EIA) for the mega Vizhinjam International Seaport and Container Trans-shipment Terminal project, Kerala is likely to have two terminals competing for business from the Colombo Port. Interestingly, the DP World-owned International Container Transshipment Terminal (ICTT) at Vallarpadam is losing out the cashew trade to the nearby smaller port of Tuticorin due to the higher cargo handling charges.
The cost-benefit projections for the Vizhinjam port, which is hardly 200 kilometres away, are more or less similar to the ICTT port. Close to 60% of the trade volumes generated out of South India get transshipped onto main vessels calling at hub ports like Colombo. The deepwater ports are expected to provide facilities for handling mother ships and thereby obviate the need for the transshipment of Indian containers through other countries. This is expected to result in a cost saving of an average $300 per box and time saving of 7-10 days. This would be a huge benefit to international trade.
But so far, the performance of the ICTT at Vallarpadam has been poor in efficiency and cost. Vessel handling charges and turnaround time at the Colombo Port are considerably lower when compared to Indian ports. ICTT has failed to achieve the desired draught required to bring mother vessels, which can load 3,000- 3,500 containers. The majority of the Indian ports can only handle vessels that can carry 500-600 containers. In fact, transshipment of containers from smaller vessels to big mother vessels is not happening in India. Smaller ports in South India are competing between themselves for the trade generated from the hinterlands.
While, the cost can be done away on higher volumes and competition between Indian ports, India lags behind in costal shipping despite having a lengthy coast and sufficient inland waterways. Changes in the Indian cabotage law, under which comes the regulation of Indian coastal shipping operations, are very important to allow foreign flag vessels to carry transshipment cargo between Indian ports. While India?s eastern coast has 2-3 vessels calling at Kolkata and Visakhapatnam, the western coast lags behind. At present, there is only one vessel that runs on a weekly basis despite the fact that cargo from states like Gujarat can be transported cheaply to the southern parts of the country economically.