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Transshipment Port

Posted 22 Aug 2024

Updated 29 Aug 2024

4 min read

Why in the News? 

India welcomed its first cargo ship at its newly built semi-automated transshipment port in Vizhinjam International Transshipment Deepwater Multipurpose Seaport, Kerala.

More on the News           

  • The port is owned by Government of Kerala.
  • It is designed primarily to cater to container transshipment besides multi-purpose and break-bulk cargo.
  • Port has been developed in landlord Port model with a Public Private Partnership component on a Design, Build, Finance, Operate and Transfer (“DBFOT”) basis.
    • Under landlord model, port authority acts as regulatory body, while port operations are carried out by private companies.
A map depicting the route to Vizhinjam Port with pathways starting from Suez Canal, through Jeddah, Aden, Dubai, Mumbai, Kochi, Colombo, Singapore, Hong Kong, and other major ports, and ending in Fremantle, Sydney, and Adelaide. The port is highlighted on the southern tip of India.

Transshipment Port

  • It is a transit hub where cargo from one ship is transferred to another on the way to its final destination. (includes rails, roads, etc.)
    • Smaller parcels of cargo are loaded on a bigger ship which is able to travel to distant ports in other countries.
Infographic titled "Why Vizhinjam?" with three panels. The first panel lists "Strategic Location" benefits. The second panel describes "Natural Advantage" of a deep draft and low maintenance. The third panel highlights Vizhinjam as a "Trans-shipment Hub" for cost-effective cargo transfer.

Significance of India as a Transshipment Hub

  • Revenue Generation: Transshipment hub has potential to curb revenue losses for Major ports ($200-220 Million) in transshipment handling. 
    • Currently, nearly 75% of India’s Transshipment cargo is handled at ports outside India.
Image with text defining turnaround time. The heading "Do you know?" is followed by the term "Turnaround time:" explained as the time needed for a ship to unload its cargo, load new cargo, and perform necessary operations.
  • Reduced Logistic Costs: It will help in lowering logistic and shipping costs by increasing efficiency.
    • Average turnaround time for Indian ports declined from 4.3 days (2012-13) to 2.1 days (2022-23) which still need improvement (Global median ship turnaround time was 1.04 days in 2022).
  • Stimulating Economic Growth: Port will significantly result in savings of foreign exchange reserves, attracting foreign direct investment & increased trade.
    • Growth of allied businesses will take place around port E.g. Ship repair, warehousing, bunkering etc.
  • Self-Reliance: With increasing Chinese influence in port infrastructure in Indian Ocean as part of Belt and Road Initiative, dependence on foreign ports is a potential national security challenge.
  • Integration with Global Value Chain: Poor shipping connectivity has hindered India’s integration in global value chain. (India’s share in world trade is about 2%)

Issues in development of Transshipment Port

  • Insufficient Natural Depth: Major Indian ports like Mumbai, Chennai, Mangalore and Tuticorin have natural depths of only 10-14 meters.
    • A good transshipment hub requires 20-meter depth.
  • Distance from international shipping lines: E.g.  Our major ports in eastern and western coast are at a distance from major international shipping lines.
  • Labor issues: Major Indian ports are bogged with frequent labor strikes, congestions, inefficiency and lower productivity at their respective ports.
    • There is often a disparity in skill levels required for advanced port operations versus available workforce.
  • Other Issues: Securing Funding, Land Acquisition Delays, Logistics and Connectivity Inefficiencies, Competition from foreign ports (E.g. Colombo, Dubai, Singapore, Jabel Ali, Port Kelang, etc.)

Steps Taken

  • Maritime AmritKaal Vision 2047: Outlines a comprehensive plan to transform India's maritime sector. The key initiatives include:
    • Deeper Drafts: Increasing draft depths to 18-23 meters to accommodate larger vessels and improve handling capabilities
    • Transshipment Hub: Developing a major transshipment hub to capture a larger share of global shipping traffic.
    • Reducing Vessel Charges: Implementing measures to lower vessel-related charges to make port operations more cost-effective.
    • Private Sector Participation: Boosting private sector involvement through projects under PM Gati Shakti – NMP and the Asset Monetization Plan
  • New international Container Transshipment Terminal development at Galathea bay in Great Nicobar (Island of Andaman & Nicobar) and Vallarpadam in Cochin (See map).
  • Tariff Guidelines, 2021 provide flexibility of fixing market determined tariff to PPP Operators thereby creating a healthy competition leading to rationalization of logistics costs.

Way-Forward

  • Infrastructure Investment: By implementing modern cargo handling techniques for increased capacity at existing ports (especially for dry cargo).
  • Public Private Partnership (PPP) Projects:  Taxes should be rationalized to attract foreign shipping companies and a single window system should be set up for approving PPP projects.  
  • Skill Development Initiatives: Launch targeted training programs to upskill local workforce.
    • Establishing Centers for Coastal and Inland Maritime Technology in collaboration with IITs/ NITs/ IIMs to provide opportunities in applied research and development. 
  • Competing with International Ports: Identify key areas for differentiation, such as cost efficiency, turnaround time, and customer service, to position Indian ports favorably.
  • Prepare Coastal Zone management Plan (CZMP): Ports may be permitted to prepare CZMP taking into consideration future construction requirements based on earlier environment clearances issued.
  • Tags :
  • Transshipment Port
  • Vizhinjam
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