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Developing Nicobar transshipment port could be a game changer for India’s maritime trade

Development of Transshipment terminal at Great Nicobar would attract the existing traffic of ports along the East coast of India, Bangladesh and Myanmar.

Posted on February 20, 2023

India has initiated action for one of the ambitious projects in the maritime sector with its plan to develop a massive international container transshipment port in the Great Nicobar Island in the Eastern Indian Ocean (Bay of Bengal).

If it comes through, it could help Indian trade avoid the transshipment ports of Colombo, Port Klang and Singapore and save huge amounts of forex. Assuming the handling rate for one container is ₹6,000, the country is losing ₹1,000 crore of potential forex every year to transshipment ports, say sources.

The Alternative solution

Transshipment ports have connections to originating and destination ports. With higher draft and huge infrastructure, they can handle large ‘mother vessels’. Feeder ships operate from smaller ports to these large transshipment ports. For instance, for a shipment from Tamil Nadu to the US/Europe, a feeder ship from Chennai or Thoothukudi will carry boxes to Colombo, Port Klang or Singapore. From here, the boxes will be loaded into mother vessels to carry them to the US or Europe.

Currently, nearly 75 per cent of India’s transshipment cargo is handled at ports outside India. The development of a transshipment port at Nicobar assumes great significance for India not only to counter Colombo port’s dominance but also to save valuable forex.

Development of transshipment terminal at the South Bay would attract existing traffic of ports along East Coast of India, Bangladesh and Myanmar as they form primary catchment for transshipment terminal. This is because the proposed terminal is strategically located on the East-West container trade route.

Kolkata’s Syama Prasad Mookerjee Port (formerly Kolkata Port Trust), has floated an EoI (Expression of Interest) for the development, operation and maintenance of the Phase I of international container transshipment port at Galathea Bay in the Great Nicobar Island.

The overall estimated capital cost for the development of Phase-I is around ₹18,000 crores. This is including the cost for construction of breakwaters, dredging, reclamation, berths and storage areas. The first phase will be developed to handle traffic of about 4 million Twenty-foot-equivalent-units (TEUs) by 2028, further increasing it to 16 million TEUs by 2058.

AK Mehra, Deputy Chairman, Haldia Dock Complex, SMPK, says that a pre-proposal conference is likely to be held on February 21 to discuss the project. SMPK is the nodal agency undertaking the development of proposed port project and managing it in a landlord mode.

SMPK in association with Andaman and Nicobar Islands Integrated Development Corporation Limited will develop the common/basic infrastructures while the concessionaire would be responsible for design, construction/procurement, finance, operation and maintenance of the proposed container handling equipment, container yard and onshore utilities.

Great Nicobar Island is only 40 nautical miles from Malacca strait, one of the most important shipping channel in the world. About 35 per cent of the annual global sea trade is done this strait. The proposed project will help transshipment of cargo from the entire east coast of India as well as from Bangladesh and Myanmar as it is a closer point than Port Klang or Singapore.

Strategic significance

Locational Advantage of Great Nicobar

The strategic location of Galathea Bay (in Great Nicobar) on the trade route, which is midway between the existing transshipment terminals and feeder ports, and the presence of natural water depth of over 20 m are some of the advantages this location enjoys.

“The project, once operational, will help bring down transshipment costs and will lead to savings of foreign exchange. We expect cost to come down by at least 10-15 per cent,” says Mehra.

The proposed port is planned such that bigger vessels (nearly 25,000 TEUs) could be handled. The proposed port is envisaged to be an all-weather deep seaport and provide water depths of over 20 m to handle even bigger vessels in the future.

Sai Krishna, Vice-President, ICRA, said the success of the project will depend on its ability to attract mainline vessels from Colombo, which also depends on offering competitive rates compared to other transshipment hubs. The new port will also face competition from the Adani sponsored Vizhinjam port.

According to Ennarasu Karunesan, Maritime and Ports Expert and IAPH’s Regional Director to India, Nicobar transshipment port will help India in a big way, since global shipping is in transition mode right now with mega ships handling 24,000 TEUs having lion’s share of container trade. Currently, Indian East Coast Ports can handle only upto 14,000 TEUs vessels with restrictions on draft and navigational channel depth, he added.

As India is on the way to become the third largest economy of the world,mega ports and transshipment ports are a requirement for sustainable growth of trade. In addition, Nicobar can also act as a strategic outpost for defence purposes as India is highly sensitive to coastal security with its neighbouring countries, he said.



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