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Vizhinjam: A Transhipment Port in the Making

Posted on September 22, 2015

The Adani Group has claimed that the Vizhinjam port in Kerala would be up and running in 1000 days with the construction starting this November. It would be the deepest sea port in India with a transhipment hub. It would be the first port in India that would be capable of handling giant mainline container vessels on regular basis. Indian exporters and importers would be able to export or import their cargo without incurring the additional cost of transhipment at the neighbouring countries. India would have then joined just a select group of countries in the world capable of accommodating the ultra large container vessels. But India has been a late entrant to this exclusive club and the sailing would not be too smooth or predictable.

Vizhinjam has several factors going in its favour. It is Located on the tip of Indian Peninsula, accessible to all the ports on the east and west coast of India and with a natural water depth of more than 20 meters, there would be minimal capital dredging and low cost maintenance dredging thereafter. It is only 10 nautical miles from one of the busiest sea route- the Asia to Europe/US east coast. The Asia -Europe is the largest container trade route in the world and is expected to remain so for a considerable period of time.

The Vizhinjam transhipment port would significantly reduce the logistics costs for the Indian trade. The bulk of the Indian shipments is transhipped at Colombo. To wean away the business from these established ports, Vizhinjam would have to match them tech for tech, cost for cost and achieve turnaround times better than the best.

Aggressive counter-action could be expected from the well-established transhipment hubs on both sides of the sub-continent. Sri Lanka has increased its grip as an island for transhipment facility by building an additional deep-water port at Hambantota, backed by the Chinese whose tacit intentions are only to stifle India’s maritime growth. The cash rich Jebel Ali Port, has the world’s best productivity for ships berthed at its docks. The oldest transhipment hub in Asia, the port of Singapore works like a well-oiled machine, where 1 in 7 of world’s containers move through its port. Malaysia’s most advanced container terminal, the Port of TanjungPelepas is strategically placed as a regional hub. None of these ports would cede their share of transhipment cargo.

It would be a tall order considering that all the transhipment ports are well entrenched and secure in their volumes. The maker of modern Singapore, the legendary Lee Kwan Yew, emphasising the need for Singapore to remain a major hub port, once said, “It (the port) has given Singapore a first-mover advantage that continues to pay good dividends to the economy.” India does not have that advantage. The Indian Government would need to step in to prop up this port not just to be on par, but to give it that leveraged vantage over the others. Though it would be an uphill task all the way, the future does look exciting.

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