Adani Ports and Visakha Container Terminal are still waiting for the shipping ministry to relax the stringent coastal shipping rule that has the potential to double their transhipment business, after a similar relaxation was granted to Vallarpadam port in Kerala a year back, reported The Economic Times.
Cabotage rule prevents movement of cargo from one Indian port to another by foreign vessels. Therefore about 70 percent of Indian container cargo is transhipped to hubs like Colombo, Salalah and Jebel Ali and are later transported to different Indian destinations. Indian vessels are considered too expensive and far fewer in number.
Adani Group's recent transhipment joint venture with Mediterranean Shipping Co (MSC) and Visakha Container Terminal in Andhra Pradesh are losing out on massive domestic and international cargo volumes and port revenue.
"We are doing transhipment for Africa, Pakistan, Red Sea and Gulf. If cabotage rules are relaxed, we'll add Indian cargo to that too. Our cargo volumes will double from the current 12,000-13,000 TEUs done per month," said Deepak Tewari, chief executive officer at MSC India.
However, after the temporary relaxation of three years granted to DP World's transhipment hub in Vallarpadam, the government has not been too forthcoming on opening up the sector entirely.
Indian shipowners' body INSA has strongly opposed any opening up of the sector. But they have only 17 container carrying vessels to offer, according to the latest data by INSA.
Indian ports could gain up to US$150 million in revenue per year if the rules are relaxed, according to a study done by Container Shipping Lines Association (CSLA). The same study said India is losing $100 million in freight charges as cargo is shipped to international transhipment hubs.
Gujarat Pipavav is also keen to become a transhipment port if cabotage rules are relaxed. Gujarat Pipavav is currently expanding its capacity to 1.5 million TEUs from 0.85 million TEUs.
"The relaxation in cabotage will allow us to fill this additional capacity quickly and look at further expansion if the volumes justify it," said Prakash Tulsiani, managing director at APM Terminals Pipavav. He expects an addition of 120,000 TEUs in volumes in the first year of relaxation to the current throughput of 600,000 TEUs.
Apart from ports in Gujarat, Visakha Container Terminal is looking at becoming a regional hub for transhipment in the Bay of Bengal. It is investing in expanding its transhipment hub. If cabotage is relaxed, it too can double the container volume from the current 6,000 TEU per month it gets using Indian flagged vessels.
"We are looking at becoming a regional hub catering to Haldia, Kolkata, Chittagong in Bangladesh and Yangon Port in Myanmar," said Sushil Mulchandani, chief operating officer at Visakha Container Terminal.
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