The growth prospect of the Vizhinjam International Transhipment Deep water Multipurpose Seaport, expected to be commissioned in May 2024, has raised the question whether the Vallarpadam terminal, showcased as India’s first container transhipment terminal, has lived up to its promise.
The Vallarpadam operator has been entrusted with a difficult task. The International Container Transshipment Terminal (ICTT) is in competition with Colombo, Singapore, Dubai and Malaysian ports. But there were no two opinions that the Vallarpadam terminal had not lived up to its promise, said a veteran of the port industry in Kochi.
He said the Vallarpadam facility had not been able to touch the magic figure of one-million TEUs a year. But there are many factors involved, including the availability of equipment, channel draft, and competitive pricing. “What may be done at this point is to get into aggressive marketing, improving cargo handling facilities and aggressive pricing so that shipping lines will be attracted to Kochi,” he added.
The ICTT has had a double negative impact on the Cochin Port Authority (CPA). The Kochi port gave up container business in favour of a private partner and, in addition, the port is burdened with incurring heavy expenditure on maintenance dredging as per the concession agreement. However, the income from the operation of the container terminal, commissioned in 2011, was not enough to justify the port’s expenditure, said trade union leader C.D. Nandakumar, who is also the convener of port employees’ Joint Trade Union Forum.
Mr. Nandakumar added that the success of a container terminal depended on factors such as proximity to the international trunk route, deep draft channel, cargo availability in its hinterland, and last-mile connectivity. Of these, Kochi enjoyed the advantages of being close to the international shipping route and last-mile connectivity. But a deepwater port promising direct sails was a game-changer, he said, pointing to Vizhinjam.
He also said that Vallarpadam had seen traffic dip a little to 6.94 lakh TEUs during 2022-23 when compared to the 7.35 lakh TEUs during the previous year. Even during the current year, the traffic volume was showing a declining trend, he claimed. The Government of India had spent over ₹350 crore in providing a railway link from Kalamassery to Vallarpadam. The facility was virtually idling at present, he added.
The low traffic volume at the terminal apart, the CPA has been incurring expenses of more than ₹100 crore a year in maintenance dredging for the ICTT to maintain the 14.5-metre draft. Even at that depth, ships of the size had not been calling at the facility frequently, said Mr. Nandakumar.
In addition, the port authority here has been providing concessions on vessel-related charges to attract more ships to the terminal. The spending has risen from ₹26.42 crore in 2012-13 to ₹83.70 crore during 2020-21. Over the last 10 years, the concessions have amounted to around ₹557 crore.
Prakash Iyer, exporter using the ICTT and a member of the Cochin Port Users’ Forum, said the Vallarpadam operator had to realise that there was stiff competition on the horizon. Despite having the best of facilities and sound productivity matching international ports, the facility must become more trade-friendly, shedding its image and attitude as a monopoly operator out of Kerala to survive the upcoming facility at Vizhinjam.
Mr. Iyer said trade and industry would benefit from competition among port facility operators and expressed the view that more challenges would change the way the Vallarpadam terminal was being operated. Vallarpadam could offer competition to even Vizhinjam and keep a level playing field favourable to stakeholders, he added.
A leading seafood exporter in Kochi said direct sales would help the seafood industry in a big way as it would reduce the time taken to reach the destination market and cut down on the cost. He pointed out that Vallarpadam needed to look at its port-related charges when compared to neighbouring ports such as Tuticorin. He said since the Tariff Authority for Major Ports fixed the rates, there was a sense of helplessness in the area.
Expansion drive
Meanwhile, DP World and the CPA signed two memorandums of understanding on Friday “to unlock the next phase of capacity and capability expansion” at the Vallarpadam ICTT. The first MoU will see DP World implement Phase I of a Free Trade Warehousing Zone (FTWZ) at the Kochi port and the second will see the global terminal operator enhance cargo handling facilities at ICTT operated by India Gateway Terminal Private Limited (IGTPL). The proposed DP World-owned and operated Cochin Integrated Business Park would be the first free trade warehousing zone development in Kerala and the first one to be co-located alongside a terminal in the country, said a press release from DP World. The synergies between the ICTT and the Cochin Integrated Business Park are expected to significantly enhance trade possibilities for international and domestic businesses. Similarly, the second MoU will expand the ICTT’s capacity as well as enhance operational efficiency to attract more cargo and liner services.
