Why the commissioning of Vizhinjam Terminal must pick up pace?

Colombo has had a respectable growth year on year but the hold it may have had on Indian cargo may be loosening primarily due large capacities being added in the India East coast Ports.

A new World Bank report finds the Indian Sub Continental region made strides in improving the performance of its container ports, but still had room for improvement, particularly in its lagging ports.

The study recommends that the countries -- Bangladesh, India, Pakistan, and Sri Lanka – improve governance of port authorities, build greater private sector participation and create a more competitive environment in the port sector.

 In this respect the drawn curtains on the out of sync TAMP is a welcome step.

When the Cabotage reform was enacted in May 2018, foreign-flag carriers gained access to Indian coastal markets for the movement of laden export-import containers for transshipment and empty containers for repositioning, thus paving the way for more cargo aggregation opportunities and new direct call additions.

Colombo has had a respectable growth year on year but the hold it may had on Indian cargo may be loosening primarily due large capacities being added in the India East coast Ports.

To put numbers into perspective, Colombo’s 2019 throughput stood at 7.2 million TEU, up 3 percent year on year, of which the Indian transshipment cargo was at a whopping 4.6 million teu, but this 4.6M teu’s was a significant far cry from the 5.5million teu’s out of 7.05 million teu’s handled by Colombo in 2018.*

The primary reason for the shift and the upswing seen on the Ex India volumes is the addition of direct connections to the Far East and Europe from ports on the India East Coast with better connection to Indian hinterland including the North East India and Nepal via Kolkata through the improved coastal feeder networks.

It is in this context that when commissioned soon, Vizhinjam Terminal must push ahead firing full steam ahead on all cylinders as given the history with Vallarpadam container terminal which has not been as much as a success as much as we would like to write home about. All excuses from not enough draft to higher operational expenses to failing to convince MLO’s to call at Vallarpadam with a regular service, we have seen it all at Vallarpadam Terminal. What causes even more pain is that ICTT Vallarpadam is the only port in the country accorded Special Economic Zone (SEZ) status. As a result, it is exempted from all duties normally levied on imports. This has enabled the promoters to save considerable amounts through exemptions on import of capital goods and equipment for establishing the ICTT. The SEZ provision also exempts the ICTT from customs and excise clearances.  Even after a decade, ICTT Vallarpadam (funnily enough the only Indian port with a ’transshipment’ in its name even) has failed to live upto its hype.

As per statistics, in 2019, the SLPA-owned JCT handled 2.28 million TEUs out of the total container handling in the Port of Colombo, which amounts to 7.23 million TEUs. Apart from that, CICT reportedly handled 2.65 million TEUs for the 12 months ended 31 December 2020.

The Port of Colombo has reached its capacity and losing market share

Calendar Year 2019 (Jan – Dec) volume of terminals in the Port of Colombo (‘POC’) compared against their respective capacities:

With WCT still a couple years away, Will Vizhinjam steal Colombo’s thunder.

·        - Sources SLPA / GOI data / JOC / World Bank / Port wwbsite / Drewry Maritime research

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