Indian transshipment at foreign hubs jumped last fiscal year

Indian transshipment at foreign hubs jumped last fiscal year

Visakhapatnam Port, India.

Transshipment traffic is the cargo that is transported between an Indian port and an international “hub” port, when direct mainline connections are not available. (Above: Visakhapatnam port, India.) Photo credit: Shutterstock.com.

An analysis of the latest, provisional Indian transshipment trade data obtained by JOC.com appears to support the government’s cabotage policy reform and other stakeholder efforts aimed at attracting more direct mainline calls and encouraging coastal shipping.

Statistics show the volume of Indian export-import containers transshipped via foreign hub ports increased to a new high in fiscal 2017-2018, which ended March 31, as the emerging market economy expanded, after the previous year’s slowdown that industry analysts had attributed to coastal network improvements and weaker freight demand.

In fiscal 2017-2018 Indian transshipment volume at major, public ports rose to 3.15 million TEU, compared with 2.78 million TEU in 2016-2017 — a 13.3 percent jump. 

Transshipment traffic is the cargo that is transported between an Indian port and an international “hub” port, when direct mainline connections are not available.

To illustrate that trend and provide context, total container trade at India’s 12 major ports last fiscal year was 9.14 million TEU, an 8 percent gain year over year, meaning 35 percent of that total was transshipped, with direct gateway traffic pegged at 5.3 million TEU during the year, according to the JOC.com study.

That shortsea, feeder activity — involving operations relegated to sending and receiving domestic cargo routed via other hub ports in the region — is more pronounced on India’s east coast, where ports generally lack the necessary draft and other infrastructure capabilities to handle the latest generation ships.

The new analysis reaffirms the above, long-time phenomenon, with the ports of Chennai, Kolkata, Visakhapatnam, and Tuticorin (V.O. Chidambaranar) being the dominant players.

Sri Lanka’s Colombo port — a magnet for India transshipment

Further, Sri Lanka’s Colombo port — which essentially thrives on the Indian Subcontinent transshipment trade — captured 42 percent of Indian relayed freight during the year, or 1.3 million TEU, compared with 1.1 million TEU in 2016-2017, data show.

Colombo was followed by Singapore, at 465,000 TEU or 15 percent, down from 21 percent previously; port Klang (Malaysia), at 237,000 TEU or 7.5 percent, down from 9.3 percent; Jebel Ali (United Arab Emirates), at 90,000 TEU, or 3 percent, flat; and others, at 1 million TEU, or 32 percent, up from 25 percent. This also points to Indian shippers’ growing use of new, emerging hub ports, such as Khalifa (Abu Dhabi), Salalah (Oman), and Hamad (Qatar) on the strength of improved regional connectivity.

In addition, a previous JOC.com analysis showed there is considerable transshipment activity taking place at India’s privately operated minor terminals, with Krishnapatnam — located about 112 miles north of Chennai — leading that pack. Krishnapatnam offers regular, weekly feeder connections to/from Colombo, Jebel Ali, Salalah, and Hamad.

The new analysis also highlights a steady uptrend in coastal shipping demand, or intra-India freight transportation by sea, reflecting the result of a renewed government focus on the development of alternative, more cost-effective, and environmentally friendly supply chain solutions. Coastal cargo handled between major ports totaled 693,000 TEU last fiscal year, a 15.5 percent jump from 600,000 TEU in the previous year, statistics show.

After India implemented the cabotage relaxation May 21, foreign-flag carriers gained the freedom to transport laden export-import containers for transshipment and empty containers for repositioning between Indian ports without any specific permission or license, and authorities argue this policy shift is already bearing fruit.

According to them, Indian ports in June were able to regain 11,589 TEU of domestic cargo that, in the normal course of events, would have been transshipped over foreign ports with shippers incurring heavy, extra logistics costs and longer transits. 

Even so, it is still too soon to tell if that policy change alone — without addressing ocean carrier concerns regarding vessel-related charges and terminal efficiency rates — will pave the way for more direct mainline calls at major ports. Nevertheless, stakeholders are generally convinced that trade would benefit from better service offerings as competition increases.

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