Indian ports need to develop hub ports as they are losing out at handling increased cargo as a load of it is being transhipped to its neighbouring hubs
A study by IIM Ahmedabad stated that the recent growth in containers has increased scope to augment the transhipment hub and feeder operations in India.
The study points out that it is important to focus on a few ports on both the coasts with deep draft. The IIM study attributes insufficient traffic, prohibitive provisions of the Cabotage Law and inadequate infrastructure, including draft requirements for a mainline ship as the reasons for a stunted growth of hub ports.
According to PS Raman, partner at R&K Shippers, a small-sized shipping agency in Chennai, “The key requirements of a transhipment terminal include its strategic location, potential to reduce total transport cost using ‘hub and spoke’ arrangement, financial savings in terms of lower land values, less need for dredging and the facility to receive higher-capacity vessels to reduce overall fleet costs.”
India’s loss is neighbours gain
Due to the absence of a hub ports in India, a chunk load of the country’s containers are currently transhipped through other ports such as Colombo (south), Singapore (east), Dubai and Salalah (west). Handling these cargoes through an Indian transhipment terminal would result in savings of between Rs 6,000-16,000 per TEU[i] for the Indian exporter.
In this context, Nayan Talukdar, manager at Go Carriers, a Mumbai based small sized shipping firm, said, “The main advantages of having a hub port would be the reduced feedering time to other ports, the revenue from the transhipment and marine side traffic from and to the hub port moving faster and cheaper.”
An estimated 9 million TEUs (43%) of the Indian traffic of 21 million TEUs will be hubbed in 2015-16. Of the hubbed traffic, 0.95 million TEUs (11%) will be hubbed in India, implying a transhipment of 1.9 million TEUs. If India hubbed 50% of it, then 4.5 million TEUs will be hubbed in the country, implying transhipment handling of 9 million TEUs. Therefore, there is an urgent need of developing hub ports in the country.
The study states that ports like JNPT[ii], Mumbai and Pipavav, on the West coast; Kochi and Chennai in the South and Visakhapatnam in the East, offer high potential in their readiness levels to start hub operations.