DP World pushes for more ships for Vallarpadam ICTT

Post the relaxation of Cabotage, DP World- operator of the Vallarpadam International Container Transshipment Terminal (ICTT)- is trying hard to attract more vessels to Kochi. Speaking at a lecture meeting organised by the Kerala Management Association, K.K. Krishnadas, Director and CEO, DP World, Kochi, said that there is a need to create a better image for the port. Krishnadas was referring to some of the problems at the port had faced in the past, including flash strikes and other issues- although Cabotage was the biggest stumbling block. 

 “This has changed now. However, more collective efforts are needed to make the port a success in competition with other global terminals”, he said. DP World also made a lot of efforts to project the ‘strike-free image’ of the port, he added.  

DP World is busy disseminating productivity and performance figures of the Vallarpadam ICTT internationally. The ICTT is said to be gradually increasing its footprint, with some mainline shipping companies regularly sending at least one ship to Kochi on a trial basis after the relaxation of Cabotage. 

With the draft at the basins being increased to 14.5 metres next month and a possible reduction in rates as more ships call the ICTT, DP World is hopeful of competing against Colombo, that some figures show handles almost half of India’s container trade at present.

Vallarpadam's woes mount with Customs-SEZ standoff

Problems at the International Container Transhipment Terminal (ICTT) at Vallarpadam- that was supposed to make Kochi a preferred global transhipment terminal - seem never to end. To add to the old issue of Cabotage comes a new one- a spat between the Special Economic Zone (SEZ) and the Customs department at Kochi over the inspection of containers at the terminal.  The two are at loggerheads, with the SEZ administration saying that inspection by Customs of transhipped containers within the SEZ is unacceptable- the Customs department says that this is their statutory duty. The Customs wants to set up an office inside the ICTT, something that the SEZ authorities have refused to allow so far. 

News reports say today that the situation has become so serious that India Gateway Terminal Pvt Ltd IGTPL)- the ICTT operator- has approached the Kerala High Court against the Customs authorities move to withdraw its staff from the terminal gate. The company has also cited the Ministries of Shipping, Finance and Commerce for delay and inaction in this connection. IGTPL says that they will not allow Customs authorities to examine containers inside the ICTT because the entire premises were a processing zone under the SEZ Act, which did not permit such examination inside the facility. 

Transhipment containers coming in at Vallarpadam are manifested presently by the SEZ at the ICTT and a copy furnished to the Kochi Commissioner of Customs. However, the Customs department says that SEZ has no authority to inspect the containers. “Inspection of export-import cargo is the statutory duty of Customs. Even the SEZ Act does not allow the SEZ authorities to inspect and clear the cargo,” they claim.

Reports about a week ago said that Customs blocked transhipment of around 60 containers that had come in from Tuticorin, discharging them from the ‘Turungia Express’ which eventually sailed out much delayed without the containers on board. An angry Dubai Port World official- DP World operates the Vallarpadam ICTT- said after the incident, “Trade will be hit if these kinds of incidents are repeated. If this situation continues, our efforts to attract more mainline services to the ICTT will become futile.” 

Rumours are afloat that some mainline vessel operators are rethinking their Vallarpadam ICTT commitments already. One operator that had started a weekly European service is set to cancel Kochi and shift to Colombo instead, observers say, pointing out that transhipment containers that arrive in this manner would not be subjected to delays with repeated Customs formalities. Says an ICTT officer, "Repeated verifications will only delay the movement of containers and the whole objective of transhipping will be futile. If the cumbersome procedures continue, international shipping lines will definitely divert and continue to use Colombo as their transhipment hub.” 

Many agree that the Vallarpadam ICTT, commissioned in February this year, will continue to remain uncompetitive unless concerted and timely action is taken. The advantages of Kochi- an all weather natural port situated close to major sea routes- are being frittered away anyway with the old issue of a possible relaxation of Cabotage for the ICTT still to be resolved, they say. 

Some experts are of the opinion that a relaxation of Cabotage is not required, and that Vallarpadam can be supported instead by a more aggressive enforcement of Cabotage on the India- Sri Lanka route. Proponents of this course of action point out that by treating this route as coastal movement- and thereby invoking the Cabotage provisions in the Indian Merchant Shipping Act- the advantages mainline vessels enjoy by using Colombo for transhipment of goods into India will simply disappear.  Seen from this perspective, it would appear that India's Cabotage enforcement is too loose rather than too tough.

Crisis at Vallarpadam: Indian Cabotage Law to be relaxed?

The ongoing crisis at the International Container Transshipment Terminal (ICCT) at Vallarpadam may have prompted the Parliamentary Committee on Transport, Tourism and Culture to recommend relaxing Indian Cabotage Laws, which so far allow only Indian flag vessels to carry cargo between Indian ports. The Committee presented its report to the Rajya Sabha earlier this month, saying, “The Government should immediately undertake a review of the Cabotage Law and take appropriate decision in consultation with all stakeholders involved.” It is learnt that Indian shipping is fiercely defending the law, one that many countries including the US enforce.

Shortage of Indian container ships has meant that Vallarpadam, the country's first ICCT, has been plagued with hundreds of containers held up at the port because of lack of feeder container vessels. Foreign flag ships calling Vallarpadam simply do not have enough Indian feeder vessels to support them. The result is poor productivity, a disincentive to containerise, bad connectivity and bottlenecks. Because of this, major players, including Maersk, Zim and CMA CGM, have gone back to calling Colombo, which is well connected with most Indian ports.

The Vallarpadam ICCT had planned to handle 7.75 lakh TEUs this year, while the 13 Indian feeder vessels available together have a capacity of just 12,156 TEUs- and they do not call Vallarpadam regularly. Trains capacities are extremely low, with just ninety boxes possible per train.

Relaxation of Cabotage, at least for container ships, has been a longstanding Vallarpadam ICTT demand. Some observers say that, unless the government implements the Parliamentary Committee's recommendations, the Rs 1800 crore port, operated by DP World on a 30-year lease, will find it very difficult to function effectively as a transhipment hub for containers. A worried Chairman of the Port Mr Paul Antony had told reporters earlier this month, “The productivity at the terminal is world class, but few ships are calling at the port.”  

The port has been plagued with dredging difficulties right from the beginning, adding to its woes. Antony was confident, however, that the port would be able to cater to vessels with a 14-metre draft well before the end of the year. He said that the main issue was Cabotage. “Unless the terminal is exempted from the Cabotage Laws, it will not be able to attract mother vessels,'' he said.

The government has yet to announce its final decision on Cabotage; no doubt, Indian shipping companies will object strongly to any proposed relaxation. Meanwhile, it is believed that the Directorate General of Shipping is leaning towards a relaxation of Cabotage for container operations, especially since Indian companies do not have the tonnage to operate feeder vessels to any satisfactory degree.

Vallarpadam, at the time of its commissioning, was supposed to give Colombo a good run for its money. This crisis could have been well averted- and major embarrassment avoided- if only the authorities had thought the transhipment requirements through and had put in place the required infrastructure and legislation to support the ICTT at Vallarpadam before permission to build was given. As things stand now, there seem to be few options available if Vallarpadam is to survive as a container transhipment terminal.

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