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Vizhinjam terminal will reduce movement cost, says study

Mony K. Mathew

Thiruvananthapuram , Aug. 29

THE proposed deepwater international container trans-shipment terminal at Vizhinjam is expected to bring down the total costs of movement of containers to and from foreign destinations, according to the Container Shipment Economics Study.

The study, carried out IL&FS Infrastructure Development Corporation and Hauer Associates, has also found that the Sethusamudram project will promote inter-coastal movements of Indian cargo, enhancing the potential of Vizhinjam as a trans-shipment hub.

The study says that container traffic at Indian ports has increased by 102 per cent over the previous five years to 3.9 million twenty-foot equivalent units (TEUs) in 2003-04. The rapid growth is expected to continue and by 2016-17, the country will handle 15.64 million TEUs.

On the other hand, the present Indian gateway ports do not attract a sufficient number of mainline vessels due to inadequate facilities and the distance from international shipping routes. As of now, about 61 per cent of Indian export/import containers are trans-shipped through the nearby foreign ports of Colombo, Singapore and Salalah (Oman.)

This results in an additional burden of up to $200 per TEU of cargo interests with freight paid by Indian exporters being 11.4 per cent of the c.i.f (cost, insurance, freight) value of goods as against the world average of 6.1 per cent.

Nearly 69 per cent of the country's total container traffic originates in or is bound for northern and western India with the South accounting for 26 per cent and the East a mere five per cent. The Jawaharlal Nehru Port Trust handles 58 per cent of this total traffic.

The main containerised cargoes are garments, electronic goods, agro-products, cotton yarn, machinery and parts, granite, coir, leather and jute products. The US/Canada/South America sector, with a 28 per cent share, is the main destination for containerised exports, while the Far East sector, with a share of 25 per cent, is the main origin for containerised imports.

Notwithstanding the location of Vizhinjam in the deep South, cargo interests in the southern, northern and western regions may find it more viable to use the port as a gateway/trans-shipment terminal instead of Colombo, Singapore or Salalah. This means the hinterland of the port may extend to the western and northern parts of the country.

The study estimates that 1.35 - 1.60 million TEUs are likely to be diverted through Vizhinjam by 2016-17 and this will be further augmented by foreign trans-shipment containers and also by the Sethusamudram project.

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