Cabotage blocking traffic to Vallarpadam?

N. K. Kurup V. Sajeev Kumar | Updated on November 12, 2017

Mr Paul Antony

From his glass-panelled cabin on the top floor of the Cochin Port office building, Mr Paul Antony gets a clear view of the Vallarpadam container terminal on the other side of the waterfront. Anyone would be at ease at such a tranquil spot surrounded by the calm waters of the Kochi harbour, but not Mr Antony.

He took over as Chairman of the port soon after the terminal was commissioned last February.

Set up and operated by DP World, a Dubai government-owned company, on a 30-year lease, Vallarpadam is expected to be the largest transhipment hub in the country.

As part of the agreement, DP World had been operating the Cochin Port's Rajiv Gandhi container terminal till the commissioning of Vallarpadam.

With the shifting of the container handling business now to Vallarpadam, the Cochin port has left with an idle terminal and more than 350 workers.

Mr Antony's major task is now to find cargo for this terminal and job for these workers. The contract with DP World does not allow Cochin Port to operate containers berths till Vallarpdam achieves a cargo throughput of 2.5 million TEUs. This could take at least five years.

“We plan to redevelop the port on the basis of a master plan being prepared by our consultant,” said Mr Antony in a conversation with Business Line.

A civil servant from the Kerala cadre, Mr Antony is not a novice at port operations. He was the Development Commissioner of the Cochin Special Economic Zone for five years from 2000 and in that capacity he was also a trustee of the Cochin Port Trust.

Yet, at Cochin port, employees are heavily unionised and the port management cannot do anything without the union's consent. This makes Mr Antony's job more difficult.

And this became evident very recently. The Cochin Shipyard had backed out of a proposal to take over and develop the port's ship repair workshop as the unions insisted that all workers should be absorbed by the shipyard.

Ship repair yard

The port now plans to float a global tender to choose a partner for the ship repair yard. Indeed, a good move, but with the adamant unions around, one can only wait to see what the bidder response will be.

For Cochin terminal, finding other than containerised cargoes will not be easy. One option is to covert the container berths into a bulk cargo terminal, but it could raise environmental issues. The port may have the potential to attract coastal cargo, but its success depends on several other factors. “We are trying to get some bulk cargo,” said Mr Antony without giving any details.

But his biggest worry is the empty berths at Vallarpadam.

“I want to see ships moving in and out always. The productivity at the terminal is world class, but few ships are calling at the port”.

As he talks, he keeps looking out at the harbour to see whether any ship was coming to berth.

A transhipment hub should attract mother ships. Initially, the problem was inadequate draft. This is now being solved. “We will be able to provide 14 meters (draft) by October”.

But the main hitch is the Cabotage. Unless that is exempted, Mr Antony thinks, the terminal will not be able to become a true international transhipment hub.

Cabotage review

Cabotage regulations restrict operation of foreign ships along the Indian coast. This means large foreign flag ships calling at Vallarpadam have to depend on Indian vessels for movement of cargo between Vallarpadam and other Indian ports.

As domestic shipping companies do not have adequate ships to operate such feeder services, this restriction affects seamless movement of cargo.

According to Mr Antony, currently there are only 13 Indian flag container vessels with a combined capacity of 12,165 TEUs which are deployed for coastal operations. “This capacity is grossly inadequate to operate feeder services from Vallarpadam,” asserts Mr Antony”.

“Despite lower cargo volume, seamless evacuation of containers is not happening.

Right now there are 580 containers waiting for transhipment to Tuticorin.

The evacuation of containers by train has its limitations as only 90 boxes can go at a time. Whereas a connecting vessel could have cleared out all the boxes at one go,” said another port official.

The promoters of Vallapadam have been seeking Cabotage exemption right from its inception. Recently, the Parliamentary Standing Committee on Transport has recommended relaxation of Cabotage for the Intentional Container Transhipment Terminal at Vallarpadam.

In its report submitted earlier this month, the committee said “the Government should immediately undertake a review of the Cabotage Law and take appropriate decision in consultation with all stakeholders involved.”

The Director General of Shipping in a draft policy for the development of coastal shipping also suggested relaxation of Cabotage for container operations.

The government is yet to take a decision, apparently because of strong opposition from Indian shipping lines. Their stand is that coastal cargo is reserved for national flag carriers and opening up of coastal trade to foreign operators will affect the development of shipping. Many countries including the US do not allow foreign lines to carry coastal cargo.

Major issues

As of now, the volume at Vallarpadam is more or less the same that the Rajiv Gandhi terminal had been handling,” said an official at ICTT, the company that operates the terminal.

“Unless the terminal is exempted from the Cabotage laws, it will not be able to attract mother vessels,'' he said. Most of these vessels carrying Indian cargo still call at Colombo as it offers better connectivity, he said.

So Mr Paul Antony has two major issues to tackle: one, to redevelop the Rajiv Gandhi terminal, find a partner for the ship repair facility and ensure that other available assets of the port are put to maximum use.

Two, as the landlord port, it is Cochin Port's responsibility is to ensure that Vallarpadam has all the facilities, including the feeder service to attract large vessels for it to become a major transhipment hub.

Published on August 21, 2011

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