Cabotage Waiver Effect: India’s VOC Port to Attract More Foreign Vessels

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Taiwan’s Wan Hai Lines Ltd will start calling at VO Chidambaranar Port instead of Colombo on its CI2 service connecting China with Europe as the port located in Tamil Nadu’s Thoothukudi district is being primed to attract mainline vessel services after cabotage restriction was lifted in May.

The CI2 service will be the first mainline vessel service to call at a major port owned by the Centre after cabotage was eased, allowing foreign-flagged container ships to carry export-import (exim) containers for transshipment and empty containers for repositioning on local routes.

Proposal Approved

Wan Hai’s head office in Taiwan has approved the proposal to call at VOC Port Trust (VOCPT) while other partners in the CI2 service are being pursued for their internal approvals, according to McKinsey & Company, the consultant hired by the Shipping Ministry to prepare a strategy for transshipment and mainline calls at major ports.

“Geographically, VOCPT is the best-suited Indian port that can compete with Colombo for transshipment, but it needs better infrastructure and draft to allow bigger mainline ships to dock,” said a shipping industry official.

VOCPT has agreed to give a draft of 12.5 metres and 270-metre length overall (LOA) to main line services with current infrastructure which would be improved once the dredging around turning circle is completed. VOCPT has two container terminals, run separately by PSA Sical Terminals Ltd and Dakshin Bharat Gateway Terminal Pvt Ltd.

Deviation

Calling at VOC Port instead of Colombo – a big regional transshipment hub – entails a deviation of 51 nautical miles, which translates into an additional voyage time of three hours for a ship. A parcel size of about 100 TEUs per week is sufficient to justify the CI2 call at VOCPT, according to industry experts.

Of the 50 services calling at Colombo, five have been identified to call at VOCPT ahead of a planned dredging project to deepen the port.

Apart from the CI2 service, other services include the AEX, the ASEA/ATX X-Press, HSX-CH3 and CCG. Another four services have been identified that can call at VOCPT based on its captive traffic alone after dredging is completed. These include services such as the EAX, Australia Express, East Coast EC5 and Empire.

Main line ship services calling at Colombo are fed Indian origin-destination containers through small feeder ships. A main line call at VOCPT will yield a benefit of as much as $50 per TEU for a ship, compared to using it as a feeder port, say experts.

Sending a container from VOCPT to Colombo en-route to the UK/Shanghai would cost $288 after factoring in vessel-related charges (VRC) and box transfer cost at Colombo, feedering cost from VOCPT to Colombo, container related charges (CRC) at VOCPT and mainline voyage cost, assuming a parcel size of 1,000 TEUs per week.

Savings

A mainline call at VOCPT would cost $50 per TEU less with savings accruing mainly from the feedering cost from VOCPT to Colombo vs VRC at VOCPT and box transfer cost at Colombo vs extra main line voyage cost to VOCPT.

VOCPT will earn ₹3.75 crore from a mainline vessel call by Wan Hai after factoring in a 60 per cent discount in VRC extended to the service. The total benefit to VOCPT from five shortlisted mainline services is estimated to be ₹24 crore.

(Source: The Hindu Business Line)

Sea News, August 24

Baibhav Mishra
Author: Baibhav Mishra