Lankan economic crisis creates opportunity for south Indian ports

In the past two months, ports in Kochi, Ennore and Thoothukudi have registered an increase in their cargo traffic

Continued disruption at the Colombo port due the economic crisis brewing in Sri Lanka has opened opportunities for ports in southern India. In the past two months, the International Container Transhipment Terminal (ICTT) in Kochi, Kamarajar Port Limited (KPL) in Ennore, and VOC Port in Thoothukudi—all have registered an increase in their cargo traffic.

The trend is likely to continue for the next couple of months, or until Sri Lanka drags itself out of the financial mess it sees itself in.

The transhipment container volume witnessed a huge jump in the past two months; the ICTT handled 13,609 TEUs and 15,324 TEUs in March and April 2022 respectively, as against 8,394 TEUs and 4,415 TEUs last year. In 2021-22, the ICTT recorded the highest-ever container traffic of 7.36 lakhs TEU, which is an increase of 6.65 per cent.

The total cargo handled by ICTT in April this year went up to 9.99 lakh tonnes from 7.88 lakh during the corresponding period last year.

The KPL in Ennore—situated 18 km from Chennai—also benefited from the Sri Lankan crisis with Mediterranean Shipping Company (MSC), the world’s largest shipping line, docking two of its vessels there in the past two months.

As a result, the cargo traffic grew to 1.65 million tonnes between April 1-May 20, 2022, against 1.13 million tonnes during the same period last year, registering a 46 per cent growth.

Although shipping lines prefer the port at Colombo—it handles almost 60 per cent of India’s transhipment cargo—as it is better located geographically on the international sea route, experts say India should take advantage of the current situation. Experts suggest that India should try to get a sizable percentage of traffic diverted to its ports permanently.

Since the crisis began in Sri Lanka in March, the ICTT and Ennore hosted two main line vessels each of MSC.

K Mohandas, former Union Shipping Secretary, told DH that Indian ports should engage with shipping lines, and highlight the possibilities of re-routing large vessels through them mainly for transhipment operations.

“We have a good network of ports. We have several advantages as many of our ports like Cochin, Mumbai, and Mundra on western side and Chennai and Ennore on the eastern side are suitable for hosting large vessels,” he said.

“The (Cochin) port posted an increase of 247 percent in transhipment containers compared to (the) corresponding period last year. We continue to get more enquiries, and if the crisis in Sri Lanka continues, more vessels might operate from Cochin. The port’s transhipment business has been on the increase since 2020,” M Beena, Chairman of Cochin Port Trust, told DH.

While attributing the constant increase to the “aggressive pricing strategies adopted”, Beena also said the work on increasing the draft size to 18 metres from 14.5 metre had also begun. “This will help us compete with Colombo port in the long run as their draft size is also the same,” she explained.

Sunil Paliwal, Chairman of Chennai Port and KPL, predicted more vessels would make “ad-hoc” calls at the Ennore port because of the availability of yards and convenient time slots. “MSC might have preferred Ennore because it is already operating a feeder service between Ennore and Colombo,” Paliwal said.

Since February this year when the economic crisis began to unravel in Sri Lanka, the VOC port had attended to six ad-hoc feeder vessels from Colombo, and six mainline vessels from African sector and beyond. The port handled 11,571 TEUs and 13,426 TEUs from ad-hoc feeder and mainline vessels.

During April 1-May 25, 2022, the VOC port handled 55.58 lakh tonnes (cargo traffic) as against 53.75 lakh tonnes during the corresponding period last year. The cargo volumes registered a growth of 3.4 per cent.

Experts said that early operationalization of the international transhipment terminal at Vizhinjam, near Thiruvananthapuram, being set up by Adani Ports can change the game in India’s favour as it is located just ten nautical miles from the international shipping lane.

“If the port was operational now, we could have wooed Colombo-bound ships and it would have worked given its strategic location,” Mohandas said.

Both ICTT and Ennore hosted over a dozen mother vessels in November 2020, when ships were diverted to other ports from Colombo due to congestion after the markets opened up following the end of the first Covid-19 induced lockdown.

R T Kishore of Zeal Lines Private Limited, which is involved in export of defence ammunition and specialised cargo like hazardous chemicals, said all stakeholders, including the government, should devise a strategy to ensure that mother vessels “permanently” dock at south Indian ports instead of coming here only during a crisis elsewhere.

He said the ports in Chennai and Ennore handle huge cargos that are meant for cities such as Hyderabad and Bengaluru, and these ports have the capacity to give the volumes that vessel owners require to operate mother vessels.

“If we provide the required volume, ships that move towards Africa from Hong Kong will consider coming to Chennai, before going to Colombo, though they have to take a detour. It is all business, and volumes matter since companies will have to shell out money for the travel and docking at ports,” Kishore told DH.