Financial Daily from THE HINDU group of publications
Wednesday, Feb 16, 2005
Financial Daily from THE HINDU group of publications Wednesday, Feb 16, 2005 |
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Logistics
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Shipping Gateway to development Sajeev Kumar
TOUCH THE HORIZON: An aerial view of the Rajiv Gandhi Container Terminal from Vallarpadam island, where Dubai Ports International is to set up a container transhipment terminal. — K.K. Mustafah
The ICTT project is being developed by the Kochi port on a build-operate-and-transfer basis with Dubai Ports International, one of the leading container terminal operators in East Asia. Kochi port, having the essential features for a container transhipment terminal, is an ideal location for the ICTT. It enjoys proximity to the trunk sea trade routes, right from Europe and West Asia to the Far East and Australia, and well-established connections throughout the country via a national network of railways and highways.
The backdrop
Dr D. Babu Paul, a former Chairman of the port, had visualised the suitability of developing the ICTT at Vallarpadam in the vicinity of Kochi port. In his book A Queen's Story - Five Centuries of Cochin Port (1987) he wrote, "If this vision is not shaped into reality, the 21st century might well see the decline and fall of Cochin; this proud Queen of the Arabian Sea is perilously close to losing her throne and much else." As the port has a large greenfield area, it had mooted a proposal to set up the ICTT. Considering the advantages and potential of Kochi, the Union Government had also made a policy decision to develop Kochi as a container transhipment port.
Advantages for the nation
Container traffic in India is growing at a fast pace. Owing to economies of scale of transportation, the international trend is to develop hub ports to handle mainline container vessels connected to nearby smaller ports through feeder services. And because of the lack of adequate facilities in Indian ports, much of the Indian container traffic is transhipped through transhipment terminals such as Colombo, Salalah, Dubai and Singapore. A majority of the country's containers, at present transhipped through Colombo, Salalah and Singapore, can be handled through the transhipment terminal. This could result in savings of between Rs 6,000 and Rs 16,000 percontainer for the Indian exporter. With the reduced freight, Indian produce can retain its competitive edge in the international market and increase trade volumes. It also makes for economic utilisation of the cargo-carrying capacity of the Indian Railways, especially Konkan Railway, and the national highways, as a substantial volume of containers will be transported between hinterland and port by land.
Advantages to Kerala
The project will ensure balanced regional development and also generate additional employment opportunities, facilitating investment flow to the tune of Rs 7,500 crore. It would also help develop several port-based industries in the State and transform Kochi into an economic hub. The project would also save the feedering cost of Kerala's sea-borne trade and consequent increase in trade volume.
Advantages to Kochi port
The Willingdon Island, where the current port facilities are located, is fully developed and, accordingly, the future development of port facilities has been planned on the port's land in the Vallarpadam and Puthuvypeen islands. The establishment of national highway and rail connectivity to these port areas, coupled with the availability of deep and wide channel for the navigation of large size vessels under the ICTT project, will throw up opportunities for the fructification of various port development schemes such as an LNG terminal, international bunkering terminal, international ship-repair facilities and international cruise terminal.
Geo-strategic plus
Kochi Port is located on the Willingdon Island, at Latitude 9 degree 58' North and Longitude 76 degree 14' East on the South-West coast of India, about 930 km south of Mumbai and 320 km north of Kanyakumari. It is an all-weather port, strategically located on the East-West trade route, only 11 nautical miles away from direct sea route to Australia and the Far East from Europe. No other Indian port enjoys this closeness to the maritime highway. Considering the geo-strategic advantage, the Shipping Ministry appointed a team of consultants in 1989 to evaluate the prospects of establishing an ICTT at Kochi. Currently, a substantial percentage of India's container traffic is transhipped principally via third country load centres at Colombo, Singapore and the Gulf region.
Chronology of events
With the evolution of the international concept of container transhipment terminal in the early 1980s, Kochi port, with its strategic locational advantage of being close to the trunk sea route between Europe and the Gulf to the Far East and Australia, initiated action to establish a container transhipment terminal. A detailed feasibility report was prepared for the project by Dutch consultant Fredric R. Harris B.V. of the Netherlands in 1991 to establish technical, economic and financial suitability for setting up a transhipment container terminal at Vallarpadam. Although Expression of Interest was invited in 1992, with its date extended up to January 1994, no encouraging response was received. The detailed project report prepared by the consultants in 1991 was subsequently updated in 1998 taking into consideration the various changes that had taken place in the economic front as well as in the ports and the shipping sector nationally and internationally. The updated report envisages the development of the container transhipment terminal in four phases over a period of 20 years to handle an annual throughput of about three million TEUs at the final stage of development, at a total estimated cost of Rs 2,118 crore. Though the feasibility of the ICTT project was established as far back as in 1990 and tenders were invited for the project both in February 1992 and May 1998, the project could not materialise on account of many uncertainties relating to the various infrastructure linkages to this `greenfield project' site.
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