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Posted Jun 14, 2009, 6:37 AM
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Registered User
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Join Date: Oct 2007
Posts: 765
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India's gateway port to be ready in 3 months 
DPW delivers project as per schedule although road connectivity will
take 4 more months to complete
To remind, Vallarpadam bidding happened in 2003 when world and Indian
economy was yet to recover from a downturn in 2001. Still, DPW clinched
the bid by offering a record 33.33% revenue share for Cochin Port Trust.
The vast potential of Vallarpadam combined with DPW's record of being
the topmost port operator of the globe have given it the lethal edge to be
India's Gateway transshipment port.
A few attempts to copy Vallarpadam project that happened later even
when the economy was clocking 8-9%, all flopped due to this single factor
with no entrenched investors showing up.
More, this anchor project has brought in over Rs.20,000 crore investment
to Kochi excluding its own.
Quote:
Vallarpadam terminal set to redefine maritime trade
The depth at the trans-shipment terminal, and the latest technology, will allow mega ships to call
P. Manoj and P.R. Sanjai
Bangalore/Mumbai: A global economy in recession is not the best of times to open India’s first international container trans-shipment terminal (ICTT). But analysts, cargo owners and DP World Ltd, the private operator set to run the terminal at Vallarpadam in Cochin port, say this will redefine how exporters and importers in India, Asia’s third biggest economy, ship goods.
A trans-shipment port, such as those in Colombo, Singapore and Dubai, typically has a depth of at least 16m, allowing big container ships to call at the terminal. Smaller vessels from regional ports use these terminals to load or unload cargo to or from the larger ships onward to the final destination.
Right time: Ganesh Raj, senior vice-president and managing director (Indian subcontinent), DP World. Abhijit Bhatlekar / Mint
“It is the right time to open the ICTT,” said Ganesh Raj, senior vice-president and managing director (Indian subcontinent) at DP World. “The global slowdown is a short-term phenomenon in the context of world trade over time. DP World continues to remain confident of the long-term prospects of the container port industry, and, hence, we are building capacity to meet anticipated demand.”
DP World, the world’s fourth biggest container port operator majority owned by the Dubai government, won a 30-year contract in a public auction in 2004 for developing and operating the Vallarpadam terminal, which is close to key international sea trade routes.
It was allowed to operate the existing Rajiv Gandhi container terminal at Cochin port for eight years or till it constructed and shifted operations to Vallarpadam. DP World aims to commission the ICTT by 30 November.
The Rajiv Gandhi terminal handled 260,000 twenty-foot equivalent units (TEUs) in the year to 31 March. A TEU is the standard size of a container and a common measure of capacity in this business.
Because of depth restrictions in the country, big container ships cannot call directly at many of India’s ports. A big portion of the container cargo, originating from or destined for India, hence, are trans-shipped at ports in Colombo, Singapore or Dubai.
As a result, India’s exporters and importers incur extra costs of at least Rs1,000 crore a year on trans-shipment of containers via other ports, according to the shipping ministry.
The depth at the Vallarpadam terminal, together with the latest technology in equipment, will allow mega container ships such as Emma Maersk, which has a capacity of at least 12,500 TEUs, to call for loading and unloading cargo. Emma Maersk is owned by the world’s biggest container shipping firm Maersk Line.
“Larger vessels bring about economies of scale and lower cost of operations for the shipping lines, which then translates into lower freight rates for exporters, importers,” said Shailesh Garg, general manager at the Indian unit of London-based maritime consultancy firm Drewry Shipping Consultants Ltd.
Traditionally, India’s most significant deterrent to handling larger ships has been the depth restrictions at its ports. As a result, the cost of trade into or out of India has been higher than for other Asian countries such as China or Malaysia.
Container trans-shipment terminals are a critical link in maritime trade, enabling shipping lines to optimize their logistic chain when moving cargo.
With the current flow of trade out of India, logistics costs are considerably high, making Indian products uncompetitive in the global market.
“With the opening of Vallarpadam ICTT, larger ships will call India. Hence, freight rates should be lower (and) transit times will be better since export goods will be loaded on mainline vessels and sent directly to destinations,” said S.R.L. Narasimhan, secretary, Western India Shippers’ Association, a body representing exporters and importers.
The success of a trans-shipment terminal for India will depend on how importers and exporters see its value in their overall supply chain.
Adding direct mainline calls from major shipping to key markets overseas will definitely help a certain segment of customers move their cargo through the ICTT, as it will provide for quicker transits and lower transportation costs.
“It is always better to have origin/destination as well as trans-shipment cargo for this kind of project so that bigger vessels will have options to call at that particular port,” said G. Raghuram, a professor at the Indian Institute of Management, Ahmedabad, who has studied the sector closely.
Having such a hub within the country gives traders a choice to directly move their cargo through the trans-shipment port or use the existing terminals at ports such as Jawaharlal Nehru Port, Chennai or Mundra port and tranship their cargo at Vallarpadam at a lower cost than at overseas terminals, said DP World’s Raj.
Trans-shipment ports such as Colombo, Dubai and Singapore have so far flourished at India’s expense. For instance, 76% of the container volumes handled at Colombo port is for cargo trans-shipment from neighbouring countries. Of the 2.7 million TEUs handled by Colombo port in 2008, 70%, or 1.9 million TEUs, originated from or were destined for Indian ports; some 60% of it from South India alone.
“Hence, the trans-shipment terminal at Vallarpadam will have an immediate benefit to the South India trade. Our conservative estimates indicate a cost-saving of $150 (Rs7,110) per container if containers are trans-shipped at Vallarpadam,” said Raj.
ICTT took several years in the making and went through three rounds of auction.
The Peninsular and Oriental Steam Navigation Co. Ltd (P&O Ports), the British port operating company that DP World acquired in 2006, had successfully bid for the Vallarpadam project in 1999. The Union government later scrapped the bid because it felt that given the involvement of P&O in Colombo, Vallarpadam would not be developed to its full potential.
As fate would have it, DP World won the bid for Vallarpadam in 2004 and soon after, bought P&O in a global takeover worth $6.85 billion. DP World later sold its stake in the Colombo terminal to avoid a possible conflict of interest.
“Prior to (the) takeover, P&O Ports had a 16% stake in the South Asia Gateway Terminals Pvt. Ltd (SAGT) in the Port of Colombo. When DP World acquired P&O in 2006, the stake in SAGT was sold to APM Terminals Management,” Raj said. APM Terminals Management BV is the container port operating unit of Danish shipping and oil conglomerate AP Moller-Maersk Group AS.
Over the past few years, the port container traffic in India has been growing at an average 15% annually. At this rate, container traffic is estimated to reach 21 million TEUs by 2016 from around 7.8 million TEUs now, according to the shipping ministry.
Though the growth rate slumped last year due to the global slowdown, the ministry’s estimates remain unchanged, said a shipping ministry official. He didn’t want to be named.
ICTT is being developed in three phases. The first phase, costing Rs1,250 crore, is designed to handle 1 million TEUs, the second another 1.5 million TEUs and the third a further 3 million TEUs, taking ICTT’s total capacity to 5.5 million TEUs when fully operational.
p.manoj@livemint.com
http://www.livemint.com/2009/06/1123...to-re.html?h=B
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Looks cool, Thanks Sanju
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