INDIA's liberalised cabotage system has
been driving transshipment activity at some ports, but most of the gains
come from repositioning empties.
India implemented cabotage relaxation on
May 21 to permit foreign-flag shipping lines to transport laden
export-import containers for transshipment and empty containers for
repositioning between Indian ports without acquiring any specific
permission or license from local maritime authorities.
The Container Shipping Lines' Association of India (CSLA) estimates that member lines "transhipped" 16,543 TEU at Indian
ports during July as a result of the cabotage relaxation, which is
volume the group argues would otherwise have been relayed over foreign
hub ports such as Colombo (Sri Lanka), Singapore, and port Klang
(Malaysia) using feeder networks, reported IHS Media.
However, a JOC.com analysis of those figures shows 12,407 TEU, or 75 per
cent, represented empty containers, with laden export-import freight
pegged at 4,136 TEU.
The picture was little-changed from June, with empty equipment movement
then estimated at 2,312 TEU, out of the perceived, incremental 11,589
TEU of transshipment.
Further, the analysis appears to reaffirm a general industry view that
privately operated minor ports would stand to benefit the most from the
cabotage rule change due to their pricing and infrastructure
competitiveness. Indeed, Adani Group’s terminals at Mundra and Hazira
generated the majority of such transhipment gains reported by CSLA for
On the east coast, the public port of Visakhapatnam and the privately
operated Krishnapatnam port are leading the transshipment race, data
Repositioning empty containers is typically a challenging/costly task
for ocean carriers, especially in the Indian market, where logistics
costs are considerably high. The above analysis is a clear sign that
unrestricted coastal shipping - thanks to the scrapping of cabotage - is
helping carriers cut repositioning costs.
On the other hand, Indian shippers seeking breakthroughs in cost
reduction and supply chain efficiency will continue to remain in the
doldrums, unless ocean carriers significantly beef up their mainline,
direct service offerings and turn some of the domestic ports into their
regional hubs, says IHS Media.