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Easing of India's cabotage prompts growth in direct loadings for carriers

OCEAN carriers operating out of India appear upbeat about the steady increase in direct loadings that they believe reflects the positive impact of a national liberalised cabotage policy enacted nearly three years ago, reports IHS Media

06 May 2021 - 19:00
OCEAN carriers operating out of India appear upbeat about the steady increase in direct loadings that they believe reflects the positive impact of a national liberalised cabotage policy enacted nearly three years ago, reports IHS Media.

Following the landmark reform, foreign-flagged liners became free to transport laden export-import containers for transshipment and empty containers for repositioning between Indian ports without any specific permission or license, thus paving the way for elevated cargo aggregation opportunities.



In its latest filing to India's Ministry of Shipping, the Container Shipping Lines Association of India (CSLA) - the local umbrella body of foreign shipping lines - said taking advantage of that liberalised window, member carriers were able to redirect an estimated 1.32 million TEU of containerised shipments to mainline ships calling at domestic gateway ports in 2020, up from 1.24 million TEU the prior year.



The group noted that the bulk of this regained volume, which it pegged at approximately 40 per cent, would have otherwise found its way through Sri Lanka's Colombo port by using feeder options, followed by Singapore (20 per cent) and Malaysia's Port Klang (10 per cent), inevitably involving extra shipper costs and longer carrier transits.



Placing that significance in further context, the report found that roughly 1.07 million TEU out of the 1.32 million TEU represented laden cargo (about 81 per cent), with empty movements making up the remainder (19 per cent).



'Cabotage relaxation has acted as a catalyst for the Indian ports to become hubs for transshipment of containers,' Sunil Vaswani, executive director of CSLA, said.



Mr Vaswani said with the cabotage law change, beneficial cargo owners (BCOs) - especially importers vexed by high inland logistics costs - secured the opportunity to enjoy more reliable and competitive coastal shipping offerings between the west and east coasts of India.



'It provided an incentive for India to be a transshipment hub so as to retain cargo, at least partially, that was otherwise lost to neighbouring foreign ports like Singapore and Colombo,' he said.



Vaswani also noted that if the modified cabotage policy were to be lifted, Indian ports could lose about 1 million TEU of transshipment traffic that they have recaptured in the post-reform years.


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