COMPETITION from privately operated minor ports that are able to adjust pricing are hindering the Indian government from achieving its objective of discouraging transshipment via foreign hub ports by reforming its cabotage laws.
The government had overhauled the cabotage laws to open up container transportation to foreign-flagged shipping lines to encourage them to make direct mainline calls at India's major ports.
However, a voyage cost analysis by a leading global consulting firm shows that service rates at key major ports on the east coast, such as Chennai and Visakhapatnam, for transshipment handling are 15 per cent higher than those charged by Krishnapatnam port, an emerging private gateway, reported Daily Shipping Times, New Delhi.
Further, it is estimated that the cost of transshipping cargo to/from Kolkata via Krishnapatnam is US$222 per TEU compared with $260 per TEU at Chennai, and $263 per TEU at Visakhatpatnam.
All other factors being equal, that lower price led to a substantial increase in transshipment volumes at Krishnapatnam between January and August, which accounted for 125,348 TEU out of the 164,892 TEU transshipped to/from the region - equivalent to a 76.2 per cent share, according JOC analysis.
Up to two million TEU to/from India's east coast region is transshipped via Singapore, Port Klang (Malaysia), and Colombo (Sri Lanka). The agency suggested authorities pursue a 'three-pronged transshipment approach' to regain that volume: first, pick up extra cargo from other ports for existing mainline services; second, work with various carriers to introduce additional ports of call; and third, lure more carriers to call at Indian ports.
The report also stated that there will be considerable cost benefits if that programme works and that many ocean carriers are considering a revamp of their Indian port coverage to take advantage of the cabotage-free, open market environment.
For example, Hapag-Lloyd is reportedly looking at the possibility of routing Qatar-bound cargo via Indian ports, instead of relaying over Jebel Ali, United Arab Emirates due to the prolonged regional trade conflict, whereas Wan Hai Lines is said to be working with the China-India II (CI2) service partners to add a new direct call at the Tuticorin port, another major port near Chennai.
Additionally, Taiwan-based Evergreen Line is expected to extend its coverage to the Deendayal port, a major west coast gateway.
The government had overhauled the cabotage laws to open up container transportation to foreign-flagged shipping lines to encourage them to make direct mainline calls at India's major ports.
However, a voyage cost analysis by a leading global consulting firm shows that service rates at key major ports on the east coast, such as Chennai and Visakhapatnam, for transshipment handling are 15 per cent higher than those charged by Krishnapatnam port, an emerging private gateway, reported Daily Shipping Times, New Delhi.
Further, it is estimated that the cost of transshipping cargo to/from Kolkata via Krishnapatnam is US$222 per TEU compared with $260 per TEU at Chennai, and $263 per TEU at Visakhatpatnam.
All other factors being equal, that lower price led to a substantial increase in transshipment volumes at Krishnapatnam between January and August, which accounted for 125,348 TEU out of the 164,892 TEU transshipped to/from the region - equivalent to a 76.2 per cent share, according JOC analysis.
Up to two million TEU to/from India's east coast region is transshipped via Singapore, Port Klang (Malaysia), and Colombo (Sri Lanka). The agency suggested authorities pursue a 'three-pronged transshipment approach' to regain that volume: first, pick up extra cargo from other ports for existing mainline services; second, work with various carriers to introduce additional ports of call; and third, lure more carriers to call at Indian ports.
The report also stated that there will be considerable cost benefits if that programme works and that many ocean carriers are considering a revamp of their Indian port coverage to take advantage of the cabotage-free, open market environment.
For example, Hapag-Lloyd is reportedly looking at the possibility of routing Qatar-bound cargo via Indian ports, instead of relaying over Jebel Ali, United Arab Emirates due to the prolonged regional trade conflict, whereas Wan Hai Lines is said to be working with the China-India II (CI2) service partners to add a new direct call at the Tuticorin port, another major port near Chennai.
Additionally, Taiwan-based Evergreen Line is expected to extend its coverage to the Deendayal port, a major west coast gateway.