Adani’s New Vizhinjam Port Holds The Potential To Lure World’s Biggest Ships To India

This Sunday at Vizhinjam port, the heavy load cargo vessel Zhen Hua 15, travelling from the East China Sea, will do more than merely set down the first set of enormous cranes at the location.

Additionally, it will highlight India among the largest container ships globally.

With its location close to the southernmost point of the nation and its upcoming 15 October opening as India’s first transhipment container port, Vizhinjam will provide India with a greater share of the world’s marine trade, which is now controlled by China. By lowering the logistics cost for freight entering and leaving the nation, it will also support its goal of becoming a substitute manufacturing centre.

The new facility will be one more feather in Gautam Adani’s conglomerate, which encountered a scathing short seller attack in Jan this year, alleging malfeasance — charges refused by the Adani Group. With a dominance that spans airports, ports, mines, and power utilities, Vizhinjam will further cement the billionaire’s status as the infrastructure king of India.

Some of the largest ships in the world call at Vizhinjam because of its proximity to international shipping routes, which account for 30 per cent of cargo flow worldwide, and a natural waterway that descends to a depth of 24 meters below the ocean’s surface. Up to now, the largest container ships have avoided India in favour of nearby ports like Colombo, Singapore, and Dubai since the country’s harbours aren’t deep enough to accommodate them.

When cargo is moved from one original vessel to a larger mother vessel at a port en route to its ultimate destination, this process is known as transhipment.

In partnership with the state government of Kerala, Adani Ports and Special Economic Zone Ltd. are developing the much-anticipated deep-sea port along the picturesque coastline. As part of its growing worldwide footprint, Adani Ports, the largest private sector port operator in India with a 30% market share, is also building the port in Haifa, Israel, and has plans to construct a hub in Vietnam.

According to Chakri Lokapriya, the chief investment officer of Mumbai’s TCG Asset Management Co., the Indian Ocean comprises 50% of sea trade. With inherent advantages, the Vizhinjam port will increase Adani Ports’ operating margins.

Per a Reserve Bank of India assessment from 2022, India’s entry into the worldwide value chain has been hampered by poor marine connections. In 2020, China handled 245 million TEUs of containers, while India handled just 17 million TEUs, per a ports ministry statement dated 7 February.

The parliament was informed by the Modi government that this would soon alter.

World’s Factory

The ministry stated in a statement that by enhancing container and cargo traffic, the future ports in Kerala’s Vizhinjam and Maharashtra’s Vadhavan boast natural drafts over 18 meters that will allow ultra-large cargo and container vessels to call on the ports, boosting attempts to make India the world’s factory.

Vizhinjam port, per the official Adani Ports website, will provide a quick turnaround of vessels, including Megamax container vessels. It’ll have a capacity of about one million 20-foot equivalent units, or TEUs, in the first phase at an investment of 77 billion rupees. Approximately 6.2 million TEUs are going to be added in the next phases.

Even for a company with as much expertise as Adani Ports, which has dealt with complaints from fishermen at this location, operating a transhipment container facility won’t be easy. Procedural delays have plagued Dubai Ports World’s rival facility at Vallarpadam.

Additionally, a network of rail and road connections between the transhipment hub and the hinterland’s factories and warehouses is required. Per Mathew Antony, the managing partner associated with Aditya Consulting, an advising firm specialising in infrastructure, ports, and logistics, the absence of such an artery support may serve as the Waterloo for any port.

Strategic Location

The federal government’s Maritime India Vision 2030 goal is to invest an estimated 1.25 trillion rupees to build outstanding mega ports and transhipment hubs and modernize the infrastructure.

Given its advantageous location between the Strait of Malacca and the Suez Canal, India can integrate into the growing importance of large ships in the trade between China and Europe.

India now has less than 10% of China’s container traffic. Still, Adani Ports and India will have a stronger position in the world’s maritime trade if the Vizhinjam port can attract more ships.

References: Hindustan Times, Bloomberg

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