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Cabotage Waiver Effect: India’s VOC Port to Attract More Foreign Vessels

Taiwan’s Wan Hai Lines Ltd’s Cl2 service connecting China with Europe is the first mainline vessel beginning to call at VOC port instead of Colombo after cabotage restriction was lifted in May.

The cabotage relaxation allowed foreign-flagged container ships to carry export-import (exim) containers for transshipment and empty containers for repositioning on local routes.

Wan Hai’s head office in Taiwan has approved the proposal to call at VOC Port Trust (VOCPT) while other partners in the CI2 service are being pursued for their internal approvals, according to McKinsey & Company, the consultant hired by the Shipping Ministry to prepare a strategy for transshipment and mainline calls at major ports.

“Geographically, VOCPT is the best-suited Indian port that can compete with Colombo for transshipment, but it needs better infrastructure and draft to allow bigger mainline ships to dock,” said a shipping industry official.

VOCPT has agreed to give a draft of 12.5 metres and 270-metre length overall (LOA) to main line services with current infrastructure which would be improved once the dredging around turning circle is completed.

VOCPT has two container terminals, run separately by PSA Sical Terminals Ltd and Dakshin Bharat Gateway Terminal Pvt Ltd.

Deviation from Colombo to VOC Port takes an extra 51 nautical miles resulting in an additional voyage time of three hours for a ship which is not cost effective; however, according to industry experts, a parcel size of about 100 TEUs per week is sufficient to justify the CI2 call at VOCPT.

Of the 50 services calling at Colombo, five have been identified to call at VOCPT ahead of a planned dredging project to deepen the port.

Apart from the CI2 service, other services include the AEX, the ASEA/ATX X-Press, HSX-CH3 and CCG. Another four services have been identified that can call at VOCPT based on its captive traffic alone after dredging is completed. These include services such as the EAX, Australia Express, East Coast EC5 and Empire.

A mainline call at VOCPT would cost $50 per TEU less with savings accruing mainly from the feedering cost from VOCPT to Colombo vs VRC at VOCPT and box transfer cost at Colombo vs extra main line voyage cost to VOCPT.

VOCPT will earn Rs3.75 crore from a mainline vessel call by Wan Hai after factoring in a 60 per cent discount in VRC extended to the service. The total benefit to VOCPT from five shortlisted mainline services is estimated to be Rs24 crore.  

 

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