The Union Ministry of Environment and Forests is reported to have given the mandatory environment and coastal zone clearance for the Vizhinjam International Sea Port project in Kerala last month. The project, envisaging an outlay of Rs. 4,010 crore, is proposed to be taken up under the public-private partnership (PPP) mode and on build, operate and transfer (BOT) basis. The Kerala Government is expected to develop the breakwaters and approach channel and ensure road and rail connectivity. It will also provide the back-up land for the port. The BOT operator will build the port infrastructure, such as berths and container yards, and install cranes and other super structures.
In the current context of developments in international container shipping and transshipment trade, it would seem to be appropriate to evaluate the potential and attractiveness of Vizhinjam as a mega container transshipment port.
State participation
In many PPP port projects, the BOT operator is entrusted with the entire responsibility of developing the approach channel, dredging, reclamation and provision of navigational aids and others. In some cases even the responsibility of providing rail and road connectivity is also loaded on to the private bidder. But in the case of Vizhinjam the Government of Kerala has taken a logical and practical approach by dividing the area of responsibility between the public and private sector partners.
The Government appears to have realised that simple expedients like wholesale application of private sector or familiar colonisation of the public sector of all aspects of port operations in the name of controlling a natural monopoly does not lead to efficient and effective operations. There is evidence that the private sector can play a socially efficient role in certain components of port operations and its involvement is indeed justifiable, both on grounds of production efficiency and cost effective operation.
Equally tenable is the evidence in favour of the public sector to organise and operate certain vital segments of port operations exhibiting ‘public goods’ character in the interests of safety, environmental protection, technical efficiency and greater public accountability. The State Government has, thus, divided the operational responsibilities more rationally between the public and private sectors based on an investment-related operational philosophy to achieve maximum economic efficiency.era of mega ships
The decade of 2010 to 2020 is going to witness a steady increase in the size of container ships. As on September 2013 the global fleet of container ships consisted 5,041 ships with 16.7million TEU (twenty foot equivalent units) capacity. There were 2985 container ships with capacity up to 2,999 TEU, 1869 ships had capacity between 3,000-9,999 TEU and ships with capacity of 10,000 TEU and upward have now reached 187.
In 2013 10 new ships of 10,000 TEU and above were ordered from global shipyards, 60 ships are likely to come out in 2014, and 55 such ships will come in 2015. Of the 459 ships ordered, 223 container ships have capacity of 7,500 TEU and above.
The trend of building bigger and larger container ships is clear and it is likely to remain strong in view of the economies of scale demonstrated by the largest ships in service, namely the Maersk Lines’ triple E class container ships of 18,270 TEU capacity that have a 30 per cent operational cost differential compared to older ships built up to 2010 or so. Further, the widening of the Panama Canal to enable vessels up to 12,000 TEU container ships to pass through, which is likely to be completed by mid-2015, is another reason to order larger tonnage.
As ships become bigger, they need deeper berths and approach channels, higher capacity cranes and an efficient turn round time. The maiden voyage of “McKinney Moeller” the world’s largest container ship has made only 13 limited port calls in its Europe-Asia service. Twenty of such behemoths are scheduled to enter the Europe-Asia route in the next two to three years.
During the maiden voyage of the Triple E-class Maersk Line, the vessels did not make a call at any of the ports in South Asia. The important criteria for a ship call are deeper ports and approach channels (at least up to 16 to 18 metres deep), close proximity to international shipping routes, high capacity cranes with outreach extending up to 22 rows across the ship’s beam, shorter turn round times with excellent container handling capability assisted by an efficient IT support team.
Colombo in Sri Lanka and Vizhinjam on the southern tip of India could become the likely candidates to be developed as mega container transshipment terminals in South Asia.
Advantage over Colombo
Colombo and Vizhinjam can both claim to have close proximity to international shipping route involving only a marginal diversion of about 20-25 nautical miles. The new deep water berths planned under the South Harbour extension in Colombo will ensure a deeper draught of 16 to 18 metres capable of accommodating the mega container ships. But Vizhinjam has the added advantage of deeper berths and approach channel up to 20 metres providing an extra cushion to accommodate even larger ships in the future at much lower cost of approach channel maintenance.
Vizhinjam being a non-major port falls outside the jurisdiction of the Tariff Authority for Major Ports and will, thus, enjoy the freedom to fix its own tariff based on a competitive market environment. As against an established and institutionalised port set up in Colombo, Vizhinjam will breathe fresh air since it has been developed on a green field environment with adequate flexibility to develop a new port infrastructure. Currently about 75 per cent of the traffic passing through Colombo is transshipped from Indian ports.
The other positives are the availability of skilled manpower, particularly trained IT hands, in the State. Kerala is also being seen as an investor-friendly Government, and the project could get full support and fast-track clearances.
When such favourable factors are properly harnessed it should be possible for the proposed mega container transshipment terminal at Vizhinjam to offer global standard in service.
Source: Business Line