When Zhen Hua 15, a heavy load cargo carrier traveling from the East China Sea, docked at Vizhinjam port on a Sunday, it marked a significant milestone for India. The arrival not only introduced the port's first massive cranes but also established India as a destination for the world's largest container ships.
Vizhinjam transshipment container port, situated near the southernmost tip of India, is a groundbreaking development. It positions India to gain a larger share of the global maritime trade, a sector currently dominated by China. Furthermore, the port will contribute to India's ambitions as an alternative manufacturing hub by reducing logistics costs for inbound and outbound cargo.
This new terminal, inaugurated recently, underscores the prowess of Gautam Adani's conglomerate, despite facing allegations of corporate malfeasance from short sellers earlier in the year, charges which the Adani Group vehemently denied. Adani's already extensive presence in ports, mines, airports, and power utilities will receive an additional boost from Vizhinjam, further solidifying his status as India's infrastructure magnate.
Vizhinjam's strategic location near international shipping routes responsible for 30% of global cargo traffic, coupled with its naturally deep channel reaching as far as 24 meters (79 feet) below sea level, positions it as an ideal hub for some of the world's largest ships. Until now, such vessels had bypassed India due to the inadequacy of its ports to handle them, opting instead for ports like Colombo, Dubai, and Singapore.
Transshipment, the process of transferring cargo from one ship to another, often a larger vessel, at a port en route to the cargo's final destination, is central to Vizhinjam's role.
Adani Ports and Special Economic Zone Ltd. collaborated with the local state government to develop this eagerly anticipated deep-sea port along Kerala's picturesque coastline. Adani Ports, India's largest private sector port operator with a 30% market share, is also involved in the development of Israel's Haifa port and has plans to establish a hub in Vietnam as part of its global expansion.
Karan Adani, Managing Director and Chief Executive Director of Adani Ports, announced a substantial investment of 200 billion rupees ($2.4 billion) in the Vizhinjam Transshipment Terminal by 2030, with an initial phase already receiving 77 billion rupees in investment. This project holds strategic importance for Adani Ports, enabling the provision of integrated supply-chain solutions to shipping lines.
India's integration into the global value chain has been hindered by poor shipping connectivity, as highlighted in a 2022 report from the Reserve Bank of India. India's container traffic in 2020 was only 17 million twenty-foot equivalent units (TEUs), in contrast to China's 245 million TEUs.
However, the Indian government has indicated that this may soon change. The Ministry of Ports has stated that upcoming ports like Vizhinjam and Vadhavan, with their natural drafts exceeding 18 meters, will enable ultra-large container and cargo vessels to call on them, potentially transforming India into the "world's factory."
The Vizhinjam port, according to Adani Ports' website, is well-equipped to handle Megamax container ships and will have an initial capacity of 1 million TEUs at an investment of 77 billion rupees, with plans to add about 6.2 million TEUs in subsequent phases.
The inauguration of the first ship's arrival at Vizhinjam was a grand event, attracting a large audience, with the regional government capitalizing on it as general elections loom. However, running a transshipment container terminal presents its challenges, including protests by fishermen at the site and procedural delays at a rival facility in Vallarpadam, operated by Dubai Ports World.
To ensure the success of the transshipment hub, a network of road and rail links connecting it to warehouses and factories in the hinterland is essential. The lack of such critical infrastructure support could prove to be a significant obstacle, according to Mathew Antony, the managing partner of Aditya Consulting, an advisory firm specializing in infrastructure, ports, and logistics.
The Indian government is actively working on a plan called Maritime India Vision 2030, aimed at developing world-class mega ports, transshipment hubs, and modernizing infrastructure, requiring an estimated investment of 1.25 trillion rupees.
As large ships continue to play an increasingly crucial role in Europe and China trade, India's strategic location between the Suez Canal and the Strait of Malacca positions it favorably on that route. Karan Adani mentioned that the port company is already in discussions with two to three anchor shipping lines interested in shifting their bases to Vizhinjam.
He also emphasized that as international trade routes witness the growing significance of larger vessels, Vizhinjam is well-prepared to accommodate these changes, with the potential to handle ships of up to 20,000 TEUs. While India's current container traffic remains a fraction of China's, the Vizhinjam port could help India and Adani Ports establish a stronger foothold in global maritime trade by attracting more ships