Adani’s new mega port can lure world’s biggest ships to India

When the Zhen Hua 15 – a heavy load cargo carrier sailing from the East China Sea – unloads at Vizhinjam International Seaport in Kerala on Sunday, it will do more than just set down the site’s first gigantic cranes. It will also put India on the map for the world’s biggest container ships.

Located near the southernmost tip of the country, the Vizhinjam transshipment container port – the first of its kind in India, was inaugurated on Sunday.

Transshipment is the practice of moving cargo from one ship to another at an intermediate port en route to its final destination, rather than having it transported point-to-point on a single vessel.

The mega port will allow India to grab a bigger slice of the international maritime trade currently dominated by China.

It will also bolster the nation’s aspirations to be an alternative manufacturing hub by reducing logistics costs for cargo coming to and from the country. 

The new terminal will be another feather in the cap of Mr Gautam Adani’s conglomerate, which faced a scathing attack by a short-seller in January that alleged corporate malfeasance – charges the Adani Group has denied.

With a dominance that already spans ports, mines, airports and power utilities, Vizhinjam will further cement the billionaire’s status as India’s infrastructure king.

Its proximity to the international shipping routes that account for 30 per cent of global cargo traffic and having a natural channel that goes up to 24m below the sea makes Vizhinjam an ideal hub for some of the world’s biggest ships to call in.

Until now, the biggest container ships have skipped India as its harbours were not deep enough to handle such vessels, and were docking at ports such as Colombo, Dubai and Singapore instead. 

The much awaited deep-sea port along Kerala’s scenic coastline has been developed by Adani Ports and Special Economic Zone – India’s largest private sector port operator with a 30 per cent market share – in collaboration with the local state government.

The port operator is also developing Israel’s Haifa port and plans to build a hub in Vietnam, as part of its expanding global footprint.

“The Indian Ocean is 50 per cent of sea trade,” said Mr Chakri Lokapriya, chief investment officer at TCG Asset Management in Mumbai. “The Vizhinjam port, with its natural advantages, will improve operating margins for Adani Ports.”

Poor shipping connectivity has hindered India’s integration into the global value chain, the Reserve Bank of India said in a 2022 report.

India’s container traffic was only 17 million twenty-foot equivalent units (TEUs) in 2020 versus China’s 245 million TEUs, according to a Feb 7 statement from the ports ministry.

The Narendra Modi-led government told Parliament that may change soon. 

‘World’s factory’

“The upcoming ports at Vizhinjam (Kerala) and Vadhavan (Maharashtra) have natural drafts in excess of 18m that would enable ultra-large container and cargo vessels to call on the ports, thereby boosting the efforts to make India the world’s factory” by improving the container and cargo traffic, the Ministry of Ports, Shipping and Waterways said.

The Vizhinjam port, according to the Adani Ports website, will offer a quick turnaround of vessels including Megamax container ships. It will have a capacity of 1 million TEUs in the first phase, at an investment of 77 billion rupees (S$1.27 billion). About 6.2 million TEUs will be added in the subsequent phases.

Still, running a transshipment container terminal will not be an easy feat, even for a very experienced company such as Adani Ports, which previously faced

fishermen protests against the Vizhinjam port.

A rival facility in Vallarpadam, operated by Dubai Ports World, has been dogged by procedural delays. 

The Vizhinjam port also needs to be connected by a network of road and rail links to warehouses and factories in the hinterland. Lack of such an arterial support “can be the Waterloo” for any port, said Mr Mathew Antony, managing partner of Aditya Consulting, a Mumbai-based advisory specialising in infrastructure, ports and logistics.

Strategic location

The federal government is working on Maritime India Vision 2030, which seeks to develop world-class mega ports and transshipment hubs, and to modernise infrastructure at an estimated investment of 1.25 trillion rupees. 

As large ships become increasingly more vital to Europe and China trade, India can embed itself in that route, given its strategic location between the Suez Canal and the Strait of Malacca.

India’s current container traffic is less than 10 per cent of China’s but if the Vizhinjam port is able to beckon more ships, it will give India – and Adani Ports – a stronger footing in global maritime trade. BLOOMBERG