Vizhinjam Port: How the first transshipment port will make India a dominant player in global maritime trade

With the berthing of the first mothership, San Fernando -- a 300-meter-long container vessel operated by Maersk -- at Kerala’s Vizhinjam Port there is enthusiasm in the air as India looks to up its game in the arena of international maritime trade.

Experts feel that the country's first semi-automated deepsea harbour will serve as a gateway for trade between Southeast Asia, the Middle East and Africa and translate into reduced logistics costs while boosting India’s share in international trade.

Adani Ports and SEZ Limited (APSEZ) and the Kerala government will likely invest Rs 20,000 crore in a public-private partnership (PPP) mode to develop the transshipment hub with all four phases to be completed by 2028-29.   

The development of this deepsea port aims to enhance India's influence in international maritime trade by accommodating the world's largest container ships and boosting container and cargo traffic.

Aniket Dani, Director- Research, CRISIL Market Intelligence and Analytics says Vizhinjam port is being developed as a large-scale automated facility with cutting-edge infrastructure, enabling faster vessel turnaround times and positioning India as a premier destination for container transshipment.

“This transshipment port's development will make India's trade more efficient, cost-effective, and less vulnerable to geopolitical tensions, allowing the country to take a larger share of cargo and container volume from dominant players in the industry. Domestically, the port will be well-connected to a 4-lane NH66 highway and proposed freight corridors and is just 16 km from Trivandrum International Airport,” Dani told Business Today.

Currently, 25 percent of India’s container traffic is transshipped en route to the destination. Until now, despite India’s rising trade with the world, the country did not have a dedicated transshipment port, resulting in three-fourths or 75 percent of India’s transshipped cargo being handled by ports outside India.

In the financial year 2021-22, the total transshipment cargo of India was about 4.6 Million Twenty Foot Equivalent Units (TEUs) of which about 90 percent were handled outside India i.e. majorly by Colombo, Jebel Ali and Singapore.

“This has led to an opportunity loss of revenue of $200-220 million for Indian ports. Commencement of operations at Vizhinjam shall open up opportunities to handle non-India transshipment cargo. This should translate into reduced logistics cost while boosting India’s share in international trade,” Maulesh Desai, Director- Research, CRISIL Market Intelligence and Analytics, told BT.

Located at the southern tip of India, the port is strategically positioned to facilitate connections with major international shipping routes between the Swiss canal and the Strait of Malacca, providing a direct link to Europe, the Persian Gulf, and the Far East.

“Vizhinjam, has a locational advantage with a natural draft of above 20m, capacity to handle ultra-large container vessels having capacity of more than 15,000 TEUs and proximity to international shipping route connecting Europe, the Persian Gulf, and the Far East,” says Desai.

After winning the bid, Adani Ports and Logistics formed a Special Purpose Vehicle (SPV), Adani Vizhinjam Port Private Limited (AVPPL), to develop the project. AVPPL entered into a concession agreement with the Department of Ports, Government of Kerala, on August 17, 2015, for the development and operation of Vizhinjam International Seaport. The port is now in the advanced stages of competition.