The Gamechanger

After a 20-year wait, the brand new ICTT at Vallarpadam is all set to be Kerala maritime’s best brand ambassador yet, further transforming the maritime and logistics landscape of the region. Shashidhar Nanjundaiah writes from Vallarpadam.

By symbolically turning on a switch on 18 February, Prime Minister Dr Manmohan Singh essentially unlocked a box of goodies that investors in Kerala’s logistics infra­structure would be most comfortable with, since they synchronise well with the state’s second best known industry. His words at the inauguration of the International Container Transshipment Terminal (ICTT) at Vallarpadam (Kochi) ring deep: “The construction of this terminal is the centrepiece of a comprehensive plan to develop Kochi as an economic and logistical hub of our nation … It is a symbol of how public-private partnership (PPP) can contribute to public good. It will be an enduring symbol of the close ties we wish to build with our extended neighbours in West Asia, especially with the United Arab Emirates (UAE).”

The new container terminal, whose cost when the first and second phases are completed will be pegged at Rs 6,250 crore, will have a berth length of 1,800 m with a draft of 14.5 m. Vessels of 8,000 TEU capacity are expected to be berthed alongside. The new terminal will have a capacity to handle three million TEUs in the final stage, and is ready for one million TEUs now. The rail connectivity is complete and the road connectivity for four lane traffic is expected to be completed shortly. The deepening and widening of the approach channel are also in the advanced stages of completion. Dredging has cost Rs 381 crore, and it is clear that this will remain a working capital for the terminal in providing the required 14.5 m depth to the largest vessels.

Connectivity has been big for Vallarpadam right from the drawing board stage, and the figures show that PPP for this terminal has been in terms of government’s investment in port infrastructure: Rs 850 crore by the National Highways Authority of India (NHAI) for the 18 km four-lane connection to national highways and Rs 365 crore by the railways for the 8.5 km connection to the rail head.

The private side of the connectivity investment has been active: a Roll On-Roll Off (RO-RO) service will provide inter-island connectivity, saving more than an hour (the alternative means is by a circuitous 40 km road haul). Owned by Lots Shipping, the RO-RO ferry has already commenced operations and can take 15 trucks on one trip.

“Connectivity at Vallarpadam was achieved ahead of time,” beamed GK Vasan, Union Minister for Shipping, during his address at the terminal’s inauguration.

Ironically, Dubai will be a port to be impacted by the new transhipment terminal, the others being Colombo and, to a lesser extent, Singapore. In nearly the same breath, Prime Minister Singh said: “I want to see Kochi as the logistics hub of the country.” It is a vision that seems right on target, given that Kochi is best located as a maritime hub of India. It provides the least deviant of the routes from the sea trade route from Suez Canal to the rest of Asia. The advantage will be that while most of Colombo’s transhipped cargo is for India and other neighbouring countries, a much larger portion of Kochi’s transhipped cargo will be domestic, easing prices from a preferential treatment to domestic carriers, and offering more logistical options. Overall costs of transhipment are expected to come down by between $180 and $300 per container including exim duty and shipping, plus a saving of up to a week or more.

“At today’s rates, if about four million containers are transhipped, the savings are enormous in real terms,” said N Ramachandran, for whom the ICTT was the last assignment as Chairman, Cochin Port Trust, before retiring mid-February. “We should reach three to four million TEUs latest by 2014-15.”

“India-specificness will help Vallarpadam gain currency as a cost-effective transhipment hub,” says NA Muhammed Kutty, Managing Director, Falcon Infrastructures, which owns a container freight station (CFS) for the Cochin Port and is gearing up for Vallarpadam by investing heavily in providing logistics.

DP World, which will have another feather in its cap as the operator for India’s largest single-operator container terminal, is optimistic about the growth of the terminal in time to come. It is also the first one to be located in an SEZ.

Industrial infrastructure is different in Kerala. The state’s plans for Special Economic Zones (SEZs) and industrial parks have been measured, careful and tailor-made to suit the state. The mission of the state’s nodal agency is, indeed, to “enable development across Kerala by identifying and promoting core competency industries of each region”. Kerala Industrial Infrastructure Development Corporation (KINFRA) has built 12 industry-specific parks, but the state has had no industrial park devoted to the maritime industry. However, one is on the anvil, and several private entrepreneurs are taking the new maritime initiatives in the state seriously.

The Second Return of The Dutch

Kochi is the first major port in India to handle containers. The first container vessel, “President Taylor”, was handled at Cochin Port in 1973, when other, older ports remained hesitant to accommodate that revolutionary concept. Cochin Port Trust prepared a preliminary report on Vallarpadam Container Terminal in 1985. In 1991, the Dutch consultants were leashed in to prepare detailed project reports. In 1992, the Cochin port trust invited offers to build the terminal but no one came forward to take up the project. Later on the same Dutch consultants reworked on the project report for which the first tender was floated in 1999. The Central Government wanted the Port Trust to again review the proposal and thus the bid was discharged in 2002. The bid was again invited in the next year and this time two bidders came up with a proposal. The two bidders were CSX World Terminals and Maersk who qualified on the project. However, this proposal did not come through. This year the bids again came for the Vallarpadam project and eventually DPI was selected as the promoter of ICTT.