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When Zhen Hua 15, a heavy-load cargo carrier originating from the East China Sea, arrives at Vizhinjam port this Sunday, it will accomplish more than merely deploying the site's initial massive cranes. It will also place India on the world map for accommodating the largest container ships.
Situated near the southernmost tip of India, the Vizhinjam transshipment container port, inaugurated today, represents a significant step towards India's increased involvement in global maritime trade, which is currently dominated by China. Additionally, it aligns with India's ambitions to become an alternative manufacturing hub by reducing logistics costs for inbound and outbound cargo.
The establishment of this new terminal is another notable achievement for Gautam Adani's conglomerate. Already a dominant player in ports, mines, airports, and power utilities, the Vizhinjam port will further solidify its status as India's infrastructure tycoon.
Vizhinjam's strategic location near international shipping routes responsible for 30% of global cargo traffic, along with a natural channel reaching depths of up to 24 meters below sea level, positions it as an ideal hub for accommodating some of the world's largest ships. Until now, India's shallow harbors prevented the largest container ships from making port calls, causing them to opt for neighboring ports like Colombo, Dubai, and Singapore.
Transshipment, the process of transferring cargo from one ship to a larger mother ship at a port en route to its final destination, is a key function of this new facility.
The long-anticipated deep-sea port along Kerala's picturesque coastline was developed through collaboration between Adani Ports and Special Economic Zone Ltd. and the local state government. Adani Ports, India's largest private sector port operator with a 30% market share, is also involved in developing Israel's Haifa port and has plans to establish a hub in Vietnam, expanding its global presence.
"The Indian Ocean represents 50% of global sea trade," noted Chakri Lokapriya, chief investment officer at TCG Asset Management Co. in Mumbai. "Vizhinjam's natural advantages will enhance Adani Ports' operating margins."
Inadequate shipping connectivity has hindered India's integration into the global value chain, as reported by the Reserve Bank of India in 2022. In 2020, India's container traffic was only 17 million TEUs compared to China's 245 million TEUs.
The government led by Narendra Modi has expressed its commitment to changing this situation. It envisions the upcoming ports at Vizhinjam and Vadhavan as having the natural depth to accommodate ultra-large container and cargo vessels, thereby contributing to India's efforts to become the "world's factory."
According to Adani Ports' website, Vizhinjam port will offer swift turnarounds for vessels, including Megamax container ships, with an initial capacity of 1 million twenty-foot equivalent units (TEUs) at an investment of 77 billion rupees ($925 million). Subsequent phases will add approximately 6.2 million TEUs.
However, managing a transshipment container terminal presents challenges, as even a seasoned company like Adani Ports has faced protests from fishermen at this site. A rival facility in Vallarpadam, operated by Dubai Ports World, has encountered procedural delays.
Additionally, the transshipment hub requires a network of road and rail links to connect with warehouses and factories in the hinterland. Such critical infrastructure support can be beneficial to the success of any port, as explained by Mathew Antony, managing partner of Aditya Consulting, an advisory firm specializing in infrastructure, ports, and logistics.
The Indian government is working on a Maritime India Vision 2030 initiative, aiming to develop world-class mega ports, transshipment hubs, and modernize infrastructure with an estimated investment of 1.25 trillion rupees.
As larger ships continue to play a crucial role in Europe-China trade, India, due to its strategic location between the Suez Canal and the Strait of Malacca, can position itself as a vital part of this trade route. While India's current container traffic is less than 10% of China's, the Vizhinjam port's capacity to attract more ships can significantly strengthen India's and Adani Ports' position in the global maritime trade landscape.
