Relaxed cabotage rules may move transshipment to Indian ports

Relaxation in cabotage rules that were prohibiting foreign flagged vessels from ferrying domestic cargo will help transferring transshipment activity to Indian ports and can help save forex and also create jobs opportunities locally, a trade body said today.

Easier cabotage rules is expected to halve Indias exim cargo handling at ports in the vicinity like Colombo.

The cabotage rules are considered one of the biggest hindrance preventing Indian ports to act as transshipment hubs, where a mother ship discharges goods at a port to be distributed by other liners.

"Transshipment will never go down to zero, but will come down 50 per cent in the next three years," Deepak Tewari, chairman of Container Shipping Lines Association said at an industry event here.

Earlier, Jibu Kurien Itty, the chief executive of Gateway Terminals said Colombo handles 65 per cent of the total exim trade of the country.

Once the mother ship discharges cargo at a transshipment port, which gets distributed on smaller vessels doing scheduled calls on pre-designated routes.

Tewari said Mundra on the west coast and Krishnapatnam on the east have undertaken efforts to cater to transshipment, but was critical of state-run JNPTs apathy towards this segment.

He pointed out that one of the reasons why transshipment cannot grow at JNPT is the charges levied to transfer goods between its four terminals, which was blamed by the industry on a lack of coordination and competitive nature of the business.

"Indian major ports will have to compete with the private sector players in order to develop transshipment capabilities," he said.

Meanwhile, Cotton Textile Export Promotion Councils executive director Siddharth Rajagopal said the cabotage relaxation will help get a 5-7 per cent cost saving for his industry as it will help export goods from domestic ports.

Bangladesh Freight Fowarders Association president Mahbulbul Alam also welcomed the changes in Indian policy framework, saying it will help its exports.

He said at present, Bangladeshi garments exported to the west travel east to ports in Singapore or Malaysia first before they are trans shipped to bigger vessels that take them to destinations.

Stating that his country will never be able to make deep draft port that can handle bigger vessels, he said having a transshipment port on the east or the west coast of India will reduce time taken for the garments to travel to their markets.