The new port at Hambantota in Sri Lanka which will become operational by the end of this year and the expansion of the existing port at Colombo could pose a serious threat to the International Container Transshipment Terminal (ICTT) if the cabotage law is not relaxed at Vallarpadom.
It is expected that from Hambantota, they can easily feed both the east and west coast of the Indian subcontinent. At present, the transshipment cargo from the Indian subcontinent is being sent either through Colombo, Singapore or Dubai and the new port is being designed keeping in view the flow of cargo from India.
The new port at Hambantota, only a few miles from the main EastWest shipping route across the Indian Ocean, will make it a hub in the south Asian region. The filling of the new port’s basin has already begun and the first ship is expected to berth by the end of this year. Sri Lanka is all set to revamp the country’s $42 billion economy by returning to its old and lucrative role as a trading hub. The port has been built to handle 2,500 ships annually in the first stage along with 6,000 ships which arrive every year at the Colombo port.
Sources said that, if the ICTT is not in a position to compete with Colombo, Vallarpadom will be relegated to the status of any other container terminal in India and the dreams of India putting up its own transshipment terminal will remain unrealised. There are moves from certain Indian shipping companies not to relax the cabotage law as it allows only the Indianflag vessels to transport cargo originating in one Indian port and bound for another port in the country.
In view of the transshipment containers coming from foreign countries and bound for other ports in India, and containers originating in other Indian ports and transshipped at Kochi on their way to foreign countries are also interpreted as domestic cargo within the meaning of the cabotage law.
This will delay the transportation from Kochi to other ports as these containers have to undergo customs examination at Vallarpadom.
The container transshipment from a country to another country through Vallarpadam should be exempted from the customs examination as is being done in Sri Lanka.
The movement has to be treated as one international movement at the transshipment and the customs examination of the container will take place only at the place of destination, but the cabotage law does not allow this.
However, it is pointed out that, as the ICTT at Vallarpadam is located within a special economic zone (SEZ), these containers will not undergo customs examination at Vallarpadom. Thus, containers transshipped through Vallarpadam will undergo customs examination only at the other Indian ports of origin or destination.
Kochi is situated closer to the international shipping routes than Colombo and is the bestsuited port of transshipment of Indian containers.
If transshipment in a neighbouring country’s ports is avoided, each TEU of containers will save at least US $ 300 and also save seven to 10 days of transportation time.
If the cabotage law is interpreted to treat transshipment containers as domestic cargo, it will be a huge disincentive to shipping lines which operate both mainline mother vessels and feeder vessels.
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