Mundra port gains from problems at other ports


Friday, 08 June 2012 03:33

Adani-controlled Mundra Port in western Gujarat is getting a business boost from a combination of unrelated developments at other ports at Kandla, Pipavav (both in Gujarat) and Mumbai's Jawaharlal Nehru Port Trust (JNPT), India's busiest container handler, reported DNA.

At JNPT, private terminal operators, smarting from the regulator's directive to lower tariffs, have lowered the volumes they handle, creating a need for alternatives in the region.

At Kandla, India's largest port by volumes, a 30 percent hike in vessel-related charges is driving traffic elsewhere.

And at Pipavav, expiry of an exclusive contract between the local Gujarat Pipavav Port Ltd or GPPL and Maersk, the world's largest container shipping line, is making the latter gaze at Mundra, which offers deep draught, huge capacity and discounted rates.

A Kotak Research note released last month stated that "Mundra has been brought on the map of Maersk", thanks to "connections to both Europe and America".

GPPL's agreement with Maersk contributed about 52 percent of the former's total container volumes. After the agreement ended in March, Maersk was free to call at other ports. Sure enough, Maersk has already moved one of its three ships from Pipavav to Mundra.

Maersk officials were not available for immediate comment. GPPL is talking with other shippers to fill the gap left by Maersk.

In May, an Ambit Research note on GPPL stated that on the day Maersk shifted its vessel to Mundra from Pipavav, it also started a new but smaller vessel call at GPPL going to the east coast of the US. "Pipavav Port is the only port in Gujarat catering to this route and the vessel is currently at the ramp up stage and will take another three to six months to scale up the volumes."

Industry sources stated that container volumes at GPPL in the April-May period fell by about 28 percent, a figure that GPPL officials neither confirmed nor refuted. "The container volumes reflect the market sentiment and are not related to the volumes brought in by any one shipping line. In the first quarter of 2012, Pipavav saw an on-year increase of 21 percent in container volumes," said a GPPL spokesperson.

As for JNPT, the Tariff Authority of Major Ports (TAMP) had issued a directive to lower tariffs. In response, the two private terminals at JNPT – DPWorld's Nhava Sheva International Container Terminal (NSICT) andAPM Terminals's Gateway Terminals India (GTI) – had significantly lowered traffic handling volumes.

As their containers pile up at JNPT, the affected shippers are expected to look at alternatives such as Mundra and GPPL.

With JNPT's third terminal – Jawaharlal Nehru Port Container Terminal – already running at a high utilisation rate, a spillover to Gujarat ports is expected, industry observers said.
As for Kandla, private player ABG Infralogisitcs operates a container terminal at the government-controlled Kandla Port.

As the Kandla Port Trust had raised its vessel-related charges by around 30 percent in the last six months, the highly competitive rates of the nearby Mundra port, coupled with scope for discounts and deeper draught, are likely to prove irresistible for shippers.

In order to stay competitive, ABG Infralogistics, despite a recent TAMP revision, did not hike its terminal-handling charges. "The rates are now capped for the next three years. However, the hike by the Kandla Port Trust in vessel-related charges is hurting traffic volumes and the terminal would see further operational losses if traffic does not improve," said an official, seeking anonymity.

But ABG's price freeze may not be of much avail as Kandla, due to its low draught and inefficiency in terms of facilities like pilotage, has been a disappointment for most shippers. Thus, it's advantage Mundra for now.

Source: Cargonews Asia