India’s Nicobar container port plan seen threat to Sri Lanka transhipment business

ECONOMYNEXT – India has called for proposals to build a container port in Andaman & Nicobar Islands in the Bay of Bengal that could threaten Sri Lanka’s transhipment business at Colombo port which manly handles sub-continental cargo.

The port management board of the Andaman and Nicobar Islands has called for expressions of interest (EOI) from private developers to build the port and also a free trade warehousing zone meant to reduce India’s dependence on foreign transhipment hubs like Colombo.

It plans to issue an international public tender to develop a ‘Container Transhipment Terminal’ with ‘Free Trade Warehousing Zone’ on a Public Private Partnership basis at South Bay.

The chosen bidder will be required to design, build, finance, operate, and maintain the container port and logistics facility.

According to the proposal, the uniqueness of the Andaman & Nicobar Islands location lies in two geographical advantages.

These are proximity to the busy East-West international shipping route which can help shorten transits and improve economies of scale, and deep natural water depths that can accommodate the latest generation of mega-ships.

According to the EOI Indian container terminals at Mumbai, Chennai, Kolkata and Cochin do not handle transhipment containers and handle containers with local origin and destination.

“The containers to Indian sub continent ports are therefore presently transhipped from Dubai, Colombo and Singapore,” it said.

“The advantage of Colombo and Singapore for container traffic is their geographic locations adjacent to the equatorial shipping line stretching from Gulf/Red Sea to the South – East China Sea.

“A look at the shipping routes for Asia-pacific & Atlantic Rim underlines the unique locational advantage that the Great Nicobar Islands possess. It is at nearest location embracing the international sea route.”

The EOI noted that most of the major ships carrying cargo between US-East Asia-Africa-Europe pass through Indian territorial waters.

“Most of these ships terminate at Colombo, Singapore, Hong Kong. As such South Bay location has the potential to positively intervene as midway transhipment terminal.

“If India institutes a transhipment terminal at this location world shipping companies would take advantage by cutting short their travel distance to South Bay and other countries will pick-up/dispatch their containers to South Bay.”
(COLOMBO, 21 August 2019)