EDITORIAL, THE HINDU BUSINESS LINE
11 September, 2012
Allowing foreign vessels to move cargo between two local ports is the first step towards greater competition in coastal shipping.
The Government’s decision to liberalise the law that currently prevents foreign vessels to carry cargo between domestic ports (Cabotage regulations) is a welcome move, as it presages greater internal competition for coastal shipping. True, such relaxation, for now, would apply only in respect of cargo moving in and out of the container terminal at Vallarpadam in Kochi. Further, the cargo has to clearly emanate from a port outside India or, if sourced from a domestic port, its ultimate destination is abroad.
The Government had really little choice in the matter. Its efforts at drawing greater volume of cargo away from transhipment ports such as Colombo, Singapore or Dubai had met with limited success until Vallarpadam came along. At present, a large volume of India’s containerised export and import cargo gets trans-shipped through these ports. Colombo alone handles an estimated two million TEUs (twenty-foot-equivalent) out of the country’s annual container throughput of 10 million TEUs. A transhipment terminal caters to large ‘mother’ ships, which would call at these ports only if there are feeder vessels to deliver and fetch cargo to and from nearby destinations. Since the domestic lines do not have adequate capacity, the volume of cargo handled at Vallarpadam became a casualty. It is in this context that the promoters of the project have been seeking exemption from Cabotage regulations for permitting foreign ships to offer such feeder services. As a pioneer project involving private capital, the success of Vallarpadam would have sent the right signals for attracting fresh investments into this sector. Hence, the Government has now conceded the demand, albeit for a three-year period.
But allowing foreign feeder vessels to move transhipment cargo between Vallarpadam and other ports is only the start of what should eventually lead to a complete relaxation of the Cabotage regulations. With a 7,500-km coast line, the country ought to be using it much more for hauling its internal cargo, given that the seaway – unlike rail or highways – does not have to be ‘built’ or maintained beyond a point. It is a pity that coastal shipping accounts for hardly 7 per cent of local freight movement in India, compared with 15 per cent in the US or 40 per cent-plus in the European Union. There is no harm at all in opening up this sector to foreign lines, if they are in a position to exploit and develop its potential. Protecting domestic ship-owners cannot be a reason for not promoting this low-cost, eco-friendly and fuel-efficient mode of moving goods. It is for the domestic lines to build capacities for operating coastal container services that can give long-haul truckers or even container trains a run for their money.
11 September, 2012
Allowing foreign vessels to move cargo between two local ports is the first step towards greater competition in coastal shipping.
The Government’s decision to liberalise the law that currently prevents foreign vessels to carry cargo between domestic ports (Cabotage regulations) is a welcome move, as it presages greater internal competition for coastal shipping. True, such relaxation, for now, would apply only in respect of cargo moving in and out of the container terminal at Vallarpadam in Kochi. Further, the cargo has to clearly emanate from a port outside India or, if sourced from a domestic port, its ultimate destination is abroad.
The Government had really little choice in the matter. Its efforts at drawing greater volume of cargo away from transhipment ports such as Colombo, Singapore or Dubai had met with limited success until Vallarpadam came along. At present, a large volume of India’s containerised export and import cargo gets trans-shipped through these ports. Colombo alone handles an estimated two million TEUs (twenty-foot-equivalent) out of the country’s annual container throughput of 10 million TEUs. A transhipment terminal caters to large ‘mother’ ships, which would call at these ports only if there are feeder vessels to deliver and fetch cargo to and from nearby destinations. Since the domestic lines do not have adequate capacity, the volume of cargo handled at Vallarpadam became a casualty. It is in this context that the promoters of the project have been seeking exemption from Cabotage regulations for permitting foreign ships to offer such feeder services. As a pioneer project involving private capital, the success of Vallarpadam would have sent the right signals for attracting fresh investments into this sector. Hence, the Government has now conceded the demand, albeit for a three-year period.
But allowing foreign feeder vessels to move transhipment cargo between Vallarpadam and other ports is only the start of what should eventually lead to a complete relaxation of the Cabotage regulations. With a 7,500-km coast line, the country ought to be using it much more for hauling its internal cargo, given that the seaway – unlike rail or highways – does not have to be ‘built’ or maintained beyond a point. It is a pity that coastal shipping accounts for hardly 7 per cent of local freight movement in India, compared with 15 per cent in the US or 40 per cent-plus in the European Union. There is no harm at all in opening up this sector to foreign lines, if they are in a position to exploit and develop its potential. Protecting domestic ship-owners cannot be a reason for not promoting this low-cost, eco-friendly and fuel-efficient mode of moving goods. It is for the domestic lines to build capacities for operating coastal container services that can give long-haul truckers or even container trains a run for their money.
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