x Abu Dhabi, UAETuesday 23 January 2018

DP World granted Indian shipping boost

Dubai ports operator to benefit from relaxation of laws in India allowing foreign ships to transport cargo between ports.

The Vallarpadam Container Terminal owned and operated by DP World in Kochi, Kerala. Container volumes in India were down in the first half. Simon de Trey-White for The National
The Vallarpadam Container Terminal owned and operated by DP World in Kochi, Kerala. Container volumes in India were down in the first half. Simon de Trey-White for The National

DP World's operations in the Indian state of Kerala are set for a massive boost following an end to a two-year struggle with local shipping laws.

The Dubai ports operator yesterday received its first transhipment service at its International Container Transhipment Terminal (ICTT) in Kochi.

Business at the terminal has suffered since it opened in February 2011 because DP World was awaiting a relaxation to the shipping law to allow foreign ships to be able to transport container cargo between its ICTT, also known as the Vallarpadam terminal, and other parts of India.

The port was developed on an understanding that foreign ships would be able to transport container cargo between ports in India.

DP World has invested more than US$1 billion (Dh3.67bn) in India to become the largest container terminal operator in the country, as it aims to capitalise on the market's economic and foreign trade growth of recent years.

The Indian government in September finally decided to ease the law to allow such shipments to take place to and from Vallarpadam for an initial period of three years. But it took several months after that for DP World to receive the official order document from the government. The terminal is now India's first and only transhipment hub.

"As soon as that comes into effect, we can then actually go and market Cochin as a transshipment hub," Anil Singh, DP World's managing director for the subcontinent, said recently.

"Indian cargo for Indian ports, today, Colombo is India's biggest transshipment hub. Right now all the cargo goes from India to Colombo and gets dropped there.

From there, the main East-West lines, which is Singapore to Europe, stop by in Colombo and do the mixing around and pick up that Indian cargo and then move on. Look at a slightly different scenario, where all the cargo from India gets consolidated in Cochin and all the ships on the east, west, north, south coast dip into Cochin and pick up. It will actually save the Indian shipper, and the consigning, time and dollars in double handling."

Local ship owners, however, raised concerns that they would lose out on business if foreign lines were allowed to carry cargo along the coast.

The MV Zim China ship of the Asia-India Sub Continent East Med (AME) service operated by the global shipping line Zim became the first service to berth at the terminal yesterday.

"ICTT will be part of the new port rotation of Zim's AME service - a flagship service of Zim Integrated Shipping Services connecting China to Mediterranean via Indian subcontinent with Cochin being the first port of call in India from China," DP World said yesterday,

DP World operates five container ports in India, including facilities in Gujarat and Chennai, as well as a train service for cargo.

"There is a crying need for development of port infrastructure," said Mr Singh.

It won a contract in November to build a $200 million container loading facility at Jawaharlal Nehru Port in Mumbai, where it already operates a container terminal.

DP World recently started restructuring its business in India to bring the assets under one holding company in the country.

The new holding company, Hindustan Ports, was approved by India's foreign investment promotion board at the beginning of this year. Some of its assets were acquired after DP World bought the Peninsular and Oriental Steam Navigation company (P&O) in 2005.

The Dubai company this month announced profits of $555m for last year, up 21 per cent from a year earlier. It revealed at the same time that it plans to spend close to $3bn this year on expanding its terminal capacity.