Artist rendition of future container terminal. Image via Indian Ports Association
(Reuters) An Indian conglomerate has started building the country’s first transshipment port, conceived 25 years ago, and the government will construct another $4-billion facility nearby to create a shipping hub rivaling Chinese facilities in the region.
New Delhi will grant billionaire Gautam Adani 16 billion rupees ($240 million) so-called “viability gap” funding to help the new port at Vizhinjam, on India’s southern tip, win business from established hubs elsewhere in Asia.
Once Vizhinjam, in the state of Kerala, is operational the federal government will start building the port of Enayam in neighboring Tamil Nadu, said a senior shipping ministry official. Enayam alone will save more than $200 million in costs for Indian companies every year, he said.
India’s 7,500-km (4,700-mile) coastline juts into one of the world’s main shipping routes and Prime Minister Narendra Modi wants to capitalize on that proximity by developing ports that can shift freight on to huge vessels capable of carrying up to 18,000 20-foot containers.
By bringing onshore cargo handling now done at entrepots in Sri Lanka, Dubai and Singapore, Modi’s government expects cargo traffic at its ports to jump by two-thirds by 2021 as India ramps up exports of goods including cars and other machinery.
The lack of an Indian domestic transshipment port forces inbound and outbound containers to take a detour to one of those regional hubs before heading to their final destination.
New Delhi expects the new ports to save Indian companies hundreds of millions of dollars in transport costs, as well as ease concerns over the growing strategic clout in South Asia of rival China, which has invested hundreds of millions of dollars in Sri Lankan ports at Colombo and Hambantota.
Adani wants the Vizhinjam port, which an arm of his Adani Group is building at a cost of around $1 billion, to be operational in 2018. The port lies hard by the Gulf-to-Malacca shipping lane that carries almost a third of world sea freight.
“The port can attract a large share of the container transshipment traffic destined for, or originating from, India which is now being diverted primarily through Colombo, Singapore and Dubai,” said an Adani Group executive who declined to be named.
But officials acknowledge that it would be difficult for the new ports to win international clients unless they offered discounts.
“A major part of transshipment is happening at nearby ports. We can win some of that business,” said A.S. Suresh Babu, who heads a government agency set up by Kerala to facilitate the construction of Vizhinjam.
“There’s a viability issue in the first few years. Already the Chinese are operating there. So unless you give some discount you can’t attract these ships. So that’s why the government of India has approved the viability gap funding.”
CHINESE THREAT
India is worried about China’s expanding reach in the region through port investments in Sri Lanka, Bangladesh and the Maldives. China is also developing Pakistan’s Gwadar seaport as part of a $46 billion China-Pakistan Economic Corridor.
China had also wanted to partner with an Indian company to build the Vizhinjam port, but its proposal was rejected by the government on grounds of national security.
India has not banned Chinese firms from investing in its ports, but takes a cautious approach as most ports are also used for “strategic purposes”, said the shipping ministry source.
That is a euphemism for dual-use port facilities that could also be used by naval vessels. The docking of a Chinese nuclear submarine at Colombo’s commercial port in 2014 shocked India’s security establishment and has added urgency to New Delhi’s push to strengthen its port infrastructure. (reut.rs/2a8nKfG)
Vizhinjam port will have dedicated berths for India’s navy and coastguard, according to a government note seen by Reuters.
India is also seeking to extend its commercial and strategic reach as it tries to catch up with China, pledging up to $500 million to develop the Iranian port of Chabahar to give it trade access to Iran, Afghanistan and the hinterlands of Central Asia, now largely blocked by Pakistan.
“We want Indian ports to compete with the best ports in the world in various parameters like turnaround time, efficiency, last-mile connectivity, infrastructure etc,” India’s Shipping Ministry said in a statement to Reuters.
But analysts remain skeptical that India can complete the transshipment ports, given that it has taken a quarter of a century to get the Vizhinjam port plan this far after legal disputes and lack of security clearance from the federal government delayed previous attempts to build it.
“Very few days or weeks pass without news of a new hub port proposal in Southern India,” said Andy Lane, a partner at maritime and port consultant CTI Consultancy.
He added that, as Colombo was a “low cost and highly efficient” port, container shipping lines were unlikely to easily consider a switch to India.
Reporting by Nidhi Verma and Krishna N. Das in NEW DELHI; Additional reporting by Keith Wallis in SINGAPORE; Editing by Douglas Busvine and Alex Richardson.
© 2016 Thomson Reuters. All rights reserved.
Sign up for gCaptain’s newsletter and never miss an update
Essential maritime and offshore news, insights, and updates delivered daily straight to your inbox
The Port of Los Angeles handled a record 1,042,652 twenty-foot equivalent units (TEUs) in September, marking the busiest month in its 118-year history as strong consumer demand and shifting global...
The Port of Los Angeles reported its best single month in its history. In a media briefing, port executive director Gene Seroka announced the port processed 1,042,652 TEUs, 23k TEUs more than the July 2025 record.
U.S. container imports are finally beginning to slow after an unusually long peak shipping season that stretched through the summer and into early fall, according to the latest Global Port Tracker report from the National Retail Federation (NRF) and Hackett Associates. The slowdown comes after months of stronger-than-expected cargo volumes at major U.S. ports, as retailers continued bringing in merchandise despite tariffs, inflation and higher transportation costs. Ports covered by Global Port Tracker handled 2.3 million twenty-foot equivalent units (TEUs) in August, up 0.4% from July but down 0.7% from a year earlier. August now appears to have been the busiest month of 2026, marking a shift from last month’s forecast that September would take the top spot. “Even with any fluctuations in final data, we’re likely past the busiest part of the year,” said Jonathan Gold, NRF vice president for supply chain and customs policy. “The truth is that the peak season started early and was stretched out through the summer and early fall, with the difference from month to month often amounting to little more than a rounding error,” Gold said. The latest forecast puts September imports at 2.28 million TEUs, down from the 2.31 million TEUs projected a month ago. October is expected to ease further to 2.25 million TEUs before volumes fall to 2 million TEUs in November. Despite the expected slowdown, imports are still running well ahead of last year in some months. September volumes are forecast to rise 8.2% year over year, followed by an 8.5% increase in October. The revised outlook follows a peak season that has repeatedly defied expectations. Retailers moved merchandise into the country earlier this year to get ahead of tariff changes and supply chain uncertainty, initially raising expectations that imports would peak early and decline through the summer. Instead, volumes remained elevated, with shipping delays and resilient consumer demand helping extend the traditional peak season. The strength has been evident at individual ports. The Port of Los Angeles recorded its busiest three-month stretch on record during June, July and August, while the Port of Savannah reported a record September earlier this week, handling 504,015 TEUs, up 3.7% from a year earlier. Hackett Associates founder Ben Hackett said the economic outlook remains mixed, with consumers continuing to spend despite signs of weakening confidence. “Despite this, consumers appear to remain confident and cautious at the same time, with consumer confidence indexes sliding to multi-year lows while consumer spending continues to be robust in the face of increasing inflation,” Hackett said. For the full year, Global Port Tracker now expects imports at major U.S. container ports to reach 25.8 million TEUs, up 1.4% from 25.4 million TEUs in 2025. That is slightly above last month’s forecast of 25.7 million TEUs. Looking ahead, January 2027 imports are forecast at 2.07 million TEUs, down 1.9% year over year, followed by 1.92 million TEUs in February, up 1%. For retailers, the extended shipping season means much of the merchandise needed for the holidays is already in the country, reducing the need for another major import surge before year-end. “Most holiday merchandise has arrived, and the remainder of the year is just a matter of last-minute replenishment and preparation for early 2027,” Gold said.
Subscribe to gCaptain Daily and stay informed with the latest global maritime and offshore news
Essential news coupled with the finest maritime content sourced from across the globe.
Sign Up
Join The Club
