Description

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Picture Courtesy: INDIAN EXPRESS

Context:

PM Modi inaugurates Vizhinjam Port, India’s first deepwater transshipment hub, boosting maritime trade and reducing logistic dependence on foreign ports.

About Vizhinjam Port

Type: Deepwater transshipment port
Location: Vizhinjam, Kerala (Arabian Sea coast)
Project Cost: Approximately ₹8,900 crore
Ownership Structure:
- - Government of Kerala: 61.5%
  - Adani Ports and SEZ Ltd: 28.9%
  - Union Government: 9.6%
Current Capacity: 1 million containers per annum
Planned Capacity (after expansion): 7.4 million containers per annum

With its strategic location near international shipping routes and natural depth advantages, Vizhinjam positions India to capture its own transshipment traffic, reduce logistics costs, and enhance its self-reliance in maritime operations.

A transshipment port serves as an intermediary hub where cargo containers are transferred from large "mother vessels" to smaller feeder ships that deliver them to regional ports. These hubs are critical nodes in global shipping networks, especially for countries with significant maritime trade.

Prior to Vizhinjam's development, India faced challenges in handling its transshipment needs:

Approximately 75% of India's transshipment cargo was routed through foreign ports like Colombo (Sri Lanka), Singapore, and Jebel Ali (UAE).
This dependency resulted in additional costs of $80-100 per container for Indian traders.
India was losing an estimated $200-220 million annually in potential revenue from servicing its own cargo.
Reliance on foreign ports made India's supply chains vulnerable to geopolitical disruptions.
Longer transit times and potential delays affected trade efficiency.

Direct Economic Benefits

Cost Savings: Reduction in transshipment costs by $80-100 per container for Indian exporters and importers
Revenue Generation: Potential to recapture $200-220 million in annual transshipment service revenue
Reduced Transit Times: Faster cargo movement through direct routes
Lower Logistics Costs: Contributing to India's goal of reducing logistics costs from current 14-16% of GDP to global standards of 8-10%

Indirect Economic Benefits

Job Creation: Both direct port operations and ancillary services
Regional Development: Economic boost to Kerala's economy
Enhancement of Coastal Shipping: Support for India's Sagarmala initiative
Potential for Port-Led Industrialization: Creation of special economic zones and manufacturing clusters around the port

Part of Broader Maritime Development

Vizhinjam port is a crucial component of India's broader maritime development strategy that includes:

Sagarmala Programme: A comprehensive initiative to enhance port-led development along India's 7,500 km coastline
Development of Additional Transshipment Hubs:

Vadhvan Port (Maharashtra) - Construction began in August 2024
Great Nicobar Island Port (Andaman and Nicobar Islands) - Awaiting regulatory clearances

Strengthening Existing Port Network: India already has 13 major ports and 217 non-major ports
Maritime India Vision 2030: Comprehensive plan to transform India's maritime sector

Must Read Articles:

India's Maritime Sector Needs $1T

Source:

INDIAN EXPRESS

PRACTICE QUESTION

Q. In the question given below, there are two statements marked as Assertion (A) and Reason (R). Mark your answer as per the codes provided:

Assertion (A): Transshipment hubs become centers of global trade connectivity.

Reason (R): These hubs facilitate cost-effective movement of goods by consolidating and redistributing cargo.

Which of the options given below is correct?

A) Both A and R are true, and R is the correct explanation for A.

B) Both A and R are true, but R is not the correct explanation for A.

C) A is true, but R is false.

D) A is false, but R is true.

Answer: A

Explanation:

Assertion (A) is true: Transshipment hubs, connecting different shipping routes and facilitating the movement of goods between vessels, become important nodes in the global trade network. They improve connectivity by making it easier to move goods between different regions.

Reason (R) is true: Transshipment hubs play a crucial role in making the movement of goods more cost-effective. By consolidating smaller shipments into larger ones or by redistributing cargo to different destinations, they optimize vessel capacity and reduce overall transportation costs.

The reason (cost-effective movement through consolidation and redistribution) directly explains why transshipment hubs become centers of global trade connectivity. The efficiency and cost savings they offer attract more shipping traffic, solidifying their position as vital links in the global supply chain.