The Kochi International Container Transhipment Terminal, locally known as the Vallarpadam Terminal, is a container trans-shipment facility which is part of the Cochin Port Trust
The aroma and flavour of its spices have drawn traders from across the seas to Kerala. Its tradition and history can never be complete without anecdotes of seafarers converging to this destination for the precious and delicious cooking ingredients. Cochin Port, harboured on the man-made marvel – Willingdon Island – was envisioned to cater to this flourishing trade at that point in time. Until recently, it has lived up to the expectations of its users and basked in its glory. However, despite Vallarpadam ICTT and the proposed outer harbour coming into the scene, it is slowly being consigned to history. Or, is there still hope for restoring lost memories?
Satyapal Menon | The Dollar Business
The ride from the Kochi airport to Fort Kochi was quite pleasant, but it did erase whatever little sense of nostalgia I had of revisiting the state after so many decades. There was a lot of difference between recall and the view that unfolded. Vast stretches of countryside, dotted by shacks, displaying famed Kerala bananas, have completely disappeared from the landscape. Back waters and lagoons seems to have disappeared into concrete jungles. But my destination, Fort Cochin, with its old buildings still standing sturdy and majestic, did create a pervasive sense of history. My cab driver Joby was a well-informed guy and he gave me a run down on the decline and the imminent fall of Cochin Port. “It was a sellout and the fallout is quite evident from the total stagnancy of both Cochin Port and Vallarpadam ICTT,” he said. It was the voice of the Vox Populi.
Ignoring history
Cochin Port and Willingdon Island – where it is located – have their moorings engineered through a fascinating and amazing endeavour. It was born out of a necessity, and also astute vision. The then Governor of Madras, Lord Willingdon conceived the idea of creating a modern port to harbour the ships that would come calling following the opening of Suez Canal and the consequent passage of vessels in the vicinity of the West Coast. His concept was translated into reality by British engineer Sir Robert Bristow, who first studied the dynamics of sea currents, tidal patterns and siltation before designing and finally constructing the island – a feat perhaps unparallelled in many years to come. 
This was in the year 1926. Today, almost nine decades down the line, the once busy and buzzing port on Willingdon Island is near cessation of operations, with the facilities being leased out to cement manufacturing majors like Ambuja Cement and Ultratech. Apart from this, only bulk imports and exports are happening from here. The entire port activity has shifted to International Transshipment Container Terminal (ICTT) at Vallarpadam. Developed in public-private partnership (PPP) mode with Dubai Ports World, the terminal was envisaged to harbour mother vessels and facilitate transshipment. But, that has not been the case, if one goes by its track record since it started operations in 2011. The reason – a lack of foresight and insight, coupled with the fact that it was established without appropriate studies and surveys about the topographical vagaries that the location experienced. The point here is that while several in-depth studies and efforts had gone into the construction of the original Cochin Port, in this case there were none. The fault lines are conspicuous, isn’t it?
The LNG Petronet is functioning at 2% of its available capacity
Promises galore
Vallarpadam ICTT was designed keeping in perspective the present and futuristic demand for transshipments. But it has failed to gauge existent ground realities. If the objective was to stop Indian ships from heading to Colombo for transshipment, it has, till date, failed to materialise. Even today, containers from India are taken in smaller vessels and offloaded to bigger vessels in Colombo, Singapore and Dubai. Colombo is the biggest transshipment hub for Indian containers with around 60% share, with Singapore at 30% and Dubai at 10%. One justification often flaunted by the developers of ICTT and Cochin Port Trust authorities was that Cochin had the advantage of being positioned at a strategic location from the international sea routes – only about 76 nautical miles from the Suez Route – when compared to other ports in the country like Mumbai and Chennai, which are much further away. The passage of traffic between Asia and Africa, Europe and America is via waters within Indian jurisdiction. Kochi is located just 11 nautical miles from the Middle-East trade route. When considered from this point of view, the objective and intent in establishing the ICTT could be credited with being judicious.
In line with times
According to the modalities of the agreement between Cochin Port Trust (CPT) and Dubai Ports World (
DPW), the ICTT was developed on the build, operate and transfer (BOT) model. Dubai Ports World was entrusted with the task of constructing, developing and operating it, while Cochin Port Trust was vested with the responsibility of providing the land, infrastructure like road and rail connectivity and maintaining the required depth for berthing mother vessels. Cochin Port’s share in the revenue from operations at ICTT is 33%. Dubai Ports World will be involved in managing the operations, apart from marketing for 30 years, after which the ICTT will be handed over to Cochin Port Trust. Initially, during the launch of operations by ICTT in 2011, there was immense optimism about its potential. The terminal was to be developed in three phases at an estimated cost of Rs.3,200 crore. The first phase, which has completed, has the capacity to handle 1 million TEU (twenty-foot equivalent unit) with the capability to be enhanced to 3 million TEU and 5.5 TEU in the second and third phases respectively. In fact, ICTT Vallarpadam is the only port in the country accorded Special Economic Zone (SEZ) status. As a result, it is exempted from all duties normally levied on imports. This has enabled the promoters to save considerable amounts through exemptions on import of capital goods and equipment for establishing the ICTT. The SEZ provision also exempts the ICTT from customs and excise clearances.
White elephant
Dr. Manmohan Singh, the then Prime Minister, while inaugurating the ICTT had described it as a milestone in logistic infrastructure development. But what followed in the years to come has proved to be problems replete with negative consequences. To begin with, one of the biggest ship liners MV Maersk Sembawang had come calling. To cut the story short – well, it was precisely that – this was also the first and the last such big vessel arriving at the ICTT. “Resorting to dredging was a blunder and the biggest mistake. No surveys were carried out to find out whether this port is capable of accommodating mother vessels. No mother ships are coming here. Only in the beginning, a few mother ships came. Now only feeder vessels from Colombo Port are coming here. That was happening comfortably at Cochin Port also. Everybody was also happy with the Cochin Port,” Antony Kottaram, Convenor, EXIM Forum, Kerala Chamber of Commerce and Industry told The Dollar Business.
The terminal has not lived up to the perceived expectations which subsequently ran aground since the projections were so full of loopholes that it failed to hold water. First and foremost was the inability of the terminal to accommodate large cargo vessels due to chronic siltation. At present, very little business is happening at the ICTT, with the terminal functioning at 35% of its capacity. On the contrary, it has proved to be a drain on Cochin Port’s exchequer – which is already cash strapped and in the depths with huge debts – running to the tune of over Rs.700 crore, to be repaid. 
The port has been pouring around Rs.60 crore annually for dredging operations at the ICTT and the total investment by the government is around Rs.1,700 crore. According to CPT’s own calculations, the estimated net loss during FY2015 would be up in excess of Rs.120 crore and given the present scenario, the losses might as well increase to Rs.180 crore during FY2016. Strangely, DPW has also been handed over – in what can be only be viewed as a bonus as if to acknowledge the value of its partnership – of handling operations at Rajiv Gandhi Terminal at Cochin Port. And this comes, with a stake in the revenues attached, till the time ICTT is fully commissioned. The despondency is quite evident and Chairman, Cochin Port Trust, Paul Antony admitted to The Dollar Business that it was going through a difficult time. “In the case of the ICTT, if it works at 1 million TEU, the port stands to get Rs.185 crore revenue per annum. Well, the issue currently is they are not, and, because of that we are facing a severe strain on finances of the port. As far as Cochin Port is concerned we are going through a bad phase.”
According to CPT’s own calculations, the estimated net loss during FY2015 would be up in excess of Rs.120 crore. Given the present scenario, the losses are expected to rise to Rs.180 crore during FY2016, putting serious question marks over its future
In a trough
A study of the container traffic statistics since the inception of the ICTT, does not reflect any significant indicators at the performance level. The number of containers handled at the port in FY2012 was 390, in FY2013 was 439 and in FY2014 was 501, with TEUs at 3.46 lakh, 3.34 lakh and 3.37 lakh respectively. The number of vessels carrying fertilisers and raw materials in the dry bulk segment, which is mainly handled at the Cochin Port, also experienced a decline during the same period, while other products in this segment witnessed a miniscule rise. General cargo vessels traffic dipped from 45 in FY2010 to 39 in FY2011, 37 in FY2012, 24 in FY2013. But FY2014 witnessed a positive turnaround with the number of vessels increasing by 17 to 41. According to Cochin Port Trust figures (on its overall operations during FY2014), the cargo traffic including liquid bulk was 20.96 MMT. The average pre-berthing time during the year was 23.18 hours and the average turnaround time was 1.76 days. The idle time, according to the figures, was 26%. Already at sea with performance and struggling to stay afloat amidst the troughs, DP World seems to have a propensity to self-destruct by hiking the TAMP charges on container handling services. The result – the EXIM community, not only here in Kerala but also in neighboring Tamil Nadu, is seriously contemplating to shift their activities to Tuticorin Port in Tamil Nadu. “There is a possibility that many of the exporters, especially those from Coimbatore, may go to Tuticorin because of the high rates here,” A. S. Rajan, Secretary, Kerala Chamber of Commerce and Industry told The Dollar Business.
A. J. Tharakan, President, Seafood Exporters Association of India, and Chairman, Amalgam Foods Ltd., attributes the high charges to high costs involved in dredging. “The costs here is the result of the expenses borne by the port for dredging activities. Apart from this, the port is also running in losses. In my opinion, the dredging costs should be paid from the Consolidated Fund of India, so that the port can make up the losses and also offer competitive rates for the services. This will enable the port to not only compete with Colombo, where the prices are lower, but also increase efficiency of the services,” he told The Dollar Business. On the question of exporters opting for Tuticorin Port, he replied, “It could be the case with exporters of other products but not seafood exporters, since we have all the facilities here.” There was high anticipation when the ICTT was awarded to Dubai Ports World. First, because of its track record and reputation as one of the best port developers in the world. Second, it had a brand image that would enable it to rope in big liners. Although the ICTT, in terms of design and construction, did meet the expectations, Dubai Ports World was unable to meet its part of the commitment in bringing in the big time ship liners.
Boon or bane
While Vallarpadam ICTT is struggling to survive and proving to be more of a bane than a boon to Cochin Port Trust, LNG Petronet located at Vypeen Island here, is also in doldrums with only about 2% capacity utilisation. Moreover, the project has been stopped mid-flow as there are issues – Tamil Nadu government has refused to give permission to lay the pipeline through its terrain. Perhaps to revive its dwindling fortunes, Cochin Port Trust is planning some more ventures out at the sea, like the Cochin Outer Harbor Project and the Multi User Liquid Terminal (MULT). Meanwhile, Vallarpadam ICTT is likely to encounter stiff competition from another transshipment hub for containers proposed to come up at Vizhinjam in Trivandrum. The project, to be established by the state government, has already been cleared by the Centre. One advantage Vizhinjam will have over the ICTT, apart from its proximity to the international route, is that it would have the capacity to harbour deep sea vessels.
Things at Cochin Port are only getting worse as ambition and ground realities seem to be in clear conflict at this major port
What next?
After my many e-mails and phone calls for an interview with K. K. Krishnadas, Director and CEO, DPW were stonewalled, I visited Vallarpadam ICTT and met him personally. Krishnadas was profuse in apologies for not being empowered to speak to the media. The silence was quite eloquent and even deafening as evidenced by the sparse activity pervasive at the ICTT, in contrast to the busy and noisy movements of containers observed at other such terminals. But we still feel that Vallarpadam ICTT, in God’s own country, could definitely do well if the authorities wake up to the alarm bells. Of course, before it’s too late!
Paul Antony, Chairman, Cochin Port Trust"Of all container terminals in India, only ICTT has transshipment in its title"
Dr. K. N. Raghavan, Commissioner of Customs, cochin"We have taken up the challenge to clear all pending drawback related cases"
TDB: What kind of cooperation do you seek from stakeholders?
Antony Kottaram, Convener, EXIM Forum, Kerala Chamber of CommerceCopyright @2024 The Dollar Business. All rights reserved.
