Adani's Mega Port Set to Attract the World's Largest Ships to India

On Sunday, the Zhen Hua 15, a heavy load cargo carrier sailing from the East China Sea, will make a momentous arrival at India's Vizhinjam Port. Not only will it set down the site's first colossal cranes, but it will also mark a significant step for India in the world of international maritime trade.

Located near the southernmost tip of the country, the Vizhinjam transshipment container port, set to be inaugurated on October 15, promises to propel India into the league of nations capable of handling the world's largest container ships. This development will allow India to stake a larger claim in international maritime trade, a sector currently dominated by China, and also reinforce its aspirations of becoming an alternative manufacturing hub by streamlining logistics costs for cargo entering and exiting the nation.

The inauguration of this new terminal represents another milestone for Gautam Adani's conglomerate, which faced a sharp short seller attack in January, making allegations of corporate misconduct — accusations that the Adani Group has vehemently denied.

Vizhinjam's strategic location, in proximity to international shipping routes accounting for 30 percent of global cargo traffic, and a natural channel extending up to 24 meters below the sea, positions it as an ideal hub for accommodating some of the world's largest vessels. Until now, the biggest container ships have been bypassing India because its ports lacked the necessary depth to handle such colossal vessels, opting instead for neighboring ports like Colombo, Dubai, and Singapore.The term "transshipment" refers to the process of transferring cargo from an original ship to a larger mother ship at a port along the way to the cargo's ultimate destination.

The long-anticipated deep-sea port along Kerala's picturesque coastline has been developed through a collaboration between Adani Ports and Special Economic Zone Ltd. and the local state government. As part of its expanding global footprint, Adani Ports is also involved in developing Israel's Haifa port and has plans to establish a hub in Vietnam.

"The Indian Ocean is responsible for 50 percent of sea trade," noted Chakri Lokapriya, Chief Investment Officer at TCG Asset Management Co. in Mumbai. "The Vizhinjam port, with its natural advantages, will improve operating margins for Adani Ports."

In a 2022 report, the Reserve Bank of India emphasized that poor shipping connectivity has impeded the country's integration into the global value chain. In 2020, India's container traffic amounted to only 17 million TEUs, a stark contrast to China's 245 million TEUs, as revealed in a statement from the ports ministry on February 7. This new port is expected to usher in a transformative era in India's maritime trade, potentially reshaping the nation's position on the world stage.

HBL