Singapore port Congestion forces MSC to opt for Indian ports for Transhipment

Congestion-hit Singapore force Mediterranean Shipping Company to rely on Indian ports for transhipment

Container terminals at India’s eastern and southern ports such as Visakhapatnam and Kamarajar are reaping the benefits

 Mediterranean Shipping Company (MSC), the world’s largest container carrier, has increasingly started using Indian ports such as Kamarajar and Visakhapatnam for its transhipment operations as congestion in Singapore force some containers lines to omit calls at the world’s second busiest container port.

“MSC is dropping containers in terminals at India’s eastern and southern ports for transhipment. It’s huge,” said a shipping industry executive.

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For instance, the Visakha Container Terminal Pvt Ltd, run by J M Baxi Ports & Logistics Ltd, handled some 70,000 twenty-foot equivalent units (TEUs) in May for the first time.

“This is mainly due to transhipment (because it is counted twice - you discharge and load back the same container). MSC is not getting space/berths in Singapore and Colombo ports (two big transhipment hubs in the region). So, they are bringing bigger ships to Indian ports and dropping their boxes; wherever they have space in Indian ports they are putting the boxes, and they will get smaller vessels to take the containers out to final destinations,” the industry executive said.

This has helped boost volumes at the container terminal run by Adani Ports and Special Economic Zone Ltd (APSEZ) at Kamarajar port, where a unit of MSC has recently acquired a 49 percent stake. As a result, the Kamarajar container terminal is almost full.

APSEZ’s flagship port at Mundra is also gaining from the congestion in Singapore.

On May 26, Mundra docked ‘MSC Anna’, the largest container ship yet to call an Indian port. The vessel having a length of 399.98 metres (roughly the size of four football fields) can carry 19,200 TEUs. During its visit, the ship loaded and unloaded 12,500 TEUs.

Last week, the international container transhipment terminal at Vallarpadam run by Dubai’s DP World at Cochin Port, berthed the 15,934 TEU capacity ‘MSC Mara’, the largest container ship to dock at the facility.

Port congestion has returned to haunt the container markets, with Singapore becoming the latest chokepoint, shipping consultancy Linerlytica said.

“Berthing delays at the world’s second largest container port of up to 7 days with the total capacity waiting to berth rising to 4,50,000 twenty-foot equivalent units (TEUs) in recent days. The severe congestion has forced some carriers to omit their planned Singapore port calls, which will exacerbate the problem at downstream ports that will have to handle additional volumes. The delays have also resulted in vessel bunching, which is causing spillover congestion and schedule disruptions at downstream ports,” Linerlytica said.

“Indian ports would also get jammed. Already terminals are seeing high inventory levels of laden units,” said an executive with one of the world’s top container shipping companies.

The congestion at Singapore port is chiefly a fallout of ships diverting via the longer Cape of Good Hope route (instead of the shorter Suez Canal passage) to help avoid attacks by Iran-backed Houthi militants in the Red Sea since October last year.

While the volumes have started seeing a small dip since April at some of the container terminals in India, transhipment by MSC is coming to the rescue, the industry executive mentioned earlier said.

Singapore is a transhipment port (with very little local cargo) and a berthing delay of 6-7 days for a ship on the East West trade plying from US/Europe to the Far East, will have a “cascading” effect.

“Instead of keeping the vessels waiting for a week to ten days in Singapore, some lines such as MSC are preferring to drop the boxes in Indian ports which have space for bigger vessels and take the containers out on smaller ships to final destinations,” he said.

The congestion in Singapore has a significant impact on the reliability of Asia-Europe container services, he added.

The congestion will also likely exert upward pressure on rates ahead of the hikes planned by lines in June as the busy season for container shipping starts in July.