The opportunity called Vizhinjam Port

A hub port must have 3 great advantages

A location that is directly on a major sea lane
Availability of deep water berths and approach channel
A dense network of established services that allows cargoes to move between a wide variety of origins and destinations
Vizhinjam has the first two great advantages .It does not have the third advantage now but as the port becomes functional a service network could evolve itself around this hub port providing effective feeder connectivity .

Recent research studies in Erasmus University in Rotterdam have shown that the shipping costs represent only about 18% of the total system cost with the reminder 82% consisting of port costs, predominantly the terminal handling charges .The ESCAP study commissioned in 2002 has also found that the real potential for future cost savings lies in the land side of the shipping operations – the source of an estimated 75% of the carriers total costs .This is why major ocean carriers themselves would like to get involved in terminal management and operations .

Another four important factors associated with achieving a hub port status are :

High volumes of domestic traffic
Good hinterland connections
Good infrastructure
Competitive port pricing

Vizhinjam being a green field site there is no domestic traffic .But good hinterland connections and infrastructure could be created by the time the port is commissioned for container traffic .Being a minor port and free from expensive institutional and bureaucratic setup ,the new port should be able to offer efficient and competitive services in a multitude of areas comprising the overall “port services”.

Increasing ship size of container vessels : Many analysts believed that once the container ship size reached 10,000 TEUs diseconomies of scale would start operating as two engines would be required to power such huge ships. But with new developments in engine design ,single engine vessels of 10,000 TEU and above can now be built. The Chinese shipping line COSCO has ordered on Hyundai Heavy Industries four super post panamax ships of 10,000 TEU each costing about US $127 million to be delivered in 2008.Recent reports suggest that AP Moller-Maersk Odense shipyard in Denmark has plans to build 8 super-post-panamax ships of 13,000 TEU capacity with new K98 engine. Orders for about 123 ships with capacity of >8000 TEU have been placed world wide as of March 2005. A vessel of >6000 TEU requires water depth above 16 m.

Cost saving due to larger ship size : Drewy Shipping consultants have reported that when compared to a 4000 TEU ship a 10,000 TEU ship results in 37% operating cost savings.While the volume of 10,000 TEU vessel is 2.5 times larger than that of a 4000 TEU ship. A recent ESCAP study has revealed that by 2011 a total of 490 very large container vessels will be of 10,000 TEU and above.It has become increasingly clear now that there are no insurmountable technical barriers to that future increase in size of container ships .Concept designs already exist for ships upto 18,000 TEUs.The limits to grow if any ,will be market determined .This is a great opportunity Vizhinjam can exploit to its maximum potential as the port will be able to offer even upto 30 m draught