Shifting fortunes in India's container ports as Cochin, Deendayal buck downward trend

New Delhi — Even as the coronavirus pandemic continued to slacken container traffic across all major ports in India during July, Cochin and Deendayal ports were seen bucking the downward trend in the month, with container volumes surpassing the year-ago figure by 6% and 10% respectively.

Market sources attribute this rise in volumes at these ports to displaced demand for container space due to a spike in air freight, shifting of traffic between ports due to evacuation and logistic challenges, delayed shipments and higher demand from the Middle East during the month.

India has 12 major government-owned ports and over 200 minor and private ports. Major ports cumulatively handle 55% of the country's maritime cargo and include ports of Cochin and Deendayal.

Total volumes for 12 major ports, barring Cochin and Deendayal port fell 18% on the year in July to 652,000 twenty-foot-equivalent (TEU), Platts reported, with the worst hit port Kamarajar, where volumes sank 39%. Meanwhile, Jawaharlal Nehru Port, the largest among all major ports, witnessed an on-year decline of 20%.

However, the Cochin port in Kerala witnessed an increase in sailings due to firm demand from Dubai, a major trading hub. Container traffic at Cochin port totaled 54,000 TEU in July against 51,000 TEU a year ago, data published by Indian Ports Association (IPA) showed.

"The fact that Cochin has a direct shipping line to Dubai is attracting more exporters, a Cochin-based freight-forwarder said. "Most of the shipments to middle-east carry fruits, vegetables, garments and medical equipment."

He also noted that many exporters are now opting for sea transport rather than air transport, as air freight had nearly doubled when container freight rates in comparison were steadier.

A source associated with Cochin port told Platts that the port handles significant domestic coastal traffic and demand for spices within the country is adding to the container volumes.

Meanwhile, traffic at Deendayal port, formerly known as Kandla port, touched 44,000 TEU in July, compared with 40,000 TEU a year ago. Market sources attributed the increase to a shift in traffic to Deendayal port due to evacuation and logistic challenges at other ports as well as delayed shipments.

"Deendayal port is typically not a container port, volumes during the month increased because container shipments which had been stuck at transshipment points earlier arrived during the month," an Ahemdabad-based customs broker said.

A Gujarat-based freight forwarder said that container shortage as well as evacuation challenges in the adjoining ports during June led to traffic shifting to other ports including Deendayal port. He noted that the shortage in container availability at Mundra port, Gujarat and worsening of coronavirus situation in Mumbai, Maharashtra led to exporters shifting operations to Deendayal port.

India has been facing a shortfall in shipping containers as it witnessed a sharp fall in imports during the month of June when exports outperformed imports for the first time in a decade.

Going ahead, market sources believe that recovery at both Cochin and Deendayal ports will continue in the coming days on account of underlying trends and with industrial activity slowly picking up, operations at other major ports in the country are also likely to witness increased container traffic in the coming months.

"In the last two months what we have seen is that exports are more than imports, which signals two things. One is that the consumption has not picked up as much as exports, and with opening up of the economy, we had expected a surge in exports. I think this will normalize in next two months and we would be back into a balanced trade," said Karan Adani, CEO of Adani Ports in an earnings call.

"What we see is that the worst is behind us and we would only see a continuing upswing trend going forward," he said.