Adani Ports to invest ₹100 bn in Vizhinjam transshipment hub

Adani Ports & Special Economic Zone Ltd. is planning to advance Vizhinjam as India’s premier transshipment hub with a ₹100 billion investment, leveraging its strategic location and deepwater capabilities to enhance global maritime trade efficiency and economic growth. This ambitious project aims to bolster India’s maritime infrastructure and reduce dependency on foreign ports.

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Adani Ports & Special Economic Zone Ltd. has surged in market value, reaching approximately $37 billion, surpassing Beijing-Shanghai High-Speed Railway Co. Its recent inclusion in India’s S&P BSE Sensex Index is expected to bolster its growth trajectory.

Deven Choksey from DRChoksey FinServ Pvt. sees this as the beginning of a new phase for Adani Ports, highlighting its robust cash flow and capacity to handle millions of metric tons of cargo. The company handled 27% of India’s total cargo and 44% of container cargoes in the last fiscal year, achieving a 24% volume YoY increase.

Additionally, Adani Ports & Special Economic Zone Ltd. is now expanding ambitiously with plans to invest ₹100 billion ($1.2 billion) in the second phase of the Vizhinjam port project in Kerala, slated for completion by 2028. This strategic move aims to transform Vizhinjam into a key transshipment container port in southern India. Situated strategically near India’s southernmost tip and along major international shipping routes, Vizhinjam is set to host its first container vessel from Maersk, marking a pivotal trial run at its 800-meter container berth.

The port’s expansion efforts align with Adani Ports’ broader strategy to enhance India’s maritime infrastructure, attracting major global container lines like MSC Mediterranean Shipping Co., A.P. Moller – Maersk A/S, and Hapag-Lloyd. This initiative is crucial for Adani Ports’ vision to establish India as a significant hub for the world’s largest container ships, aiming to capture a greater share of global maritime trade, currently dominated by China.

The funding will primarily support the extension of Vizhinjam’s existing berth and breakwater, essential for protecting the harbor against wave forces. Adani Ports plans annual investments of up to ₹60 billion to bolster capacity and infrastructure, as outlined by Chief Executive Director Karan Adani. Additionally, the terminal will feature bunkering facilities for ship refueling, additional cranes, and a cruise terminal capable of hosting large luxury liners.

The deepwater international container trans-shipment terminal aims to address India’s significant need for a dedicated facility, given the absence of such terminals currently in the country. With its strategic location and natural deep channels reaching depths of up to 24 meters below sea level, Vizhinjam is poised to emerge as a preferred hub for some of the world’s largest ships on the international shipping line and close to the East-West shipping axis, requiring minimal dredging and ensuring low operational costs. This green-field project, located away from urban areas, allows for optimal master planning and development to accommodate modern shipping requirements. Expected to handle 4.10 million TEUs annually, Vizhinjam Port is poised to reduce logistics costs and enhance economic growth by attracting a substantial share of container transshipment traffic currently diverted to neighboring ports. The port’s proximity to major highways and the national rail network further enhances its connectivity and accessibility, potentially transforming it into a pivotal hub for both southern and northern Indian regions.

This represents a strategic boon for India, located advantageously along major international shipping routes. With its capability to accommodate the largest mainline vessels and offering 2000 meters of container berthing space with a draught of 18.4 meters, the port will further reduce India’s reliance on foreign ports for cargo transshipment. This development is poised to stimulate significant economic growth, creating both direct and indirect job opportunities, akin to the transformative impacts seen in ports like Rotterdam, Singapore, and Colombo. While concerns persist regarding its socioeconomic and environmental impacts, proponents argue that the port’s strategic advantages and operational efficiencies will outweigh these concerns. Additionally, the cabotage benefits promise to lower freight costs and increase tonnage on coastal routes, bolstering India’s maritime connectivity and trade capabilities. The port’s military significance is also noteworthy, potentially influencing India’s naval strategy with discussions on joint military operations and provisions for emergency defense berthing facilities.