INSA calls for greater usage of Indian ships and ports for transshipment traffic of Bangladesh

      05/02/2018

Bearing in mind the thrust of the Hon’ble Prime Minister of India as well as Hon’ble Minister of Shipping towards the growth of maritime transport and growth of the trade between BIMSTEC countries, Indian National Shipowners Association (INSA) has called upon the BIMSTEC Secretariat to promote the usage of Indian ships and Indian ports/transhipment hubs on the East Coast of India for the purpose of transhipment of Bangladesh EXIM cargo.

The letter dated 30/4/2018 of INSA draws the attention to the fact that geographically, Indian ports are closer to Bangladesh. This will mean faster connections, cheaper freight and better utilisation of port capacities and vessels slots ex Indian ports. Indian port operators are known to be open to commercial negotiations. “This is a win-win situation for all concerned, Indian ports will benefit through increased traffic and the Bangladesh box trade will be connected faster and at a cheaper cost”, said Capt. Vivek Kumar Singh, Managing Director, Shreyas Shipping Limited who is already providing transhipment services over ports in the East Coast of India.

The letter requests the assistance of BIMSTEC Secretariat towards initiating suitable steps which could lead to fruition of commercial discussions between service providers and trade. India’s container fleet has grown 17% CAGR from 2014 to 2018 when policy changes were brought in by the Government of India, including providing duty free bunkers for coastal vessels.

“We believe that Indian shipping companies are geared to provide effective and efficient services for the transportation of bulk cargoes as well as containerised trade of Bangladesh and Indian companies are keen to provide logistics services for Bangladesh traders and companies” said Mr. Anil Devli, CEO, INSA.

Background: According to Institute of Shipping Economics and Logistics, the container port traffic of Chittagong Port in 2016 was 2.350 million Twenty-Feet Equivalent units (TEUs) of containers and in 2015 saw 2.025 million TEUs of container traffic.

It is also estimated that there will be a three-fold rise in container traffic in next 15 years. The expected figures are 2.7 million TEUs in 2020 and 5.4 million TEUs in 2040, according to the news website container-new.com. The major imported commodities are food grains, cement, fertilizer, coal, salt, sugar and edible oil. These are the transshipment volumes that could be got on the ports on the East Coast of India.

In March 2016, as part of stage one of the bilateral agreement, for the first time in their history as nations, neighbours Bangladesh and India launched direct cargo services which enabled goods shipped by sea to reach each other’s ports in a maximum of four days. Bangladesh and India signed an agreement during Indian Prime Minister Narendra Modi’s visit to Dhaka on June 6, 2015, followed by the signing of a protocol in November, which cleared the way for direct maritime cargo services.

Previously, goods sent from India took more than three weeks to reach Bangladesh’s Chittagong or Mongla ports because shipments first had to pass through Colombo or Singapore. This direct service has therefore reduced time and costs. This has also boosted trade between India and Bangladesh and allowed India to ship products to its seven north eastern states via Chittagong port. The next logical step therefore is to seek diversion of transhipment traffic of Bangladesh to Indian ports.

The text of the bilateral deal stipulated that the maritime shipping services between India and Bangladesh would enable the movement of cargo to the north eastern states through Chittagong, and thereafter by road or river routes. As part of stage two, “The deep draft ports on the eastern coast of India can be ‘hub ports’ for the onward transportation of cargo to Bangladesh via the coastal mode. The Indian ports will attract enhanced cargo and also the overall transportation cost to Bangladesh will get reduced,” the document said.

Cargo ships from Bangladesh’s Chittagong, Narayanganj, Ashuganj, Paira, Khulna, Mongla and Pangaon (near Dhaka) ports can carry goods to seven Indian eastern coastal ports in Kolkata, Haldia, Paradip, Vishakhapatnam, Kakinada, Krishnapatnam and Chennai and vice versa, according to the agreement papers.

Now is time to implement this stage two of the bilateral deal where EXIM transshipment of Bangladesh is re-directed to Indian ports on the East Coast of India.

Note: The Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) comprises Bangladesh, Bhutan, India, Myanmar, Nepal, Sri Lanka and Thailand.

The main objective of BIMSTEC is technical and economic cooperation among south Asian and southeast Asian countries along the rim of the Bay of Bengal.

In his message, Hon. Prime Minister of India Shri. Modi referred to the BRICS-BIMSTEC Outreach Summit hosted by India in Goa in 2017 and said: "I am happy to note that we are implementing the robust agenda that we agreed on in Goa, to achieve greater connectivity, trade, people-to-people contacts, and sustainable use of resources”. INSA represents the Indian flag shipping industry since its formation in 1929 and is mandated to promote the growth and use of the Indian flag vessels.