Maldives Container Transshipment Terminal
Market Study -Analysis of The Opportunity -zia@ziaahmed.org -www.ziaahmed.org
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Proposal
The proposed Maldives Container Terminal will focus on Transshipment between major east west arterial trade flows and feeder markets of India, Pakistan and Bangladesh. To develop Maldives Container Transshipment Terminal with 1.6 m TEU capacity by 2010 and increase it to 3.1 m TEU by 2015.
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Key Points
Location. Competition. Future. Cost Pricing
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Key Points
Demand- Supply. Productivity. Core competition is with Colombo and Cochin. India at present constitute 60% of the total transshipment of target market segment. Prices will go down in future. Demand growth will also slow down in future.
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Maldives – Location
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Location
The Republic of Maldives is a group of atolls in the Indian Ocean about 1029 miles (1656 km) (894 nautical miles) south of Bombay, India or about 417 miles (671 km) southwest of Sri Lanka. The islands that make up the Republic of Maldives are very small - the total area being around 298 square kilometres and Malé the capital island being only 450.6 acres. Deviation from main East- West Shipping Lane is 22 nautical miles which can serve the Indian Subcontinent's Transshipment requirements very well. Latitude 4.17°N, Longitude 73.50°E
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Competition
South India, Sri Lanka and Maldives all are well posed to handle Indian sub-continent cargo. The Maldives Container Transshipment Terminal should be well placed to attract carrier with relay operations and plug into regional feeder network. Competitive cost term for Maldives:
Will be broadly competitive with Colombo and Cochin (India) for sub continental cargo’s. Will be superior to these ports for East African cargos –Although it is not competitive as Salalah-. Will have edge over Colombo for Europe and western subcontinent cargos.
Success of Maldives depends upon, matching and exceeding the productivity achieved at Colombo. Maldives terminal will be well placed to handle transshipment containers and particularly between those shipped between the East Asian- Indian Subcontinent, the East Asia- Africa/Indian Ocean and Europe-Indian Subcontinent trade.
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Future
Over 2005-15, over 238% increase in capacity is planned at different ports.
Indian West coast- 275% increase to 17.5m TEU/year. Indian East coast- 111% increase to 3.9m TEU/year. Pakistan- 325% increase to 5.9m TEU/year. Bangladesh- 127% increase to 1.3m TEU/year.
Maldives port, - core competition will be with Colombo and transshipment facility at Indian Ports. Some considerable capacity will be added in the South Asian transshipment market, amounting to a 130% increase by 2010 and further 52% increase by 2015, to 10.65m TEU/year.
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Future
Increase in demand and Forecast Table
Country – Times Increase India Sri Lanka Pakistan Bangladesh South Asia Transshipment--Jeddah-Colombo Transshipment- South Asia 1995-2005 3.5 times 2.3 1.85 3.5 1.99 4.5 2.6 2000-2005 1.03 times 0.42 1.38 0.9 1 2.3 0.5 m TEU 2005 2015 m TEU 5.01 13.90 (2.46) 1.57 0.91 9.83 11.49 1.9 1.49 6.70 2.60 24.69 31.86 4.85
70% of TEU handled at Colombo is Transshipment. 70% of Bangladesh’s container trade is feeder through Singapore. When new project and expansion plan get going demand growth for transshipment will decrease from present level of 23% to 20%.
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Future
Project which will have direct impact on Maldives Container Transshipment Terminal
Sethu Samudran Channel Project- (India). Cochin-(India) Vallarpadan Container Terminal. Gwader Port (Pakistan). Kandala (India) Container Terminal . Ennore Port India Development. New terminal and facilities at Colombo, JNPT- India and Chennai and West Bengal will reduce the transshipment requirement of the Indian Subcontinent. Apart from this one more factor to be taken into consideration is one big competitor handling all facilities around i.e. Colombo, Cochin, JNPT and Gwader is developed and handled by Dubai Port
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Cost
Arterial Deep-Sea Shipping Costs
$ per 40’ Container Salalah Colombo Maldives Cochin Dubai $ per 40’ Container Salalah Colombo Maldives Cochin Dubai Singapore Singapore 6800 TEU 363.30 215.28 248.93 239.34 371.97 Singapore 12500 TEU 284.28 175.56 200.27 193.23 290.64 Rotterdam 6800 TEU 533.35 702.23 668.59 681.62 652.61 Rotterdam 12500 TEU 408.21 532.24 507.53 517.11 495.80
Feeder Shipping Cost – 1000 TEU Vessel
Jeddah 250.57 443.48 390.95 411.44 366.00 644.80 Karachi 237.57 253.46 247.55 213.80 168.23 456.48 Bombay 296.66 194.10 194.10 154.18 168.23
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Kolkata 492.99 240.72 293.25 278.28 485.37 294.04
Chittagong 499.29 247.02 299.55 284.58 491.68 276.57
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Cost
Comparative Port Charges for 6800 TEU Vessel Salalah Colombo Cochin Dubai Singapore $/Call 7800 9850 11250 8715 43500 $/40’ Container 3.71 4.69 5.36 4.15 20.71
Regional Container Transshipment Tariffs and Prices $ per transshipment Cycle Salalah Colombo Cochin Dubai Singapore Quoted Tariffs 20 40 142 185 120 165 114 130 144 194 87 131 Medium Customer 20 40 63 91 70 91 Na Na 62 85 80 125 Large Customer 20 40 84 87 Na 67 114
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Cost
Maldives will benefit from minimum distance. In terms of deep sea shipping costs, hub ports to the west of the Maldives will be favoured for transshipment to/from Europe, while easterly locations are better located for Asian Cargoes. In terms of feeder costs Maldives will be best placed for the eastern subcontinent, whilst Colombo, Cochin and Maldives vie with ports located in and the entrance to the Gulf to provide the lowest feedering cost for the western subcontinent. For traffic to/from East Asia, the Maldives will be competitive for subcontinent destinations, though shipping cost is slightly higher than for Colombo, Cochin. For Africa & Southern Market Maldives is well located compared with Colombo, Cochin but more expensive than Salalah. For containers shipped to/from Europe Maldives is well placed to serve Indian Subcontinent market, being more competitive than Colombo but marginally expensive than Cochin.
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Pricing
Slower demand growth or rapid development of competing terminal capacity could severely compromise the balance of market. In base case demand will between 0.94-1.03 m TEU until 2005, beyond this steady increase of capacity utilisation is forecast. In low case demand will be 0.76-0.88m TEU and then increase to 1.04m TEU until 2020, in this situation project will have marginal or negative return. In current market conditions stevedoring charges for a double container is move would be around $88 per container, additional port dues of around $5 per container. When terminal will be introduced in the base case prices will be between $72-82 and in low case $60-70 per double move.
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Pricing
Forecast Potential Transshipment Volumes to 2020 Capacity 2009 2010 2011 m TEU 0.080 1.60 1.60 Transshipment Capacity Utilisation IN % Base Case 65.5 62 59.7 Low Case 59 55 52.2 Transshipment Demand- m TEUs Base Case 0.45 0.99 0.96 Low Case 0.40 0.88 0.84 2012 1.60 58.5 50.4 0.94 0.81 2013 1.60 57.1 47.6 0.91 0.76 2014 1.60 64.1 52.3 1.03 0.84 2015 1.60 63.3 50.2 1.01 0.80 2020 1.60 75 65 1.20 1.04
Forecast Potential Transshipment Charges to 2020 2009 2010 2011 2012 Transshipment Capacity Utilisation IN % Base Case 65.5 62 59.7 58.5 Low Case 59 55 52.2 50.4 Stevedoring Prices $ Base Case 77.84 74.99 73.52 82.31 www.ziaahmed.org zia@ziaahmed.org Low Case 69.05 65.61 63.36 74.13 2013 57.1 47.6 71.73 59.86 2014 64.1 52.3 80.56 65.72 2015 63.3 50.2 79.50 63.01 2020 75 65 94.22 15 81.65
The Verdict
This project is feasible if and only if , major volume shipping line join the hand as joint venture partner and provide security of container The cost of the infrastructure development is very high, there is need to get subsidies and money at preferred terms from World Bank or some multilateral institution so the over-all cost can be reduced to make the proposal more attractive and more feasible.
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