Adani Ports may shut Krishnapatnam box terminal as volumes plunge

Dec 21, 2023 India Shipping News

AHMEDABAD : Adani Ports and Special Economic Zone Ltd (APSEZ) will likely to shut the container business at Krishnapatnam Port in Andhra Pradesh as a steep fall in volumes and other strategic moves including the sale of a 49 percent stake in the Ennore container terminal to a unit of Mediterranean Shipping Company forces a rethink.

If that happens, it could be a rare move by APSEZ to cull a container terminal, the fastest growing segment in its portfolio.

APSEZ, India’s biggest private port operator, took full control of Krishnapatnam Port, the country’s second biggest private port, in 2021 for an enterprise value of Rs13,675 crores.

The container terminal at Krishnapatnam Port has a capacity to handle some 1.2 million twenty-foot equivalent units (TEUs) a year.

“Container cargo has reduced drastically at Krishnapatnam Port. APSEZ is yet to take a call on shutting the terminal,” said a shipping industry source with close ties to APSEZ.

On an average, the terminal is handling some 18 ships. Till a year ago, the terminal used to handle some 12,000 TEUs a month.

In November, the terminal received some 12-13 ships, handling about 5,000-5,500 TEUs. “This is too low a volume,” the shipping industry official said.

“When there is hardly any cargo, APSEZ will have to look at various alternatives and options,” the shipping industry executive said.

Between April and November this fiscal, the container terminal handled 147 ships, bringing 92,081 TEUs.

The container terminal at Krishnapatnam Port is mainly a transhipment facility to handle containers meant for Kolkata, Nepal and Bangladesh.

Some four years ago, the Krishnapatnam container terminal used to handle as much as 40,000 TEUs a month in transhipment when Maersk Line was operating a service there. Maersk is not doing transhipment anymore from Krishnapatnam Port.

Currently, mainline vessels are calling at Chennai, Ennore and Kattupalli facilities and small cargo in the hinterland prefer to go there.

Port industry sources said that the container terminal at Krishnapatnam Port is set to die a “natural death”.“If you look at the hinterland of Krishnapatnam Port, it is mostly the Chennai hinterland including Vijayawada, Guntur, Bangalore etc. But it was traditionally going to Chennai port. Now they have Kattupalli Port, Ennore (Kamarajar) container terminal and Krishnapatnam Port (all run by APEZ) and these three facilities are competing with each other on containers. So, Adani’s plan is to make Kattupalli and Ennore a cluster for containers while Krishnapatnam will focus on bulk and liquid cargo. So, there are no pollution concerns in and around Chennai and they will try to grab more bulk and liquid cargo at Krishnapatnam and concentrate containers at Ennore and Kattupalli,” a port industry executive said.

Last week, Terminal Investment Ltd, a unit of Geneva-based Mediterranean Shipping Company S.A, the world’s biggest container shipping line, acquired a 49 percent stake for Rs247 crores in an 8 lakh twenty foot equivalent units (TEUs) capacity container terminal run by APSEZ in stateowned Kamarajar Port in Tamil Nadu.

Ships owned by Mediterranean Shipping Company call at the Ennore container terminal on its weekly NEMO service which it operates in partnership with the French container line CMA CGM S.A.

APSEZ also owns Gangavaram Port in Andhra Pradesh on the east coast and together with Ennore and Kattupalli, the upcoming terminals at Colombo and Vizhinjam and the operational terminals at Mundra and Hazira on the west coast will make the east-west coast connection better. Containers from the west and east coasts can also come to Vizhinjam and can be consolidated,” the port industry executive said.

APSEZ, according to the shipping industry executive, has not announced the closure of container business at Krishnapatnam Port.

“But they are not marketing the terminal. Krishnapatnam terminal is mainly for transhipment cargo; local cargo is very less. They will not say they are closing but slowly they will. It will die a natural death,” he said.

APSEZ will continue to operate the Krishnapatnam container terminal as a “stop gap arrangement” till it secures permission to handle boxes at Gangavaram Port.

“Once the Gangavaram container terminal starts operations, they will shift the container cargo from Krishnapatnam to Gangavaram. The ships bringing container cargo meant for Kolkata, Nepal and Bangladesh are calling at Visakhapatnam container terminal also. They only have to extend the service to Gangavaram Port once Krishnapatnam Port is shut,” the shipping industry executive said.

“These are all based on costs, whichever terminal is offering the cheapest rates. The liners will save on vessel related costs while the ocean freight remains the same,” he said.

Once Gangavaram comes, they will slowly kill the Krishnapatnam container terminal. They have already relocated employees from Krishnapatnam to Gangavaram, the shipping industry executive said.

Krishnapatnam Port will focus on bulk and liquid cargo to utilise the infrastructure better and shift all container handling equipment to Gangavaram Port, he added