Tycoon Gautam Adani-led Adani Ports and Special Economic Zone Ltd (APSEZ) has opened talks with Mediterranean Shipping Company S A, the world's biggest container carrier, to sell as much as 49 per cent stake in its international container transhipment port at Vizhinjam in Kerala, in a move that will likely make the port's biggest customer a shareholder, multiple sources said.

APSEZ has previously used joint ventures with global container shipping lines to attract volumes to its facilities.

For instance, APSEZ runs two separate container terminals at its flag ship Mundra port - India's biggest commercial and container port by volumes handled - in equal joint venture with Terminal Investment Ltd, a unit of Geneva-based Mediterranean Shipping Company and with the French container line CMA CGM SA.

Terminal Investment also holds a 49 per cent stake in the container terminal run by APSEZ in state-owned Kamarajar Port Ltd in Tamil Nadu.

The stake sale talks on Vizhinjam port align with the provisions in the concession agreement signed by APSEZ with the Kerala government that allows the port developer and operator to dilute its stake to "26 per cent or such lower proportion as may be permitted by the Authority during the remaining Concession Period (after the first year of commercial operation date)."

The container transshipment port at Vizhinjam started commercial operations on December 3, 2024 and within 18 months of starting commercial operations, it has crossed two million twenty-foot equivalent units (TEUs) handling mark, making it the fastest to achieve this feat.

Almost the entire volumes handled at Vizhinjam have been underwritten by Mediterranean Shipping Company.

APSEZ and MSC did not respond to mails seeking comment.

The two million TEUs milestone reinforces Vizhinjam's emergence as a globally competitive deep-water transshipment hub and reflects rising confidence among top global shipping lines in the port's infrastructure, efficiency and strategic location.

Since launching operations, Vizhinjam has handled over 950 vessels, including 67 Ultra Large Container Vessels (ULCVs), each measuring nearly 400 metres in length. The port has also berthed some of the world's most iconic container vessels, including 'MSC Irina', the world's largest container ship, and 'MSC Verona', among the deepest-draft container vessels to call at an Indian port.

The ability to berth and service next-generation container vessels positions Vizhinjam among a select group of ports globally capable of handling large-scale transshipment traffic with high operational efficiency.

At a time when global shipping routes are increasingly being shaped by geopolitical tensions, supply-chain disruptions and the ongoing conflict in West Asia, Vizhinjam's strategic location along the Indian Ocean corridor is emerging as a critical advantage for shipping lines seeking route stability, operational efficiency and faster cargo movement.

Located just 10 nautical miles from the international east-west shipping route, Vizhinjam offers a significant geographic advantage for global trade movement between Asia, the Middle East, Europe and Africa. Its natural deep draft of around 20 metres enables large vessels to dock, improving operational efficiency and reducing turnaround time.

Vizhinjam also offers regular shipping services connecting South Asia, Europe, Africa and South America, enabling faster container movement and strengthening India's position in global maritime trade networks.

The port's proximity to key global shipping lanes enables carriers to save transit time and fuel costs, strengthening Vizhinjam's competitiveness as a preferred transshipment destination in the Indian Ocean Region (IOR).

Reducing reliance on foreign ports

The rapid growth in cargo volumes is expected to play a critical role in reducing India's reliance on foreign ports across Asia for transshipment cargo.

For decades, a huge chunk of India's transshipment cargo was routed through regional hubs such as Colombo, Singapore, Jebel Ali and Port Klang. Vizhinjam's rapid scale-up is now positioning India to retain a larger share of this cargo domestically while strengthening its competitiveness against established transshipment hubs in the Indian Ocean Region.

APSEZ has begun work to expand the capacity of Vizhinjam container transshipment port by 4.1 million TEUs a year with an investment of about 16,059 crore or $1.753 billion.

The capacity expansion will help transform Vizhinjam from a national container transshipment port into a regional transshipment hub, serving the Indian subcontinent, Africa, the Middle East, and other global trade corridors, sources said.

The first phase of the port, built with an investment of about ?8,800 crore, can handle container vessels of up to 24,000 TEUs capacity. The expansion will be designed to accommodate next-generation container vessels of up to 28,000 TEUs, reflecting long-term planning for future global shipping trends.

Following the expansion, Vizhinjam Port will be able to berth up to five mother vessels simultaneously from a continuous two-kilometre-long container berth, making it one of the two longest container berths in India along with Singapore's PSA International-run terminal in Jawaharlal Nehru Port.

While the nameplate installed capacity will increase from one million TEUs to 5.1 million TEUs a year after the capacity expansion, Vizhinjam Port will be capable of handling as much as 5.7 million TEUs a year backed by advanced automation, additional cranes, and higher operational efficiency, sources said.

To support this, APSEZ plans to install 12 new ship-to-shore or quay cranes from the existing 8 cranes and 27 new yard cranes to add to the 24 already operational.

The expansion involves extending the container berth by 1,200 metres from the existing 800 metres, creating a continuous 2,000-metre-long container berth.

The capacity expansion, to be completed by 2028, will significantly enhance the port's container handling capacity and support the commencement of full-scale export-import (EXIM) operations.

Vizhinjam's scale-up is viewed as strategically significant for India's trade ambitions.

As cargo volumes grow, the port is expected to enhance India's cargo retention capabilities, strengthen maritime connectivity and improve the country's competitiveness in global supply chains.

The port's emergence also comes at a time when shipping lines and global economies are increasingly prioritising resilient maritime infrastructure and diversified trade routes amid evolving geopolitical uncertainties across West Asia and key global shipping corridors.

In October last year, Mediterranean Shipping Company revealed a plan to convert a dozen of its foreign flag ships to the India flag. This will help the carrier overcome the government's January decision to roll back the cabotage waiver granted in 2018, permitting foreign flag ships to transport export-import (EXIM) laden containers meant for transshipment, empty containers meant for re-positioning, agricultural and horticultural products, and fertilizers on local routes without a license from the Directorate General of Shipping.

India's coastal trade is reserved for Indian flag ships and foreign ships are allowed to operate only when locally flagged ships are not available, according to the so-called cabotage rules.

The rollback of the cabotage waiver was slated to take effect after a three-month transition period from April 21 but the implementation timeline has been extended by six months till October by the government, citing the "exceptional and evolving global circumstances to ensure operational continuity and stability in container shipping operations".

A container transshipment port/terminal acts like a hub, into which feeder vessels bring cargo from smaller ports that is then loaded onto larger ships for transportation to final destinations and vice versa. Larger vessels bring about economies of scale and lower the cost of operations for shipping lines, which then translates into lower freight rates for exporters and importers.

The easing of cabotage allowed Mediterranean Shipping Company to deploy its foreign-flag feeder container ships to haul containers landing at Vizhinjam to other Indian ports and bring containers from there to Vizhinjam for loading onto mother vessels.

The government's decision to withdraw the cabotage relaxation has led to a backlash from container shipping lines.

"This could have a severe impact on the Indian trade as far as the feeding of empty containers for the export trade as well as the movement of loaded boxes are concerned, which in turn could impact the efficiency and cost of logistics," Sunil Vaswani, Executive Director, Container Shipping Lines Association (CSLA), told ET Infra.

Source: ET Infra. Com 

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