Propelled by dynamic economies, big investment in port infrastructure, and rising transshipments, South Asia is expected to continue its impressive container shipping growth even as other regions suffer from weak global market demand, according to maritime consultant Drewry.
In a new analysis, Drewry stated that recent global container growth owes much to the robust performance of South Asia.
“Growth in container shipping is becoming a rare commodity; global port throughput only increased by 1% in 2015 (the second lowest on record behind 2009) and the first quarter of 2016 was even worse with only a 0.5% rise,” it said.
That the industry can point to any growth at all is largely down to strong volumes in the South Asia/Indian Subcontinent region, it added, saying box port traffic (including empties and transshipment) in the area gained 5.3% in the first three months of 2016, “the highest attained by any region and 10 times the global average.”
Port throughput in South Asia grew by 5.3% in 2015 to reach just under 22 million TEUs, which puts the region on a par with the East Coast of North America. Each of the South Asian countries contributed to the additional TEU count with India’s throughput growing by 234,000 TEUs, Sri Lanka’s by 278,000 TEUs, Pakistan’s by 274,000 TEUs, and Bangladesh’s by 324,000 TEUs.
Aside from the economic energy of the region—the IMF expects GDP growth for the four countries between 2015 and 2020 to be well above the world average with India topping them at around 8%—part of the reason for the upswing in South Asia container handling is greater incidence of transshipment.
Previously, container lines preferred to base their hub and spoke networks in the Middle East and Southeast Asia, as port infrastructure in South Asia lagged for many years.
But the development of Colombo as a viable hub following the end of the civil war in 2009 has boosted the South Asia TEU count, said the report. The Sri Lankan hub’s growth was tapered by the continuous upsizing of vessels with deeper draft requirements, but the opening of the Colombo International Container Terminal at the new South Harbour in 2013 with 20-meter access channel, has kick-started further activity.
Aided by some very competitive transshipment tariffs, Colombo attracted another 144,000 TEUs in the first quarter of 2016 compared to a year ago, an upswing of 11.5%. The port is now a key East-West hub with about three-quarters of all traffic transshipped to other countries in the region, and has benefited from the boom in garment exports from Bangladesh and from Sri Lanka itself.
“The growth of the apparel industry will be key to the future gateway traffic and transshipment volumes for the South Asia region. Apparel exports from the regions grew by around 10% annually from 2005 to 2014 and Sri Lanka alone has set a sales target for the industry of $8 billion by 2020,” said Drewry.
Furthermore, new port developments in the pipeline across South Asia will attract more direct services and lessen the need for feeder service to and from the Middle East or Southeast Asia, keeping more of the volume within the region.
For example, there are plans for a deep-water container terminal in Bangladesh, which is expected to be built around 2020. Because the balance of Bangladesh’s business favors trade with the Far East, it is more naturally connected towards the Southeast Asia hubs, but they stand to lose some of that traffic when the new port opens.
The region is also set to gain transshipment alternatives to Colombo in the near future with new developments in India (Mundra at the forefront) and in Sri Lanka (Hambantota), which will make the region even more attractive to carriers.
Photo: Rehman Abubakr
