A Report on Visakhapatnam Container Terminal Pvt Ltd and its Locational

Advantages

Containerization is a system of intermodal cargo transport using standard ISO containers

that can be loaded on container ships, railroad cars and trucks. Containerization has
become the integral part of logistics. It has revolutionized cargo shipping. Visakhapatnam
Container Terminal Private Limited (VCTPL), an all-weather Container Terminal located
in the Outer Harbour of Visakhapatnam Port, is on the East Coast of India in position
latitude 17° 41’ North and longitude 83° 18’ East. Quay length is 450 meters and the
permissible draught is 15.0 meters alongside. The depth of 16.5 metres makes VCTPL
the deepest container terminal in the country, amongst the major ports in India.VCTPL is
equipped with post-panamax gantry cranes, modern RTGs, Reach Stackers and a fleet of
modern ITV (Internal Transfer Vehicle) capable of handling all type of containerized
cargo including reefer and out of gauge equipments.VCTPL has implemented advanced
software and systems to provide secure, reliable, faster, efficient and user-friendly
services to all its customers, and suppliers. The terminal, therefore, has the flexibility to
adapt software to specific customer requirements and keep abreast of the advances in
electronic data interchange (EDI).

Geographically, Visakhapatnam lends itself to be the natural conduit of trade

from the fast growing markets of Andhra Pradesh, Orissa, Chhattisgarh, Jharkhand,
MP, UP, north India and West Bengal

The transhipment of traffic to and from Kolkata/Haldia, could be at VCTPL instead of

either at Colombo or at Singapore as at present. If VCTPL becomes the transhipment
point in preference to Singapore/Colombo, then fewer vessels would be needed for
feedering, and the steaming time would also be much less. There was considerable
potential for transhipment of cargo to and from Bangladesh, he added.

Container Corporation of India (Concor) has to play a key role to provide the crucial
connectivity to VCTPL's berth. By providing the necessary connectivity, the congestion
problem on the Delhi-JNPT/NSICT corridor can be removed.
Containers to the Far East countries , can be routed through the VCTPL's terminal at
Visakhapatnam.instead of being routed through the west coast ports as at present,
Already many containers to the south east nations are routed through VCTPL at
present.There is already rail connectivity (Delhi-Bina/Katni-Bilaspur-Raipur-Vizag)

It is capable to handle over half a million TEUs. VCTPL is already in the process of
adding new cranes to its existing set-up in anticipation of wide spectrum of cargo. During
the first three years of operation, it handled 20,000 to 22,000 of TEU a year.
It is well supported by customs, rail and road connectivity to the hinterland of northern,
central, eastern and southern India.

The Visakhapatnam Container Terminal Pvt Ltd (VCTPL) is set to touch, or cross, the
one-lakh TEU mark by the end of the current financial year, according to Capt Sriram
Ravi Chander, Chief Operating Officer.

During 2008-09 it had handled 90,000 TEUs of cargo and is set to touch the one-lakh
TEU mark by the end of the current fiscal. It is growing at 25 per cent per annum in spite
of the economic recession
VCTPL is set to touch the half-a-million TEU mark in three years.Cargo originating from
Andhra Pradesh, Orissa, Chattisgarh, Madhya Pradesh, Jharkhand, and Bihar was being
routed through the terminal.

In June 2009, VCTPL signed an MoU with Vedanta Aluminium at Jharsuguda in Orissa
and the project cargo will be routed through its terminal.

Tobacco from Guntur was still going to the Chennai port and there were certain problems
in attracting the commodity to Visakhapatnam but other commodities such as chillies and
cotton were being sent through the latter.

The paper industry is based on the banks of river Godavari, in and around a city called
Rajahmundry, which is closer to Visakhapatnam (Vizag) as compared to Chennai.
However, in the past before VCTPL was setup, due to lack of proper container terminal
facilities at Visakhapatnam Port, waste paper imports and finished paper exports have
been predominantly routed through Chennai gateway. This, over a course of time,
established itself as an accepted trade route. The system was working well until the recent
past, when the increased in-land logistics expenses compounded with the hassles
involved in crossing state borders, congestion, delayed realization of imports and related
expenses in relation to these delays are adding up to the costs of imports to the
consignees.The surmounting problems with the current logistics option have created an
exigency among the paper industry to look for a more viable option and the Visakha
Container Terminal provides the requisite option to the paper industry for their imports
and exports.A series of interactions between the senior management of various paper
mills, Shipping Agents and VCTPL were deliberated and now mutually believe that
VCTPL is indeed an ideal gateway for waste paper imports and finished paper exports.
This is mainly due to

• The proximity to paper mills – VCTPL is just 180 KM from the paper mill belt of
Andhra Pradesh while Chennai is almost 700 KM away.
• Congestion free and user friendly operations at VCTPL.

To tread on the new discovered path, major paper mills like ITC and Andhra Paper Mills
started routing their shipments through Visakhapatnam and others are ready to follow the
suit.

On 23rd Januray 2009, VCTPL and BATCO-RCM CFS, which manages a container
freight station and runs transport services, have entered into an MoU to provide cost-
effective and efficient logistics solution for export-import cargo to and from the port’s
hinterland. According to the MoU, the two companies will adopt a “virtual seaport”
concept, wherein the container terminal at the port will be directly linked to the
landlocked industrial hub through a container freight station (CFS). Shippers will have a
guaranteed connectivity to the seaport. The gates of the virtual seaport at Hyderabad will
be opened or closed in accordance with the calling of container vessels at the VCTPL
terminal and there will be fixed time and fixed cost connectivity. The movement of
containers will be tracked continuously through an advanced system. The arrangement
will guarantee seamless movement between the container terminal and the inland CFS.

Important features of this MoU are:

1. Provide a cost effective solution to the EXIM trade in Hyderabad with a single
window approach.
2. Opening and closing of sea port gate in Hyderabad for Export cargo with a fixed
timeline for connecting the container vessels calling Visakhapatnam.
3. Provide high quality service to the EXIM trade while handling the cargo &
containers.
4. Provide a seamless service to the customers without any hassles for shipment of
the EXIM containers between Visakhapatnam and Hyderabad, at 15% less cost
than that of carriage to Nhava Sheva.
5. With this, the Exporters and Importers in and around Hyderabad have a cost
effective option for moving their cargo especially to the Far East and U.S (West
Coast) markets instead of routing through Mumbai /Chennai.

A trade meet was jointly organised by VCTPL and the Container Corporation of India
(CONCOR) to explain why the trade should patronise the inland container depot (ICD)-
Raipur and the advantages of the recently scheduled rail connectivity between Raipur and
Vizag. Chief General Manager (CGM), CONCOR, Central Region, and Presidents of
Chhattisgarh trade bodies and around 100 delegates from the trade, statutory bodies,
shipping lines, forwarders and other service providers attended the meeting.

It was highlighted in the meeting that Visakhapatnam was only 546 km from Raipur as
compared to 1,178 km to the nearest West Coast port. The Vizag terminal was also well
equipped with the right infrastructure facilities. CONCOR decided to run a scheduled
service between ICD-Raipur and Vizag.Vizag gateway was the most logical and
economical solution for the landlocked state of Chhattisgarh. The state exported cargo
worth more than Rs 10,000 crore every year. The efforts put in by VCTPL and CONCOR
for providing a platform for Chhattisgarh trade to deliberate on the possible logistics
solutions were commended by trade and industry organisations. Since the state was
landlocked, functioning of the dry port was critical for trade. Logistics dictated that Vizag
was the ideal gateway for Raipur

The Urla Industrial Association, of Chattisgarh highlighted the important issues the trade
was facing. Its prime concern was in getting clearance of heavy metal scrap 1&2, which
was not available in Chattisgarh .So the trade now had to get scrap imports cleared at
ICD-Nagpur and then bring them to Raipur. This was a cumbersome exercise and
involved additional expenses.The support from shipping lines was essential for the
success of the functioning of the dry port at Raipur.

The ICD at Raipur, would be of great help to industrial units and trade located at
Chhattisgarh and western part of Orissa. The traffic includes not only rice, deoiled cake,
heavy melting scrap required for local furnaces and foundries but also a wide variety of
items needed by the plants of NTPC, BALCO and SAIL, all located in the region.

Large parcels of export quality rice are currently sent by rail and road from the region to
west coast ports of Kandla and Mumbai involving substantial transportation cost. The
commissioning of the Raipur ICD and its link with the VCTPL it was hoped, would
substantially reduce the inland logistics cost.

Main line vessels operated by INDFEX 2 (India Far East Express Service), a consortium
of four shipping lines -- Shipping Corporation of India, Pacific International Line, K-Line
and Dongmana -- are calling at the Vizag port every week. Trains from Inland Container
Depot (ICD), Tuglakabad, are also bringing containers to the terminal. These trains also
pick up containers from ICD Malanpur (Gwalior) and carry back containers meant for
ICD Tuglakabad and ICD Nagpur. All these factors are helping VCTPL in getting new
and additional container cargo from faraway places.

The throughput at the VCTPL on account of the ICDs located at Tughlakabad near Delhi
and at Nagpur in central region is showing an upward trend.

VCTPL organized an exclusive trade meet for container trade of Orissa on Saturday,
22nd September, 2007 in Bhubaneswar. Representatives from a wide cross section of
EXIM trade representing the Shipping Lines, Forwarders, C&F Agents, Exporters,
Importers, CFS Operators and transporters attended the meet.There is tremendous
potential of EXIM cargo in Orissa with several major Steel, Alumina and Power projects
coming up in this hinterland.

The meeting highlighted the advantages of using VCTPLand the benefits to the EXIM
trade in Orissa while routing their cargo through this un-congested gateway port.It was
pointed out that VCTPL is a better option, in every respect be it inland haulage, ocean
freight as also quality of service when compared to the neighboring ports in the Orissa
hinterland. Besides, the terminal there is world-class CFS facilities with ample yard space
available at competitive tariff. Orissa is a fast developing state with several major FDIs.
With several new projects coming up in this area, VCTPL has the infrastructure and
expertise for catering to the demand of Project Cargo shipments through Visakhapatnam.

Around 70 per cent of the containerised cargo was being routed through Mumbai and
Chennai, even though there were other terminals ready to cater to the needs of exporters
and importers.The terminal has necessary facilities for handling cargo, good rail
connectivity to the hinterland, ample warehousing space and many distribution points.
There will be a distinct cost advantage for the industries by exploiting the facilities and
advantages offered by VCTPL

Once the economic recession wears off completely and the many projects and SEZs in
the vicinity of Vizag kick off, there will be a very bright future for VCTPL.