India rises as hub in global container shipping

TOKYO — India has launched an ambitious plan to build massive ports and open new shipping routes, seeking to capitalize on companies shifting away from China over its tensions with the U.S.

Jawaharlal Nehru Port — also known as Nhava Sheva Port — is India’s second-largest in terms of container handling volume. The port, near Mumbai, is being renovated with a $131 million loan from the Asian Development Bank and others.

Existing ports like this one have limited room for expansion. In February, the government and private sector, including Nhava Sheva’s operator, announced plans to build a port at Vadhavan, north of Mumbai.

With an investment of 210 billion rupees ($2.43 billion at today’s rates), India aims to make it one of the top ten ports in the world as global commerce turns to the Indian Ocean rim, home to nearly a third of the world’s population.

The bulk of the world’s container transport follows routes connecting Asia with the U.S. and Asia with Europe. Ships leaving Asian ports are relayed through international hubs like Shanghai, the world’s largest port in terms of container handling volume, and Singapore, the second largest, with most continuing directly to the U.S. or Europe.

Up to now, Indian ports have been positioned as spokes of hub ports, but in May 2024, Switzerland’s MSC, the world’s largest container ship company, called a large container ship with a capacity of 19,200 twenty-foot equivalent units (TEU) at Mundra Port in the country’s west. Last fall, a 24,000 TEU-class ultra-large ship called at Vizhinjam Port in the south.

MSC currently operates a main route from Qingdao, China, via Busan, South Korea, and Shanghai to Barcelona, Spain, with 20,000 TEU-class ships, and temporarily added Vizhinjam as a stopover. It still calls there on another route from Europe back to Asia. Opening a regular route to a 20,000 TEU-class ship is a major move for a shipping company.

“Until now, 20,000 TEU-class ultra-large ships could only go directly from Shanghai or Singapore to Europe or North America,” said Gentaro Hara, deputy head of the research group at Japanese shipper NYK Line. “A new route has been opened to India.”

“In the future, a new route for 20,000 TEU-class ultra-large ships may be made to go directly from India to the east coast of the U.S.,” Hara added.

Exports from East and Southeast Asia to India and the Middle East in 2024 reached about 9.61 million TEU, a 40% increase from 2022. “The expansion of cargo movement is remarkable, especially in consumer goods,” Hara said.

Japanese companies are looking to capitalize on India’s transformation to a shipping hub. Ocean Network Express, a joint venture between shippers NYK, Mitsui O.S.K. Lines and Kawasaki Kisen Kaisha, opened its first route of its own connecting India and the U.S. East Coast last year.

This month, ports of call on that route were changed to make it easier to cover major ports in both countries, such as Mundra and Nhava Sheva, as well as New York.

Shipping and logistics companies are hoping that business originating from India will expand to other regions and industries. Shipping companies have begun to see India as an export hub.

Passenger vehicles exported from India in fiscal 2024 stood at approximately 770,000 units, up 15% from the previous year, according to the Society of Indian Automobile Manufacturers.

Suzuki Motor released the Fronx sport utility vehicle in Japan in October last year as a re-imported model made in India. Nissan Motor started exporting the compact Magnite SUV this year from India’s Kamarajar port.

“We’ve come to regard the Indian Ocean as a strategic region for our car carrier business more than before,” said Yutaka Ikeda, regional head at MOL (India). The Mitsui O.S.K. subsidiary collaborates in the operation of Kamarajar port.

India is expected to be a gateway to Africa as well. The Indian Ocean Rim Association has 23 member nations, including India, Australia and South Africa. Countries in the organization are home to 2.7 billion, accounting for 30% of the global population.

India’s gross domestic product is forecast to grow 6.2% this year, exceeding the global mean of 2.8%. Tanzania and Kenya also have above average outlooks of 6% and 4.8%, respectively.

“If there’s a hub in India, it’ll be easier to understand what is happening around the Middle East and Africa,” said Koichiro Hayashi, NYK Line’s Research Group leader. The Indian diaspora has a strong presence in Africa, especially in former British territories such as Kenya and South Africa.

NYK unit Yusen Logistics Global Management will establish a location in Kenya during the fiscal year ending March 2026. The operation will set up an East Africa regional headquarters, leading to a logistics expansion further inland in the continent.

“We’ll use Kenya as a bridgehead for expanding our business in India and Africa,” said Takeshi Kondo, executive officer at Yusen Logistics Global Management.

The company will start by offering forwarding services for cargo imported by air and sea from India and other parts of Asia. This will capture the rising demand in Africa for consumer goods, such as auto parts, pharmaceuticals and apparel.

Yusen Logistics Global Management will then move on to operating its own logistics facilities. In the fiscal year ending March 2027, the company plans to enter South Africa, a market it had temporarily withdrawn from.

“The Indian Ocean rim is a complete white space,” said Kondo. “We seek to make it a new priority region.”

The article appeared in asia.nikkei