PSA To Partner With MSC in Phase 2 of BMCT in J N Port

Singapore’s PSA International Pte Ltd and Mediterranean Shipping Company S A (MSC) are said to have opened “preliminary talks” to strike a potential partnership that allows the world’s biggest container line based in Geneva to use the second phase of PSA’s terminal at Jawaharlal Nehru Port near Mumbai for its exclusive, dedicated use, people with knowledge of the matter said.

The talks may also explore the possibility of MSC picking a minority stake in the facility named Bharat Mumbai Container Terminals Pvt Ltd (BMCT), a wholly owned facility of PSA International operating at J N Port, the people said, asking not to be identified discussing confidential information.

The concession agreement followed by state-owned ports such as J N Port Authority for 30-year cargo handling contracts permits a terminal developer/operator to dilute equity, partly or fully, after the lock-in period – typically till two years after the commercial operation date (COD) – ends.

Hence, PSA International has the freedom to dilute stake in Bharat Mumbai Container Terminals because the contractually mandated lock-in period for divesting the promoter’s equity, either partly or fully, has ended.

PSA International did not respond to an email sent by ET Infra seeking comment. A spokesman for the Geneva-based MSC said it “declines to comment” to an email requesting comment.

Bharat Mumbai Container Terminals is currently expanding capacity by adding 1 km of quay (berth) with a capacity to handle 2.4 million twenty-foot equivalent unts (TEUs) a year, investing some Rs3,196 crore. The second phase is slated to start operations in early 2025.

PSA International spent about Rs4,719 crore to build the first phase of the Bharat Mumbai Container Terminals with similar berth length and capacity. The first phase started operations in February 2018 on a 30-year concession awarded by Jawaharlal Nehru Port Authority through a global tender. The terminal can berth super post-Panamax vessels.

PSA International is a wholly owned unit of Temasek Holdings Pte Ltd, the state holding company owned by the Singapore government, while J N Port is India’s biggest state-owned container gateway and the nation’s second largest overall behind Mundra Port in Gujarat.

The Singapore port operator won the rights to develop and operate the terminal at J N Port by offering the highest revenue share of 35.79 percent to the port authority in an auction. It is the largest single foreign direct investment (FDI) in an Indian port project.

Globally, liner shipping companies have been ploughing some of the record profits made during the pandemic to buy stakes in port terminals and inland logistic networks to sharpen the integrated logistics play.

Presence in J N Port

MSC’s interest in gaining a presence in J N Port was evident when it came tantalisingly close to winning a tender floated by Jawaharlal Nehru Port Authority in 2022 to privatise the container handling terminal previously run by the state-owned port authority.

Terminal Investment Ltd, a unit of Mediterranean Shipping Company, quoted the second highest royalty of Rs4,293 per TEU, just Rs227 short of the highest royalty of Rs4,520 per TEU placed by an equal joint venture between J M Baxi Ports & Logistics Ltd and CMA Terminals Holding (a unit of CMA CGM S A, the world’s third largest container shipping firm) to win the tender.

A potential partnership with MSC will help Bharat Mumbai Container Terminals garner the 50,000-60,000 TEUs a month that the carrier ships through J N Port on 9 weekly services, a shipping industry source said. A major chunk of these volumes is currently shipped by MSC through the two terminals run by Dubai’s DP World Ltd.

“These volumes will be diverted to its dedicated facility in Bharat Mumbai Container Terminals if a partnership materialises with PSA,” the shipping industry source said.

A potential deal, according to the people mentioned earlier, will depend on PSA International.

“PSA International will have to decide how they are going to manage and run the second phase of Bharat Mumbai Container Terminals,” the people said.

“Given the number of MSC services that calls at J N Port every week, it can easily do a dedicated berth,” they added.

Bharat Mumbai Container Terminals handled 1.714 million TEUs in FY 23, 37.72 percent more than the 1.244 million TEUs handled a year earlier.

Between April and July this financial year, BMCT handled 7,11,895 TEUs, clocking a growth of 39.61 percent over the same period last year.

A potential deal by MSC through its terminal arm will further boost J N Port’s reputation as a top gateway for India’s export-import trade due to the presence of the world’s top notch terminal operators and container lines in some form or the other at the port.

Aside PSA International, other terminal operating giants such as Dubai government-owned DP World Ltd and A P M Terminals Management B V, the port/terminal operating unit of Denmark’s A P Moller-Maersk A/S runs facilities at the state-owned port. A P Moller-Maersk also runs Maersk Line, the world’s second largest box carrier, which calls at the port located near Mumbai.

CMA Terminals Holding, a subsidiary of France’s CMA CGM Group, a global player in sea, land, air, and logistics solutions, is a 50 percent stakeholder in Nhava Sheva Free Port Terminal Pvt Ltd, one of the five container terminals operating at J N Port. The CMA-CGM Group also runs a container line, the world’s third largest, under the same name, which operates services from and to J N Port.

German container shipping line Hapag-Lloyd AG holds a 40 percent stake in J M Baxi Ports & Logistics Ltd which, in turn, holds a 50 percent stake in Nhava Sheva Free Port Terminal Pvt Ltd. Hapag Lloyd also uses J N Port to ship containers originating from or destined for India.

By the time the second phase of BMCT starts operations, J N Port will likely be connected to the western dedicated freight corridor (DFC) network, adding to the competitiveness of the port among India’s EXIM trade as scheduled, time tabled container trains can ply between the port and Dadri, a hub in Northern India, in just 24 hours, the industry sources added.