SHARED BENEFITS. MSC’s Terminal Investment is set to acquire 49 per
cent stake in Vizhinjam terminal, operated by Adani Port
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There is a curious asymmetry in the way we regulate transport infrastructure.In container shipping, it is increasingly common, and widely accepted, for an ocean carrier to own a stake in the terminal where its ships berth. MSC owns and operates terminals through Terminal Investment Limited (TiL); Maersk has APM Terminals; CMA CGM has built a substantial global terminal portfolio; and Hapag-Lloyd has established Hanseatic Global Terminals across various hub-and-spoke locations.The situation is no different in India. Recent examples include Hapag-Lloyd acquiring 40 per cent stake in JM Baxi Ports & Logistics; CMA CGM in partnership in Nhava Sheva Free Port Terminal; and MSC’s Terminal Investment agreement to acquire 49 per cent stake in Vizhinjam terminal, operated by Adani Ports.The logic is straightforward. A shipping line investing in a terminal can bring capital, technology, cargo and operational expertise. It can align vessel schedules with terminal operations, improve asset utilisation, create transshipment hubs and provide greater certainty of capacity. However, there is a potential downside.A carrier-controlled terminal could favour its own vessels, provide preferential berthing or pricing or disadvantage competing shipping lines. These concerns need to be addressed through concession conditions, competition law, transparent tariffs and non-discriminatory access requirements.The recent debate over whether airport operators should be allowed to own airlines has brought into focus a much larger policy issue: How should India regulate vertical integration across the transport sector?Concerns over airport ownership by airlines are understandable. Airports control scarce resources, such as slots, gates, parking stands and passenger facilities. An airport operator with interests in an airline could potentially favour it, disadvantaging competitors. Equally, a dominant airline controlling an airport could influence access to critical infrastructure.This raises the question why such ownership structures, viewed as a potential problem in aviation, are accepted in maritime transport.Pros and consThe potential for conflicts of interest exists in ports too, yet vertical integration between shipping lines and terminals is generally permitted. This warrants closer examination.According to media reports, the Ministry of Civil Aviation has clarified that India does not have a blanket prohibition on airport operators owning or operating airlines. Restrictions largely arise from the concession agreements of individual public-private partnership airports. Notably, Delhi, Mumbai, Bengaluru and Hyderabad airports — which together account for nearly 80 per cent of India’s passenger traffic — contain such restrictions.Vertical integration can generate significant benefits, including improved coordination across the value chain, economies of scale, growth in investment and operational efficiencies. At the same time, it can potentially lead to market foreclosure and concentration of market power.Several developed economies follow vertical integration, where airlines operate dedicated terminals within airports, while competitive neutrality is maintained through regulatory oversight rather than outright ownership prohibitions.In India, while policymakers aspire to create an integrated multimodal logistics system, regulation remains organised around individual modes.As the country enters an era of unprecedented investment in transport and logistics infrastructure, questions remain over how vertical integration may improve efficiency and how it may harm competition. The apparent solution is to allow integration where it creates value, regulate where it creates market power, and ensure competition through transparent and consistent regulations.After all, what’s good for the goose should not automatically be bad for the gander.
