Causal relationship between Indian ports' originated container traffic and total transshipments of port of Colombo : a Granger Causality analysis

Abstract

India is both the number one port of destination for transshipments

moving out of Colombo, and the number one port of origin for

transshipments coming in the port. The port of Colombo is complementary

to India’s growth aspirations. Today out of 4.7 million (TEUs) transshipment

volumes of port of Colombo, close to 40% are Indian transshipments coming

from East and West multiple ports of India and a major portion of the Indian

transshipment container traffic handled by the port of Colombo is down to

India. Using the Granger causality approach, this research investigates the

causality relationship between Indian ports’ originated transshipments and

total transshipments of port of Colombo based on monthly time series data

(transshipments throughput in TEUs) from 2008 to 2017.It finds a

unidirectional causality from total transshipments of Colombo to Indian

ports’ originated transshipments in port of Colombo. It suggested that the

ongoing port expansion projects, opening up for new markets and attracting

new shipping lines in port of Colombo have been created a significant impact

on Indian ports’ container traffic through port of Colombo.

Key words: Unit root test, Granger causality, Total transshipments, Indian

originated transshipments, Port of Colombo