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Indian hub terminals need to reduce charges

Monday, 13 February 2012 | 11:00
Charges in Indian ports are very high compared to international hub ports such as Colombo, Singapore, Dubai and Salalah. Most private terminals operating at major ports such JNPT, Chennai and Cochin are levying high charges and it is forcing many Indian exporters to tranship their cargo through foreign ports.
It works like this: An exporter from south India, for instance, could send his US East Coast-bound container through any feedering port (any minor port) to Colombo, from where mother ships will pick it up for the final destination. It may take a couple of weeks more in transit compared to less than a month taken by a direct service from Nhava Sheva (JNPT), but the exporter will save on freight. For exporters who dispatch thousands of containers every month, it means good saving.
The following figures tell us a story. Colombo Port, which handles around 4 million containers annually, manages to do so with the help of Indian cargo. More than half of its total throughput comes from India. Colombo, which doesn’t have any substantial domestic cargo, is now expanding its capacity three times to 12 million, with four new terminals that are going to be operational beginning next year, all eyeing Indian cargo. Deep draught (depth) of 18 meters to 24 meters will help them attract mother ships carrying 12,000 containers, giving Indian exporters and importers the benefits of high economies of scale. In India, we do not have any port offering 18-metre draught today. The largest container port at Nhava Sheva is still struggling with 11-12 meters. A dredging project, which is expected to deepen the Mumbai shipping channel to 14 meters in first phase and then, 17 metres in the second phase, is hanging fire for 3-4 years. Once dredged, the freight for each container shipped out of / into JNPT is likely to move up, if the port decides to recover the huge dredging cost that is pegged at Rs 1,500 crore for phase I.
Kochi’s international terminal by DP World, the only transhipment terminal in India, has raised a serious issue. Much before the terminal went operational in February 2011, the Cochin Port Trust board had announced that the terminal would offer competitive rates in comparison with international ports in the South / South East Asian region, and that the vessel related charges would match the tariff at the regional ports. DP World had also announced its decision to match the international hub ports in the region on the terminal handling charge (THC) for transhipment containers. But all that seems to have gone with the wind.
A group of seafood exporters, who took up the issue of high THC at Vallarpadam (Kochi) to the court, is fighting a long battle with the non-transparent system of fixing THC by shipping lines and their agents. They have blamed lines and agents for a steep 125 per cent hike in THC to Rs 18,500 per refrigerated container (reefer) at the terminal, more than double the Rs 8,300 rate fixed by Tariff Authority for Major Ports (Tamp). Lines and agents are apparently charging rates other than what has been notified by Tamp under the guise of THC.
Globally, THC is charged by shipping lines or their agents to recover from shippers the cost of paying the terminal operator for loading/unloading the container and other related costs borne by the line at the port of shipment or destination. But obviously, if the charges are steep, exporters have a right to question it. Interestingly, shipping lines and their agents at the terminal have refused to cooperate with the new system of direct billing of THC introduced by the terminal, after a court directive.
It is indeed the duty of ports to ensure that the lines and terminals stay away from fleecing customers. Such acts would only make our exports non-competitive in the international market. While international ports like Colombo will gnaw into India’s growing maritime trade, our hub ports would struggle for survival.
Source: My Digital Fc
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