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JN port faces massive capacity shortage

Saturday, 25 February 2012 | 00:00
There is uncertainty over new rates at the container loading facility run by Gateway Terminals India Pvt. Ltd at Jawaharlal Nehru port (JN port) after the Delhi high court reserved an order on the firm’s petition.
Gateway Terminals had in its petition sought a stay order on the port tariff regulator’s decision to cut rates at the facility by 44.28%. The rate cut by the Tariff Authority for Major Ports (TAMP) is effective from 24 February.
Gateway Terminals is 74% owned by APM Terminals Management BV, the world’s third-biggest container port operator and a unit of Danish shipping and oil conglomerate AP Moller-Maersk Group AS. State-run rail hauler Container Corp. of India Ltd (Concor) holds the balance stake in the terminal.
Mint could not independently verify the repercussions of the court’s stand. The court could have stayed the rate cut, given an interim stay or not stayed the rate cut at all in view of the timeline set by TAMP, two port experts said on condition of anonymity. All the three possibilities have been employed in the past in tariff litigation.
Even if the court gives its order on Friday, the lower rates would have already taken effect, one of the experts said.
Dinesh Lal, chairman of Gateway Terminals, and P.K. Agrawal, its chief executive officer, did not respond to calls seeking comment.
The rate cut will benefit customers shipping their container cargo through the JN port terminal, but will also strain the container-loading capacity of India’s busiest port.
Gateway Terminals loaded 1.85 million standard containers in 2010-2011, accounting for about 20% of the containers that passed through India’s ports in that period.
Gateway had asked TAMP for an increase of 8.72% on the existing rates arguing it could handle more than 2.1 million standard containers a year if the hike was granted. But after the rate cut was announced, Gateway told JN port it will load only 1.4 million containers a year—the number it can handle based on the optimum quay capacity of the terminal—for the next three years ending 31 December 2014.
“This is not acceptable to us,” said S.N. Maharana, chief manager, operations, at JN port. “Gateway has declared a capacity of 1.8 million standard containers a year. If the capacity is reduced, exporters and importers will suffer.”
Agrawal of Gateway Terminals confirmed the company was looking to restrict the capacity of its JN port facility to 1.4 million standard containers. “Handling higher volumes will depend on how the tariff case is settled; we cannot be perpetually running in losses,” he said on Wednesday.
In the year to March 2011, JN port handled 4.27 million standard containers from its three terminals, operating at more than their designed combined capacity of 3.6 million containers. The port cannot handle more containers unless it expands capacity.
“There is lack of overall capacity in JN port,” a spokesman for the Mumbai and Nhava Sheva Ship Agents Association said, requesting anonymity. “If private terminals deliberately reduce volumes, it will seriously affect the trade.”
Source: Livemint
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