Alchemy of Indian Shipping
Article No – 9
the dark head of monopolistic privileges:
The legs of democracy shake when the law of the land condons unjust laws or applies the laws selectively. Port Authorities indulge and scavenge on an excessive economic-rent - with their monopolistic privileges - mandated by the government, at a huge cost to the nation. On my last essay it was pointed out that our stevedoring costs in containers is 82% higher than China's and also substantially higher than that of Singapore and Malaysia, albeit our input costs being way lower than theirs. I must stress here on the fact that even the export THC, IHC or stevedorage are subject to an additional pain of 10.2% service tax, essentially fracturing our central policy of boosting exports.
Today, lets talk about the export storage charges in our terminals. These charges are ungodly to our export boosting policies in an insidious design that corrupts our commercial enterprise. For simplicity, we shall take the example of a 20' dry laden box on export from India.
Terminal | Free days | Storage | Shut-out Charges | Service Tax` |
GTI | 3 Days | 3.84$ ~ 11.05$ | 48.6$+Rs 1770 | 10.2% |
JNP | 3 Days | 2.76$ ~ 15.34$ | 35.01$+Rs 1275 | 10.2% |
NSICT | 7 Days | 2.86$ ~ 11.44$ | 69.04$+Rs 1339 | 10.2% |
Free time counts from the following day of entry of container till the day of shipment, Sundays and holidays included. The quantum of storage charges and re-nomination charges merit similar comparison with comparable countries - as with stevedoring. The gates are kept open to accept the containers, much before the free time starts. This appears understandable for the up-country cargo arriving before the free-time starts. However, the intent is less altruistic. If the vessel calls exactly in line with its ETA and manages to berth as declared, then the 3 free days can be availed by beating the serpentine queue. If the ETA is delayed or if the berthing is delayed - which happens regularly in Indian ports - the free time is hardly free. Irrespective of the time when the boxes went in, the new cut-off and delayed departure renders the free-time too punitive for the box operator in question - a helpless actor who can be penalized for no fault or negligence from his side. The next worst thing that can happen is when the intended vessel fails to call. The carrier arranges alternate vessel. Now, there are two bounties for the terminal - a fat storage bill and shut-out charges. Its a misfortune for the carrier. The carrier abandons its moral responsibility to own up the fat charges. The box operator who is directly billed by the terminal has no where to hide, but to pay up. The shipper refuses to pay this unfair charge, reasonably and rationaly so.
Under such painful situations, can any one justify 3 days as free time for export cargo? Next comes the unfairness of the quantum of storage per day to as high as 15$ and re-nomination charges to such high numbers. Transportation charges are billed, whether done or not. There is a clear need to rationalize these tariffs scuttling our export enterprise. The last and not the least disturbing element lies in affixing the penalties to the right party. There appear to be four actors in this transaction - the terminal, the vessel operator, the box operator, and the shipper. If at all we have a punitive tariff to fix discipline in our system, the errant party needs to be penalized and the innocent protected. If the the vessel operator fails to bring in the vessel or perform as per his declared intent in time, all consequent charges should be entailed to him. If the delay or breakdown in the port operations are as a result of the negligence, machine failure or ineptitude of the port authorities or the terminal, the charges should be directed to them in all fairness. The gate-in time and cut-off time should be declared by the terminal. No box should be allowed in outside this period, unless specifically authorized by the box operator. The unjust practice of penalizing the innocent party should be brought to a stop to improve the system.
Warm Regards
Capt Rath l Econship
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