The major port trusts owned by the Centre are “not keen” on promoting transhipment of containers at their ports. This has come as an embarrassment to the Shipping Ministry, after it lifted cabotage restrictions in May to permit foreign container ships to ply on local routes.
Cabotage was eased to promote container transhipment in India and cut the dependence on Colombo to send and receive containers, which entailed extra time and costs for exporters and importers (EXIM).
The major port trusts don’t have a strategy in place yet vis-à-vis transhipment,” said Capt Deepak Tiwari, Chairman of the Container Shipping Lines’ Association (CSLA), a lobby group. “They have their own hinterland cargo of exports and imports, so transhipment doesn’t make sense,” he said, adding that “maximum transhipment is happening at non-major ports such as Mundra, Krishnapatnam, Kattupalli and a little bit in Hazira”.
Shipping lines are ready to give a minimum volume assurance, but major port trusts are not “willing to negotiate” on their vessel-related and transhipment charges, he noted. All the container handling terminals at major port trusts, except one facility at Jawaharlal Nehru Port Trust (JNPT), are run by private firms.
Low transhipment charges and high vessel-related charges (VRC) at major port trusts are acting as deterrents to transhipment, says industry sources. Transhipment charges are collected by the private terminals, while VRCs are collected by the landlord port trusts.
Non-major ports are more flexible in setting and negotiating such rates. In Jawaharlal Nehru Port Trust (JNPT), India’s busiest container port, the container terminals run by D P World and A P M Terminals are “not forthcoming or committed” to go for transhipment because of certain “commercial” reasons and, hence, would want to focus on mainline container business, says JNPT Chairman Neeraj Bansal.
And, the newly opened container terminal of PSA International is facing an issue on inter-terminal transfer of containers. “We want to use JNPT as a hub, but we are not ale to do it,” says Prashant Sindhwani, director-operations at the Indian unit of German line Hapag-Lloyd A G.
JNPT’s Bansal said his port was reluctant to go for transhipment for fear of losing toll revenue from a Rs 3,200-crore road widening project connecting the port, for which it had borrowed $400 million, and the loan repayment is linked to the VRCs. In effect, lowering the VRCs (which are collected in dollars) for promoting transhipment, will hurt the repayment of ECB loans. It will, in turn, reduce toll revenue from lesser export-import cargo, hurting the recovery of investment from the road project.
“Instead of asking for discounts, lines should prepare a business plan/ comprehensive policy on transhipment for all the terminals at JNPT,” Bansal said.
“The rates set by the Tariff Authority for Major Ports (TAMP) for transhipment are low. That’s why terminals at major port trusts are not interested in transhipment,” said Suresh Amirapu, CEO, Bharat Mumbai Container Terminals Pvt Ltd, which runs a facility at JNPT.
The transhipment charges approved by TAMP for container terminals at major port trusts is about $57 per TEU, while it is $80 per TEU in Colombo and $110 in Singapore, according to Amirapu.
On the other hand, a shipping line pays Rs 11 lakh more in vessel-related charges for calling at Kochi compared to Colombo, says Jibu Kurien Itty, CEO, India Gateway Terminal Pvt Ltd, the transhipment terminal-run by D P World at Vallarpadam in Cochin Port Trust. At Chennai, it is much more, he added.
Chennai Port Trust is offering 60-70 per cent rebate in vessel-related charges to mainline ships calling at its two privately-run container terminals, according to its Deputy Chairman Cyril George. “We are waiting for shipping lines to come for discussions,” he said.
“No one has approached Visakhapatnam Port Trust so far on starting transhipment,” its Deputy Chairman P L Haranadh, said. “We are ready to offer whatever more is required, in addition to the 70 per cent discount in VRC announced earlier,” he said.
“Transhipment cannot work in silos. We neither have the infrastructure, including depth for mainline vessels to come, nor do we have adequate feedering happening out of ports such as JNPT,” V. K. Singh, Managing Director of Shreyas Shipping & Logistics Ltd, said.
“Terminals at major port trusts never encouraged transhipment in India. That’s why we have reached this situation today,” says V K Singh, managing director of Shreyas Shipping & Logistics Ltd.
“Most of our terminals at major port trusts have become gateways. So many direct calls are coming, why should a port such as JNPT move containers by transhipment?” he asked.