Financial Daily from THE HINDU group of publications
Friday, Jan 04, 2002
Chennai operators to roll back congestion surcharge
Raja Simhan T.E.
CHENNAI, Jan 3
THE diversion of a large number of containers in the last two months from Chennai to other ports, especially Tuticorin, has prompted the Chennai Feeder Operators (CFOs) to further roll back the Chennai port congestion surcharge. However, there are a few strings attached to the rollback, according to trade sources.
The sources said that at a meeting held in Singapore on December 28, the CFOs agreed to reduce the surcharge to $75 per TEU (twenty foot equivalent unit) from the current $125 per TEU on all sailings on or after January 5.
The surcharge will be removed on all export sailings from January 15, based on the productivity level remaining at above 850 moves per day for the January 5-15 period.
A few days back, the surcharge was reduced to $125 per TEU from $200, according to a communication to Chennai Container Terminal Ltd (CCTL) from Henry Noon & Co Management Consultant, Secretaries to the CFOs.
The conditions for the rollback include achieving certain average productivity norms by CCTL and waiting time of vessels at the Chennai port not exceeding 4-5 days.
Under a privatisation programme, CCTL, a special purpose vehicle created by P&O Ports, Australia will operate the container terminal at the Chennai port for 30 years. The company began operations from November 30, 2001.
Industry sources said that in the last two months, around 30 per cent of the boxes got diverted from Chennai to Tuticorin port.
This was also evident from the fact that the Tuticorin port, which was to handle 1.56 lakh TEUs by the fiscal ending March 31, 2002, handled more than 1.58 lakh TEUs as on December 26, 2001.
The $200 per TEU surcharge prompted the trade to divert the boxes to Tuticorin.
This was because even after paying the surcharge at Chennai, due to congestion, it was still uncertain whether the boxes would catch the mother/feeder vessels at the transshipment ports - Singapore, Colombo and Port Kelang - on time, the sources said.
The trade spent around Rs 10,000 on road transportation on diverting every container from Chennai to Tuticorin.
But the additional expenditure was worth it considering the fact that there was an assured shipment at Tuticorin, according to the sources.
In the communication, the CFOs said: "CCTL should ensure sufficient export receiving time (four days gate opening/carting) and basis continuous receiving per individual member's service - and the total port stay of not more than 3-4 days."
The import immediate congestion surcharge would be removed from January 30, against the productivity level continuation of above the 850 moves per day average. (The import surcharge was introduced 15 days after the export surcharge and thus the logic of lifting it 15 days later.)
The CFOs also said that in general, if a port stay for vessels exceeds five days for more than seven consecutive days, an immediate re-valuation of the surcharge would be conducted.
While CCTL has been achieving reasonable productivity, the vessel operators' focus is on the total port stay durations and the respective import/export volumes handled.
The recent vessels have endured 12-15 day port stays and have additionally sailed with load factors of as little as 30 per cent, the sources said.
The CFOs have lost substantial amount of money over the last 30 days. The surcharge only reflects a partial recovery and was based on previous fuller load factor levels and levied in arrears, they said.
The CFOs also said that the improving vessel waiting time forecast in the forthcoming weeks was partly due to all vessels having sailed from Chennai (and schedule-wise may bunch again on return creating delays), not to mention the low export move counts.
"Members remain extremely concerned regarding the lack of export traffic, which has been diverted to other ports due to the problems at Chennai," the CFOs said.
According to the sources, in December 2001, CCTL handled 17,887 boxes, with a daily average of 596 boxes.
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