The Hindu Business Line : Main line container vessels calling at East Coast ports — Govt bid to bring down charges on par with Colombo

IN a move to reduce India's dependence on Colombo port as a transhipment hub for its exports and imports, the Government has decided to cut the vessel-related charges for main line container vessels calling at the three East Coast ports of Chennai, Tuticorin and Kochi to bring them on a par with Colombo tariffs.

The exact quantum of reduction in vessel-related charges will be determined by the three respective major ports trusts on the basis of their existing tariffs which varies from port to port.

"The reduction will be in the region of a whopping 75-80 per cent," a senior Shipping Ministry official said. However, container feeder vessels will not be included in the proposed cut in vessel-related charges. The aim is to attract more main line container vessels to these three ports and reduce transhipment through neighbouring ports, particularly Colombo, he noted.

The Shipping Ministry will issue an order to this effect to the three major ports after the Shipping Secretary, Mr D.T. Joseph, returns from London, where he is attending a meeting of the International Maritime Organisation.

Transhipment results in delay in cargoes reaching their destinations as well as extra costs of at least $70 per 20-foot containers.

On the basis of a policy direction given by the Government under Section 111 of the Major Port Trusts Act, the Tariff Authority for Major Ports (TAMP) had in September last year issued a gazette notification providing flexibility to major ports to charge reduced rates than the one approved by the tariff regulator. The notification stated that the rates prescribed in the scale of rates approved by the authority would be merely ceiling levels. Similarly, the rebates and discounts would only be floor levels.

The major port trusts may, if they so desire, charge lower rates and/or offer higher rebates and discounts to compete with other private operators, TAMP had said. Such rates would have to be approved by the Board of Trustees of the respective port trusts.

With this flexibility in rate fixing already in place, the Ministry has decided to issue an order to Chennai, Tuticorin and Kochi ports to reduce their vessel related charges to compete and wean away India's transhipment traffic from Colombo port.

The Government has identified Chennai as a hub port on the East Coast where P&O Ports operates a container terminal while PSA-SICAL runs a box terminal at Tuticorin port. Besides, an international container transhipment terminal is being planned at Kochi port with private participation.

"The decision to cut the vessel-related charges is a bold step in the best interests of Indian trade. We have been clamouring for years for this. It will help get some transhipment traffic away from Colombo," Mr J.H. Sarbh, Director, P&O, Ports told Business Line.

The vessel-related charges at the three Indian East Coast ports are very high compared with Colombo. At Chennai, it is almost double than Colombo Port. "If the Government reduces the vessel related charges to bring it on par with Colombo, it will be a huge plus," notes Mr Sarbh. "But, don't underestimate Colombo, it will fight back," he warned.

A top official with PSA-SICAL said that any reduction in vessel related charges to bring them on line with global levels would be beneficial to India. "If the charges are cut, more main line vessels will be tempted to put their vessels and service in those areas," he observed.