PSA ensures cut in capacity doesn’t hurt biggest customer

PSA ensures cut in capacity doesn’t hurt biggest customer
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First Published: Wed, Aug 01 2007. 12 30 AM IST
Updated: Wed, Aug 01 2007. 12 30 AM IST
Mumbai: PSA SICAL Terminals Ltd has ensured that its 15 July decision to reduce cargo handling capacity at its container terminal in Tuticorin port does not affect the operations of its biggest customer Bengal Tiger Line (BTL).
The company had reduced its operating capacity to the minimum stipulated under its agreement with the government following a spat with the tariff authority, which sets prices for port operators at Union government-owned ports. However, it has decided to restart the use of a third crane for ships of BTL from 31 July, according to an executive at PSA SICAL, who does not wish to be identified.
BTL, registered in Cyprus, is a joint venture between Cyprus-based Schoeller Holdings and Hamburg’s Transnaval Schiffahrtsges.mbH & Co. KG and is the biggest vessel operator from and into Tuticorin.
It offers container shipping services connecting Tuticorin with Colombo port as a ­common feeder carrier that links transhipment ports such as Colombo, Singapore and Dubai with smaller ports in the sub continent, West Asia and East Asia. Big container vessels call at transhipment ports to load the cargo arriving from smaller ports on feeder vessels such as those of BTL, and ship them to final destinations.
BTL’s 1,600 twenty-foot equivalent (teu) capacity vessel Tiger Sky makes eight-nine calls in a month at Tuticorin carrying 28,800 teus from Tuticorin to Colombo and back. A teu is the standard size of a container and is a common measure of capacity in the container business.
Tiger Sky docked at Tuticorin port on the morning of 31 July for unloading and loading cargo on its current voyage.
“Because of the size of the vessel and its capacity, Tiger Sky requires three cranes for loading and unloading the box cargo to meet her sailing time,” said the PSA SICAL executive. A third crane is not required for lesser capacity vessels calling at Tuticorin port, he added.
“As the largest vessel operator at Tuticorin utilizing the only vessel which requires a third crane, we have, to date, been the most penalized by the terminal operator’s decision to scale down services. We are seeking ways for PSA SICAL to address this unfair situation so that we are not unduly affected,” said B. Sridhar, a director at the Indian unit of BTL.
PSA SICAL Terminals, which runs a 450,000 teu capacity terminal at Tuticorin port, had reduced capacity at the terminal by almost one third from 15 July, in reaction to the tariff regulator’s refusal to allow it to raise charges for the services rendered. The terminal, which handled 377,000 teus in the 12 months to March 2007, decided to right-size its operations to meet its contractual commitment to the government of handling 300,000 teus a year. Consequently, from 15 July, PSA SICAL has been operating with only two quayside cranes as against the earlier three.
Last year, PSA SICAL approached the Tariff Authority for Major Ports (TAMP), which sets prices for cargo handling at the 12 Union government-owned ports in the country, seeking an increase of around 30% on the Rs2,100 it was charging per teu for its services. TAMP responded by reducing the tariffs by around 54%.
PSA SICAL challenged this decision in the Chennai high court and obtained a stay against the TAMP order. The case is before the court.
The company said that the decision of the tariff regulator has made its operations commercially unviable. “The much reduced revenue per teu is not able to cover the cash operating expense and the royalty payment to the government,” the operator said in an earlier statement.
According to the terms of the contract signed with the government in 1999, PSA SICAL started paying a higher royalty of Rs1,010 per teu to the government from 15 July, up from the earlier Rs780 per teu.
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First Published: Wed, Aug 01 2007. 12 30 AM IST