BackPanel proposes cap on bulk cargo charges
The panel has suggested that monopolistic control over bulk cargo movement be ended
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Kolkata: A five-member committee of port trust chairmen has recommended to the Union shipping ministry that a ceiling should be imposed on tariffs for loading and unloading of bulk cargo at the 12 so-called major ports in India, but has turned down suggestions that handling agents be selected through bidding and that they pay a revenue share or royalty to the ports.
At the same time, the panel has suggested that monopolistic control over bulk cargo movement be ended and that port authorities remove entry barriers to allow all handlers to provide services at regulated tariffs.
The panel, headed by Paul Antony, chairman of Cochin Port Trust, was formed earlier this month at the direction of the Union shipping ministry to examine recommendations by the government and other sources on bulk cargo handling at major ports. It was given two weeks to present its views.
Antony refused to comment on the panel’s recommendations, which came to light on Monday—within days of the Kolkata Port Trust, or KoPT, yielding to pressure from the Union shipping ministry and proposing new laws for bulk cargo handling at Haldia port.
KoPT ordered last week that bulk cargo handlers at Haldia port are to be selected through bidding and that they must pay a minimum revenue share of ₹ 13 a tonne from within the maximum tariff of ₹ 119.48 a tonne that they can charge under revised laws for loading and unloading of bulk cargo.
It has emerged over the past few days that KoPT’s move, widely seen as an attempt to regulate tariff and eliminate monopolies, is likely to face legal challenge. Under the existing arrangement, onshore bulk cargo handlers pay a small licence fee to the Haldia port authorities and could decide tariff freely on their own.
The recommendations of the five-member panel, being partly at variance with KoPT’s directives, are a shot in the arm for cargo handlers opposing the new laws at Haldia port.
KoPT chairman R.P.S. Kahlon, who was on the five-member panel, also refused to comment on the recommendations.
“How can rules be so vastly different for different ports?" asked a spokesperson for Ripley and Co. Ltd—the dominant cargo handler at Haldia port—when told about the panel’s recommendations. He had said last week that his company wasn’t opposed to change, but the government must create a level playing field across ports.
The head of another handling agency at Haldia port said KoPT’s proposed law would force service providers to retrench workers in large numbers to stay afloat. In the light of the panel’s recommendations, which “rightly takes into account ground situations", the shipping ministry should review KoPT’s decision last week, this person added, asking not to be identified.
The panel recommends “a normative approach" in determining the cap on tariff, adding that distinction should be made between mechanized and manual handling of cargo. The recommendations were reviewed by Mint.
It has often been alleged that because of the absence of any regulation on tariff for manual movement of bulk cargo, the onshore bulk cargo handlers made supernormal profits, but the view was dismissed by the five-member panel.
Compared with the new tariff ceiling proposed to be imposed by KoPT, the spokesperson for Ripley and Co. had said last week that his company charges ₹ 150-250 a tonne for loading and unloading of bulk cargo.
However, the five-member panel says in its recommendations that such cargo operators typically charged ₹ 120-200 per tonne and that their profit was estimated to be 20% of the tariff.
Their estimated “net profit when compared with the capital invested by them may not imply abnormal profits", the panel said while also rebutting allegations that cargo handling agents influenced decision-making by the port authorities and resisted mechanization to hold operations in their sway.
The panel said asking bulk cargo handlers to pay royalty or revenue share would result in cost escalation for importers and exporters and undermine the competitive strength of the 12 major ports vis-a-vis the newer ones, which are fast gaining market share. These so called non-major ports already account for about 43% of cargo movement, according to the panel.
The committee has recommended that onshore and onboard cargo handling (currently conducted by stevedores) be integrated in the same manner as in mechanised container movement. “Stevedoring and shore handling of vessels in major ports be carried out by a single agency as far as possible," the panel said in its recommendations to the government.
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