Mumbai: Moving cargo from India’s busiest container port through customs clearance, just four kilometres down the road, is about to get very, very expensive for some shippers.
In a move that will have an impact on some portion of the 54% of all container cargo that goes through Indian ports, the private operator that handles the largest container freight station for the Jawaharlal Nehru Port here plans to raise rates by 225% to 500%.
If the plan goes through, exporters and importers may have to pay as much as five times more at what is the port’s largest container freight station, an off-dock facility that decongests it by shifting cargo and customs-related activities outside the port area.
Speedy Multimodes Private Ltd, a private operator hired by the government-owned port, plans to raise the rates to bring them on par with prices that are currently charged by 17 other private operators at the port whose tariffs are not regulated by the Tariff Authority for Major Ports.
“I am just asking for what is due on account of input cost increases,” said S. Krishnamoorthy, managing director of Speedy, which has a 20-year contract for the freight station starting January 2006.
“Diesel price has gone up by about 300% since the time the rate was last revised by the tariff regulator in 1999,” he says. “Besides, the cost of equipment and input costs that go into transportation, such as tyres and spare parts, have gone up as well,” he says.
The proposed rate hike for loading, unloading and transportation of a 20-foot equivalent unit container will range from Rs3,040 to Rs6,840. The current rate, approved by the tariff authority way back in 1999, is Rs1,350 per container, a standard unit in the shipping business. Speedy says the current rate is less than half of what other private operators charge.
There are 18 container freight station operators, including Gateway Distriparks, Allcargo and Balmer Lawrie that service the JN Port. But Speedy manages the only station whose tariff’s are regulated by the tariff authority. Speedy’s 54-acre facility is owned by the port and it handles 6,000 containers a month. The other 17 operators cumulatively handle 70,000 boxes a month.
Despite its position that other operators charge a lot more, Speedy’s proposal isn’t going down well.
“If a (container freight station) involved in basic operations such as loading, unloading and transportation is allowed to levy exorbitant rates while handling the country’s international trade, then all discussions about bringing down the transaction cost of India’s exports to make them more competitive in the global market is meaningless,” said Omprakash Agrawal, senior vice-president, The Bombay Custom House Agents’ Association.
The government plans to call a meeting of operators to discuss the issue, said Gopal K. Pillai, secretary, Union ministry of commerce.
Officials at the tariff authority say that prior to any ruling on the request, a public hearing will be held soon to debate Speedy’s proposal.
India’s high logistics costs have been a matter of concern for the government and planning agencies. “India spends 13% of its GDP (gross domestic product) on logistics costs while this is just 7-8% in advanced countries. India has to cut its high logistics costs to make ourselves competitive in global trade,” says Anwarul Hoda, member, Planning Commission.