Private terminals at JN Port cash in as court case lingers
High logistics cost in India is the biggest hindrance for Indian businesses on the global stage, shipping minister Nitin Gadkari had said
Bengaluru: Shipping minister Nitin Gadkari is making concerted efforts to cut high logistics costs for shipping cargo into and out of Asia’s third-biggest economy, but at state-owned Jawaharlal Nehru Port, India’s biggest container gateway near Mumbai, exporters and importers are saddled with high costs.
And there is no end in sight.
For at least four years, customers have been paying at least Rs.1,411-1,834 more for shipping a cargo container (depending on whether they are evacuated by truck or rail) through Gateway Terminals India Pvt. Ltd (one of the three private facilities operating at JN Port) as the ad-interim (immediate relief) stay granted by the Bombay high court on a petition filed by the terminal operator against a rate cut of 44.28% ordered by the tariff regulator in January 2012 is yet to be decided.
The excess money collected by Gateway Terminals during the financial years between April 2012 and March 2016 since the rate cut amounts to between Rs.1,094.92 crore and Rs.1,423.17 crore.
Similarly, Nhava Sheva International Container Terminal Pvt. Ltd (NSICT), the facility run by Dubai’s DP World Ltd, has been collecting between Rs.930 and Rs.1,209 extra from customers for sending or receiving a cargo container (for evacuation by road or rail). This is because the Bombay high court granted an interim stay on a petition filed by NSICT against a rate cut of 27.85% ordered by the Tariff Authority for Major Ports (TAMP) in February 2012. The case is yet to be settled.
The excess collected by NSICT during the four years between April 2012 and March 2016 since the rate cut would add up to about Rs.386.88 crore to Rs.502.95 crore.
The two private facilities are operating at JN Port, which handles close to half of India’s cargo containers every year.
High logistics cost in India is the biggest hindrance for Indian businesses on the global stage and the government seeks to reduce cost under the Sagarmala project, Gadkari said on 15 April in Mumbai during the Maritime India Summit 2016 organized by the shipping ministry.
“The logistics cost in India at present is 18%, while it is 8% in China. We aim to reduce it to 10% under the Sagarmala project,” Gadkari added.
Gateway Terminals is 74% owned by APM Terminals Management BV, the container terminal operating unit of Danish shipping group AP Moller-Maersk Group A/S. The balance stake is held by state-owned rail hauler of containers, Container Corp of India Ltd (CONCOR).
Three people directly involved in sending cargo containers through Gateway Terminals and NSICT confirmed that the terminal operators were charging higher rates (old rates) from customers with the backing of the court.
“In view of the order of the Mumbai High Court dated July 2, 2012 in Writ Petition (L) No 1410 of 2012, the tariff rates applied are as per tariff order dated March 3, 2010”, Gateway wrote in an invoice raised on one of its customers.
JN Port Trust and the shipping ministry declined to comment, saying that the matter is before the court.
“Gateway Terminals is collecting tariff completely in compliance with order from the court,” a spokesman for Gateway Terminals said.
“This matter is currently sub-judice and Mint should not be publishing anything which does not adhere to the rules of the honourable high court. We do hope in consideration to the above Mint will not be publishing this story,” a spokesman for DP World, which runs NSICT, said in response to a questionnaire sent by Mint.
“Four years have passed since the high court gave the ad-interim stay. Gateway and NSICT have been conveniently charging customers as per the old rates at the expense of India’s foreign trade. And, JN Port Trust, which is a government-owned entity, is a silent spectator to all this,” an executive with a global container shipping line said.
Exporters and importers say that the case pending for four years in the high court should be disposed of expeditiously.
In July, the shipping ministry mandated consulting firm Deloitte Touche Tohmatsu India Pvt. Ltd to carry out a study of 16 cargo terminals including Gateway and NSICT that are covered by a rate setting guideline issued in 2005.
The aim of the study is to find out how they have fared over time, to understand the veracity of their claims that they are in bad shape financially, and whether they have been maintaining proper accounts and records of the money collected.
Deloitte has been asked to submit the study by September, a ministry official said on condition of anonymity.