Bangalore: India’s exporters have renewed demands asking authorities to regulate a controversial charge collected by shipping firms.
The so-called terminal handling charge (THC) is levied by the ports and other service providers on the shipping lines, who in turn recover it from their customers.
Trouble brewing: A file photo of the Jawaharlal Nehru Port in Mumbai. Photograph: Ashesh Shah / Mint
While THCs levied by the Union government-owned major ports are a notified tariff item regulated by the Tariff Authority for Major Ports (TAMP), the fees recovered by the shipping lines from their customers are not regulated by any agency.
“The TAMP does not have any power to regulate THCs,” said an executive at the tariff regulator for major ports.
“The THC is supposed to be a reimbursement of the actual amount paid by the shipping lines to the ports and other service providers. But in actual practice that is not so,” said S.R.L. Narasimhan, secretary of Western Indian Shippers Association. “The THC is a substantial amount and sometimes exceeds 70-80% of the ocean freight,” he added.
According to the association, the shipping lines collect $250-300 (Rs10,575-12,690) as THC for a standard 20-ft container. “The worst part is that THCs are increased arbitrarily without consulting exporters,” said P.N. Suri, president of the body. “The shipping lines have been hiking THCs without disclosing the actual expenses incurred by them for the amount recovered. We want the THC to be regulated,” he added.
Some exporters have claimed that the shipping lines are resorting to ‘double-dipping’ by using THC to pass on the trade risk to them.
“There is a big difference in what they pay to the ports and what they recover from customers under THC,” said J.C. Mongia, senior manager for export and import at Noida-based heavy engineering machinery maker ISGEC.
“Ocean freight includes cost of loading cargo containers onto ships and unloading containers from ships. Despite this, the expenses incurred for loading and unloading containers are recovered from the trade under THC, leading to double-dipping,” said Suri.
A possible solution could come in the form of the Shipping Trade Practices Bill, which has been drafted to regulate various agencies in the logistics chain. “Once the Bill is signed into law, the shipping lines will have to provide details and the break-up of the various components of the THC, ahead of accepting shipments from customers,” said Suri. The Bill is currently being vetted by the law ministry.
However, shipping lines are opposing attempts to regulate THC. “We are opposed to any regulation of THC,” said an executive at Mumbai-based Container Shipping Lines Association (CSLA), a body representing container shipping lines operating from India.
CSLA has also refuted charges of overcharging. “We are recovering THC only on an actual basis. We are not making any money out of this,” said a CSLA executive.