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Business News/ Industry / Infrastructure/  Failure to set rates for stevedores, shore handling agents a violation, says panel
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Failure to set rates for stevedores, shore handling agents a violation, says panel

Govt hasn't given any reason for not setting the rates for these service providers who handle about 124 mt of cargo a year

A file photo of Kolkata port. More than 90% of the shore-handling agents undertake stevedoring of ships also. Photo: BloombergPremium
A file photo of Kolkata port. More than 90% of the shore-handling agents undertake stevedoring of ships also. Photo: Bloomberg

Bangalore: The 12 ports run by the central government have violated rules by not setting rates for stevedores and shore cargo handlers, although their activities come under the purview of the tariff regulator, a committee of port trust chairmen appointed by the shipping ministry said.

“The Major Port Trusts Act 1963 makes it clear that all operations in a major port (owned by the Union government) with regard to unloading/loading of cargo and subsequent operations in the port may be done either directly by the port, but if these operations are assigned to agents, such assignment by the port shall be with the previous sanction of the Central Government, and that TAMP (Tariff Authority for Major Ports) needs to notify rates for these operations, and that the agents so authorized shall not charge in excess of these rates for the port operations," the five-member panel headed by Paul Antony, chairman of Cochin Port Trust, wrote in its 21 July report on regulating stevedores and shore handling agents. Mint has reviewed a copy.

The shipping ministry hasn’t given any reason for not setting the rates for these service providers who handle about 124 million tonnes (mt) of cargo a year out of the combined 555 mt handled by all the 12 ports.

Worse still, overlooking this statutory requirement, the shipping ministry issued a stevedoring policy in June 2009, 12 years after TAMP was set up, allowing stevedores to collect charges directly from exporters and importers and leaving such charges to be decided by the parties based on market forces.

As a result, one set of cargo handlers selected through an auction are regulated by TAMP while the other who load and unload cargo manually from non-mechanized berths are allowed to charge market rates.

“This needs to be rectified as it is a statutory necessity under the major Port Trust Act," the committee said.

“The rates of stevedores and shore handling agents are not notified by TAMP because they operate out of port berths (common user facilities) where they don’t have monopoly, while BOT (build, operate and transfer) operators construct their own berth and since they have monopoly in cargo handling, their ceiling rates are notified by TAMP," said B.K. Mansukhani, promoter of Kandla-based stevedore and shore handling agent Rishi Shipping Pvt Ltd.

Stevedores, who handle cargo manually, are just one link in the maritime logistics chain. After the cargo is unloaded from a ship and put on the wharf, it has to be taken to the stockyards and from there to railway wagons and trucks for transportation to end use customers. This work is done by onshore cargo-handling agents.

More than 90% of the shore-handling agents undertake stevedoring of ships also. This had led to demands for appointing stevedores and shore-handling agents in major ports through auctions and tenders on a revenue-sharing basis, as is the case of public-private-partnership (PPP) projects, to increase competition and bring revenue to the ports.

Demanding a revenue share from the conventional cargo handling agents, the committee said, could result in an increase in the transaction cost at these ports and lead to further diversion of cargo to the other ports which are already growing at almost five times the rates of the government-run ports. Policy prescriptions based on premises of monopoly of the so-called major ports, when they controlled 91% of the cargo in 1994-95, are bound to backfire if they are applied today, when there is a vibrant private sector controlling 43% of the market.

“The committee is, therefore, unable to agree with the suggestion that ports must appoint stevedores and shore-handling agents by tender-cum-auction with the bidding parameter being royalty/revenue share. Instead, it favours the statutory solution of getting TAMP to notify ceiling rates within which competition can be brought in among the different agents as a more sustainable solution," the committee said.

Even accepting the argument that revenue share or royalty cannot be a cost item in the tariff of the operator, it does not mean that the cost of such outgo is not factored in when doing business.

Implicit in this argument of the panel is a helplessness on the part of major ports to ensure that the TAMP-approved rates are collected by the stevedores and shore-handling agents without charging anything extra, says Ramakant Burman, general secretary, Haldia Dock Officers’ Forum.

“Going by this logic of the committee, the private cargo terminals operating at major ports on royalty or revenue share basis would have resulted in driving away cargo to non-major ports by raising the cost to the trade," said Burman. “The argument that royalty imposition will increase cost of cargo handling is highly misplaced and not based on facts."

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Published: 12 Sep 2014, 10:46 PM IST
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