Home / Companies / News /  Higher discount in marine charges may revive car shipments

Bengaluru: The shipping ministry has doubled the discount given in the so-called vessel-related charges to roll-on-roll-off (Ro-Ro) ships that ferry cars and trucks along the coast to 80% from 40% months after two services shuttered operations citing high marine charges.

“The higher discount in vessel-related charges will be valid for two years. The government is committed to promoting coastal movement of cars/trucks on Ro-Ro vessels," a spokesperson for the shipping ministry said. This will make transportation of cars and trucks by sea more competitive, he added.

Vessel-related charges or marine charges include port dues, berth hire and pilotage.

Link Shipping and Management System Pvt. Ltd undertook 18 voyages between October 2015 and February 2016, carrying laden trucks between New Mangalore Port in Karnataka and Hazira port in Gujarat before shutting the service and scrapping the 22-year-old pure car and truck carrier (PCTC), MV Maria India.

Symex Maritime Inc. ran a solitary voyage in February 2016 carrying 800 cars manufactured by Hyundai Motor India Ltd from Chennai to Pipavav in Gujarat, before it folded up and sent the ship IDM Symex, also a PCTC, for demolition.

The shipping ministry is seeking to promote the ferrying of cars and other automobiles along the coast to tap a fuel-efficient, cost-effective and environment-friendly mode of transport, compared with road and rail. 

As a step in this direction, in September 2015, the government allowed foreign registered Ro-Ro, hybrid Ro-Ro, Ro-Ro-cum-passenger, pure car carriers and pure car and truck carriers to operate along the country’s coast by easing a so-called cabotage law that allows only Indian registered ships to carry cargo on local routes. The relaxation of cabotage rule for these categories of ships will run through September 2020. 

Both MV Maria India and IDM Symex were foreign registered Ro-Ro ships. 

Also Read: Port investors poised for a better deal in India

Since the collapse of the first two coastal Ro-Ro services, ship operators led by Link Shipping and Symex Maritime, Union government-owned ports and carmakers such as Hyundai have been lobbying the government to change the method of charging marine dues that account for nearly 18% of the total voyage cost of a Ro-Ro ship.

Vessel-related charges are currently levied on the basis of the ship’s gross registered tonnage (GRT), slab wise. Ships plying purely on local routes were given a 40% discount. In other general cargo/tanker vessels, the dead weight tonnage (DWT) is higher than the GRT. But, in Ro-Ro vessels, GRT is higher than DWT as the cargo is voluminous and, hence, the shipowner has to pay higher port charges. 

To overcome this handicap, ship operators had sought calculation of vessel-related charges on the basis of the ship’s DWT or on its net registered tonnage. 

“Alternatively, the vessel related charges need to be discounted 75% as against the current discount of 40%. This will enable Ro-Ro vessels to call on multiple ports en-route, while simultaneously improving their fill factor for a better viability and sustained operation. This measure will help Ro-Ro vessel operators to offers more competitive rates," says V. Anand, senior general manager, sales logistics at Hyundai Motor India. 

Hyundai Motor, according to Anand, is seeking to de-risk the outbound supply chain by looking into alternative modes of transport such as coastal shipping for distributing finished cars.

Currently, Hyundai moves 96% of its cars by road through car carrier trucks and trailers and the balance by rail. 

“The higher discount in vessel-related charges will help revive Ro-Ro shipping services," said a spokesperson for Union government-owned New Mangalore Port Trust.

Also Read: Shipping ministry to fund infra projects

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