Bangalore: Kamarajar Port Ltd that operates the Union government-owned port at Ennore near Chennai is planning to start a scheme that will incentivise car makers in and around the city to move even their local shipment via sea. Currently, cars sold locally are moved by road from the factories.

Only automobiles exported by global auto makers from their plants in India are shipped on car carriers through ports such as Mundra, Pipavav, Mumbai, Chennai and Kamarajar.

“We propose to give some discount in cargo-related charges to incentivize coastal movement of cars," said M.A. Bhaskarachar, chairman and managing director of Kamarajar Port Ltd.

Kamarajar, the only union government–owned port that is run as a company (the other 11 are run as trusts), is offering a discount from 2012 in vessel-related charges (comprising port dues, berth hire charges and pilotage) to ships including car carriers calling at the port for picking cars for exports.

“We are now planning to give a rebate in cargo-related charges also. The board will take up the proposal at its next meeting," Bhaskarachar said.

The cargo-related charges for export cars are calculated on an ad valorem basis depending on the value of the cars. Original equipment manufacturers (OEMs) have argued that levying cargo-related charges on ad valorem basis for coastal shipments will not help in switching from road to sea.

Ad valorem rates for cargo-related charges will not work out for coastal movement of cars, said an executive at NYK Auto Logistics (India) Pvt. Ltd, a unit of Japan’s NYK Group, one of the world’s top automotive ocean transporters and logistics firms.

“Cargo-related charges have to be levied as fixed charges on a per unit basis in order to make it viable for the modal shift from road to sea. This will make it easier for the OEMs to calculate the cost difference between road and coastal shipment," the NYK Auto Logistics executive said.

“Keeping this in view, we are working out a reasonable amount," Bhaskarachar said.

The factories of four passenger car makers--Ford, Nissan, BMW and Hyundai-- are located in Chennai. Toyota exports cars that are made in its Bengaluru plant through Chennai and Kamarajar (Ennore) ports. Truck makers Daimler and Ashok Leyland are also located in Chennai.

In August, the government lifted curbs on foreign-registered, specialized car-carrying ships to operate in Indian waters for five years in a bid to help shift movement of such cargo from roads and railways.

The so-called cabotage law makes it mandatory to use Indian ships to transport cargo between different ports along the country’s coast. Foreign ships are allowed to operate only when Indian ships are not available, after obtaining a licence from India’s maritime regulator.

While Indian fleet owners do not run such specialized ships, there is potential for transporting around 105,000 cars annually using specialized ships on the Gurgaon-Mundra-Cochin, Pune-Mumbai-Chennai and Pune-Mumbai-Cochin routes, according to the shipping ministry. Increased availability of these vessels is needed to meet the growing coastal movement of goods.

In March, the shipping ministry flagged off a scheme that gives incentives to cargo owners, consignors and consignees when they transport certain identified bulk commodities, containerized cargo or automobiles on Indian vessels on local routes.

The scheme also covers transportation of vehicles wherein cargo owners shall be eligible for incentives of Rs300 per two-wheeler vehicle, Rs600 per three-wheeler vehicle and Rs3,000 for other vehicles.

These commodities have been identified on the basis of their low levels of transportation through coastal and inland waterways.

Auto makers say that the incentive scheme will take off only if the government removed the stipulation to use Indian registered ships for coastal shipment. “The government has allowed foreign registered car carriers to ply on local routes because such specialized Indian registered ships are not available with Indian fleet owners. Hence, the condition to use Indian registered ships for coastal movement of cars needs amendment to make the scheme a success," said NYK Auto Logistics executive quoted above.

“The Cabotage waiver was granted to ICTT Vallarpadam with subject to a review after a period of 3 years. DP World has not received any notification from the Government on the process of the review - a spokesman for D P World said.