• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

Santanu Sanyal

AT A recent SCOPE-Shipping (Standing Committee on Promotion of Exports by Sea) in Kolkata, representatives of the shippers' associations were a dejected lot. Understandably so. The Additional Commerce Secretary, who presided over the meeting, made it clear that henceforth the issue of the terminal handling charges (THC) at various ports would not be part of the agenda of the SCOPE-Shipping meeting.

The shippers felt, perhaps rightly so, that they had been given a raw deal. They would be denied the forum they had used so far to air their grievances. As it is, shipping lines have long abandoned the practice of holding consultations with shippers before any change in the freight rates, including the charges levied under various heads. By washing its hands off the THC matter, the Government, the shippers seemed convinced, had acted only at the behest of the shipping lines, which had a much stronger lobby than the shippers.

The Additional Commerce Secretary made it clear that under its present policy the Government was opposed to any kind of intervention in a situation where the market forces were active.

Earlier, the representatives of shipping lines and shipping agents pointed out to him that the shipping freight was determined by the free interplay of market forces, so much so that the freight had at present had touched the rock bottom.

For example, the freight from India to US' East Coast port was as low as $500 per TEU against the conference rate of $1,500. This rate did not even cover the cost of surface transport. THCs, thus, provided some relief to them in such difficult situations.

This point was reiterated by the shippers who felt there was a need for greater transparency in the THC structure. The shipping lines were using THCs to cushion the impact of dropping freight rates. Since in the present market condition, the shipping lines are unable to raise the freight, they are using THCs to add to their earnings.

According to shipper sources, THC, as the term implies, can only be treated as recovery of costs incurred.

The THC is for providing terminal services till presentation of containers for loading in case of export and for terminal services provided after reception of containers alongside the vessel in case of imports.

The UNCTAD definition of liner terms says that freight includes cost of loading on the vessel and discharging the cargo from the vessel. The containers move mostly on liner terms and the cost of stevedoring is part of ocean freight and, therefore, cannot be a component of the THC.

At the Kolkata SCOPE-Shipping meeting, the THC issue first came up while the review was in progress over the actions taken on the decisions at the last SCOPE-Shipping meeting in Chennai last April. At that meeting it was decided that the THC issue at Chennai port would be deliberated by the Shipping Ministry. The Commerce Ministry spokesperson present at the Kolkata meeting informed the house that the Shipping Ministry, after deliberation, came to the conclusion that THC issue should not be regulated.

At best, the components could be identified.

Reference was also made to the order passed by the Tariff Authority for Major Ports (TAMP), prescribing the THCs. However, the order could not be implemented as it has been challenged in court. The matter being sub judice, the Government, as the Additional Commerce Secretary explained, also declined to be drawn into it.

On June 26, 2001, TAMP passed an order in regard to the fixation of ceiling for some of the components of THCs in Mumbai port. The order stipulated that the on-board stevedoring cost could not be part of the THC. Based on the merits of arguments forwarded by various organisations, TAMP had concluded that on- board stevedoring cost was included in the freight. There would be double counting if the same was also shown as a component of the THC.

One of the shipping agents has gone to the court, questioning the jurisdiction of TAMP to regulate the THC and the matter is thus sub judice.

At the Kolkata SCOPE-Shipping meeting the issue of high THCs at Kolkata port surfaced. Pursuant to the implementation of the revised scale of rates with effect from April 4, 2001, THCs at Kolkata port were increased by the Association of Shipping Interests in Calcutta (ASIC), the body of shipping lines and shipping agents. The increase, according to Eastern India Shippers Association, was very high, for both house-stuffed containers as well as dock-stuffed containers. Also, as the EISA complained, the rates were fixed arbitrarily.

The THC issue, though raised by the shippers at the meeting in Kolkata, was left in a limbo. The shippers were upset as a result. Since the matter was sub judice, how could the shipping lines/agents fix and manipulate THCs till the matter was decided by the court, they wondered.

After all, arbitrary fixation of THCs, they felt, amounted to cartel-type action. When no conference line was bound by the freight fixed by the conference in the present market scene, there was no reason why the THCs fixed by the conference should be considered sacrosanct.

The shippers also looked forward to the state-owned Shipping Corporation of India for, what they call, "some justice". SCI, in their opinion, should disassociate itself from such matters as can have damaging impact on the country's exports. True, the freight rate are down today, benefiting shippers. But the present situation may not continue indefinitely.

Once the upward trend in the freight market becomes visible, the shippers will at the greater mercy of the shipping lines. At that time, the absence of a forum like SCOPE-Shipping will cost them dearly, it is felt.

Send this article to Friends by E-Mail

Stories in this Section
Emirates SkyCargo `best airline'

Copyright © 2002, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line