The Hindu Business Line : Private terminal operators

A large number of shippers have urged the Shipping Ministry to consider the various issues before firming up the policy framework for the private terminal operators at major ports.

THE uncertainty over the award of contract for the Jawaharlal Nehru Port Trust's proposed third container terminal, it appears, is over. With the Shipping Ministry approving the highest revenue share price bid submitted by the Maersk-Concor combine for installing and operating the terminal for a 30-year concession period, the JNPT management has issued the Letter of Intent asking the bidder to submit additional bid security amount and sign the concession and licence agreement within a stipulated period. The Maersk-Concor combine, one hopes, will now go ahead with implementing the project.

However, not everybody in port and shipping circles is convinced that the emergence of yet another international shipping and terminal operator on the port scene, though in partnership with a state-owned company, will necessarily yield great benefits to all concerned. Rival operators have already expressed apprehension that the terminal, when ready for operation, will actually be used as captive facility despite the stipulation in the agreement to run it as a common user facility. After all, the Danish line accounts for the single largest share of the total container throughput at India's major ports, it is pointed out.

What will happen in reality of course remains to be seen but the traumatic experience of the shippers at Chennai port's container terminal recently due to the none-too-satisfactory handling of the labour issues and at the Nhava Sheva International Container Terminal for the past several months as a sequel to huge pendency problem there has brought into sharp focus the need for a proper policy framework for dealing with the private terminal operators at the major ports. The dislocation of normal services in these terminals, both run by the same private foreign operator, not only rendered the professed objective of efficient, speedy and cost-effective and seamless movement of cargo, both inward and outward difficult to achieve but also led to a situation where time-sensitive exports had to be taken out of the port and sent by air at a huge additional cost to avoid the risk of cancellation of orders and loss of reputation.

The steps taken by the authorities of the Nhava Sheva container terminal such as frequent closure of export gates, directives to the shipping lines not to load in foreign ports consignments meant for ICDs in North India, forcing the line operators to make certain number of vessel calls at other terminals operated by the same licencee for some consideration, indiscriminate shutouts with penal shutout charges, it is felt by many, amounted to discriminatory and restrictive trade practices. One wonders if the practice of extending undue preference to one set of shippers at the cost of other sections was warranted in a terminal supposed to function as a common user facility. Particularly upsetting was that the landlord port, in its pursuit of maximisation of revenue and achievement of the top slot in container throughput, chose to look the other way, often not realising that the basic objective of a service provider is to offer cost effective service of world class quality.

A large number of shippers therefore have urged the Shipping Ministry to consider the various issues before firming up the policy framework for the private terminal operators at major ports. First, the tender document should be structured properly making it obligatory for the bidder to clearly project traffic, separately for inbound, outbound and transshipment traffic, both for short-term and long-term, on annualised basis. Also, the document should contain details of the back-end integration such as back-up space, rail/road linkages to handle the projected traffic effectively such that in case of failure to handle the traffic, the operator does not get away with it simply by laying the blame at the doors of various government agencies. There should also be a contingency plan to cope with the emergencies.

Next, it has been suggested to the Ministry that the tender document as well as the concession agreement should contain a clause providing for periodic review of operation either by the government or by a government-nominated agency and the terminal operator must cooperate with the agency concerned by providing all assistance that might be needed for such a review. In addition to general terms and conditions governing protection of confidentiality of information, it is felt that there should be additional clause incorporated in the agreement such that the terminal operator, if a shipping line or a consortium, must not use the information provided by the shippers to the detriment of shippers.

Finally, the government must exercise its powers whenever there is a prima facie case of the terminal operator and its agencies not acting in the best interest of the country's trade.

It may be noted that even in the US, the role model of free enterprise, there is a statute to regulate the terminal operators, common carriers and various transport intermediaries. The statute is administered by the Federal Maritime Commission, which has been vested with the judicial powers for imposing punitive fines in addition to initiating various other corrective actions. Unfortunately, in India there is neither a statute on the lines of the one in the US nor any FMC-like organisation. Worse, the existing rules and regulations governing maritime operations and foreign trade do not have any enabling provisions for any intercessory action by the government.

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