The Hindu Business Line : TAMP okays new wharfage rate for motor vehicle traffic at Mumbai port

ANTICIPATING a big surge in the shipment of motor vehicles, the Mumbai Port Trust has secured approval from the Tariff Authority for Major Ports (TAMP) to levy a separate wharfage rate for handling such traffic based on an ad valorem basis.

In a Gazette notification issued on October 7, the tariff regulator has approved a ceiling rate of 0.3 per cent of the f.o.b. (free-on-board) value for exports and 0.3 per cent of the c.i.f. (cost, insurance and freight) value for imports as wharfage rates for handling motor vehicles at the port.

While levying a separate wharfage rate for handling motor vehicles, the port should provide certain minimum additional facilities to the export of motor vehicles on a common user basis, TAMP has stated. These include use of the port trust private road without payment of permit charges, unloading ramp for motor vehicles received by rail for export free of cost, pre-shipment storage facilities inside the Indira Dock free of demurrage for 30 days and arrangement for supply of water for cleaning of vehicles, including permission for recycling plants inside the docks.

As part of a package to increase the export of motor vehicles, projected at 60,000 units per annum, the port trust has also assured facilities such as easing of octroi procedure, provision of priority berthing for motor vehicle carriers on BPX berths and maintaining the entire operational area congestion-free.

The port trust has exclusively earmarked 30,000 sq metres of area (to be scaled up to 50,000 sq m soon) to facilitate export and import of vehicles on common user basis apart from 3,500 sq m for pre-dispatch inspection facilities.

The cost of providing the separate facilities is estimated to be around Rs 84 lakh per month. "Instead of recovering charges separately for providing each of these facilities, it is essential to levy a separate wharfage rate for export/import of vehicles," a port trust official said.

The port trust reckons that the proposed rates are comparatively reasonable and lesser than or on a par with the rates prevailing at neighbouring ports of JNPT and Chennai, the two other major ports that handles large volumes of motor vehicle traffic.

At JNPT, the wharfage rate is 0.5 per cent of the f.o.b./c.i.f. value, whereas, at the Chennai port, the rate is 0.3 per cent of the f.o.b. value for export of motor vehicles.

However, users such as Tata Motors have said that there was no justification for increasing the wharfage rates. Ashok Leyland has suggested maintaining status quo.

According to the CII, hiking the wharfage rate will render the Indian automobile industry uncompetitive in the global automobile market.

"We have assured more exports through Mumbai port as the pre-revised rates are competitive.

If the rates are increased and that too by such a huge margin, our exports to Iraq, West Asia , Africa and South Asian countries would suffer badly due to stiff competition," Ashok Leyland said.

Automobile exporters also said that the increase in wharfage rates have come at a time when their margins are being squeezed due to higher ocean freight and the appreciation of the rupee against the US dollar.

"We have to absorb these costs. If the wharfage rates are revised upwards, it is not economical for us to use the Mumbai Port. We will continue with JNPT," Tata Motors pointed out.

Maruti Udyog, which was considering a shift from JNPT to the Mumbai Port given the existing lower and attractive wharfage rate at Mumbai, said that a hike in rates would discourage car exporters from using the Mumbai Port.