The Hindu Business Line : Desperately seeking another box terminal for Chennai

It should be the responsibility of the Government to make a second container terminal in Chennai the reality that shippers have been pursuing for the past few years.

The 14-day strike by a section of workers of Chennai Container Terminal (CCT) ended on Thursday night but the fourteenth disruption in the last three-and-half years only underscores the immediate need for another box terminal in the country's second largest container handling port.

A section in the maritime trade is of the view that the concession agreement between CCT and the Chennai Port Trust (ChPT) too requires a relook.

The provision for benchmarking the terminal's productivity should be incorporated in the agreement.

The strike, launched by about 70 workers with the support of a union demanding reinstatement of seven dismissed workers of CCT, halved the productivity.

Consequently, the Chennai Feeder Operators levied a congestion surcharge of $30 per TEU (twenty-foot equivalent unit) from June 25.

Pressure on trade

Frequent disruptions at the terminal put enormous pressure on the trade. Also, says Mr V. Upendran, President, Chennai Custom House Agents Association, for no fault, the trade is penalised. The trade paid about Rs 25 lakh a day as congestion surcharge. This is in addition to the financial burden running into crores of rupees due to production losses, cancellation of orders and diversion cost for rerouting the consignments through other ports. There should be a system and a scientific method for application of surcharge by the feeder operators.

Also, there should be a legal framework in regard to the passing the surcharge on the trade, he observes.

There is an urgent need for a second terminal, says Mr J. Krishnan, Chairman, Logistics Committee, Madras Chamber of Commerce and Industry. It is a monopoly of a single private terminal operator. The terminal, which handled 7.34 lakh TEUs last year, is growing at 20 per cent a year, and in the next 24 months CCT will exceed its capacity due to lack of space.

In the absence of any other terminal, the traders rely on the existing one and pay more.

An alternative container terminal to complement the existing terminal is the only solution to solve the problem at CCT. However, the proposal for a second terminal is pending with the Centre as one of the bidders, Hutchison Port Holdings, is yet to get the security clearance.

Mr Ashok R. Thakkar, President, Hindustan Chamber of Commerce and Industry, raises several questions: Why should trade pay congestion surcharge when it is the inefficiency of CCT that has led to the pre-berthing detention of vessels?

Do the feeder operators pass any benefit to the trade when vessels sail faster or the container terminal functions efficiently? The feeder operators, in his opinion, need to take up the problem with the CCT and recover the cost instead of penalising the trade.

Concession Agreement

According to the Chennai Customs House Agents Association, the concession agreement between CCT and the Chennai Port Trust needs to be revisited.

There should be penalty clauses for failure to meet the throughput, including absorption of all penal charges — be it a surcharge or demurrage or storage or detention. In the absence of such benchmarks, there will be no accountability on the part of the terminal operator. The best way to achieve efficiency and cost effectiveness would be to encourage competition. In a competitive environment, both the management and the workforce would be forced to respect the interest of the trade and the terminal users.

With the Ennore port providing the right opportunity, it should be the responsibility of the Government to make a second container terminal a reality, especially when the trade has been pursuing this for the past few years, the Association points out.

When there is a move to have a fourth container terminal at Nhava Sheva in view of the burgeoning traffic, there is no reason why Chennai, the second largest container handling port, should be denied one.