The Hindu Business Line : Slowdown: Customs agents feel the pinch

Margins under pressure
Companies lower Customs clearing charges as a cost-cutting measure
Customs agents want relief from container train operators
Container train operators approach Railways for significant lowering of haulage charges
Railways yet to act — feels lower haulage charges will not increase cargo availability

Mamuni Das

A Delhi-based Customs house agent recently received a communiqué seeking a 35 per cent reduction in clearing charges from one of its large customers — a multinational company that manufactures horns and central locking devices here and is a global supplier for auto makers including Honda, GM, Ford, Volvo, Maruti Suzuki, Tata Motors, Eicher and Swaraj Mazda.

“When such a large customer sought a reduction in charges because his margin is under pressure due to lower demand and he needs to cut costs, we had to reduce the Customs clearance charges. After all, we have to stand by our customers through thick and thin,” says the agent, requesting anonymity.

“Several of my customers who imported nickel (an input item for steel-makers and batteries) are now unable to sell it as the prices have dropped by over 60 per cent during the past few months,” the agent says.

Stung by falling product prices and a depreciating rupee, these importers now prefer not to take delivery.

Another agent has reduced Customs clearing charges by 50 per cent for a company that imports silicone sealant — an input in construction industry used as an adhesive for glass, metal and wood panels — following a request from the customer.

Higher inventory

The Customs agents that Business Line spoke to say the export cargo booking in October has dropped by about 25-30 per cent against September, while the import cargo is down by about 15 per cent.

With this, the daily inventory at Concor’s Tughlakabad depot had gone up to over 11,000 twenty feet equivalent unit (TEUs) because importers are not taking delivery, said a depot source. It (the inventory levels) used to be less than 9,000 TEU until September. Import arrivals were down in October by around 8-9 per cent compared to the previous minth.

Export bookings were also down, by between 10-12 per cent in October compared to September. “Importers, hit by exchange rate fluctuation and drop in demand, are not taking deliveries. While all sectors have been hit hard, chemicals, PVC, and construction material appear to be impacted more,” said a source.

This has led to a significant reduction in revenue collection at Concor’s inland container depot (ICD) at Tughlakabad, it is learnt.

Senior Government sources say that most importers are not clearing imported white goods from Asian countries, particularly China, due to sharp decline in demand and the volatile exchange rate situation. With their margins under pressure, Customs clearing agents have now approached container train operators and shippers seeking reduction in demurrage and detention charges.

Cut in charges sought

“We are requesting Container Corporation of India (Concor) and shippers to reduce the detention and demurrage charges. We are also requesting them to increase the free time allowed for detention,” said a Customs agent, adding that speedier approval by Customs officials without any frivolous queries would help their work significantly.

Container train operators, in turn, have approached the Railway Ministry seeking an across-the-board reduction in haulage charges. Haulage charge is the money paid by container train operators for using rail infrastructure such as the track and signalling system.

The Railways have already reduced haulage charges in the heavy-weight domestic segment by ten per cent for container operators for the November 1-December 31 period.

However, the Indian Railways appears reluctant to further drop prices which will impact its margin. “If lowering of charges across the board would ensure higher cargo levels, we would have done that by now,” a Railway Board official told Business Line recently.

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