Till a few months ago, congestion surcharge was the only levy collected by shipping lines that bothered the trade in Chennai. But today, there are half a dozen charges, including equipment charge, container imbalance and cost recovery, that the lines charge the trade mainly to compensate for poor freight cost.
While importers or exporters do not have any role in the levy of such a surcharge, they still have to bear the brunt. Incidentally, such a surcharge contributes the most to the overall invoice pricing to send cargo by a container out of Chennai.
For instance, some lines charge $200 a container as container imbalance charge while most of the charges, including terminal handling, were less than $100.
“In a globally competitive market, such additional cost per box by way of surcharges will cripple our industry,” said a large exporter of leather products.
An official of a large custom house agency recently raised the issue of levy of various surcharges with a senior government official in the Union Finance Ministry. He said the surcharges are being forced on users. “Why should we pay for somebody else’s mistake?” he said referring to the shipping lines and container terminal operators.
The official promptly replied by asking the official to put in ‘black and white and send it to me.’ It has been a practice of the feeder operators and shipping lines to impose surcharges under various names, some of the terminologies widely used by them to garner additional revenue.
Neither the feeder operators nor the shipping lines that impose such surcharge have defined these surcharges.
It is presumed that the imposition of such levy could be that the lines or feeder operators, generally factor turnaround time for a vessel — from the origin port to the destination port, pre-berthing time and stay in berth — in the port/terminal in their costing, said a port user.
The users have no option but to pay the surcharges with no scope for resistance as failure to pay these charges would result either in delay in clearance or denial of exports.
The method adopted for computing/imposing the surcharge (both in terms of quantum of surcharge and the duration) is a mystery to the trade. For instance, last year from mid-August it was $75 a TEU; from mid-September $150 a TEU; and from mid-October $200 a TEU. It would be incorrect to assume that every month the stay has doubled for the surcharge to double, he said. “There is no scientific method for publishing the charges. It has become a convenient tool to enhance their revenue at the cost of trade,” he said. Trade is not the contributor to congestion but is at the receiving end of the penal measures adopted by the feeders and shipping lines.
However, shipping lines have enough justification for levying the charges. On equipment surcharge, they say it takes a long time for a container coming into the city to leave due to delays at various places.
“While there is demand in countries like China for containers, we cannot keep it idle here. We need to reposition the boxes to places where there is demand,” said an official of a large shipping line.
“Once the container comes in, we do not know when it will go out. It is very unpredictable here,” he said. At the Chennai port, the imports are higher than exports creating an imbalance in trade. This also means that containers are lying unused.
“It is a loss for us if the container is not used effectively,” the official said. The official said that the containers are on lease for $10-15 a day. “We need to pay to various companies from who we have taken the boxes on hire. Since there is not enough demand for exports, we need to collect from the trade,” he said. There should be a regulatory body to monitor overseas pricing mechanism and imposition of such charges, said a port user.