Labour unions have demanded withdrawal of discount in port charges introduced to woo ships to Vallarpadam terminal.

In a letter to the port chairman, the Joint Forum of Trade Unions alleged that the Kochi port would be losing heavily on account of this concession at a time when it is passing through a severe financial crisis.

Quoting figures, the forum pointed out that the number of ships that visited the port was 336 in 2011-12 and the rebate amount was at Rs 14.53 crore.

However, in the current financial year, the amount rose to Rs 25 crore as on January when the number of vessels had touched only 310. In 2010-11, the rebate amount was Rs 5.09 crore.

The trade unions also questioned the logic behind reducing the vessel-related charges in Kochi as other hidden charges such as terminal handling cost impeding the trade from bringing cargo to the port.

It may be recalled that the port management had announced a 30 per cent concession on vessel-related charges for feeder vessels and 50 per cent for mainline vessels with a minimum of two sailings from Kochi to West Asia and South East Asia in 30 days.

A mainline vessel of 60,000 GRT (Gross Registered Tonnage) with 12 hours of stay at the port was given concession of up to 86 per cent of the prescribed tariff, unions said.

Rebate graph

It is pointed out in the letter that the rebate graph is going up while the number of ships visiting the port had come down.

However, the port management maintained that the strategy of introductory pricing was necessitated to woo more lines to switch over ICTT to meet transhipment requirements.

As per the concession agreement with DP World, the port is contractually bound to establish vessel related charges on par with competing terminal of Colombo.

The Traffic Manager of the port C.Unnikrishnan Nair said the strategy adopted by the port is to widen the business base and bring down the unit cost impact. Price discounts are common in the logistic sector and even Chennai port provides discounts to vessels despite its existing large volume.

The amount given away as discount to a vessel calling at the port is much lesser compared to the revenue share from cargo income that the port targets through each additional vessel call.

Nair said that discount is given to smaller vessels at the rate of 30 per cent to ensure reliable connectivity and minimise the feedering cost.

The port, which experiences the maximum siltation in the channel, is currently meeting the entire dredging cost from its account and factoring the cost in its charges for services for vessel handling.

Higher than others

For this reason, the vessel-related charges in Kochi are higher than other South Indian ports, he added.

The change of loyalty does not take place over night in established logistic supply chains. There will be a gestation period between the introduction of discounts and consequent visible business growth. It is unfair to criticise the policy of discounts in the intervening period, he added.

(This article was published on March 14, 2013)
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