JN port charging its way out of congestion

The congestion problem at Jawaharlal Nehru port is not something new, particularly during this time of the year. Every year, when the monsoon breaks over the Arabian Sea, its fury paralysing life in Mumbai, operations at the JN port, and other Mumbai ports too, get hit, throwing up myriad problems, including congestion.

The situation in JN port, which is attracting a congestion surcharge slapped by major international container operators, is unique in many ways. First, there is no congestion in the port in the strict sense of the term. There was no pre-berthing detention of vessels (though the problem persisted at one of the terminals till May) nor was there any large-scale accumulation of boxes in the yards at either of the two privately run terminals, NSICT and GTI. Only the government run terminal has a pre-berthing detention of seven to nine days, presumably because of crane replacement work.

The situation is not just a rain-induced seasonal problem; it has been prevailing for the past few months. As a result, the container throughput of the port has declined around 4 per cent so far this year vis-à-vis the same period last year.

Congestion, it is generally presumed, takes place when there is a boom in traffic, the volume far exceeding the port's handling capacity. The situation at the JN port now is different. And it may, therefore, give credence to the view that the so-called congestion surcharge has been imposed not necessarily as an outcome of the congestion; it is but one of the many means adopted by the shipping lines to try and recover their losses.

It may be also be a way of putting pressure on port and terminal operators to decongest. Several factors are believed to have combined to create the present impasse.

Prolonged agitation

The trouble started around February-March, when a go-slow agitation at NSICT hit normal operations at the terminal. The prolonged agitation has taken its toll on the port's output.

In May, JN port announced its plan to close half the berthing capacity at its own terminal for 40 days beginning June 20 to replace three old cranes. As a result, the Government-owned terminal could only handle smaller ships.

This effectively entailed a loss of about 20 per cent of the container ship berthing capacity. The port authorities said that they had made the announcement well in advance, giving the shipping lines and the trade enough time to work out a contingency plan. Worse, DP World's terminal suffered damage when the three new cranes were transported on a barge for installation at the state-owned terminal.

Capping it all, there were “move-count restrictions” by GTI terminal, run jointly by AP Moller and Container Corporation of India (for all practical purposes, by the Danish shipping major) and NSICT, by DP World. GTI and NSICT, it is learnt, have not made much progress in regard to their appeal to TAMP (Tariff Authority for Major Ports) for an upward revision of rates.

According to the concession agreement, the tariff that the two terminals can charge should be based on the capital cost of the project and the maximum throughput declared to be handled by them.

In case the threshold is crossed, the rates must be brought down, says the TAMP regulation. This is unacceptable to terminal operators, who argue that they should be rewarded for their efficiency — that is, for exceeding the designed throughput.

Losing out on volumes

But TAMP is not impressed with the argument. As a result, a situation has arisen now where the terminal operators, it is claimed, stand to lose on incremental volumes — for exceeding the designed throughput. They, therefore, have imposed the “move count restriction” to limit the maximum number of boxes to be handled at the quayside for a vessel.

The immediate fallout is that Pipavav and Mundra, the two private ports in Gujarat, stand to gain immensely.

The “move count restriction” by the two private terminal operators in JN port have forced many lines to unload mainly North India-bound cargo at these two ports. The delay in the award of contract for the fourth terminal at JN port because of a court case is also going to benefit these Gujarat ports.

But others suffer. The ships are being forced to make additional calls and therefore incur additional expenditure as the traffic is getting split between JN port, Pipavav and Mundra. The government-owned JN port stands to also lose out substantially on the royalty revenue lost on account of the flight of traffic to Gujarat ports. At the end of the day, it is the trade that suffers the most.

Will the authorities concerned take note of this?

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