Logistics

CFS operators against waiver of penal charges for container storage

TE Raja Simhan Chennai | Updated on April 27, 2020 Published on April 27, 2020

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A controversy has erupted on waiver of all penal charges for container detention, demurrage and storage payable on import or export by custodians ― ports, Container Freight Station (CFS), Inland Container Depot (ICDs) and shipping lines to give relief to EXIM trade due to Covid-19 pandemic.

Generally, a period of three days is allowed as free period, after which charges are applicable at various custodians.

And, if the lockdown is removed on May 3, the controversy, if not sorted out quickly, could snowball into a major showdown between the EXIM and CFS operators (31 in Chennai and 34 in Mumbai).

 

In Chennai, inventory at CFS and all three ports and four terminals put together should be around 75,000 containers. Another 15,000 could be added in the next couple of weeks.

There will be a staggering 85,000 to 90,000 containers to be moved out of ports, terminals, and CFSs. The ‘showdown’ could affect the movement of boxes to importers and could lead to chaotic situations, said an official of a Custom House Agency.

The whole issue started on March 29 when the Director General of Shipping ordered all custodians to waive penal charges during the lockdown period from March 22 to May 3.

However, oeprators of CFS ― an extension of ports to handle/store containers ― in Mumbai and Chennai opposed this stating that they are not bound by the directions of DG Shipping or Tariff Authority for Major Ports but regulated only by the Handling of Cargo in Customs Areas Regulations (HCCAR), 2009.

Taking a similar stand, the Chennai Chapter of the National Association of Container Freight Stations (NACFS) said that demurrage and other charges payable by the importer will act as an incentive to importers, thereby making them clear the container from the CFS at the earliest. It urged withdrawal of government directives to the CFSs on the waiver of charges. The CFSs have moved over 50,000 containers to various CFS outlets from the ports/terminals with just 10 per cent cleared by importers.

However, the Central Board of Indirect Taxes and Customs (CBIC) on April 23 directed its Commissionerates to ensure strict compliance with the DG Shipping order by the CFSes. This follows complaints that CFSes are insisting on full payment of ground rent and other charges for delay in clearance of containers that could not be cleared due to lockdown.

The Chennai Port Trust urged NACFS members to comply with the government advisories.

Even the Minister of Maharashtra for Textiles, Fisheries and Ports has written to the Minister of Shipping, Government of India that the advisories of the Ministry are disregarded by a private CFS in Mumbai and there should be strict instruction to the CFS to waive the storage during lockdown period including refund wherever collected.

AV Vijayakumar, Chairman, Federation of Freight Forwarders Association, collecting a penal charge (not handling tariff). which they are ineligible as per the directive of the Ministries of Finance and Shipping. is grossly incorrect. There is not a single industry which is not suffering and any custodian or carrier exploiting the situation needs to be made answerable for violating Centre's directive, he added.

S Natarajan, President, Chennai Customs House Agents Association, said some of the CFSs have agreed to waive the charges. However, those who are not provided are violating the directions of CBIC. Shipping lines / NVOCC did not adhere to the orders stating that they have not heard from their head offices, he added.

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Published on April 27, 2020
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