D P World defers rate increase at Vallarpadam box transhipment terminal by a month

India Gateway Terminal Pvt Ltd (IGTPL), the international container transshipment terminal run by Dubai’s D P World Pvt Ltd at Vallarpadam in Cochin Port Trust has “deferred” a planned rate hike by a month, the global port operator said on Thursday.

The rate hike was in “very low double digits ranging from 5 to 12 per cent,” according to shipping industry sources.

The rate increase approved by the Tariff Authority for Major Ports (TAMP) on March 3 was slated to take effect from Friday, April 10, for a three-year period. India Gateway Terminal had even sent out trade notices to the export-import (EXIM) fraternity in Kochi informing them about the implementation of the rate hikes.

“We have a tariff increase for IGTPL approved by TAMP in the normal course. The application of this increase has been deferred by a month in view of the ongoing COVID-19 crisis. We will review the same after a month,” a Mumbai-based spokesperson for D P World said. The rate increase was approved by TAMP after a two-year gap.

The rate increases were opposed by the export-import (EXIM) trade. They have also urged the terminal operator to defer the rate increases in view of the lockdown imposed by the government to slow the spread of coronavirus that has roiled trade.

“Implementing the rate increase approved by TAMP without discussing it with the trade will put our efforts to bring more volumes to ICTT in vain,” said a trade source.

The EXIM trade has also urged the India Gateway Terminal to waive the ground rent charges on EXIM, empty and coastal containers during the lockdown period as directed by the Shipping Ministry at all the major port trusts to ease the difficulties faced by the trade.

In FY20, ICTT handled 620,000 twenty-foot equivalent units (TEUs), 4.28 per cent more than the 595,000 TEUs it handled in FY19, despite a challenging year marked by global and local economic slowdown and trade disruptions due to the outbreak of coronavirus.

A TEU is the standard size of a container and a common measure of capacity in the container business.

The terminal, built with an investment of about Rs 3,200 crore, shared by the government and the Dubai-government-owned entity, was opened in February 2011, with a capacity to load 1 million TEUs a year.

A container transshipment terminal such as the one developed at Vallarpadam acts like a hub, into which smaller feeder vessels bring cargo which then gets loaded onto larger ships for transportation to final destinations. Larger vessels bring about economies of scale, and lower the cost of operations for shipping lines, which then translates into lower freight rates for exporters and importers.

Vallarpadam was designed to cut India’s dependence on neighboring hub ports such as Colombo in Sri Lanka, Singapore, Salalah and Jebel Ali in Dubai, Tanjung Pelepas and Port Klang in Malaysia to send and receive container cargo, thus saving time and cost for exporters and importers.

About 2 million TEUs originating in and destined for India gets transshipped at Sri Lanka’s Colombo port every year, entailing extra cost and time for exporters and importers.

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