EXIM trade at loggerheads with terminals, lines and CFS over levy of penal charges during lockdown

P Manoj Mumbai | Updated on April 16, 2020 Published on April 16, 2020

Entry point Kattupalli port, according to APSEZ, is emerging as Chennai’s new gateway for exim trade in the Chennai/Bengaluru region (file photo)   -  Bijoy Ghosh

As distress tightens its grip on the trade, exporters-importers are at loggerheads with container terminals, shipping lines and container freight stations (CFS) over levy of penal charges arising from the delay in clearing containers due to lockdown restrictions.

Trade sources said that private container terminals, CFSs and container carriers have disregarded a Shipping Ministry advisory to major port trusts to waive demurrage and ground rent (among many other charges) over and above the free period for any delay in loading/unloading operations or evacuation/arrival of cargo for reasons attributable to the lockdown measures.

The Customs Department have written to CFSs after receiving complaints that they were insisting on full payment of ground rent and other charges for delay in clearance of containers.

“A CFS is taken to be an extended arm of the port and it functions as the docks (as per CBIC circular issued on December 22, 1995). Hence, you are requested to follow the lawful position that is in public domain,” Sanjay Mahendru, Commissioner of Customs (Nhava Sheva) General, told CFSs serving Jawaharlal Nehru Port Trust (JNPT) in a letter.

On Wednesday, Chennai Customs admonished CFSs operating in and around Chennai, citing similar complaints received from trade.

Sudha Koka, Commissioner of Customs, Chennai-IV requested CFSs in letter, “to consider the waiver of ground rent, penalties and demurrage charges during the lockdown period from March 25 till such extended period.”

Unfair, say CFS operators

CFS operators say that it was “unfair” to be told to waive ground rent charges.

“There is a cost to us for holding the containers. We have been told to pay the labourers’ full salary, but they have not come to work, and we cannot collect ground rent. It cannot be a blanket waiver. If we give a blanket waiver, then people will not be interested in clearing the containers at all. We will give some extra free period. It doesn’t mean that my expenses are not reduced. But, by asking us to waive the ground rent charges, my income is being reduced. That is wrong. How can you expect us to survive,” said the chief executive of a CFS near JNPT.

Ground rent contribute as much as 40 per cent to the revenue of CFSs and inland container depots (ICDs). “Ground rent waiver will impact our financial condition adversely and we should be compensated to the extent of waivers granted,” he said.

Amongst the container terminals operating at major ports, the facility run by JNPT itself has waived off the ground rent charges, while PSA International is offering a 50 per cent discount in storage charges on all import containers at its terminals located at Jawaharlal Nehru Port Trust (JNPT), Chennai Port Trust and V O Chidambaranar Port Trust (VOCPT) from April 16 to April 30.

Shipping lines levy charges

Trade sources said that shipping lines, with the exception of Maersk Line, are also levying container detention charges and demurrage despite the Ministry advisory.

BusinessLine has reviewed four invoices raised by ANL and Ocean Network Express (ONE) for container detention, demurrage and storage charges (after the free period) on importers who have shipped their boxes through the container terminal at Vallarpadam in Cochin Port Trust during the lockdown period.

In container trade, demurrage refers to ground rent charged by the terminal, while detention refers to the levy collected by the shipping lines. An invoice is raised on both the charges after the permitted free period.

Maersk line, the world’s biggest container carrier, had waived container detention charges on all its import shipments into India till April 14.

Government’s ‘advisory’

India’s Director General of Shipping advised shipping lines, through an order issued on March 29, not to impose container detention charges on import and export shipments from March 22 to April 14.

The DG Shipping Amitabh Kumar also advised lines to desist from collecting “any new or additional charges” during this period.

But, most of the lines calling at Indian ports have not reciprocated as it was in the nature of an ‘advisory’ and not a ‘direction’.

“The major port trusts should invoke force majeure and the shipping ministry should issue directions to terminal operators, shipping lines and CFSs to waive all penal charges such as ground rent, detention, storage, license fee and lease rent to support the trade,” said Alan Jose, vice chairman of the Federation of Freight Forwarders’ Associations in India.

Published on April 16, 2020

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