The much-publicised direct billing system aimed at reducing the terminal handling charges (THC) at Vallarpadam has run into rough weather.

This follows a decision taken by the Kochi Port management to withdraw the direct billing proposal, amidst concerns raised by some trade bodies.

Transparency charges

Earlier, the port management proposed to introduce direct billing from January to reduce THC levied by shipping lines, which is higher in Kochi compared to other ports, and to bring in transparency in charges being collected by service providers.

Later, it deferred twice and decided to implement the plan with effect from April.

A senior port official told BusinessLine that several stakeholders, who had initially supported the move, have now expressed apprehensions with regard to increase in charges by service providers, deposits to be maintained with ICTT and the procedural hassles arising from the change in billing pattern.

Cost factor

This has also given rise to concerns that the changes in terms of delivery may lead to cargo diversion to ports where Bill of Lading on container yard to container yard are still offered.

Hence, it has been decided to continue with the present system of billing at ICTT, the official said. However, the management called upon stakeholders to act together to bring down the costs to make Kochi competitive. As the high handling charges have become a matter of concern for the trade, it was decided to allow the terminal operator to bill it directly from exporter/importer.

Sources in the shipping circles said that the insistence of the terminal operator to deposit with them a minimum of ₹5,000 per container by all shippers and consignees for implementing direct billing have torpedoed the proposal.

Many of the trade bodies are against the decision, as they feared that they have to pump in an additional amount as advance payment.

Add-on charges

Hitherto, the shipping companies are making THC payment to DP World and thereafter billing the importer/exporter together with add-on charges relating to their own services.

This, according to sources, had resulted in incidence of service tax being incurred twice. There were also disputes related to charges billed by some steamer agents under various heads.

The decision to continue with the existing system of billing procedure will hinder the exim trade financially, the sources added.

Published on March 18, 2015