Singapore’s PSA International Pte Ltd has quit membership of the Indian Private Ports and Terminals Association (IPPTA), an industry lobby group, as its dispute with D P World and A P M Terminals over the issue of transfer of containers hauled by rail to/from different terminals at Jawaharlal Nehru Port Trust (JNPT) escalates into a full-blown rivalry.

PSA, owned by Singapore’s sovereign wealth fund, is no longer a member of IPPTA, a 15-member group that was formed to lobby the government on port industry related issues at major ports, multiple persons having knowledge of PSA’s exit from IPPTA, said. PSA’s name does not figure in the list of IPPTA members, according to its website.

PSA’s decision to walk out of IPPTA is connected to a complaint it had filed with India’s anti-trust regulator, the Competition Commission of India (CCI). In the complaint, PSA alleged that the Dubai government-owned entity (D P World) and the container port operating unit of A P Moller-Maersk Group A/S (A P M Terminals), which have been running facilities at JNPT for many years, were creating entry barriers to its newly-opened terminal at India’s busiest container gateway, thereby limiting its operational effectiveness since the 18 February start.

After seeing merit in PSA’s complaint, the CCI has ordered further investigation into the issue.

Mike Formoso, managing director of PSA’s India unit, did not respond to a call made to his mobile seeking comment.

“PSA probably realised that by continuing in IPPTA they cannot fight other member terminals; that’s why it left,” an industry official said.

Container transfer issue

The feud between the top global container operators relates to the inter-terminal transfer of containers, a system that is unique to JNPT where D P World runs two terminals, one each by A P M Terminals, PSA and the government-owned port trust.

Container-laden trains arriving at JNPT from the inland container depots (ICDs) located in the hinterland, typically carry boxes destined for different terminals. When the “mixed train” arrives, it is placed at the rail siding of the terminal that has the most containers on that trip and is referred to as the “handling terminal”, which unload the boxes from the train, including those meant for other terminals.

It is the responsibility of the other terminals to send their trailers to fetch the containers from the “handling terminal” and move it to their respective terminals for further loading onto ships, according to the arrangement mutually agreed by all the terminals before PSA started operations at JNPT.

The same process is followed for the import cycle also.

The Tariff Authority for Major Ports (TAMP), in a common order, approved a uniform rate of Rs 400 per TEU for inter-terminal rail handling operations from 15 February 2007 based on an application filed by JNPT. Individual terminals billed this charge to its customers- the shipping lines.

Gateway Terminals (run by A P M Terminals) and Nhava Sheva International Container Terminal (run by D P World) have refused to collect the boxes arriving on “mixed trains” at Bharat Mumbai Container Terminal (run by PSA), shipping line sources said. “Hence, BMCT has assumed the responsibility of doing both up and down movement of boxes at its own cost just to ensure that the trade flow doesn’t stop,” an official with a container shipping line said.

NSICT and GTI have argued that the inter-terminal transfer of containers from GTI/NSICT to BMCT and vice-versa would be “operationally unfeasible and commercially unviable” given the considerable distance of as much as 12 kms between them and BMCT.

“What those two terminals are doing is they are charging Rs400 per TEU because they are applicable to all the boxes whether they come to BMCT or NSICT or GTI or anybody else. Secondly, they are also charging one additional service request (ASR) – Rs 1,800 per TEU in the case of GTI and Rs 2,100 per TEU for NSICT (as per TAMP-approved rates for their respective terminals) - on the shipping lines, only for those boxes which are coming to or from BMCT. This is actually increasing the overall transaction cost to trade,” the shipping line executive said.

The ASR, though, is not being charged by the terminal run by government-owned JNPT.

Yet, it is an embarrassment to JNPT which played a key role in India’s 66 rank jump in the ‘Trading Across Borders’ component of the World Bank’s Doing Business (DB) rankings 2019 — from 146th to 80th position.

“What NSICT and GTI are saying is if you sent a box which is destined for or originating from BMCT, if you want us to handle that box, you pay this much as ASR. Essentially what they are saying is that if you want to do business with BMCT, then it is a heavy penalty to you, you have to pay this additional amount, otherwise we will not give that box. And in any case, we will not do the horizontal movement of boxes,” the shipping line executive said.

This cost barrier is being created by NSICT and GTI to block train operators, mainly Concor, from running “mixed trains” to BMCT and instead go for dedicated or scheduled services, he alleged.

NSICT and GTI are also resisting JNPT’s efforts to thrash out a consensus on the vexed issue so that it can take a proposal to TAMP to include BMCT also into the common order approved in 2007.

PSA claims that the distance from GTI to Nhava Sheva (India) Gateway Terminal (also run by D P World) is 3.9 kms and from GTI to BMCT is 4.3 kms. It had offered to “absorb” the incremental cost arising from the 0.4 km extra distance.

BMCT even suggested that it was willing to sign “bilateral agreements” with NSICT and GTI on inter-terminal transfers if they were not keen on including BMCT in the common order of TAMP.

“Eventually, when BMCT found there was no solution in sight, it filed a complaint with CCI. It is a collaborative practice between two entities and the fact that the terminal run by JNPT is not charging the ASR itself shows that it is an unnecessary or invalid charge,” the shipping line executive said.

The rivalry between the global giants runs deep.

The opening of the PSA terminal has intensified competition for containers at JNPT, with the volume growth not showing any significant growth.

“Due to competition, BMCT is giving lot of discounts to wean away shipping services from GTI and NSICT to attract cargo. Any further increase in volumes at BMCT will be at the cost of other terminals. They are trying their best to stop BMCT from growing at their expense,” an EXIM trade official said.

In December, China’s COSCO Shipping Lines will shift one of its service from GTI to BMCT. PSA is from the Far East; A P M Terminals also runs terminals in the Far East. PSA is forcing container lines to pass through its terminals. By virtue of that, GTI is likely to lose volumes. Cargo once lost is lost forever,” said the EXIM trade official.

In course of time, BMCT will have a 2-km long berth capable of handling 4.8 million TEUs which will necessitate running dedicated trains. “Till that time, BMCT will have to climb on someone else’s shoulder to survive. After that, BMCT will simply cast them away just like curry leaves,” he added.

 

Related Topics
comment COMMENT NOW