Rate hikes and new charges show Mundra Port’s ability to dictate terms

Mundra Port, India’s biggest commercial port by volumes and the flagship of Adani Ports and Special Economic Zone Ltd (APSEZ) is surging ahead year after year, but the hike in rates both on marine as well as rail side from April 1 reflects its ability to dictate terms to users on the back of its growing clout in ports.

APSEZ cranked up the rail handling charges at Mundra by double digits from $85 for a loaded 20-foot container to $110 and from $125 for a loaded 40-foot container to $165.

The rail handling charge is on top of the ₹7,500 plus GST it began collecting as train access charge on all trains arriving at Mundra port from November 1 last year.

APSEZ also levies a port infrastructure development charge of ₹1,400 for a 20-foot container and ₹2,700 for a 40-foot container for using the 74 km-long rail line it has built linking Mundra with Adipur on the Indian Railways network for evacuating cargo.

Shipping lines against hike at Mundra

In comparison, state-owned Jawaharlal Nehru Port Trust (JNPT), which Mundra overtook in FY21 to emerge India’s biggest container gateway, doesn’t levy either a train access charge or a port infrastructure development charge.

Shipping lines have opposed the hike in marine charges at Mundra. “We have not accepted the hike,” an executive with a top container line said.

“People talk about Indian container ports being expensive but Mundra was already one of the most expensive even before APSEZ hiked the marine and rail charges from April 1,” a trade source said.

“On the one hand, Indian Railways continue to give a 50 per cent discount in haulage charges for double stack container trains and from April 1 Container Corporation of India (Concor) is giving a 50 per cent discount in empty container haulage for two months. But, on the other, rail handling charges in Mundra have been raised by double digits,” the source said.

APSEZ is using its strong, pan India presence to dictate terms, says industry sources.

Railways’ sops

For instance, Adani Logistics Ltd recently applied to the Indian Railways seeking concessional haulage charge for running trains from Mundra to Maliya Miyana (about 166 km) and back for transporting mainly Morbi tiles to the port. Short lead traffic such as this is not lucrative for train operators compared to long lead movements.

“While backing Adani’s proposal, the Railways Ministry decided to offer the same concessional rates to all container train operators looking to ply on this route to ensure a level playing field,” an industry source said.

“But, for all other container train operators, the concessional haulage charge offered by the Indian Railways is nullified by the train access charge and the port infrastructure development charge levied by APSEZ,” he said.

“That’s Adani’s game plan. Because of its large network, APSEZ is in a position to dictate terms,” he said.

The government has been harping on reducing the end-to-end logistic costs. “Ports have to give rates that are competitive. If they dictate terms like this, how will the logistics costs come down,” he asked.

Overall, Mundra port handled 144.4 million tonnes (mt) of cargo in FY21, clocking a growth of 4 per cent on a year-on-year basis.

In containers, Mundra handled 5.65 million twenty-foot equivalent units (TEUs) in FY21, posting a growth of 18 per cent compared to last year.

The cargo volume gap between Mundra port and Deendayal Port Trust (India’s second largest commercial port and the biggest by volumes among the 12 ports owned by the Centre), both located on the Gulf of Kutch, has widened to 28 million tonnes (mt) or more than 23 per cent in FY21. Deendayal handled 117.56 mt.

“The rates at Deendayal Port Trust are cheaper than Mundra. But, the higher rates at Mundra is offset by better facilities, superior services and faster turn-around time compared to Deendayal,” said an official at Deendayal Port Trust.

COMMENT NOW