Logistics

Scrap order on waiver of detention charges: Container carriers tells Government

P Manoj Mumbai | Updated on April 30, 2020 Published on April 30, 2020

Representative image

Carriers say they have taken steps to ease the pain for the EXIM trade

Global container shipping lines, operating from India, are taking the Government head-on by declining to comply with a directive to waive container detention charges levied by them from importers stating that the orders issued by various authorities in this regard “were not legally binding on them”.

The Director General of Shipping (DGS) and the Central Board of Indirect Taxes and Customs (CBIC) have asked carriers not to collect container detention charges following a Shipping Ministry order to facilitate exporters and importers hit by the lockdown restrictions.

“These notifications are not legally binding on the lines and has to be rescinded. Instead the matter should be left to the lines, to consider each case on its merits,” Sunil Vaswani, executive director, the Container Shipping Lines Association (CSLA) India, said. CSLA India is a lobby group for global container carriers operating from/to India that includes Maersk Line, MSC and CMA CGM.

On April 27, DGS Amitabh Kumar had asked CSLA in a letter to share details of its member lines who are complying with the government order, citing complaints that carriers were not extending the benefits to their customers.

As the stand-off continued, Shipping Minister Mansukh Mandaviya warned that he will “quarantine” the carriers if they refused to follow the government order on waiver of various charges including the container detention charges.

Acting on a complaint from the importers, Kolkata Port Trust has barred, pending further investigation and compliance, non-vessel owning common carriers (NVOCCs) such as Sea Hawk Lines India Pvt Ltd and PORTRADE Shipping Agencies Pvt Ltd from operating at the port for levying container detention charges “in violation” of the government order.

Carriers say they have taken steps to ease the pain for the EXIM trade.

The shipping lines have facilitated the process for delivering containers, even in the absence of original documents, thereby “exposing themselves to immense financial risks”. Many shipping lines have already independently offered additional free days on container detention from March 22 till April 14, despite these “notifications not being legally binding on them”, CSLA said.

“With the lockdown likely to continue for some more time, lines cannot grant endless container detention free time,” Vaswani said.

Carriers have continued to call at Indian ports, carrying import containers, despite having to sail out light due to very low export volumes, thereby increasing the per unit cost of operation of vessels.

“Since March 25, forty-six sailings of scheduled services had to be blanked / cancelled and some of the services had to be rationalized, resulting in huge costs to the lines for the idling of vessels,” Vaswani stated.

The non-clearance of cargo by the importers has led to acute congestion at terminals, container freight stations (CFS) and inland container depots (ICDs) across the country.

Blaming the delay in evacuation of containers by the importers to the orders issued on waiver of container detention charges, CSLA said, “The importers, therefore, have no incentive to effect early clearances and are instead using the containers as free warehousing space for storage of cargo”.

The blanket waivers, Vaswani said, are proving to be “counter-productive” and the delay in clearances is proving to be “detrimental” to the country’s exports as ports, CFSs and ICDs are facing a space crunch to handle export volumes.

“The equipment of the lines is blocked with uncleared import cargo thereby leaving hardly any containers to cater to the export shipments, particularly once the surge in the bookings happen, after the lock-down is lifted. This will harm the exporters more than anybody else,” he said.

Shipping being the backbone of the logistics industry, merely looking at the issue solely from an exporter or importer point of view, would endanger the entire supply chain.

If shipping – the strongest service provider in the logistics chain with ships and containers – itself collapses, then all this will become meaningless, Vaswani added.

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Published on April 30, 2020
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