Logistics

Speedy Multimodes to quit deal for running JNPT CFS

P Manoj Mumbai | Updated on September 06, 2018

Swastik Enterprises Ltd which runs India’s only container freight station (CFS) that is regulated by the rate regulator has notified its owner Jawaharlal Nehru Port Trust (JNPT) of its intent to quit the 20-year operation and maintenance contract, bringing the curtains down on a controversial deal.

The CFS - Speedy Multimodes Ltd – spread over 68 acres is owned by JNPT but was given to DBC Port Logistics Ltd on an operation and management (O&M) contract for 20 years beginning January 1, 2006. Hence, Speedy is the only CFS among the 33 servicing JNPT whose rates are regulated by the Tariff Authority for Major Ports or TAMP, the rate regulator for the 11 Union government-controlled ports.

In July 2016, DBC sold Speedy to a clutch of investors under the banner of Swastik Enterprises after notifying JNPT of the decision. The sale coincided with a government move to bolster direct port delivery (DPD) of import containers landing at JNPT to cut cost and time for shippers.

The controversy

The Customs Department then designated Speedy for handling DPD boxes - if the import containers were not cleared by the DPD clients from the terminals within 48 hours of landing, the port terminals were directed to shift them to the Speedy CFS, located 7 km from JNPT. The designated status gave more business to Speedy.

This led to allegations of favouritism from other CFS operators servicing JNPT. Following protests from DPD clients, the Customs later designated 20 more CFSs to handle DPD containers with some conditions.

In April, the Customs further allowed shipping lines to shift DPD containers lying uncleared after 48 hours to any CFS nominated by them instead of the designated CFS.

This hurt the business and revenues of Speedy.

A JNPT official confirmed that Swastik has notified the port authority to exit the O&M contract after serving a notice period of six months.

“Swastik’s decision to quit the contract will have to be approved by the board of trustees of JNPT,” the official said.

Ashish Chandna, managing director and CEO of Speedy Multimodes, did not respond to calls made to his mobile phone seeking comment.

Speedy has been mired in controversy since starting operations in 2006.

JNPT show cause notices

In October 2011, June 2012 and June 2014, JNPT issued show cause notices asking Speedy to explain why action – including termination of contract - should not be initiated against it. JNPT issued the show cause notices mainly on two counts of violations - for collecting charges from customers more than the rates approved by TAMP and for unauthorised permission to third parties to conduct business from its premises.

Besides, the licence agreement signed by JNPT and Speedy states that the contract can be terminated for non-payment of stipulated amount for three consecutive times in a year (this happened between July 2013 and June 2014) and for unsatisfactory service.

But Speedy was let off the hook. In 2015, Speedy was given a rate hike by TAMP, its first since starting operations in 2006. Three earlier attempts in 2007, 2009 and 2013 to raise rates were vetoed by TAMP. The rate regulator gave another hike to Speedy in October 2016 after applying a new rate revision model approved by the Shipping Ministry in 2015 for services rendered by the port trusts (excluding private terminals).

Published on September 06, 2018

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