Logistics

Stevedores urge Chennai Port Trust to drop planned rate hike from July 1

P Manoj Mumbai | Updated on June 13, 2021

Stevedores load and unload bulk and break-bulk cargo onto and from ships

Stevedores have urged Chennai Port Trust to drop a planned rate increase from July 1, the fourth hike in 18 months, stating that "tariff stability was needed to retain the existing traffic and also grow in a highly competitive and price sensitive market environment”.

The rate increase, set to take effect from May 1 but deferred to July 1, will jack up the handling costs at the port by Rs1-2 per metric tonne (PMT).

Stevedores those persons who load and unload bulk and break-bulk cargo onto and from ships.

On April 21, the Chennai Port Trust issued a notification to raise the scale of rates (SOR) by 0.55 per cent on achieving certain performance standards in FY21 as per the 2018 Tariff Policy.

On December 29, 2019, the SOR was increased between 36 per cent to 50 per cent despite many representations against the hike.

On 1 July,2020, the SOR was revised upwards by 1.88 per cent and on December 29, 2020, the estate rentals were increased by five per cent.

Following the December 2019 rate revision, the handling costs at Chennai Port rose steeply by Rs 12 PMT in addition to the increase in vessel related charges.

The handling costs went up by a further Rs 2-3 PMT from 1 July 2020 together with an increase in vessel related charges, wharfage and all other port costs, making Chennai Port un-competitive and unviable, the Chennai Port Stevedores Association wrote in a letter to Sunil Paliwal, Chairman (I/C) of Chennai Port Trust.

The December 2020 estate rental increase has “pushed the cost of leasing land beyond the reach of users and has also put an additional cash outflow burden on those few who have leased land for cargo storage”.

The port trust has also made it mandatory for stevedores to use the Port’s harbour mobile cranes (HMC), resulting in the diversion of cargo from Chennai port to neighbouring ports such as Kattupalli and Krishnapatnam.

The traffic handled by Chennai Port Trust declined 6.86 per cent in FY21 to 43.552 million tonnes (mt) from 46.759 mt in FY20.

There is a marked decline of bulk and break-bulk cargo, requiring stevedoring services, at Chennai Port, in the last decade, the association said.

“The stevedores cannot absorb another increase in the last 18 months if the port trust were to implement it from 1 July,” the association president Ishwar Achanta said.

The stevedore said they market the Port’s services and bring cargo and retain the customer, acting as a business development arm/marketing agent of the Port.

Merely stating that an increase is warranted for achieving the performance standards in the previous year is not good enough reason, when considering that the Port infrastructure is largely vacant and unutilised, the Association said.

“Stevedores, unlike other intermediaries such as agents and Customs brokers, have all in contracts and cannot pass on the increase to the trade,” it said.

The lobby group said that the Chennai Port Trust management should signal reliability of service by providing tariff stability, without an increase of any tariff whatsoever, whether by indexation or otherwise, for the next 24 months.

“This will give confidence to industry that Chennai Port Trust means business and is willing to serve as a catalyst to trade,” it added

Published on June 13, 2021

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