Chennai Port takes fight for auto shipments to Kamarajar

P Manoj

Setting sail Cars parked at the Chennai port waiting to be loaded onto a docked Ro-Ro vessel (file photo)

Receives backing of rate regulator to set wharfage rates on ad valorem basis

Mumbai, September 25

The Chennai Port Trust has received the backing of the rate regulator to set wharfage rates for auto shipments on an ad valorem basis, reversing the unit/weight-based method introduced last year, as it looks to compete with the nearby Kamarajar Port Ltd (KPL), in which the trust holds a 33.33 per cent stake.

Accordingly, wharfage rates will be collected from users on an ad valorem basis, at 0.47 per cent of the free-on-board (FOB) value of the cargo for exports and imports, and a concessional ad valorem wharfage of 0.29 per cent of the FOB value for coastal movements, subject to a ceiling rate.

The rates will be applicable to machinery and equipment fitted with wheels as assembled units, such as excavators, motor graders, dumper trucks, wheel loaders, bull dozers, pavers, power transformers, concrete mixers, along with its own accessories, based on various weight slabs.

It will also cover motor vehicles/four wheelers carrying passengers and cargo of up to 1,400 CC and above, and six wheelers and above, depending on weight slabs.

It is a unique case of two Central government-owned ports, located nearby, fighting for the same cargo, for which the auto hub in and around Chennai is also seeing stiff competition from private ports such as Krishnapatnam.

Kattupalli Port, run by Adani Ports and Special Economic Zone Ltd (APSEZ), is also gearing up to handle automobiles.

KPL, India’s only Central government port that is run as a company, is just 24 km away from Chennai Port, which functions as a trust like the other 11 Centre-owned ports. Kamarajar is free to set rates based on market forces while the rates at the 11 major port trusts are set by the Tariff Authority for Major Ports (TAMP).

Port users handling motor vehicles and machinery and equipment fitted with wheels said the levy of wharfage on unit/weight basis from November 2016 raised the wharfage charges steeply, compared with the previous ad valorem system.

Revenue loss

The wharfage charges fixed on per-unit basis for machinery and equipment fitted with wheels as assembled units and motor vehicles were found to be very high compared with the charges at KPL, posing the risk of diversion of these cargo to KPL where the wharfage is collected on ad valorem basis, resulting in loss of revenue, Chennai Port Trust told TAMP.

“In such a scenario, if Chennai Port Trust is levying a per-unit basis, it will be very difficult to match KPL rates due to the basic differences in calculating wharfage. Hence, it is imperative to roll back the wharfage rates for the above categories from unit basis to ad valorem basis,” Chennai Port Trust wrote in its proposal submitted to TAMP.

Coastal shipping

Chennai Port Trust had switched to the unit/weight-based collection on automobiles transported on roll-on/roll-off (Ro-Ro) vessels following a direction from the Shipping Ministry to all major port trusts handling automobiles, to promote auto shipments by the coastal route for local distribution. “In this backdrop, recognising the contention of Chennai Port Trust about the risk of diversion of cargo, this Authority decides to prescribe ad valorem rates from February 20, 2017, as proposed by the port trust along with unit-based wharfage rates, and the quantum of unit-based wharfage rates approved vide the tariff order passed in September 2016 for Chennai Port Trust shall be the ceiling rates,” TAMP wrote in its order published in the Gazette on September 13.

Auto-makers such as Hyundai Motor Company, which had lobbied for the introduction of a flat per-unit wharfage rate for coastal movement of cars to popularise the alternative mode of transportation, said the roll-back to the ad valorem method will not have any adverse impact on car shipments for by the sea route.

“It will benefit truck manufacturers such as Ashok Leyland,” said a Chennai-based auto industry executive.

Published on September 24, 2017

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