Gateway Terminal - the Maersk-CONCOR joint venture terminal operator – at the congested Nehru port finds itself at the center of a controversy.
At least six major carriers have clamped emergency congestion surcharge on import containers passing through Jawaharlal Nehru Port (JNPT). The surcharge is of around $ 150 for 20 ft container and $ 300 for 40 ft container. Its is after some years the congestion surcharge plague has made a come back to JNPT, the largest container port in the country. But strangely Gateway Terminal Ltd (GTL), one of the container terminal operator has been forced to bring down volumes because of the spat between the GTL and the Tariff Authority for Major Ports (TAMP). More strangely, JNP in a communique today has denied there being any congestion stating that reports in the press are misleading.
Gateway Terminal is a 50:50 joint venture between Container Corporation of India (CONCOR) and APM Terminals Management B.V., the port division of A.P. Moller-Maersk Group. GTL has a capacity designed for handling 1.8 million TEUs but could exceed two million TEUs annually.
According to an officials of GTL, every three years terminal operators are entitled for rate revision and accordingly have to make an application to the TAMP. Consequently, GTL requested for being allowed to increase the rate by 2%. GTL has a sanctioned capacity of about 1 million TEU but has gone ahead and achieved productivity of 1.2 million TEU this year. “Having achieved such productivity because of their efficiency TAMP has come down on them heavily and asked them to reduce their rates by 10%,” stated an official of J. N. Baxi & Co.
Importers say that the congestion has partly been caused because CONCOR, the extended arm of the Indian Railways, is not providing sufficient rakes to evacuate much of the containers destined for Northern India. But a CONCOR official refuted this saying it has nothing to do with the congestion. “In fact the container pendency is now down to 8 days and the backlog has been brought down from 8,000 TEUs to mere 4,000 TEUs. Besides, there is yard capacity for 40,000 TEU. The number of rakes moving the containers to Delhi and upcountry destinations has been increase to 18 per day. Referring to the congestion Container Shipping Lines Association however, point out that there are issues like delays in berthing/unberthing, pilot shortage, draft restrictions, etc that need to be addressed urgently.
“Lowering tariff rates is unfair and increasing volumes at our terminal not only helps us but also benefits Indian trade,” said Chief Executive Officer of GTL Arvind Bhatnagar said. He denied that GTL was being penalized for their higher productivity. “We have not reduced our volumes but have gone in for optimization. There is no link between TAMP asking us to reduce our rates and our terminal productivity.”
He added, “As far as cost is concerned our returns are 15% and this does not include the 35% royalty which we have to pay the landlord port - JNPT. The royalty component is met from our top line.”
It is understood that the tariff rate is determined on the basis of cost plus 15% return on the capital employed. In the royalty paid by a terminal operator to the port and finance costs are excluded.
The trade also agrees with TAMP’s directive asking GTL to reduce its tariff. The Indian Merchants Chambers (IMC) in a statement pointed out, “In the light of huge volumes being handled by the concerned terminal, instead of the tariffs being reduced, the terminal operator seeks an upward revision. Since Gateway has already been compensated by huge volumes being handled, it would be appropriate that TAMP either retains the existing tariff, or in all fairness and taking into account the present scenario and conditions, reduce tariff by more than 40%.”
The Shipping Ministry is expected to intervene in matter as there is likelihood of an adverse backlash considering that the government is seriously pushing for faster development program in an endeavor to shore up the economy.