Maritime Logistics Players Openly Defy Shipping Ministry Order on Waiving Charges

As the cash-flow crunch escalates, the maritime logistics industry has openly defied a Government diktat to waive of a slew of charges to help exporters and importers tide over a tough time as the country fights to slow the spread of the virus.

The container freight station (CFS) operators have told the statutory authorities that they operate as per as the guidelines issued by the Customs Department under the Handling of Cargo in Customs Area Regulation, 2009 (HCCAR).

“None of the circulars/guidelines/letters issued by the statutory bodies were issued under the HCCAR and none of the directions can be classified as ‘regulations’ issued by the Customs Department/other authorities under HCCAR,” Umesh Grover, Secretary General of the Container Freight Stations Association of India (CFSAI) wrote in a April 23 letter to Sanjay Sethi, Chairman of Jawaharlal Nehru Port Trust (JNPT).

“A CFS is regulated only by the HCCAR and not by the Tariff Authority for Major Ports (TAMP) and hence the circulars issued by the Director General of Shipping to major ports cannot be extended to a CFS,” Grover wrote in the letter.

“Hence, even if the DG Shipping directs major ports not to levy storage charges or directs liners not to levy detention charges, the same directions cannot be extended by JNPT or other authorities to direct our member CFSs not to levy ground rent/demurrage charges, even after services of storage of goods have been rendered. Our rates are published and we are charging only the said rates and are not charging any excessive rates. As a matter of fact, most of the importers enjoy concessions and work far below the tariff and in addition also enjoy free days to the tune of 10-15 days, Covid 19 or no Covid 19,” he added.

Resentment is building up against the Shipping Ministry's direction, asking private container terminals at major ports to waive storage charges/ground rent during the lockdown period (i.e till May 3).

“No country in the world, indeed no port has extended such waivers on storage charges during the lockdown,” an executive with a private box terminal said while questioning the logic behind the government’s decision.

Referring to the Government’s move to wield the stick during the pandemic, he said, “In all my years in the industry, I have never seen such cooperation between parties to try and overcome issues together such as clearance of containers. But, the importers lobby seems to hold sway over the government”.

“It’s not about money. It’s about the risk of inadvertently screwing up the supply chain,” he added.

“The trick is that the State-owned ports will force terminal operators, CFSs, ICDs and shipping lines to accept all the conditions prescribed by the Ministry to get deferments on their payments to the government in return,” he said adding that the statutory authorities have started “threatening them to comply with the Ministry order”.

CFS operators say that the “unlimited demurrage or ground rent waivers” sought by the importers were proving to be counterproductive in clearing containers from port terminals and CFSs.

“Importers are actually getting incentivised by the waivers as they feel why should they inherit risk and come out during the pandemic, though facilitated by the Ministry of Home Affairs and authorities. They have nothing to worry as they rightly believe their cargoes are lying safe with custodians such as CFSs "free of cost", so why should they use their resources, cash, custom duty etc?” said CFSAI’s Grover.

With consistent evacuation from the terminals by the CFSs, and importers not taking deliveries, CFSs are almost packed.. “The authorities need to take cognizance of the fact that by encouraging the so called ‘unlimited waivers’, ports and CFSs will start choking faster,” he said.

This will impact empty containers needed for exports as these will be available only after the import containers are destuffed.

“The longer the waivers and freebies offered, more will be the shortage of empties for exports. Shipping lines will surely not import empties for catering to exports. They would rather have blank sailings and save thousands of dollars in vessel related charges for calling at a port. Going forward, this will impact the entire EXIM trade,” Grover said.

CFSs are facing severe cash flow crunch as they work on turn-around of containers per month. “With import deliveries down by 75-80 per cent, our members have expressed fear that they are staring at no income, but huge expenditure and they are all saddled with serious cash flow issues,” Grover added.