Trade recovery charges force them to forgo margins
With more and more Shipping Lines levying Chennai Trade Recovery (CTR) charges on delayed container deliveries at the Chennai Port Trust (ChPT) in the past few days, port users have started to have a relook at their export activities.
According to recent notifications, CTR charges are being levied by shipping lines and feeder operators ranging from $70 to $210 per twenty-foot equivalent units (TEUs).
The levy of Rs.10,000 per container has shrunk the margin of importers and exporters.
Left with fewer options, some of the traders have started paying the charges as demanded, while others are planning to have a relook at products and ports.
Low value exports
Low value exports from ChPT mainly consists of maize, fibre waste, minerals, chemicals, sea foods, granite, leather, textiles and agriculture commodities. Margins earned by the traders on these commodities are about Rs.10,000 per container.
While questioning the rationale behind the CTRs, the traders said that in the last two decades, trade congestion charges were levied only on a couple of occasions. But now the charges are levied whenever congestion lasted for more than two weeks.
Due to the absence of an effective regulatory body to curb such practices, the traders have sought the intervention of Union Commerce and Shipping ministries.
Talking to The Hindu , S. Muruganandam, maize exporter said, “In a month, we export about 60 containers. The margins are very low on this product. Either we have to renegotiate the price with our buyers or suspend our exports as they are not viable.”
Important port of call
A major importer of newsprint said that he was not in a position to use nearby ports such as Krishnapatnam, Kochi or Tuticorin due to rising cost, absence of customs officials and administrative reasons.
“ChPT serves as an important port destination on the east coast for Bangalore, Chennai and Hyderabad with frequent calls by mainline vessels. The freight rate is also quite economical. As there is less demand for fibre waste, pith and quartz in domestic market, we export them. The orders are booked in advance and hence a sudden levy of surcharge such as this would eat into our profits,” another trader said.
More waiting time
Arguing on behalf of a shipping line, one of the representative said they were forced to wait for at least two to three days for berthing that invariably added to their operations cost.
The delay meant, altering the port of call, missing the connecting vessel and further the deliveries. Hence, CTRs were levied after giving due notice to the trade.
For the last few days, the first container terminal has been maintaining the inventory at 4,000 TEUs to avoid congestion.
In other words, the operator evacuated around 1,000 boxes per day against 2,000 boxes that increased the waiting time of other vessels.
“We can evacuate all the boxes in a day and take the inventory to 8,000. But that would increase the congestion. We don't want that to happen,” an official said.
Terming the surcharge as ill-timed, Chennai Custom House Agents' Association president A.V. Vijayakumar, sought the intervention of Chennai and Ennore Steamer Agents' Association to urge its members to withdraw the additional burden immediately as it would send wrong signal to the trade and stakeholders.
ChPT Chairman Atulya Misra said due to the trade adjustment exercise carried out at the harbour last week, container inventory at both the terminals was brought down to 8,000 against 14,000 a few weeks ago.
Calling the levy of surcharge by shipping lines and feeder operators as ‘opportunism,' Mr. Misra said “I am at a loss to know why it is levied as there is no drastic change. They have to behave responsibly. I will convene a meeting of the stakeholders on Friday.”