PMO mulls bringing container freight stations under vigilance to curb unseen charges in ports

The Prime Minister’s Office (PMO) has decided to bring container freight stations (CFS) across the country under vigilance in order to bring about a check in the invisible costs of handling containers in the major ports of the country.

Till 2014 handling contractors and stevedores, who were engaged in port activities on the strength of section 42 of the Major Port Trust Act did not share revenue with the ports. (PTI)

The Prime Minister’s Office (PMO) has decided to bring container freight stations (CFS) across the country under vigilance in order to bring about a check in the invisible costs of handling containers in the major ports of the country. The invisible costs involved in handling are making the government owned major ports un-competitive against the private ports for which the shipping ministry has been long insisting on direct port delivery. But the manipulation continues and this has prompted the PMO to bring the country’s major ports under its direct vigilance. This may even lead to crack down on certain container freight stations involved in increasing cost of handling above slot rates, said a key shipping ministry official.

In a private port all the operations are taken over by the port and agents generally have no function. Private ports operate their own container freight station mainly within the dock with stuffing and de-stuffing all done within the port. The port itself gives end to end services directly contacting the end customer or the exporter.
In government ports each activity is divided with stevedores and handling agents. They do almost all the onshore operations comprising 70% of the port’s activity. In addition to that container freight stations, outside the port and managed by private independent authorities, play a major role – from taking containers from the port to inspecting and obtaining all clearances and releasing it to the end customer. This is where the invisible costs play.

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Till 2014 handling contractors and stevedores, who were engaged in port activities on the strength of section 42 of the Major Port Trust Act did not share revenue with the ports, which they were supposed to under section 48 of the Major Port Trust Act. It was only after a PMO drive, which formed a special investigation team to look into the irregularities, that paying royalty by handling contractors became regular in the ports. The government lost huge revenue in the process of certain handling contractors taking all handling charges for themselves.

Now it is the container freight stations that are adding up invisible costs to handling charges, making major ports in-competitive. According to shipping ministry estimates each container spends an average Rs 10,000 -12,000 in a CFS above slot rates but in JNPT it may be as much as Rs 30,000, said the shipping ministry official adding “shipping lines encourage CFS in charging above slot rates and certain shipping lines give preferential treatment to certain CFS to get a cut from the amount whatever the CFS gets. This has become a practice in the Indian major ports, mostly JNPT, and so the shipping ministry is at present insisting on direct port delivery.

Some ports like that of Kolkata has already started directly delivering a chunk of its cargo to its customers. “The Kolkata Port has set up its own CFS and almost 50% of Kolkata port’s cargo are delivered directly to the customers by the port,” MT Krishna Babu, chairman of the Kolkata Port Trust as well as of the Vizag Port Trust said adding that the major ports were trying to bring about more consolidation in the handling activities of the ports, which would make monitoring of stevedores, handling contractors and CFS operators more easy. At present direct port delivery was as less as 10% in other ports, Krishna Babu said.

The ministry wanted to bring about changes in the Major Port Trust Act to make government port norms at par with the private or corporate ports, which will not only check irregularities but will bring more efficiency in handling. However, the plan to corporatize ports, which would make it more accountable to the people, has been dropped for now, the official said.

 

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