‘Chennai port’s decision to raise tariff will make it uncompetitive’

The Chennai Port Trust (ChPT) is caught in a Catch-22 situation. Its decision to revise the tariff (Scale of Rates) effective November 29, has faced stiff opposition from the port users. However, without an increase, it would be impossible for the ChPT to meet its expenses, especially the huge wage bill after the pay revision from January 1, 2017. The pay revision has led to an increase in labour cost by nearly 30 per cent, forcing the ChPT to hike the tariff, said an official of ChPT.

The Chennai port competes with the neighbouring Kamarajar, Katupalli and Krishnapatinam ports. While other ports are reducing their tariffs to attract cargo, ChPT has increased it, making the port uncompetitive, feel many port users. The rate increase has come at a time when the port is struggling to find cargo, said one user.

For the period April-October 2019, cargo throughput at the port declined by nearly 9 per cent to 28.58 million tonnes, as against 31.43 million tonnes in the same period last year, according to data released by the Indian Ports’ Association that represents the major ports.

The tariff increase was 36 per cent in stevedoring; between 15-30 per cent in others such as wharfage, storage and vessel-related charges, and close to 50 per cent in demurrage, said Ishwar Achanta, President, The Chennai Port Stevedores’ Association, whose members provide cargo loading and unloading services at the port.

“The increase is a death knell for the port. Surely our ships bringing 1 million tonnes per annum will shift. Already, a ship called at Kattupalli and loaded 6,000 MT last week and the next ship is also due there,” he said.

Achanta said that at a meeting with stakeholders on November 14, Mansukh Mandaviya, Union Minister of State for Shipping (Independent Charge), said that ChPT cannot load its costs such as pension pay-outs and increased salaries (on account of wage revision) onto the tariff levied on port users. “However, we were shocked to receive a notification from the ChPT Traffic Manager’s office, advising that the increased Scale will come into effect on November 29,” he told.

“With Chettinad Multi Cargo terminal at Kamarajar Port ramping up operations after a slow start, and Kattupalli Port offering huge discounts resulting in the diversion of Caterpillar and granite blocks exports, and with Krishnapatnam port on the verge of being acquired by Adani Ports, we, the primary stakeholders of Chennai port, are seriously disadvantaged by ChPT increasing handling costs,” said Achanta.

‘Workers will be affected’

“It is our earnest request to take cognizance of the serious difficulties being faced by our members in sustaining their companies and their businesses. Directly and indirectly, 5,000 workers will be affected by this move to increase tariff leading to immediate diversion of cargo,” he appealed to both the Shipping Ministry and ChPT.

“We request you to defer the implementation of the scale of rates and assist the trade to retain the already low volumes at Chennai Port,” he added.

Stakeholders consulted, says ChPT Chairman

Defending the tariff increase, ChPT Chairman P Raveendran said that the SoR is revised with due consultation of the stakeholders, and most of their concerns were taken care of and thereafter the proposal for the revision of SoR was sent to Tariff Authority for Major Ports (TAMP), besides publishing the proposed SoR in the Chennai Port website as per the TAMP guidelines.

TAMP, after due process, conducted the public hearing with all the stakeholders. The issues raised during the meeting were again analysed and many of the increases proposed such as ‘cold move’ charges; double berth hire charges for occupation of double berth by large ships; increase in wharfage for cereals and pulses and fertilizers; wharfage rates for oil bunkering, coir and jute, documentation charges for vessel imported as cargo, were withdrawn.

The increase was mainly in areas like on board labour charges (shown part of stevedoring charges) which was necessitated due to pay revision from January 1, 2017, and the ChPT had absorbed this increase till date. “The overall increase in tariff due to the revision will be only around 3 per cent for a ship calling at the port,” Raveendran said.

However, the impact of these labour charges is minimal since the port has implemented National Industrial Tribunal Award on manning scale in toto, he said.