NEW ERA IN TRANSSHIPMENT
The new law on transshipment of Indian EXIM containers is going to have a long lasting impact in boosting transshipment at Indian ports and reducing overall freight forwarding cost for exporters and importers
In a bid to check outflow of Indian EXIM cargo to foreign ports and to boost transshipment at Indian ports, the government has declared new policy giving relaxation for coastal movement of EXIM transshipment containers and empties on foreign carriers. A notification released on May 21 by ministry of shipping states that it is necessary to put in place effective policy measures to reduce and eliminate transshipment of Indian EXIM containers through foreign ports and to reduce cost of repositioning of empty containers.
Earlier as per sub-section (1) of Section 407 of Merchant Shipping Act, 1958 foreign container lines were restricted from moving transship EXIM containers or empties from an Indian port to another. A special license issued by DG Shipping was needed by a foreign carrier to load empty or loaded container. Due to which EXIM containers largely transshipped through foreign ports. Over the years containerized EXIM cargo movement grew in volume but at the same time the imbalance in India’s merchandise trade remains prevalent as a result there has been disparity in availability of empty containers at Indian ports. It requires repositioning of empty containers between Indian ports as per requirement at a competitive rate to keep overall freight costs low for exporters and importers.
However, as per the latest notification the restrictions under sub-section (1) of Section 407 of Merchant Shipping Act, 1958 on foreign container carriers is abolished if they are fully or partly engaged in transportation of empty or loaded exim containers meant for transshipment. Meanwhile, the foreign carriers availing the relaxation will have to adhere to the guidelines that the loaded containers should be consigned through Bill of Lading to or from a port outside India for the purpose of transshipment at an Indian port. Also the laden containers are loaded or unloaded at an Indian port for transshipment purpose. Additionally the loaded containers should be covered by the arrival or departure manifest for transshipment.
Meanwhile in a dynamic international business scenario where international shipping tariff is highly competitive, in order to achieve better economies of scale, container business has rapidly evolved from point-topoint to hub-and-spoke model. Such a model has not fully evolved in India and this has resulted in almost 33 per cent of Indian container cargo getting transshipped at foreign ports. The latest decision will further pave way for growth of transshipment hub ports in India as a result it will help in reducing logistics cost for shippers and plug loss of foreign exchange to overseas ports. The ease of movement for foreign carriers will not only help growth of India’s very own transshipment hub ports, but it will also lead to higher competition amongst shipping lines.
Sensing a change in cabotage law Indian fleet operators had already threated to dump local registration. While the government has been encouraging coastal shipping that prompted domestic operators like Shreyas to invest heavily to add capacity will now have to compete with foreign lines that have cost advantages owing to tax and other benefits. It is to be seen what will be the next course of action by Indian vessel owners, and will foreign carriers invest enough in Indian shipping industry to improve the situation. Industry pundits opine improvement in cargo volume will attract much needed investment in shipping fleet, if so it will be a win-win situation for the sector.
Deepak Tewari, MD
MSC Agency India Pvt Ltd
“it brings competition within the exim feedering trade around the Indian coast, which will drop the feedering rates. Secondly, this will encourage use of Indian ports for aggregation and transhipment.”
Julian Bevis, Senior Director, Group Relations
Maersk South Asia
“it brings greater competition to the feeder market, benefitting exim. Indian ports can compete for container traffic currently handled in regional hub ports.”
Vinita Venkatesh, Director
Krishnapatnam Port Container Terminal
“It will induce higher cargo throughput at Indian ports. KPCT is well equipped with large land area, deep draft, high speed operations and competitive tariff to service the requirements of the transhipment cargo of both the Indian flag as well as the foreign flag carriers.”
