Despite the major ports in India having made strides in productivity in the past few years the vessel-handling charges are still the highest as compared to our nearest international competitors.
The vessel related charges in Jawahar Lal Nehru port in India which handled as much as 1.93 million TEUs last fiscal, at $37 per TEU is 75 per cent higher than that of Singapore.
Both Colombo and Dubai also charge at much lower rates of $7 and $6 per TEU, respectively.
"It is a pity that the transhipment vessels opt for Colombo port instead of Kochi due to high vessel related charges," D T Joseph, the shipping secretary said. A committee report on the vessel-handling charges is pending with the ministry.
"It is the profitability of the ports rather than productivity which is the crucial factor in determining the charges," a port official said.
The ports are burdened with various costs while the budgetary support is negligible. The ports have to raise 84 per cent of the 1,094.89 crore (Rs 10.948 billion) annual plan grant approved for the year 2003-04.
The budgetary support will be a mere Rs 180 crore (Rs 1.80 billion) of which Rs 150 crore (Rs 1.50 billion) would go to Kolkata Port Trust for river regulatory schemes.
Thus, effectively rest of the eleven ports have to be content with just Rs 30 crore (Rs 300 million) of government assistance.
The operating ratio expressed as the share of operating expenditure in operating income has declined consistently since 2000-01.
The dredging expenses and the amount spent on salaries account for more than half of the operating expenditure.
Overmanning at the ports has been a constant problem causing the salary bill to be so high.
A case to allow the flexibility in fixing the employment levels of the various activities of the ports according to their needs is pending at the National Tribunal in Mumbai.
In some cases, ports have also been urging the government to contribute more to the dredging expenses which form 12-13 per cent of the total operating expenditure.
Joseph, however, said that he understood compulsions of the ports but these still did not justify the huge gap in the vessel-handling charges compared to the nearby ports. A Shipping Corporation of India official concurred with him.
"The cost of port development should not be passed on to the liners through high vessel charges. Instead, the ports instead should ask for more budgetary support," the official said.
Another factor which put pressure on the profitability is that the ports are also responsible for conducting various development activities like replacement of equipment, construction of berths, procurement of floating crafts and upkeep of the townships around the ports.
The international ports on the other hand do not have to worry about these additional costs, a port official said.
"We thus follow a simple rule of cross-subsidisation, compensating for the high costs accruing to us through high vessel-handling charges," a port official said.
Moreover, the cargo related charges in India are not very high compared to international standards which could offer respite to the shipping lines in terms of total charges paid by them, he added.
In fact, JNPT has lowest cargo related charges among the Singapore and Colombo and Dubai ports.
A committee headed by the Cochin port chairman to review vessel related charges and container handling ports recommended various measures by which vessel-handling charges could be brought down.
One of the suggestions was to unbundle the pilotage operations which is a major contributor to the vessel-handling charges so that the liners pay only for the services availed by them.
For instance, at present a liner has to bear both pilotage-in and pilotage-out charges even if it has availed only one of the services.
However, the committee qualified its recommendations saying that the private operators should be ready to compensate the ports for the loss accruing to them on the account of lower vessel-handling charges.
The report said that the private operators could afford to do so as they would benefit in terms of greater number of ships calling at their terminals.
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