Epic problems this summer at India’s largest container port provide a stark example of the hurdles the country faces in raising its profile in world trade, and the reality-bending challenges to needed reforms.
A mounting series of delays at the summer’s peak led to new carrier congestion surcharges at the Port of Jawaharlal Nehru (Nhava Sheva), pushing some shippers to alternative gateways and triggering heated charges and countercharges across the ocean shipping supply chain. The oddest of those responses came from the port itself, which seemed to deny events happening in plain sight in arguing, “there is no congestion,” at its facilities.
The port’s numbers suggest there may be some truth to that. Container volume at Jawaharlal Nehru was almost flat year-over-year in the quarter ending June 30, a sharp turn downward from the 8 percent growth the port reported in the two years ending March 31 and well off a planned pace to more than double container handling within five years.
But operators say the boxes have been backing up, partly because of tight terminal space and partly from a new round of the port’s seemingly intractable labor slowdowns, leading to a repeat of the delays that prompted five carriers to add congestion surcharges a year ago.
“All three terminals at JN port operate at more than 90 percent utilization,” said Anil Singh, senior vice president and managing director of DP World, which operates the Nhava Sheva International Container Terminal.
The latest wave of congestion comes as peak season for the gateway nears for apparel and sporting goods. Bottlenecks have been exacerbated by the installation of three rail-mounted quay cranes at a terminal owned by Jawaharlal Nehru Port Trust.
Hapag-Lloyd said it has faced berthing delays of up 10 days, forcing some shippers to divert shipments to Mundra, a private cargo facility up India’s west coast. The German carrier followed APL in adding a congestion fee for Port Nehru shipments.
Shippers said the charges only added to the pain and mounting costs in their supply chains.
“The application of congestion surcharges is unacceptable since I blame the carriers as much as the terminals for this situation,” said R. Venkatesh, chairman of Western India Shippers Association. “None that I know of plans a service or capacity increase considering the terminal capacity, so such changes effectively impose serious strain on the entire operation.”
Port officials said they created a plan to ensure operations at terminals were minimally affected, and said the real problems were the result of misunderstandings between shippers and carriers.
“Whenever a complaint of congestion surcharge is brought to our notice, we have consistently taken action demanding the lines not to do so as there is no congestion,” port officials said.
APL, Hapag-Lloyd, OOCL, “K” Line, Wan Hai Lines, Pacific International Lines and Regional Container Lines have added surcharges ranging from $60 to $80 per TEU, according to reports.
The surcharges spread to the Port of Chennai, India’s second-largest port, where Hapag-Lloyd added a congestion surcharge this month because of a backlog following a series of strikes by port drivers in June and July.
Labor problems forced the closing this month of the export gate at Gateway Terminals India, Jawaharlal Nehru’s largest terminal facility. Dockworkers reportedly initiated an unofficial “go-slow campaign” on Aug. 2 at the joint venture between APM Terminals and state-owned rail operator Container Corporation of India.
The labor confrontations provide a forbidding over India’s port operations as the country struggles to make larger, long-awaited improvements to its infrastructure.
In the near term, however, congestion will have to be addressed with better planning, because plans for a 4.8 million-TEU fourth terminal have been stalled for years.
Plans for that terminal seem to be as bottled up as the boxes at India’s ports.
APM Terminals, part of the A.P. Moller-Maersk, challenged being excluded from the tender process, and India’s Supreme Court ruled in APM’s favor. After a two-year legal battle, the operator said in June the project wasn’t financially feasible.
A consortium headed by Singapore-based PSA International and Mumbai-based crane operator ABG Infralogistics is expected soon to secure the money needed for the terminal.
The port in late July called for bids from global consulting firms for a fifth terminal with an undisclosed TEU capacity. The port is also working to deepen its main access channel to 46 feet through a $180 million contract slated for completion in two years.
Such improvements are aimed at building container volume, which reached 4.27 million 20-foot equivalent units in the fiscal year 2011 that ended March 31, to 11 million TEUs by 2016 and 23 million TEUs in 2025.
Shippers may wonder, however, whether those boxes will move through the port or sit waiting on ships and in terminals, gathering charges while they wait.