India’s Jawaharlal Nehru Port Trust (above) is looking to bring more discipline around pricing for the inter-terminal movement of transshipment cargo. Photo credit: JNPT.

Having fixed previous intra-port rail service issues, the outcome of which is being reflected in the latest inland container depot (ICD) figures, India’s Jawaharlal Nehru Port Trust (JNPT) is looking to bring more discipline around pricing for the inter-terminal movement of transshipment cargo. 

JNPT, India’s busiest public container harbor, has issued a trade notice setting a uniform rate scale toward handling services for transshipment containers moved in and out of its own facility, as part of what it called a move to “eliminate discrepancies.” 

Intra-port transshipment transfers typically involve normal terminal handling charges (THC) and additional lift-on or lift-off charges. 

Transshipment trade development is a government priority and, as such, those containers enjoy a rebate of up to 50 percent of the normal regulator-approved tariff at the port terminal. With that incentive plan, all inter-terminal transshipment moves will be charged at Rs. 2,629 ($37) per TEU, including Rs. 844 toward lift-on charges, instead of the normal Rs. 4,414 per TEU, the notice said. 

“Revised rates for inter-transshipment containers have been made applicable for all BOT [build-operate-transfer] operators i.e. one shifting charge plus normal transshipment charges in case of discharging/loading of an inter-terminal transshipment container to/from JNPT and all the BOT operators,” the port said.

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JNPT’s new pricing statement comes amid steady traction in intra-country containerized transportation activities thanks to the May 2018 national cabotage law modification. That reform opened the doors for foreign-flagged ships to transport laden export-import containers for transshipment and empty containers for repositioning between Indian ports without any specific permission or license — previously an exclusive domestic carrier play with inadequate capacity and limited network reach.

But deep tariff concessions under new government directions have become a pain point for private terminal stakeholders owing to their royalty or revenue-sharing obligations toward landlord ports, particularly as they battle an increasingly challenging market environment. 

Transshipment revenue risk

The Indian Private Ports & Terminals Association (IPPTA), the umbrella body for BOT investors, earlier said transshipment handling holds greater revenue risk for terminal operators as they often incur royalty payments twice on such containers, adding they want to be fairly compensated through revenue share adjustments before considering any downward rate revision. 

“Going forward, terminals may find it extremely difficult to sustain [themselves] for long and this could adversely impact the growth of container traffic, unless we get some support from the respective ports,” IPPTA said in a previous letter to the government.

With those concerns as a backdrop, private concessionaires have yet to fall in line with the government’s tariff incentive guidelines on transshipment traffic. The port recently broke through similar resistance from private handlers over lower rates for ship calls to and from Chabahar Port in Iran after lending a revenue sharing “olive branch” to them.

Efforts to reach DP World Nhava Sheva and APM Terminals Mumbai, JNPT's busier private handlers, for comment were unsuccessful.

“We have a TAMP [Tariff Authority for Major Ports]-approved scale of rates, and we follow that. There is no discount at present,” a private terminal official told JOC.com, requesting they not be identified. TAMP fixes tariffs for all BOT operators at major Indian ports.

Combined with recent intermodal rail gains following the Aug. 1 implementation of a broader intra-port deal, JNPT has seen a strong upward trend in transshipment traffic in the current fiscal year (2019-20). New port data collected by JOC.com shows the port’s combined transshipment volume hit 95,477 TEU during April-December, up from 28,112 TEU in the same period of 2018-19 — a more than three-fold rise. The fact that private handlers hold larger share in this movement — together accounting for 86,647 TEU during April-December — makes the government call for a collaborative, equalized discount program even more significant.

Further, transshipment activity at Indian ports has been trending up in the past year, propelled by the cabotage relaxation. December data released by the Container Shipping Lines Association (CSLA) is the latest evidence of the uptick in direct shipping. According to the foreign carrier group, Indian ports were able to regain a new high of 109,503 TEU usually shipped through foreign hub ports last month, up from 81,048 TEU in December 2018.

While those proactive steps and evolving positive outcomes bode well for trade development, the wide variance in pricing among terminal operators within a port for transshipment handling services could lend further credence to shipper concerns that THC costs remain mired in a lack of transparent policy and undermine the competitive dynamics of container supply chains. It remains to be seen how far ongoing government intervention — which CSLA calls a trade disruptor — will help remove so-called distortions in the logistics ecosystem.

Bency Mathew can be contacted at bencyvmathew@gmail.com.