Rejection of legal relief for Indian shippers threatens port flow

Rejection of legal relief for Indian shippers threatens port flow

With the pandemic hurting demand, containerized traffic through India’s major public ports crashed 36 percent in May year over year. Photo credit: DP World India.

With Indian courts ruling against shippers on blanket relief from COVID-19-related port storage penalties, beneficial cargo owners (BCOs) who failed to collect containers in a timely fashion will have little choice but to pay accrued charges or abandon the low-value freight altogether.

Dismissing writs filed by BCO groups, an appeals court in New Delhi ruled that government advisories on extended free time and penalty waivers were more in the form of general advice rather than a binding directive.

“Some of the advisories only contemplate that authorities concerned should adopt a sympathetic and humanitarian approach and have advised them not to charge ground rent or penal charges,” the court noted in its order. “In these circumstances, there is no material on record which prima facie suggests that any right of the petitioner [BCOs] has been violated by the respondents [container freight stations].”

Cargo flows in and out of marine terminals became an onerous chore when a nationwide lockdown came into force in late March. Now, although authorities have lifted much of the restrictions, many BCOs are unwilling to retrieve containers because of hefty penalty demands from CFS owners even as major carriers offered extended free time to induce clearance.

All this poses a costly, two-pronged supply chain challenge. With lingering undelivered shipments, carriers run the risk of insufficient equipment availability to meet resurgent trade demands, while inland depots that typically offer temporary storage for shippers risk being unable to find more space to hold new containers. That pressure would ultimately trickle down to on-terminal inventory management.

“A recurrence of the bottlenecks that arose in the initial weeks of the lockdown must be avoided to keep the freight moving in a difficult market,” a Mumbai-based freight forwarder told JOC.com.

While a resolution to penalty disputes seems to be getting more complicated, carriers and CFS owners generally see the heightened debate over detention and demurrage fees as unreasonable and out of context. They also argue government and legal authorities shouldn’t intervene in contractual issues between individual service providers and cargo owners in a free, competitive market environment.

Call for industry intervention

However, the Brihanmumbai Customs Brokers Association (BCBA), whose members typically handle customs clearance services for cargo owners at Jawaharlal Nehru Port Trust (JNPT), said shipper complaints about port storage charges are widespread and, as such, the impasse calls for industry-level intervention.

“It is no longer a mere commercial matter. It is a question of ethical practices,” the BCBA said in a letter to the CFS owners. “It is a matter of principle and we must both as responsible associations rise to the occasion for resolving the disputes as far as possible.”

Maersk maintains it has been distinctly proactive on providing relief to its customers. “In the weeks after announcing our last measures on detention charges, we have seen over half of uncleared cargo getting cleared immediately, which is extremely encouraging,” Maersk (India) said in a statement to JOC.com. “Our focus from the beginning has been on minimizing the pressure from the logistics ecosystem and we have devised solutions that are amicable for the customers as well as the whole industry.”

With the pandemic hurting demand, Indian port volumes took a deep cut in May, a JOC.com analysis shows. Containerized traffic through major public ports crashed 36 percent year over year, while minor private handlers saw last month’s total throughput fall 20.4 percent from a year earlier.

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