New overweight surcharge by shipping lines worries shippers in Cochin Port

KOCHI : The shipping fraternity in the Cochin Port is keeping their fingers crossed, over the decision of some international shipping lines, to introduce a new overweight surcharge (OWS) effective from February 7.

The OWS applies to dry cargo containers, with a gross weight exceeding 18 tonnes with a rate fixed at $250 per 20 ft dry containers. The surcharge will be applicable to cargo originating from Indian ports like Nhava Sheva, Mundra, Tuticorin, Hazira, Cochin and Mangalore and other destined ports in the Indian Ocean region.

With limited options in hand, shippers will eitherhave to pay the OWS, or need to reduce the weight per container to the level prescribed by each shipping line. The situation is likely to continue for another couple of months or more, said Mr. Binu K.S., President of Kerala Steamer Agents Association (KSAA).

Owing to the current Red Sea situation, he said ships have started re-routing their transit schedules through the Cape of Good Hope and the round trip voyage from Indian ports to Europe demands an extra 12-14 days. All major lines, have increased their freight rates to cover the longer transit time to reach the destination. Escalation in freight levels will have an adverse impact on the export sector, which is already in distress due to space constraint and longer transit.

The emerging situation has also scuttled the window berthing at many ports and subsequently vessels omitted many ports to keep the window schedules. This resulted in piling up of cargo at many transhipment ports and vessels are getting loaded with full capacity, he added.

Container liners are compelled to take cargoes, with an average weight of 14-15 tonnes per TEU to accommodate a maximum number of units. When cargo weight goes up, the loading gets reduced and liners will face loss due to less number of containers. To mitigate such types of losses, the implementation of overweight surcharge is inevitable for many lines, he said.

Mr. Prakash Iyer, Chairman of Cochin Port Users Forum said, “Tonnage matters a lot for ships which are having long haul voyages to sectors such as Europe and the US. However, most of the shipping lines refuse to charge additional tonnage cost, as part of a give and take policy. But, some countries strictly follow the tonnage policy. There must be a balancing act by lines and shippers, as neither the low catch fetches more, neither cargo nor high freight rates reduces exports, he said.

Since, Cochin Port is handling more than 40 ft of export cargo, there would not be much impact on shippers with the fixation of $250 for 20ft containers, as these are often being adjusted with ocean freight. Moreover, the impact on trade due to the levying of this surcharge, is expected to be very minimal when the freight rates are again on a downward trend, Iyer said.