SCI to acquire 5 new container ships leading others to help exporters reducing logistics costs
NEW DELHI : The Shipping Corporation of India (SCI) will acquire five new functional container ships and other agencies involved in export logistics like Container Corporation (Concor) and ports will reduce their tariffs to help exporters tide over the problems of rising freight cost, shipping delays, shortage of containers, and congestion at the ports, government sources said on Thursday.
Commerce & Industry Minister Shri Piyush Goyal held an inter-ministerial meeting here on Thursday Union to address rising freight cost, shipping delays, shortage & non-availability of containers, and congestion at ports, leading to difficulties that exporters face. These adversely impact trade. For immediate relief to exporters CONCOR has decided to allow empty containers to be stored for a period of 90 days in the yard at the Jawaharlal Nehru Port Authority (JNPA) free of cost and has also slashed the loading and handling charges significantly,
The decisions were taken at an inter-ministerial meeting called by the ministry of commerce to address the problems being faced by exporters due to shipping-related disruptions.
On immediate basis the SCI has also announced that they will also charter additional ships to significantly increase their capacity by 9000 twenty-foot equivalent units (TEUs).
SCI currently has just two liners – SCI Chennai and SCI Mumbai. Container shipping generally operates according to regular schedules on set routes so therefore they are also known as ‘liner’ services.
Lack of enough domestic shipping capacity has meant that 90-95% of the cargo is transported by foreign shipping lines. This gives them control over access and freight rates, limiting India’s ability to manage costs and schedules, according to a report by Global Trade Research Initiative (GTRI). Association of exporters have been seeking setting up of an Indian shipping line to reduce dependence on foreign shipping companies.
Charges of Rs 3000 that are being levied beyond 90 days, are now reduced to Rs 1500. Further, the storage and handling rates will be reduced for containers from Rs 9000 to Rs. 2000 (for a 40 ft container) and from Rs 6000 to Rs. 1000 (for a 20 ft container) by Concor , Chairman and CEO, Railway Board, Satish Kumar announced.
Concor is a state-run company under the ministry of railways and takes care of export logistics within the country. Chairman of JNPT Unmesh Sharad Wagh said that steps have already been taken to eliminate any congestion and bottlenecks. “To enhance export related processes, traffic delays near and around JNPA will be minimised and simultaneous container scanning at JNPA will be implemented for faster clearances and reduced turnaround time,” he said.
Central Board of Indirect Taxes and Customs (CBIC) will ensure that custom clearances at the ports will be expedited by simultaneous screening of two twenty feet containers, Revenue Secretary Sanjay Malhotra said.
In the meeting it was also decided to set up a multidisciplinary help desk to support exporters.The meeting was attended by officials of ports and shipping ministry, railway board, department of revenue, civil aviation, SCI, Concor. Association of exporters, representatives of shipping and logistics companies also participated in the discussions.
According to Federation of Indian Export Organisations (FIEO)’s Director General Ajay Sahai said there is no shortage of containers per se though specific varieties like Refer, Open top containers or 45 Cubic feet may be short supply.
“It is the lack of space on ships and blank sailing which is the basic problem. Shipping lines have been urged to increase frequency and ports have been asked to reduce turnaround time,” he said.
Sahai said despite disruptions faced by Indian exporters, overall freight rates have started coming down and are likely to come down further. Mundra to UK freight for a 40 Feet container declined from $4000 to $3200 between July 24 to September 24, he said.
“I am confident that it will result in significantly bringing down the shipping cost, improve the availability of empty containers, help faster evacuation of export consignments, and significantly reduce the congestion at ports,” Goyal said.
The Government will continue to regularly monitor the situation with the next review scheduled towards the end of October, he added.