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The Jawaharlal Nehru Port Trust (JNPT)

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Applicant

(Passed on this 5th day of January 2001)

This case relates to a proposal made !?y in& Jawaharlal Nehru Port Trust (JNPT)

for increasing the free periods for various classes of containers.

In Its proposal, the :INPT has stated that they have been receiving requests from

Shipping Lines and the CSLA for increasing the free period for various classes of containers. The

matter has been considered by its Board of Trustees and decided to propose different free period

for various classes of containers as given below:

(i).

To allow free period of 15 days in the case of empty transhipment containers,

instead of no free days allowed at present.

(ii).

To allow free period of 3 days for normal import/export empty containers against

no free days allowed at present.

(ni).

To allow free period of 7 days in case of ICD loaded import/export containers

moved by road instead of 3 days allowed at present.

(iv).

To allow free period of 3 days in case of ICD empty import/export containers

moved by road as against no free days allowed at present.

In its proposal, the JNPT has given the following points in favour of its request:

(i).

Several requests were received from the Shipping Lines / Container Shipping

Lines Association (CSLA) for revision of tariff in respect of free period presently

allowed for empty transhipment containers* M/s. ZIM Lines have also requested

the port to allow 30 days free period for empty transhipment containers as has

been allowed for loaded transhipment containers at present.

(ii).

In order to reduce yard Inventory and to motivate Shipping Lines for early

repositioning of empties for export stuffing, presently no free period is allowed for

Empty (Local) Containers. There is a pressing demand from Shipping lines to

allow free period for empty containers at par with loaded containers (local) i.e.,

three days from the date of arrival. Shipping lines are requesting three free days

for empty normal containers mainly because they may get some time to arrange

for transporter and availability of place in the private yards.

(lii).

Presently empty containers meant for transhipment are not allowed any free

period. But there is a pressing demand from the Shipping lines to relax the free

period in respect of empty containers for transhipment also. This would definitely

help Shipping lines to use the JNP for transhiping empties from Europe to

Colombo and other destinations. In other words, it would assist in the general

development of the JNP as a hub port.

(iv).

Presently loaded ICD containers moved by road are given a free period of 3 days

and there is no free period for empty ICD containers moved by road.

The

justification for a shorter free period for ICD containers by road is that they do not

need to wait for aggregation like ICD containers by rail, but can move

independently. Now, it is represented that most of the ICDs are located in the

hinterland and it is found difficult to arrange transport immediately especially to the

places like Pithampur-lndore, Chinchwad-Pune, etc.

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The JNPT has also stated that on account of the proposed increase in free period,

the financial loss to the Port will be about Rs.1.5 crores. To cover this loss, an additional traffic of

about 6000 TEUs is required.

The proposal of the JNPT was circulated to concerned representative bodies of

users and the NSICT also. The comments received are summarised below:

Nhava Shova International Contalnar Terminal Limited (NS1CT)

(i).

The TAMP has always advocated that there should be performance related

criteria for measuring the efficiency of ports. The present proposal has not

demonstrated how efficiency will improve. It must be ensured that the present

proposal will not lead to congestion.

(ii).

The free periods being offered will have its effect on revenue earning of JNPT who

have recently put in an application for a 30% tariff increase. This could result in

higher tariffs being applied for in future for the other activities.

(iii).

The JNPT is taking unfair advantage of its extra land area to provide relief by

converting its CY Into a general storage area and giving unrealistic discounts. The

principle of a Container Terminal is not to use the CY as a storage yard. The real

reduction in costs should flow through productivity improvements and the JNPT

has in no way proved the same.

Jr»e Container Shipping Unas Association fCSLA)

(i).

The CSLA supports the proposal of the JNPT.

(ii).

It is assumed that the same tariff condition will apply equally to the NSICT.

Indian National Shipowners' Association (INSA)

(i).

INSA notes with satisfaction that the Port has responded to the long pending

request of rationalising the free periods.

(ii).

The JNPT Board resolution provides scope for subsequent review, if need arises.

6.1.

A joint hearing in this case was held on 21 Nov. 2000 at the JNPT office in

Mumbai. During the course of joint hearing the following submissions were made:

The Jawaharlal Nehru Port Trust

(i).

Earlier we wanted to avoid congestion and wanted speedy movement. Hence, no

free periods were allowed.

(ii),

(a).

Now lines have been requesting for grant of free periods,

(b).

JNPT want to promote transhipment traffic,

(c).

There are bottlenecks In ICD container movement by road.

(d).

JNPT have enough space; so, we want to give this facility to normal

(empty) container movement also.

(HI).

We have taken average dwell time of all containers for determining the free

periods. Our proposal is well within the averages.

The Nhava Sheva International Container Terminal Limited (N$|CT)

(i).

We do not really care to interfere in JNPT affairs.

Oi).

A container yard is meant to be a transit area. Traffic must mow last What is

proposed militates against this.

(Hi).

This should not become a precedent The NSICT should not be required to do the

same as we dont have the space.

The Container Shipping Lines A—oclatton (CSLA1

(I).

We expect the same terms to apply in the NSICT also.

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(a).

15 days free period for empty transhipment containers is tow. It shall be

21 days.

(b).

For import / export empty containers three free days are inadequate, tt

shall be 7 days.

(cj

ICD containers moving by rail and road shall be allowed the same number

of free days.

(d).

In reality, movement by road is more difficult The JNPT must enhance

the free time for road movement and it must be more than that of rail

movement

Mumbai and Nhava-tthevaShlo-tntennodal Agents' Association (MAN3A1

(i).

We welcome the proposal as it meets the tong standing demand of the trade.

(ii).

(a).

For purposes of free days the distinction between loaded/ empty must be

abolished.

(b).

For purposes of free days ICD containers moving by rail and road should

have the same terms.

The Shipping Corporation of India (SCI)

(i).

We endorse the proposal and congratulate the JNPT.

Oi).

We suggest that NSICT mu«t also adopt this.

Oil).

We endorse the views of the CSLA on free days for ICD containers.

(iv).

The free period for transhipment containers (empty) should be increased from 15

to 21 days. For transhipment of empties by two different lines, more than two

weeks are required.

(v).

The free period for ICD empties moving by road should be enhanced from 3 to 15

days to equate it to rail traffic.

The Indian Merchants Chamber HMO

We fully support the proposal and suggest that it will be even better if free period can be

raised further.

The Bombay Custom House Aoenta Association (BCHAA1

(i).

We must always consider the implication for total handling charges.

fiiV

This proposal goes to reduoe the burden on trade. So, we welcome it

37//<niPot>> - 3 '

THE GAZETTE OF INDIA : EXTRAORDINARY

[PART III—SHC. 4]

6.2.

During the joint hearing, the CSLA filed a written submission highlighting the

following points:

(i).

It is Indeed a welcome move to allow free period of 15 day* in the case of empty

transhipment container*, however, it is worthwhile to compare the free periods

offered by other transhipment hubs in the region. Dubai offers 20 days free period

for such containers, Colombo offers free period of 21 days. Considering the

current operations scenario of connections for transhipment boxes at JNPT, the

port should consider 21 days free period instead of the 15 days proposed.

(H).

Due to unfavourable imbalances, lines are required to position empty containers

into India and, therefore, are incurring heavy costs as a result. In most of the

oases, lines are required to bear these costs and cannot pass on the same to

merchants. The free period of three days proposed by the port is not adequate to

arrange for transportation of empty containers to the yards, as these are mostly

situated 25/30 kms away from the port Each round trip takes about 5 hrs. and

considering the huge number of empties that are discharged at the JNPT, it

becomes difficult to evacuate alt the empties within the three free days.

Therefore, tt is suggested that the port should consider 7 free days for import /

export empty containers.

(iii).

In case of movements to ICD locations by road, lines are required to make their

own arrangements of transportation. Paucity of trailers, time taken for completion

of documentation and obtaining permission from customs compel the lines to keep

such containers in the port. Therefore, it will be logical if the 15 days free period

available tor ICD containers by rail is also extended to the ICD containers moved

byroad.

7.1.

The BCHAA has forwarded its further observations, a summary of which is given

below:

(i).

Keeping in mind that Container Terminals are not meant to be used as a storage

area, and only meant to be a transit point, at which containers are received from

or loaded on vessels, the J.N. Port authorities had in their wisdom created a Buffer

Yard nearly 4 years ago, thereby forcing exporters to incur a sum of Rs.35 to 36

crores per annum, just to ensure that the Port Terminal Container Yards was not

congested.

(li).

The trade is very happy to note the decision taken by the J.N. Port Administration

in extending free days for storage of Containers In the Port container yard, and

accordingly suggest that the authorities should issue orders to close down the

operations at the Buffer Yard.

(in).

The trade is also very happy that the decision taken by the Ports Administration in

extending free days to containers should result in lower handling costs of the

containers at the Gateway Port. As a result, tremendous amount of monetary

savings will accrue to the Shipping Lines and their agents. This aspect requires

serious consideration in the context of the THC.

7.2.

The NSICT has also filed a written submission. The mam points made by the

NSICT are as follows:

(i).

The NSICT will not interfere in the JNPTs business practices except when tuch

practices will have-direct impact on its business.

(li).

The Lines are demanding similar arrangement from the NSICT also.

(iii).

The JNPT has about 60 hectare of land at against the NSICT's 26 hectare. The

NSICT does not have the physical resources to offer greater number of free days.

(v).

Presently, the JNPT may be able to accommodate increase storage period.

However, throughput through both terminal at the Jawahartal Nehru Port will

lubstantially increase within the next 2 years. Decision taken today may haw

effect on productivity In the short term future.

With reference to the totality of information collected during the processing of this

oase, the following position emerges:

(I).

The proposal is to be seen as a relief provided to the Trade in deference to their

longstanding demand. The JNPT also envisages an opportunity of more flow of

empty transhipment containers, as a result of enhancing free days in respect of

this oategory.

The Port has estimated a revenue loss of about Rs. 1.50 crores, p.a., If the

proposed increases in dwell time are allowed. It has also mentioned that about

6000 TEUs are required to make up this loss. Considering the volume of

containers at the JNPT, the additional throughput required to make up the loss

amounts to about 1% of its annual container traffic. It is reasonable to expect that

one of the leading container handling ports in the country can easily achieve a

volume growth of 1% per annum and thereby square up the losses.

Viewed from this perspective, the JNPT proposal deserves to be approved.

(ID-

All the users have welcomed the proposal. However, they have demanded further

enhancement of free periods. The JNPT has rightly dismissed these demands

saying that its proposal is based on average dwell time of these containers.

It has to be recognised that any rationalisation having significant financial impact

can be made only at a gradual phase. The enhancement of free time proposed

now will definitely provide considerable relief to the Trade. It is noteworthy that

the proceedings of the JNPT Board meeting held on 22 Sept 2000 also suggest a

review of the proposed arrangement subsequently. That being so, the demand for

further enhancement of free periods right now is found to be unreasonable.

(iii).

The NSICT objections mainly stem from its apprehension of having to face

demands from the Lines for similar concessions from it also. In fact, the Shipping

interests have already raised this demand.

When both JNPT and NSICT approached the Authority for approving an upward

revision of their existing tariffs, the Lines criticised such a move as an

extraordinary coincidence, which would defeat the trend* towards competition.

Strangely, the same Lines now want both the NSICT and JNPT to join hands in

this case!

Eventhough, the NStCT had initially adopted the JNPT tariff structure, it has

recently opted to branch off. The rates and conditions relating to the services

rendered by the NSICT can not be equated with those of the JNPT. The point

made by the NSICT about land-availability merits consideration. The demand

raised by the Shipping Lines for extension of similar benefits at the NSICT just

because the JNPT is offering such benefits is, therefore, found to be unreasonable

and can not be conceded.

The points raised by the NSICT about efficiency and productivity are no doubt

relevant However, It can be reasonably presumed that the JNPT would have

considered these aspects before formulating the proposal, as it may not be its

Intention to sacrifice its terminal's productivity for allowing some concession to the

users based on their long pending demand.

THE GAZETTE OF INDIA : EXTRAORDINARY

[PART III—SEC. 4]

(tv).

The BCHAA has suggested that the JNPT should close down the operations at

the Buffer Yard in the light of its decision to extend free days for storage in the

Port" s yard.

The Buffer yard is meant for storage of factory stuffed (FCL) export containers

pending completion of shipment formalities. The volume of such containers and

the categories of containers covered by the instant proposal may not be

comparable. It is relevant here to note that not allowing the containers into CY

without clearance of shipment formalities is an international practice. The exporter

must arrange for all required clearances before his container can be moved to the

CY. Also, there is no significant change in the circumstances obtaining in 1997,

when the Buffer Yard was Introduced by the JNPT and now warranting withdrawal

of the arrangement, except a slight fall in the volume through the JNPT with the

advent of the NSICT.

Notwithstanding the international practice obtaining in this regard, with the falling

traffic, it may be advisable for the JNPT to examine its volume forecasts and

average dwell time of containers and to undertake a review of the Buffer Yard

arrangement

(v).

The BCHAA observation about the savings to the Lines arising out of this proposal

and its effect on the THC are relevant. Recently, the MBPT has submitted a

proposal to regulate THC for the port as a whole. The MBPT proposal has been

circulated to all ports for examining the appropriateness to adopt the model

followed by the MBPT in other ports. No port, including the JNPT, has come up

wtth any proposal for regulation of the THC. The JNPT is advised to examine the

MBPT model of the THC regulation and examine the possibility of adopting the

model for the JNPT terminal also.

With reference to the analysis given above, and based on a collective application of mind,

the Authority hereby approves the following proposals of the JNPT:

• 1 .

The free period for empty transhipment containers shall be 15 days instead of 'nil¹

at present

The free period for import / export (local) empty containers shall be three days

instead of nil at present

The free period for ICD import / export containers moved by road shall be as

follows:

Loaded

7 days.

Empty

3 days."

10.

The JNPT Is directed to Introduce the above provisions in its Scale of Rates

appropriately.

H .

This Older will come into force with immediate effect after its Notification in the

Gazette of India.

S. SATHYAM, Chairman

[ADVT./III/IV/143/Exty./2OOO]

Printed by the Muugar, Oovt of India Pren, Ring Ro«d, M«y«puri, New Delhi-110064

by the

• of Publicrtiom. Delhi-H00J4.