Lines nominated box delivery to CFS at Hazira under hold

With no resolution in sight on the extra charges being collected by Adani Hazira Port from CFS operators on lines nominated containers, the stalemate continues.

MUMBAI: Adani Hazira Port Pvt Ltd (HPPL), a unit of Adani Ports and Special Economic Zone Ltd (APSEZ), is said to have stopped delivering import containers nominated by the shipping lines to container freight stations servicing the port.
In a 25 August Customer Advisory, Adani Hazira Port said it will collect extra charges of Rs2,500 for a 20 ft container and Rs4,000 for 40 ft and 45 ft boxes from CFS operators when import loaded containers are taken to a CFS as nominated by the shipping lines. Adani Hazira Port also asked the CFS operators to maintain a Pre-Deposit Account (PDA) balance at the terminal from 8 September to facilitate invoicing CFS’s nomination charges for the import laden box.

The new levy took effect from 8 September.
“Delivery of containers nominated by shipping lines to container freight stations at Hazira are under hold,” a spokesman for the Container Freight Stations Association of India (CFSAI), a lobby group, said.
Some four CFS operators located around Hazira Port are not ready to pay the extra charges, arguing that the port operator was not providing any “additional service” to justify collecting the additional levy.

Container ports/terminal operators typically levy terminal handling charges (THC) from the shipping lines for services associated with unloading of import containers from a ship and moving them to the port’s container yard. The shipping lines, in turn, recover the THC from the importers.
Shipping lines then nominate a CFS of their choice or the consignee’s choice where the import containers are taken for final delivery.

A CFS is an off-dock facility licensed by the Customs Department to help decongest a port by shifting containerised cargo and carrying out customs-related activities outside the port area.
The terminal handling charges paid by the shipping lines to the port includes delivering the container by loading it onto the customer’s vehicles, the CFSAI spokesman said.
A CFS industry source said that the port “cannot legally stop” delivering the containers nominated by the shipping lines to a CFS.

“It’s a breach of contract that the port has with the shipping lines. The shipping lines have to take up the matter with the port because it is their containers that have been stopped from being delivered to the CFS’s nominated by them,” he said.
Responding to CFSAI’s representations seeking withdrawal of the extra charges, the Adani Hazira Port has blamed the CFS model as the main reason for the high logistics cost in India, particularly in the ports sector.
The CFSAI said it disagreed with this view of Adani Hazira Port.
“It is incorrect to even say that the present model of CFS’s in India is in any way leading to higher costs, as alleged. This is not factually correct, nor is there any evidence to support this assertion, which is far from truth and substance,” Umesh Grover, Secretary General, CFSAI, wrote in a 7 September email to the Chief Executive Officer, Adani Hazira Port.
Irrespective of the origins of the container freight stations in India, the fact remains that private CFSs are very much present and operating, Grover wrote in the email, adding that Adani Hazira Port “cannot unilaterally and arbitrarily bring about steps to deprive such CFS’s their right to carry on business, as guaranteed by the Constitution of India”.
The extra charges make the logistics cost even further uncompetitive and more expensive. This itself is a ground for Adani Hazira Port to withdraw the proposed charges, he said.
Stating that the extra levy is a “penal cost” imposed on the CFS operators to which the containers are destined to, the CFSAI alleged it was intended “to prevent containers from moving to CFS’s outside the Port/Terminal, and to compel the trade to use the Port’s/Terminal’s EXIM Park instead, which is in breach of the Competition Act, 2002”.
Notwithstanding the Direct Port Delivery (DPD) scheme, the Government has given the choice of the CFS’s to the consignee/receiver/importer.
“Your action to impose the proposed charges, would amount to you acting to deprive the importers of their choices, which also is contrary to law, and the guidelines/Public Notice/s issued on this behalf,” Grover stated.
The CFSAI pointed out that Hazira Port’s prevailing published tariff for Terminal Services covers handling by quay crane, charges for transportation from quay to yard and vice versa, charges for grounding lifts at CY and for landing or loading the container from or onto the customer’s vehicles.
The charges are collected by the port from the shipping lines as THC (terminal handling charges) and are being levied even prior to the CFS taking out the containers.
“Consequently, where is the justification for any additional charges to be imposed on the CFS operators only for the CFS operators to take the containers to their respective CFS’s, more so for the reasons alleged by you? There are no enhanced costs for delivering the containers to CFS’s, as alleged or at all. In fact, admittedly, it appears that you are illegally seeking to recover capital costs for the proposed further developments in the Port by the levy/imposition of the proposed charges,” Grover said.
The CFSAI reiterated that APSEZ was using its ‘dominant’ position to impose a penal tariff, to be collected from the CFS’s without providing any service whatsoever, which would, instead, cause appreciable adverse effect on competition in the CFS business at Hazira.
While lauding Hazira Port’s endeavour to create world-class infrastructure, the “same cannot be at the expense of the private CFS operators”, the CFSAI added.