Shipping Panel Undecided On Container Detention Charges

Consensus continues to elude the high-powered panel constituted to determine container detention charges even as it prepares to submit its report to the director-general of shipping later this week.

The director general, in turn, will forward the report to the surface transport ministry, possibly adding his comments, sources said. Container detention charges are paid by importers (shippers) to compensate for delays in returning containers to shipping lines.

Sources close to the committee said shippers and shipping lines were unable to agree on what this charge should be. Shippers had doubled their offer, which was also turned down by the shipping lines, who are sticking to their original demand. Sources, however, were tight-lipped on the figures quoted by the two sides.

The panel was formed in February 1997 to resolve the dispute between the shippers and the shipping lines. At the time of its constitution, director general of shipping M P Pinto had stated that detention charges should be left to the market forces to decide.

However, both shippers and shipping lines do not entirely subscribe to this view. Shippers feel that the tariff authority for major ports should decide on such matters.

However, both sides have agreed to delink the ground rent from the detention charges.

At present, shipping lines pay the ground rent to shipping lines and their agents who, in turn, pay it to the port trusts. Under the new procedure, the shippers will directly pay the port trusts.

Some headway has also been made on the administrative costs for containers.

Currently, the rate for a 40-feet container is twice that of a 20-feet container. For instance, under the 1985 rate scale, it is $3 per Teu (twenty equivalent units) and $6 per Feu (forty equivalent units). The lines and shippers have now agreed upon a uniform rate irrespective of the container size, sources said adding that the precise rate was yet to be agreed upon. At present, shipping lines allow a free period of five days for returning the containers. After that, they start recovering the charges which vary from $8.50 per Teu per day to $48 per Teu per day depending upon the number of days at Mumbai and Jawaharlal Nehru ports.

The last time detention charges were prescribed by the directorate general of shipping was in 1985. These rates were prescribed on the basis of ground rent of $1 at the exchange rate of Rs 10 to the dollar.

Ground rent is paid by the shipping lines to port trusts for storing containers and has consistently on the rise. Currently, the Mumbai port charges $2.50 per day.

Shipping lines hiked the detention charges with every increase in ground rent, which was objected to by shippers. The Reserve Bank of India too stepped in and stopped repatriation of the excess amount, estimated at Rs 200 crore. This had led to the constitution of the panel.