Chennai Port Strike Hits Coffee, Tobacco Shipments

A flash strike by Chennai port workers has hit shipments of coffee and tobacco to Europe and the US. The foreign exchange loss is estimated to be around $25,000.

"Coffee exports for June have collapsed," said Coffee Federation of India vice-president Ashwin Shah, whose company Madhu Jyanthi is a leading exporter. "The strike in Chennai a few weeks ago and Monday's flash strike have paralysed work and clogged the port. We will have short-term loss. But, our big worry is that we will lose the trust of foreign buyers and all future dealings will be jeopardised."

May, June and July are the peak months for coffee shipment and 500 trucks full of coffee are waiting outside the port for the congestion to clear. Coffee for 250 containers, about 5,000 tons, is stuck and exporters are faced with defaulting on their contracts.

 

The congestion in the port means that coffee and tobacco will be stuck for five to seven days in the port before going on board a ship. Shipping lines have imposed a surcharge on containers due to the delay. A surcharge of $100 has been slapped on every container. This works out to a $5 increase in cost per tonne for exporters, a loss to him and forex loss to the country.

Forex loss in coffee is valued at $25,000, but the loss to tobacco is much higher. Tobacco is exported mainly through Chennai as it the nearest port to Guntur, and 1000 containers are shipped a month. Tobacco is shipped in 40 ft containers, on which the surcharge is $200. Thus, $200,000 will be the loss of tobacco exporters.

A clearing and forwarding agent in Chennai said Madras Port Trust chairman Manivanan's mismanagement was the reason for the congestion. He said the chairman was lenient with workers and gave in to their demands. The workers had gone on a flash strike, but had come back to work yesterday. "I would advise all exporters to route their shipments through Cochin. I am sending my stock to Cochin," he added.

But all commodities cannot be sent to Cochin. Certain loading facilities are available only in Chennai and so some of the coffee has to be shipped from there, said Shah. "We cannot operate if there is a breakdown in infrastructure. Ports are a basic requirement for trade. We can achieve 20 per cent increase in exports when infrastructure falters."

More than 35 per cent of coffee export goes through Chennai, while 55 per cent goes through Cochin and the rest through Tuticorin. Chennai port has space for three or four container ships to berth. But 21 ships have come to the port all of a sudden at the same time. Port officials are being blamed for this fiasco. The port's labour can load 80 containers in an eight-hour shift, which is low compared to 1,000 containers a shift Singapore.

This overcrowding of ships is the main reason for the congestion, though a change in the stacking rules has worsened the problem. The port agreed to workers' demand to decrease the number of containers in a stack from four to two. Workers had argued that they had to shift three light containers to get to a heavy container, which goes to the bottom of the ship for balancing reasons. But cutting the stacking size effectively cuts the storage capacity by half. So, containers were held up outside the port.

The Coffee Federation of India has sent a letter to the commerce ministry requesting intervention. Coffee Board chairman S V Ranganathan spoke to Manivannan on Friday and though he said matters would be sorted out, nothing has happened, Shah pointed out.