(Published in Part – III Section 4 of the Gazette of India, Extraordinary)
|No. 172||New Delhi, the 26 June, 2001|
Authority for Major Ports
In exercise of the powers conferred by Section 48 of the Major Port
Trusts Act, 1963 (38 of 1963), the Tariff Authority for Major Ports hereby
disposes off the proposal of Mumbai Port Trust (MBPT) for fixing of rates for
different port related services grouped in the package called the Terminal
Handling Charges at the Port of Mumbai as in the Order appended hereto.
( S. Sathyam )
R D E R
on this 12th day of June 2001)
This case relates to the proposal submitted by Mumbai Port Trust (MBPT)
for fixation of rates for different port-related services grouped in the package
called the Terminal Handling Charges (THC).
The MBPT has requested this Authority to approve the rates of stevedoring
and transportation included in the THC and notify them u/s 48 of the Major Port
Trust Act, 1963.
The MBPT has stated that the THC is presently fixed by the Karmahom
Conference without consultation with the Port authorities.
The THC fixed by the Karmahom Conference is very high; and,
they have further revised the THC from January 2000.
Various representations have also been received by the Port stating that
the THC at the Mumbai Port is very high.
The MBPT has also added that a meeting was taken by the Secretary
(Shipping) and Additional Secretary (Commerce), wherein it was decided
that the THC should be regulated by the TAMP.
Having analysed the THC at the Mumbai Port, the MBPT has given the
following points in its proposal:
The employees of the Bombay Dock Labour Board were absorbed by the Mumbai
Port Trust in 1994; but, the accounts of the DLB was maintained
separately. These accounts
showed a huge deficit and, therefore, it was considered to increase the
on board labour charges from Rs.525/- per worker to Rs.1030/- per
worker. But, at the
same time it was apprehended that the proposed increase would lead to an
exorbitant increase in the THC. Therefore,
a Committee of officers was appointed by the MBPT to `work out (i) the optimum
charge for supply of on board labour taking into account the average employment,
wage structure & other benefits and (ii) cost analysis and
optimum/reasonable cost of each element of THC with recommendation of the rates
for each element thereof which has been privatised.
(ii). The committee recommended as under:
(a). The charge for supply of the on board labour be at wage plus 146% levy to cover other benefits and cost plus piece rate payments at actuals; and,
(b). The THC fixed by the Karmahom Conference is much higher than the actual costs even after considering the recommended rates and administrative costs. The optimum charges for each element of the THC was recommended by the Committee.
(iii). The analysis of the committee set up by the MBPT is
(a). Port-related charges : The port related charges are on the basis of rates already notified under the Scale of Rates. The Shipping lines, however, charge 8 days ground rent [licence (storage) fees] and, also recovers Container Detention Charges (CDC) after the expiry of 5 free days allowed at the port. Hence, for 3 days, the ports ground rent of US$ 7.5 or Rs.301/- is recovered in excess, which needs to be corrected.
(b). Transportation: The rate charged for the transportation, assuming the average distance travelled to various locations from the CFS in the port is on the higher side even after considering the rise in the diesel prices. The optimum rate is Rs.2396/- for a 20’ container and Rs.3791/- for a 40’ container against the charges of Rs.2824/- for a 20’ container and Rs.5053/- for a 40’ container levied by the Lines under THC prior to 1 January 2000.
(c). Stevedoring: The present stevedoring charge under THC is nearly double especially in case of FCL containers and also the cost attributed under THC, on account of stuffing and de-stuffing operations using the port labour including the on board labour, is more.
The Committee of Officers had also found that the THC under the stevedoring cost included charge for on board stevedoring at Rs.640/- per TEU. The committee observed that the freight on container covered all cost till discharge of container on wharf; and, no such separate charge was recovered by Lines in the case of general cargo.
(d). Miscellaneous charges: These are the Customs charge for movement of containers beyond official Customs working hours. They do not form part of port service falling within the jurisdiction of TAMP.
(iv). The recommendations of the Committee were accepted
by the Board of Trustees of MBPT in their meeting on 13 March 2000.
The MBPT has worked out the proposed charges for stevedoring and
transportation by allowing a contingency margin of 5%.
However, no such contingency is provided in the port related
charges, as they are already notified under the Scale of Rates.
(vi). The proposed rates for stevedoring and
transportation are as under:
FCL (Port CFS)
and Export LCL (Port CFS)
/ Stuffing / Destuffing charges
(vii). Both the services (stevedoring & transportation) are
provided by the private parties on authorisation by the MBPT.
In case of stevedoring, the authorisation is through MBPT (Licencing
of stevedores) Regulations,
1979, which are approved by the Government.
In case of transportation, authorisation is through a registration
scheme. The arrangement
being in force for many years has the informal approval of the Government.
The proposal was forwarded to the concerned representative bodies of
users and other relevant organisations for comments.
A summary of the comments received is given below:
THC is an established concept in container shipping round the world
governed by the UNCTAD rule which is duly incorporated in Karmahom Conference
(ii). Two committees under the aegis of the DG (Shipping) had gone deeply into the components of THC and fixed the cost heads. Karmahom Conference have not added any new component but collect only what is charged by the service providers to Lines for the movement & handling of containers.
(iii). The THC and CFS service charges at the Mumbai Port
started moving up since mid 97 due to the following factors:
The MBPT converted the rupee based charges to US$ denomination leading to
an increase of 115% in the Ground Rent – Exports and 105% hike in the wharfage
and on shore labour charges.
The MBPT have doubled their earnings due to the exchange rate
fluctuations alone. The MBPT
announced an increase of 48% in the Stevedoring labour charges, which
resulted in an increase of around Rs.1100/- for exports and Rs.750/-
(iv). They charge the trade on the basis of weighted
average for stevedoring charges.
Lift on / Lift off charges are approved by a committee headed by the
(then) DG (Shipping) and such charge cannot be removed while computing THC.
(vi). The Nhava Shava Container Terminal Operators
Association has confirmed that the transportation charges are being paid to the
transporters anywhere between Rs.2200/- to Rs.2400/- per TEU.
They have imposed a further surcharge of Rs.300/- per TEU for loaded /
empty container, due to diesel price hike, w.e.f.
1 October 99.
(vii). The MBPT have not taken any steps to reduce its own
charges by improving productivity or reducing cost and abolishing notional
charges like gang compensation or on shore labour charges, that too in
dollar denominated tariff. Instead,
the MBPT has proposed to increase the “On Board Stevedoring”
charges based on cost plus formula although there is a surplus staff of 50%.
(viii). The activities / costs (of individual elements of the THC) are
determined by respective service providers and none of them falls within the
realms of Karmahom Conference Lines.
(ix). Certain charges like empty lift on / lift off, movement of empties between ESY / CFS and CFS / ESY, survey, etc., which are not strictly under the purview of the port, will continue to be a part of THC, as per the Line notified charges.
Recovering of ancillary charges are treated as an extension of freight
and Lines are called upon to pay 3.6% Income tax on total income and not
on residual portion of income, after disbursement is made to respective
(xi). The Lines block their working capital upfront to
pay THC/ CFS services and wait for reimbursement through recovery by way of THC/
CFS service charge.
They are prepared to accept the proposed charges to be notified under
Section 42 of MPT Act, provided the MBPT confirms that they will provide
all the services presently given to the Lines, that the level of charges
proposed are binding upon the respective service providers and further that the
Lines are not called upon to pay any extra cost over and above the charges
proposed by the MBPT.
Alternatively, the MBPT may collect the prescribed THC directly
from importers and exporters and pay the service providers leaving the Lines to
concentrate on ocean transportation.
(xiii). If the TAMP decides that it is incumbent on the Lines to
collect THC from Trade, the amount so collectible should be grossed up by
the tax element and a reasonable administration fee should be added.
The Container Shipping Lines Association (CSLA)
It has fully endorsed the views
expressed by the Karmahom Conference.
Bombay Stevedores’ Association
The wage for the purpose of on board labour charges may be clarified i.e.
whether it is average daily wage of all the categories of on board labour
(erstwhile Bombay Dock Labour Board) combined or whether it is the highest
reigning wage of each category. Further,
the definition of wage may be clarified as to the inclusion of the various
elements of wages.
(ii). Bipartite Wage
Negotiation Committee constituted by Govt. of India in the MOST has
signed on 2 August 2000 a Memorandum of Settlement on wage revision,
benefits and condition of services of dock and port workers at the Major Port
under Section 12 (3) of Industrial Dispute Act 1947.
Accordingly the element of stevedoring / stuffing / destuffing charges
included in the proposal of the MBPT will undergo a change as follows:
On account of revision of wages, the highest daily wage of senior
worker will go up by 44% approximately over the pre-revised daily wage.
If the proposed 146% of levy is also considered, the cumulative
increase will be 108% approximately.
The cost of supervisory staff and allied workers (on deputation to
various stevedores upto 31 July 2000), which is to be paid by the
stevedores to MBPT will go up by 54% and shall have to be borne by the
stevedores even if they do not have any cargo handling work at the port.
The wage revision arrears from 01.01.1998 has been kept at
20% in the proposed 146% levy as against the 36% arrears arrived in accordance
with the terms of wage settlement by the Committee.
Mumbai and Nhava Sheva Ship – Intermodal Agents’ Association (MANSA)
The negotiation which is in the final stages between the MBPT, BSA and
Dock Workers’ union regarding transfer of supervisory staff who are on
deputation to stevedores to the port will totally change the working procedure
and will produce impact on the costs which will eventually have to be borne by
the Shipping Agents / Lines. They
will be forced to pass it on to the trade as they cannot absorb this increase.
This will adversely effect the container traffic at the MBPT.
(ii). The proposal to create a pool of supervisory
staff to be managed by the traffic manager will alleviate the burden upon
individual stevedores of dealing volumes:
Shipping Corporation of India Ltd.
It has endorsed the comments furnished by the Karmahom Conference in this
(ii). In case of further revision in the charges,
a minimum notice period of six months must be given by the MBPT to the shipping
lines and the trade.
Indian National Shipowners’
It has endorsed the views expressed by the Karmahom Conference and Shipping Corporation of India.
Maharashtra Rajya Truck Tempo Tankers Bus Vahatuk Mahasang
Reduction in transportation charges is
unjustified due to abnormal increase in the price of diesel cost.
A copy of the comments received from the above users was forwarded to the
MBPT by way of feed back information.
The responses received from the MBPT are as follows:
The point made of increase in THC due to denomination of port tariffs in
dollar terms is not valid as recovery by the agents on these counts is also in
labour charges was much higher under the erstwhile DLB.
On absorption of BDLB employees, the rate was fixed at Rs.325
per worker in 1994 and raised to Rs.525 per worker per shift from 1997 to
recover the actual cost. Even
this rate now does not cover the actual labour costs.
(iii). Lift on / off charges have been taken into account
in the working of transportation cost at all points, the ship side,
the stack-yard and the CFS.
(iv). Despite a lower
rate for on board labour at Rs.525/-, stevedoring cost is much
higher in the THC (notified by the Karmahom Conference).
Even if the port recovers full cost of labour on the proposed cost plus
basis, the rate for stevedoring is still higher.
The suggestion of the MBPT recovering the THC and making payment to
various service providers appears to be out of context.
The container lines obtain various services from different operators and
they are responsible for recovery of the relevant charges and for distributing
(vi). Once the TAMP approves the rates to be levied by
various service providers, the MBPT can enforce such rates.
Till now, the service providers are levying the charges at their
discretion as per their contractual terms.
Further, all the Major Ports / Private Terminal Operators were
requested to furnish their comments on whether the regulation may be done for
the individual service providers or of the THC for the port as a whole through
prescription of ‘ceilings’ of the rates to be applied to
authorised service providers.
The comments received from Ports / terminal operators are briefly given
Jawaharlal Nehru Port Trust (JNPT)
The various elements of activities covered under THC at MBPT are
different from that of JNPT.
(ii). At JNPT, the notified composite rate
covers the stevedoring, wharfage and transportation whereas in MBPT all
the three elements are separated and performed by different agencies viz.
port, stevedores and transport contractors.
(iii). At JNPT, stuffing and destuffing operation
are performed by the CFS operators outside the ports’ limit using their
own labour whereas at the MBPT ports’ labour as deployed within the
The Mormugao Port Trust (MOPT)
As suggested by the MBPT the ceiling rates for THC may be prescribed
separately for individual ports.
(ii). The volume of container traffic is not
substantial at the MOPT; and, the THC charged at the MOPT is much
lower as compared to other ports to attract the container traffic.
Port Trust (PPT)
MBPT proposal is a step in the right direction to regulate the Port costs.
(ii). The authorised service providers may be
permitted to operate only with the previous sanction of the Central Government
as provided u/s 42(3) of MPT Act 1963.
The informal approval of the Government for container transportation
service at the MBPT is not in line with the provision of the Act.
(iii). THC paid by the shipping Lines are not usually
disclosed to the port authorities. There
is no mechanism to ensure that the rates provided are followed by the authorised
(iv). Under the
Stevedoring Regulation, a port itself can act as stevedore and notify the
rates for stevedoring operations on board the vessel in respect of various
cargo/container services. At
PPT, the port is a registered stevedore and undertakes stevedoring
operations for some of the cargo/containers.
Notifying the charges for stuffing and destuffing, stevedoring and
transportation charges will indirectly compel the port to take over the services
at notified rates in case no private service provider is willing to provide the
services at such rates which might create problem as the port may not be able to
provide the services as efficiently as a private operator.
(vi). It is desirable to have stevedoring as a separate
service instead of combining them with stuffing / destuffing.
(vii). Containers are
not handled at PPT, so there is no immediate requirement to notify THC.
Port Trust (CPT)
If the transport companies have not been authorised by the MBPT as per
Section 42 (3) of MPT Act, 1963, TAMP cannot fix the charges for
the same. Also, the TAMP
cannot exercise its authority over that portion of transportation which takes
place outside the port premises e.g. transportation from exporters’
warehouse to port or vice versa may not necessarily be in the port approaches.
(ii). The TAMP has got jurisdiction for fixation of
port related charges, stevedoring charges (where DLB is merged with Port
Trust) and for Intra-port transportation charges.
(iii). Bringing THC
within the purview of TAMP will be in the overall interest of the Import /
PSA SICAL Terminals Ltd.
THC shall be determined by the market
forces and shall not be regulated.
Nhava Sheva International Container Terminal Ltd., (NSICT)
(i). The proposal of MBPT is reasonable.
(ii). The ocean freight constitutes the largest
portion of the transportation charge for the containers. Terminal Charge is a minuscule portion of the total charge
incurred to ship containers.
(iii). Lines openly operate in cartels and even increase
the tariff as a part of the cartel.
(iv). Lines do not have any regulator. The entire Shipping Industry does not have any regulator for
tariff except the TAMP in the case of Port tariff.
A joint hearing in this case was held on 15 September 2000 at the MBPT.
During the joint hearing following submissions were made:
Custom House Agents Association (BCHAA)
Let the MBPT circulate details of its study which expose the gap between
what Lines pay to the Port and what they collect from the shippers.
(ii). Please go by the UNCTAD definition of THC. Karmoham compilation refers to THC commencing from CFS not from wharf or yard.
terms as given by the UNCTAD may be referred.
Freight includes ‘on board stevedoring charges’.
(iv). What are the components of THC?
THC should commence from the points where trade is allowed to handle
cargo. All other (earlier)
expenses should go into ‘freight’.
It is a fallacy that the cost of THC will go up because of cost of Dock
labour. The Lines book
minimum labour; but,
collect a lot more through excessive THC per container.
(vi). The THC calculation of the Lines is based on a
small number of containers being handled.
The position is very different now.
(vii). ‘Free days’ must start from the point the container reaches CFS.
(viii). THC is an average cost with respect to 4 or 5 small operators.
Consequently, there is a wide margin for the big operators.
Mumbai & Nhava Sheva Ship Intermodel Agent’s Association (MANSA)
Overtime of Customs is payable when loading / unloading occurs u/s 36 of
the Customs Act. Rules framed thereunder require every time to pay over
time for the same staff. The
financial burden is also heavy and we do not agree with BCHAA.
(ii). DG (Shipping) had dealt with the components
covered by THC clearly and comprehensively.
THC is in two parts: Factory
stuffed THC; CFS stuffed THC.
There is no dock stuffing for THC purpose.
This is the international practice.
(iii). The TAMP has jurisdiction only over some components
of THC; not over the composite THC in toto.
(iv). Stevedores and
transporters have to react to the MBPT’s proposal; not so much
the Lines. The Karmoham
composite rate is not open to scrutiny by the TAMP or the Port.
Why can the MBPT not slap an order, as part of the licensing
condition, on stevedores and transporters to adhere to certain rates.
Why should the TAMP come in?
(vi). Karnataka High
Court has passed an Order stating that THC is cost recovery; not freight.
(vii). One-third of vessel side stevedoring is absorbed by the
Lines. Only two third is
included in the THC.
(viii). For some perishable cargo (e.g. onions) THC is
included in freight. But,
that is an aberration.
Components of THC has been identified by DG (Shipping), not by us.
(ii). Cost of some of the components has been going
up (e.g. Ground rent and wharfage have gone up enormously).
We have, therefore, to hike the THC.
(iii). Dollar denominated tariffs amount to 24.80%.
Whenever exchange rate goes up, the Port collects from us at the
current rate of exchange. Therefore,
we have to increase. Where
is the need to consult? We are
compelled to raise.
(iv). The BCHAA goes by the practice followed in break
bulk trade, which is not relevant.
It is only container today. The
UNCTAD definition is with respect to break bulk.
We are following the international practice, which has been
confirmed by the SCI.
(vi). Stevedoring is
included in the composite THC. It
is not included in freight.
shippers had to take our ‘No Objection Certificate’ to go to a
non-conference ship. Now,
they are free to go anywhere. Why
complain against us? Let them go to
the cheapest source.
(viii). We are not interested in doing all this.
Let the port, as a terminal operator, take over this
function; and, recover costs directly from users.
(ix). The MBPT says, they have no control over
Dock Labour –
Who then controls them?
The analysis given by the Port has not taken into account several
elements of THC.
Container Shipping Lines Association (CSLA)
The TAMP is not empowered to deal with THC in toto.
It can deal with only some components.
operator, internationally, is now required to give composite
(iii). There is no conformity between what we pay the Port
and what we collect from shippers because we pay many others many things.
(iv). Karmahom is not
THC can not say it has no control over its labour. It must control and take Government’s help if
(vi). The UNCTAD code is not used now. Market forces determine what is THC.
Shipping Corporation of India
TAMP can only deal with some components of the THC.
(ii). Stevedoring is
a part of composite THC. It
is not a part of freight.
(iii). At the MBPT there is no single terminal operator.
Container handling becomes complex because of this multiplicity of
(iv). Karmahom is not
a monopoly. There are many
non – conference lines. The
THC is governed by competitive market forces.
(v). UNCTAD is a theoretical document. Market forces operate and determine differently.
Indian National Shipowners’
THC is well within TAMP jurisdiction.
(ii). Let the TAMP conclusively decide what are the
components of THC.
(iii). Coastal traffic
must get concession in THC also and should be denominated in local currency.
Bombay Stevedores’ Association
Labour Pool is formed and managed by
the MBPT. They have raised
the rates enormously. This
has not been considered in the stuffing/destuffing cost cited by the MBPT in its
Western India Shippers Association (WISA)
There is no doubt about TAMP jurisdiction. Let TAMP deal with this
as a test case.
(ii). Legal fiction is that container is an
extension of the vessel hatch. Container
handling is, therefore, a vessel related activity. On Board handling charges should, therefore, be
part of ‘freight’.
(iii). The activities relevant here are ‘from CY
to CFS’. Others can not be
relevant to THC.
(iv). Go by the IPBCC definition of THC.
Karmahom is a member of the IPBCC.
(v). While doing the costing, recent increases in productivity should be taken into account. Karmahom reckons an out put of 7 containers whereas today the output is at 14 per shift.
(vi). Look at the availability of traffic both ways for
costing of transportation. The
MBPT proposal does not clarify this.
(vii). DG (Shipping)’s committee report; Bansali
report and all other reports on THC say that the rates are high.
(viii). Dollar denomination of certain container handling activities is
wrong. The TAMP did not
consult us. The Order may be reviewed.
Nehru Port Trust (JNPT)
We already have a composite operation and a
composite charge. At the
MBPT, three parties provide these services. Hence, these
are not comparable.
In response to the above the MBPT’s submissions were as follows:
We have mooted this proposal because SCOPE (Shipping) has stridently
recommended it. Shippers
have constantly demanded such steps.
(ii). Our study reveals that cost recovered by
service providers, are very high.
The idea is to reduce the cost to importer.
(iii). Stevedoring /
transportation / port related charges are included in our proposal for THC.
Customs related charges are not included in THC.
(iv). Karmahom has
recently increased THC again. They
do it unilaterally and do not discuss with us at all.
The recent wage revision has an impact of 40% on the cost.
Guidelines states that the THC shall not include ‘on board handling
charge’; that is part of ‘freight’.
(vii). ‘Free period’ should commence from the
time cargo reaches the CFS/nominated area.
has increased. The MBPT has
persuaded Unions to accept an out put of 15 containers against earlier norm of 7
containers. But Lines do not
give any rebate in THC for extra productivity.
(ix). We cannot overnight give a contract for a composite
service at a composite rate. There
may be labour restrictions. In
anyway, competition is better.
(ix). For transportation cost, only one way
traffic availability is assumed.
In the joint hearing, the WISA, and BSA have furnished
written submissions as summarised below:
Western India Shippers Association (WISA)
(i). The IPBCC tariff defines THC in case of export FCL container, as the charge payable by the merchant for its reception at the Terminal, its handling and its presentation to the vessel for loading. This confirms that “On Board Stevedoring” is an activity covered by loading and the Merchant’s liabilities ceases immediately after the container is presented to the vessel.
(ii). In respect of the import FCL container the
IPBCC tariff defines it as the charges payable for its reception alongside the
vessel and its handling at Terminal together with associated documentation.
This means the merchant is liable for charge only from the point at the
wharf when the container is off-loaded from the vessel.
(iii). Some of the main points listed down in the analysis
of the Port’s Committee as reasons for the higher THC at the Mumbai
Port are as follows:
There are no free days for containers.
Thus, though the storage fees at the Mumbai Port are lower,
the total THC works out higher.
The benefit accruing from ICON scheme has not been passed on to the trade.
(c). Transportation cost is worked out on a one way operation assuming a return journey with no load.
No weightage have been given for volume discount offered by both
stevedores and transporters to shipping lines.
Cost benefit arising out of transporter-wise pre stack arrangements have
not been passed on.
(iv). Survey fees are
included in THC; but, the same is to be borne by the shipping
lines who engage their own surveyors in order to avoid any dispute about the
condition of the container.
Bombay Stevedores Association Limited (BSA)
In the MBPT proposal the stevedoring charges covers only on board labour
cost excluding supervisory cost which is separately billed.
The MBPT has considered an out put of 15 TEUs per gang for destuffing in
their costing. This assured out put has hardly been achieved.
(iii). The MBPT is charging 66% more levy and that is on
the daily wages of the highest pay scales instead of average daily wages paid to
supervisory staff and allied workers.
(iv). Impact of wage
arrears from 1.1.1998 has not been considered in the costing.
This impact should be included under the head stevedoring or
alternatively, surcharges on containers and cargo may be levied by the
MBPT from shipowners prospectively to cover the arrears of wages, as they
are the actual beneficiaries of the service.
A stevedore is required to pay a minimum amount to the MBPT irrespective
of whether he has work or not and this amount represents the daily wages of 3
sets of supervisory staff and allied workers (27 personnel).
This element of idle cost is not considered in the costing of stevedoring
At the joint hearing, the following decisions were taken:
The CSLA to give a note in 4 weeks’ time clarifying the UNCTAD
KARMAHOM and SCI to give a joint note about a complete listing of the
components of the THC.
INSA to give a note in 4 weeks about TAMP’s jurisdiction over
(ii). Copies of these
notes would be given simultaneously to the MBPT and the BCHAA so that they could,
within 4 weeks thereafter, submit their comments thereon.
(iii). On receipt of notes and other information, a
further joint hearing would be held, if necessary.
Subsequent to the joint hearing, the BCHAA furnished the following
comments on the MBPT proposal:
The TAMP has legal authority u/s 48(e) read with Section 42 of the MPT
Act, 1963 to notify the Scale of Rates for services performed by the
Board or other person.
(ii). The definition of Liner term given by
INCOTERMS and P&O definitions which states that freight includes cost of
loading onto and discharging from the vessel.
This clearly confirms that on board stevedoring cost presently included
by the shipping companies in THC cannot be a component of THC.
Freight rate includes all cost incurred till the container is delivered
by the carrier to the CY/CFS, from where the trade is permitted to
receive or handle the container.
(iii). The definition of THC as a charge for handling FCL’s
at Ocean terminals confirms that all charges incurred only after a container is
received at the terminals can be part of THC. All cost incurred for the container to be offloaded and
stored at the Container yard in the Terminal, form part of Sea freight
and all cost incurred for handling FCL’s thereafter, would be
part of THC.
(iv). The TAMP has correctly denominated the on board
stevedoring charges, etc. for the MBPT in US Dollars, as
the said expense is part of ocean/sea freight and is recovered by Shipping Lines
and their Agents from the trade in convertible Indian currency.
The DG (Shipping) committee findings were never accepted by the Trade.
The Lines have unilaterally revised the THC and introduced many new
(vi). The exercise carried out by the MBPT shows that a
minimum of 25% to 40% is being recovered by the Lines under the guise of THC.
If the cost of loading and unloading on / from vessel, which forms
part of sea freight, is excluded, the excess recovery made will be
more than 60%.
components are charged twice.
Ground rent is levied under THC as well as in CDC.
An expense for supplying forklift is shown whereas no such equipment has
ever been supplied by the Lines or their agents.
THC includes round trip for containers i.e., from the time
it lands at port till it is brought back to port for re-shipment.
However, THC on export containers is also recovered.
Survey fees are shown as an expense under THC, whereas the same is
borne by the Trade directly. In
the case of break bulk cargo, the Lines have their own surveyors and the
charges have never been recovered from the Trade.
(viii). Labour cost for
destuffing included in THC is based on a minimum destuffing of 7 containers by a
labour gang in a shift. The
shipping lines place indent with the port for supply of one labour gang per
shift, whereas on an average 70 to 100 TEUs are destuffed within a shift
by the Trade, who are forced to bring in additional labour at their cost. This results in huge amounts being recovered by the Lines.
Conference has confirmed that THC is reimbursement of actual cost incurred.
There is no possibility of there being any play of market forces in THC
since it is not determined on the principle of ‘supply and demand’
or ‘option being available.
The arguments of lines that THC should be left to market forces can be
accepted, if THC is not a monopoly of the Lines.
How can the THC be same for a small shipping line which handle only 200
to 300 containers in a year and the Lines which handle more than a lakh TEUs per
year? This exposes the myth of the
Lines argument of THC being reimbursement of actual cost; and,
proves that THC cannot be left to market forces.
(xi). Though the
operations are different at both the MBPT and the JNPT, the Lines recover
the same tariff of THC from Trade. The
only difference is that for movement of container at JNPT, part amount of
THC is recovered by the CFS operators and the entire THC is not recovered by the
(xii). Eventhough Lines claim that THC is reimbursement of actual expenses incurred, the Government of India has deemed it fit to levy a tax on their gross receipts, as it has arrived at a conclusion that the Lines are profiteering. The MBPT report further substantiates this position.
The comments offered by the Karmahom Conference with reference to the
above narrated comments of the BCHAA are summarised below:
TAMP has jurisdiction only over those THC elements notified by the MBPT
viz. ground rent, wharfage and on shore labour.
All other elements of THC falls outside the purview of TAMP.
(ii). With the introduction of NET freight w.e.f.
1 April 1982, the Shippers are free to exercise their freedom to ship by
any vessels to secure any rate advantage. Currently only FAK rates are quoted in the market.
As long as the shippers do not pay the liner freight, they cannot
expect the lines to follow the liner terms.
(iii). The BCHAA argument about storage charges,
etc. forming part of sea freight was not accepted even by the DG
(Shipping) report. The
UNCTAD has defined THC, which is also incorporated in the Conference
(iv). As long as KARMAHOM Lines receive the services from
the service providers without any add on / incentives, they do not have
any dispute on THC.
Labour productivity norm is not fixed by Lines. If the MBPT notifies the productivity norm and corresponding
charges, the Lines will abide by that provided they get the services at
the notified rates.
(vi). THC at Mumbai is different from THC at the JNPT.
(vii). If definition of income as prescribed by Tax Authorities
is accepted, then THC cannot be construed as reimbursement of cost.
It will be an extension of freight and hence there is no reason for it to
be subjected to jurisdiction of regulatory authorities.
If the TAMP still considers the THC as reimbursement of cost, then
an element of Tax @ 3.6% shall be added.
(viii). The TAMP must consider a reasonable provision towards
Administration cost and Financing cost shall be added to THC.
As agreed in the joint hearing, the different agencies submitted
their notes on the different points of reference.
A summary of the submissions is given below:
Container Shipping Lines Association (CSLA)
The UNCTAD definition of liner terms does not clarify the point referred
to in the joint hearing.
(ii). Where a rate is
quoted as ‘liner terms’, it simply means that the rate
includes loading and discharging costs.
Depending upon the terms of the contract, the loading /
discharging costs will be simply the responsibility of different parties.
(iii). In container trade, rates are generally
quoted with five elements viz. haulage (at load port) , terminal
handling (at load port), sea freight, terminal handling (at
discharge port), destination haulage (to destination).
These elements may be quoted separately or as a composite rate.
(iv). A liner term rate would generally include terminal
charges but it does not imply that terminal handling cost does not have to be
If this logic is true and if Lines quote through rates, then they
have to absorb not only terminal costs but inland costs as well, which is
manifestly not correct.
The various elements of THC as identified by two separate committees
appointed by the Ministry of Surface Transport are:
Transportation/Movement of empty Container.
Empty lift on at Depot.
Empty lift – off BPT (TLT) at stuffing point.
Lift-on/off container at stuffing point.
Transportation to vessel including Lift off/on at pre-stack MBPT
transtainer and drayage at hook point.
Stuffing cost paid to stevedores.
Stuffing cost payable to port/MBPT labour.
Gate night allowance.
Ground Rent to MBPT.
Receiving cargo in shed.
Container Lock seal, Survey, Inspection, Scrutiny.
(ii). When the MBPT was handling more than 5 lakh
TEUs, due to congestion, it took on an average 14 days for an
imported container to reach the nominated site.
By deducting 5 free days at CY and 1 free day at nominated site the
chargeable days work out to 8 days, which is recovered under THC.
Likewise, it was the experience of Lines then that an export
container took 6 days to reach ship’s side from the nominated site.
(iii). Though CDC
becomes applicable after 5 days, Lines spend much higher amount for
The MBPT did not offer any free period on container.
Containers were moved from yard to nominated site after 6 / 10 days.
Lines had to absorb extra burden of ground rent from 6 to 10 days and
also allowed one day extra free day at nominated site.
Due to the position explained above, the Karmahom decided in 1994
to include at least the cost of 3 days ground rent in THC for Mumbai.
This is not a double recovery.
Despite this, the Lines still remain out of pocket on CDC recovery
since importers do not pay any CDC till container reaches nominated site plus
one extra free day at the nominated site.
(iv). On-shore labour charge is only a notional cost to
make good for the perceived labour redundancy.
The MBPT has not explained what type of value added service is rendered
to warrant recovery of this charge.
Lift on / off is an actual charge incurred and paid by lines; and
has the sanction under 1988 DG (Shipping) report. The MBPT cannot exclude this from THC.
(vi). Despite the
higher charges prescribed in Bombay Stevedores Association (BSA) tariff,
Karmahom lines recover weighted average of destuffing/stuffing cost through THC.
(vii). No comments with reference to on-board stevedoring charge
are necessary since the MBPT have increased this charge from Rs. 600/- to
administration cost and financing cost should be added to existing THC to arrive
at actual cost, which should be reimbursed by the shippers.
(ix). Terms and
conditions and payment of freight come as a package and cannot be dealt in
isolation. Since the trade pays the market rate and not the Conference
1985 tariff rates, it cannot expect the benefits of conference tariff
terms and conditions.
It will be incorrect to say that container lines operate only on Liner
terms. They accept cargo on
FIO terms as well.
Indian National Shipowners
The INSA has not submitted any separate
note but informed that the Karmahom Conference note may be taken as reflecting
its views also.
At the joint hearing, the MBPT submitted a copy of its internal
notes explaining the methodology adopted in estimating stevedoring rates and
On a preliminary scrutiny of the proposal, the MBPT was requested
to furnish additional information/clarification on various points. The
MBPT has furnished the requisite information / clarifications.
Some of the main points are summarised below:
In the year 1994, the Central Govt. revoked all Schemes
framed under the Dock Workers (Regulation of Employment) Act, 1948.
Further, it superseded the Bombay Dock Labour Board for a period
of one year. The period of supersession has been extended from time to
time till date. The powers
and functions of the BDLB were vested in the Chairman (MBPT).
All workers and staff of the erstwhile BDLB were absorbed in the MBPT
from 1 March 1994 and from that date they have become employees of the MBPT for
all purposes. Even if the
BDLB is revived in future, they cannot be transferred back to the BDLB,
against their desire.
(ii). The pre-stack areas are nominated
transporter-wise so as to enable the concerned shipping agents and Lines to make
maximum utilization of equipment and trailers.
It is the sole discretion destined to the CFSs.
(iii). The proposed transportation cost covers only one
way operation. Back loading
of containers for exports forms part of THC for export containers.
In practice, the transporters plan operations so that the trailers
do not come back empty.
(iv). On shore labour cost for loading / unloading is not
included in THC as the cost is covered under wharfage. When containers are destuffed / stuffed at port CFSs,
port labour is supplied for the operation.
Since the cost of this labour is not covered by wharfage, a
separate charge is levied.
The proposed Transportation cost is based on the discussions the port had
with transporters. The cost
of oil, fuel consumption, etc. needs to be reviewed,
if necessary. Weightage for
long trip of trailers is given to compensate notional loss in earning potential.
(vi). Creation of a
common pool of supervisory staff, who have been repatriated to the Port
by stevedores, will not have any adverse impact on THC.
The MBPT has also furnished the following comments on the notes submitted
by the BCHAA, Karmahom Conference and the CSLA:
It agrees with most of the comments of the BCHAA.
(ii). Ocean freight
includes cost of loading on to and discharging from the vessel; therefore,
separate on board stevedoring should not be recovered under the THC.
(iii). The components of THC listed by the 1985 committee
of DG (Shipping) are as follows:
(a). Port related.
(aa). Licence (Storage) fees.
(ac). Ground rent at CFS.
(ad). Labour cost.
(ba). Lift on / off empty at empty yard
(bb). Lift on / off empty at CFS.
(bc). Transportation from empty yard to CFS to pre-stack
(bd). Lift on / off laden container at CY / CFS.
(be). Lift on / off laden container from CY to Ship – Ship to CY.
(ca). Stuffing / destuffing / lift on and transportation.
(cb). On board stevedoring including fork lift to CY.
(da). Survey at the time of loading / unloading.
(db). Survey at CFS.
(dc). Customs charge.
The MBPT proposal includes the above components.
and stevedoring are port functions authorised to private parties and hence,
fall within TAMP’s jurisdiction.
CDC are recovered after 5 days though ground rent for the period of 8
days is included under THC.
(vi). Forklift used
in destuffing is generally provided by stevedores.
However, most of the time consignees bring forklift and use them
(vii). The Port grants 7 free days for cargo inside FCL and,
therefore, exerts pressure on transporters to move the FCLs to respective
CFSs within three days from the landing.
As many as 70.43% of FCL, 79.07% of LCL and 64.72%
of ICD containers were in fact delivered from the port within 14 days of landing
during the period from 1 January 2000 to 31 July 2000.
Presently, the stay of containers in the Docks is reduced to an
average of 5 days but THC has not been reduced.
argument that the MBPT has accepted the on board stevedoring as an element of
THC is not correct. In the
proposal, this element is added in THC as the Lines do not accept its
inclusion in freight. The
MBPT, however, maintains that on board stevedoring should have
been a part of ocean freight.
(ix). The on board labour charge needs an annual revision
to accommodate wage increase of workers.
Likewise, transportation cost needs to be automatically adjusted
for increase in fuel prices.
Based on the arguments advanced by the various parties in the first joint
hearing and the written submissions made by them subsequently, the
following specific issues emerged for consideration:
Whether on board stevedoring cost is included in ocean freight.
(ii). Recovery of
ground rent in both THC and CDC.
of the cost estimates made by the MBPT for different elements of THC.
(iv). What can / will be the alternate arrangements if
Lines refuse to render services at the notified rates.
The justification for denominating the charges for wharfage and storage
charges in US Dollar terms.
(vi). How can THC be determined by market forces when the
Lines claim it as reimbursement of actual costs?
In this backdrop, a second joint hearing was held on 15 January
2001 at the MBPT premises to consider the specific issues mentioned above. At the joint hearing, the following submissions were
Director General of Shipping
Our regulation was informal based on a common agreement.
We have no statutory authority to regulate THC.
(ii). We will give all assistance to the TAMP.
In container shipping there are no stevedores. The JNPT engages its contractors.
They levy a composite rate.
UNCTAD has defined ‘Liner terms’.
Users can not pick and choose items at will.
(iii). As of 4 December 2000 entire 8 days ground rent
have been removed from the THC.
(iv). We do not want to do terminal handling at all.
Let somebody else take this over.
We have not received details of costing.
We will comment later on costing.
(vi). If Bill of Lading states that additional payment
are required, then that will have to be honoured.
Otherwise, the BHCAA claim is acceptable.
The Mumbai Nhava Sheva Intermodal
Agents Association (MANSA)
We are not licensed operators.
We do not provide any services.
How can we be regulated with respect to charges levied by others?
(ii). THC is a composite charge. We can not be asked to itemise our charge.
are licensed by the port. Their
rates can be regulated.
(iv). Our representation about composite berth hire
charges levied at the MBPT refers liner terms in the context of break bulk cargo
and not containers. Containers
are carried on FIO terms.
Like wharfage charged directly to shippers, let the ports do the
THC service itself and charge directly.
(vi). THC is an insignificant portion of the total cost
and hence there is no need to regulate THC.
(vii). In case of ‘dock – stuffed’
containers, shippers go to the Lines out of their own volition.
There shall, therefore, be no question of regulating our
THC in such cases. We must talk about regulating THC of only ‘factory
(viii). Lines must have an ‘administrative surcharge’ for doing terminal services. For instance the JNPT levies an administrative surcharge for collecting customs overtime charge.
(ix). Nowhere in the
world is THC regulated.
The Bombay Custom House Agent’s
SCOPE (Shipping), Ministry of Shipping (MOS) and Ministry of
Commerce (MOC) have all said that the TAMP should regulate THC.
(ii). The Lines talk of market forces.
In fact, the MBPT has proposed the rates in consultation with all
including Lines. Why should
they object now?
(iii). If liner terms is for bulk & break bulk,
then container is also a break bulk and hence it applies.
We are clear about the UNCTAD definition.
(iv). We are being exploited. We have given the details about the excess amount recovered.
Lines are creating a ‘fear psychosis’ by threatening to
stop the services, etc.
No such thing will happen. The
MBPT can handle all this well if it comes to that.
(vi). Bill of Lading specifically mentions notified ‘place
of delivery’ which means there shall be no extra transportation charge
in the THC for the movement between the port and the place of delivery.
(vii). Karmahom claims
of reduction of THC w.e.f. 4 Dec. 2000.
The Karmahom has not done anything.
The reduction is a result of more free time allowed by the MBPT.
The Lines charge CDC, which is a higher rate and we end up paying
(viii). Regulation of
THC will have no implications for stevedores.
Confederation of Indian Industry
We endorse the responses given so far on behalf of the trade.
(ii). We emphasise transparency in all operations.
Why should the Lines hesitate to break up the components of their
(iii). The THC may be insignificant to the Lines.
But, to a shipper it is very significant.
Such relative considerations cannot be relied upon in this context.
In today’s competitive context, every rupee counts.
The Western India Shipper’s
The IPBCC definition of the THC is very clear. On board handling does not come into picture at all.
(ii). There need be no fear about stoppage of
services. Even if Lines
withdraw the cargo will continue to move.
(iii). Why talk of international practice? Nowhere else do they have the legal fictions of container
being an extension of the hatch.
(iv). The views of BCHAA about notified place of delivery
mentioned in the Bill of Lading, are valid.
Why cannot the port do this regulation as a part of the licensing
The Bombay Stevedores’
Port licences the stevedores.
The License is subject to various conditions. The Port itself could have regulated our charges.
If they did not, there was a reason because our services vary from
customer to customer.
(ii). We are becoming a de-regulated society.
Why add a new regulation?
(iii). What will TAMP regulate?
95% of our cost is labour cost.
Labour is from the port and their wages, etc., are well
(iv). Already five
stevedores have closed their operation.
If you regulate our tariffs in the prevailing conditions more will close.
Maharashtra Rajya Tempo, Truck,
Bus Vahatuk Mahasangh & Other Transporters
We charge different rates for different customers.
Our rate has not increased for the last four years.
Only when the diesel rate was increased by 40% last year, we
increased our rate by 8% to 12%.
(ii). Labour cost is
increasing but the work is reducing.
Idle labour is increasing and we are affected.
(iii). Our manoeuvrability to absorb increases is severely
The Container Shipping Lines
TAMP is not the correct Authority to regulate THC. Nowhere else is it regulated.
(ii). This is an age of deregulation. Therefore, to regulate THC will be a retrograde step.
(iii). Lines are not collecting from the trade more than
what they pay to service providers.
(iv). Port must regulate licensees. They cannot abdicate this responsibility in favour of anybody
Indication of ‘place of delivery’ in the Bill of Lading
does not by itself indicate that freight includes cost of delivery at that place.
There has to be a specific contract therefor.
(vi). We do get concessions and rebates from ports and
private terminal operations. But,
we go by averages in THC. Some
Lines may benefit; some may loose.
Indian Merchant’s Chamber (IMC)
CSLA and MANSA welcome TAMP as a regulator when it comes to Port tariff.
Their objection to regulation of THC by TAMP is illogical.
(ii). The MBPT cannot deliver all terminal services.
Lines must be reasonable and continue to provide these services.
The Shipping Corporation of India
If the MBPT can ensure these services at the
rates proposed, we will include them as such in the THC.
The Jawaharlal Nehru Port Trust (JNPT)
(i). We have no doubt about TAMP’s jurisdiction to regulate THC. For JNPT all these have already been regulated by TAMP.
(ii). As a licensor, the port can and must
(iii). Movement of
cargo from CY to CFS is the responsibility of the line not of the port.
The Mumbai Port Trust (MBPT)
Karmahom has passed on the benefit of increase in free days.
But, they have offset more than that by levying CDC.
(ii). It needs to be carefully examined whether the
freight includes on-board handling and customs overtime.
wharfage on containers should be included in THC at all.
(iv). If it becomes necessary the MBPT will provide /
organise the terminal services.
Some of the user organisations made written submission at the joint
hearing, the salient points of which are as follows:
Confederation of Indian Industry
On board stevedoring cost is included in ocean freight.
As such, its collection as an element of THC is unfair.
(ii). Ground rent
should not be collected twice and its cost element should be excluded.
(iii). There is no justification in denominating the
charges for wharfage and storage in US dollar.
(iv). The THC cannot be determined by the market forces
as these are actual costs incurred by the Lines.
If the liner Lines refuse to render services at the notified rates,
the port may make arrangement to provide this facility.
and stevedoring constitute the main costs.
These are raised periodically.
There is a need for these rates to be notified to ensure an element of
The Mumbai Nhava Sheva Ship
International Agent’s Association (MANSA)
In case of factory stuffed THC the shipper picks up containers from Lines
depot taking it to his factory/private CFS and brings it back to the port CY.
The line takes the responsibilities of the container from the CY and the
cost of transporting from CY to vessel and loading into the vessel is charged as
factory staffed THC.
(ii). In case of CFS / Dock stuffing, the
shippers opt to bring the cargo to Line’s CFS and the Line takes the
responsibility to stuff the cargo into the container.
The cost of stuffing the cargo into the container, transporting it
to the port/CY and subsequently loading into the vessel is included in CFS/Dock
(iii). The factory stuffed THC charged by the Lines is
insignificant to the average value of cargo.
Factory stuffed THC works out to 0.21% of FOB value of containers
at the MBPT.
(iv). If the port/cargo interest feel that the charges
are excessive they can recover all the charges directly from the trade.
The Lines are carrying on the activities of Terminal operators at the
MBPT. The NSICT and to a
lesser extent the JNPT are the only Indian Ports which provide all terminal
services. In all other
Indian Ports, the Lines carry out the terminal operator’s
(vi). It will be reasonable for the Lines to add
administrative surcharge of about 20% on their outgoings (on account of payment
to service providers engaged by them).
Subsequently, the BCHAA filed a further submission in light of the
discussion during the second joint hearing.
It has reiterated most of the arguments made by it earlier.
In addition, it has made the following statements:
Its argument that sea freight includes all costs incurred till the
containers are delivered at the nominated place (as stated in the Bill of
Lading) has not been disputed by the Lines or Karmahom Conference in the joint
(ii). The Karmahom has reduced THC by barely Rs.500/-
per TEU w.e.f. 4 Dec. 2000 in view of the increase
in free days allowed by the Port. Instead,
it has now started computing free days under CDC from the day container is off
loaded from vessel and not after the container has reached the CFS. This amplifies the attitude and manner by which the Lines
exploit the Trade in recovering cost which are incurred.
(iii). On board stevedoring charges recovered by the Ports
should be dollar denominated as it relates to sea freight.
The CSLA also submitted further comments highlighting the following:
THC are calculated using an average of all lines costs and,
therefore, any benefit secured by one Line (by way of rebate from
terminal operators) will impact the THC to some extent.
(ii). When a cost component, which is an
agreed THC component, changes, then THC will be adjusted. This is based on the principle that the THC is cost recovery.
(iii). With reference to the BCHAA argument about the
nominated place of delivery mentioned in the Bill of Lading, the
following points are relevant:
The copies of Bill of Lading furnished by the BCHAA are not Lines B/Ls.
They are NVOCC documents.
Documentation and local customs and practice are also relevant.
There may be other documentations in the form of service contracts.
Further, a detailed clausing of the B/L may specify that THC is
collectable. Local custom
and practice may be that a THC is always collectable.
Absence of a THC on B/L does not obligate the Lines to deliver to the
location free of charge.
In April 2001, the BCHAA brought to our notice that the MANSAA has
unilaterally revised documentation processing fee to cover the increasing input
costs and upgradation of the agencies for EDI.
The BCHAA has also produced a copy of letter dated 30 Jan. 1999
issued by the MBPT addressed to the MANSA which states that levy of
documentation fee should have the prior approval of the Port.
With reference to the totality of information collected during the
processing of this case and based on records produced by various organisations
participated in this proceedings, the following position emerges:
Terminal Handling Charges are collected by the Shipping Lines for
different services provided to containers at a container terminal.
Eventhough these services are provided within the port area, the
charges are realised by the Lines since they engage different service providers.
These charges realised form a bone of contention between the Trade and
the Lines, particularly with reference to the transparency and
reasonableness of the charges. These
charges have never been regulated by any statutory authority.
The two committees of DG (Shipping), referred by many users in
this context, have done primarily a listing of various elements of
services qualify under the THC. The
Trade has categorically mentioned that it had rejected these reports.
As has been admitted by the DG (Shipping) in the joint hearing in this
case, the efforts made by the Directorate was informal; and,
it lacked any statutory backing. Before
the Authority was created in April 1997, the Board of Trustees of a major
port, with the prior sanction of the Govt. was vested the powers
to fix tariffs. Under the
provisions of the MPT Act, the Board of Trustees could have regulated
rates for various services for which THC was collected.
This has, however, never happened.
The proposal of the MBPT under consideration is perhaps the first attempt
to statutorily regulate rates for different services under THC.
To our limited knowledge, this may perhaps be the first attempt in
the world to statutorily regulate various elements of charges under THC.
(ii). In this backdrop, the MBPT deserves to
be complimented for formulating a well structured and reasoned proposal.
The proposal contains objective analysis of all related matters and
provides a great insight into the relevant issues.
(iii). The Authority’s jurisdiction to regulate
THC has been questioned mainly by the Lines.
In this context, it is relevant to refer to the concerned
statutory provisions contained in the MPT Act. Section 48 of the Act empowers the Authority to frame Scale
of Rates at which and statement of conditions under which the various services
specified under clauses (a) to (e) shall be performed by a Board (of major port)
or any other person authorised under Section 42 at or in relation to the Port.
Section 42(3) of the Act empowers a Port Trust Board to authorise any
person to perform any of the services mentioned under Section 42(1).
Such authorisation, however, requires prior sanction of the
Central Government. Section
42(4) clearly states that such authorised person cannot charge or recover for
his services in excess of the rates prescribed by the Authority.
This amply shows that the Authority can regulate the relevant activities,
as services specifically identified under section 42 ibid, when the
following three conditions are fulfilled:
The THC component shall be in respect of a service specified in clauses
(a) to (e) of Section 48 of the Major Port Trust Act.
The service shall be provided under a specific authorisation of the Board
Previous sanction of the Central Government must have been obtained for
It is noteworthy that the Karmahom Conference and the MANSA have also
admitted that some of the elements of THC can be regulated by the Authority.
The THC has been broadly split into 4 groups viz. Port related
charges, Stevedoring Charges, Transportation and Miscellaneous.
Port related charges are already regulated by the Authority.
Stevedoring and Transportation activities are carried out in port area,
they undoubtedly qualify as services listed under Section 48(1) and also 42(1).
Some of the charges under the sub-head ‘miscellaneous’
relate to customs and not port related activity.
That being so, the Authority is statutorily duty bound to
prescribe ‘ceiling’ rates only for all the qualifying
activities. It is noteworthy
that these services are provided by the Terminal Operators themselves at the
JNPT; and, the Authority has notified the rates charged by them.
(iv). Regulation of
the rates for different qualifying services for which THC is collected by the
Lines can be done in two ways:
Regulation of rates to be levied by individual service providers.
Regulation of relevant rates under THC for the Port as a whole through
prescription of ‘ceilings’ of rates to be applied to ‘authorised
In case of (a) above, regulation can be done only when the three
pre-conditions mentioned under sub-para (iii) above are fulfilled.
In case of (b) above, regulation can be done without reference to
individual service-providers. In
this case, ‘ceilings’ of rates for various elements of
THC will be prescribed for a particular port; and, the Port Trust
concerned will ensure their application to authorised service-providers by
making this a condition precedent before authorising them in terms of Section
42(3) of the MPT Act.
The MBPT proposal seeks to follow the model at (b) narrated above.
The approach proposed by the MBPT appears reasonable.
In any event, it may not be possible for this Authority to
meaningfully prescribe rates for individual service-providers based on their
cost of operation, in view of the huge number of individual
service-providers operating within the Mumbai Port precincts.
It is to be recognised that the rates proposed by the MBPT are based on
an extensive study of market and past and anticipated performance levels.
It is relevant in the context that the rates to be approved by the
Authority are only ceilings and service-providers can levy charges below that
limit. It is for the MBPT to
enforce the adherence of rates notified by the Authority through specific
It is noteworthy that the MBPT authorises stevedoring through Regulation
framed with the approval of the Government and transporters through a
It is relevant here to examine the nature of THC. The Karmahom Conference has sometimes argued that it is a
recovery of cost incurred and at some other point mentioned that it should be
treated as an extension of sea freight.
The CSLA and MANSA have categorically mentioned that THC is a recovery of
cost incurred. The MANSA has
even cited a judgement of Karnataka High Court to bolster its argument in this
regard. The Karmahom
Conference has not produced any evidence to show that THC is an-extension of sea
freight. That being so,
THC can only be treated as a recovery of cost incurred.
The cost incurred, in this context, is the payments made to
the service-providers by the Lines.
Statutorily, the service-providers cannot levy anything for
port-related activities in excess of the rates fixed by this Authority.
That being so, this analysis indicates that the ceiling rates
fixed by the Authority for individual services will be the ceiling rates in THC
which the Lines can levy. In
view of this clearly emerging position, the MANSA’s objection
that ‘the Lines are not licensed by Port; and, their
charges cannot be regulated’ is found to be devoid of any merit.
The position clearly emerging is that the regulation of relevant
element of THC is not direct but incidental.
(vi). For an accepted definition of THC, the BCHAA,
WISA and even the MBPT have relied on the definitions contained in the IBPC
Container tariff rules / regulations.
The WISA has also pointed out that the Karmahom Conference is also a
member of IBPCC. These
definitions clearly show that THC is for terminal services provided till
presentation of containers for loading in case of export and for terminal
services provided after reception of containers alongside the vessel in case of
import. This definition is
not contested or challenged by the Lines.
The BCHAA has, however, argued that the THC must commence
from the place where Trade is allowed to handle containers.
The argument of CSLA that such services provided before delivery /
loading cannot be free of cost deserves to be admitted.
Since the definition of IPBCC about THC is adopted by operators / agents
in India and is in vogue since long, there is no reason why it cannot be
accepted as reflecting the correct position.
(vii). The proceedings in this case have brought forth various
vital issues which are to be settled before we proceed to fix ceiling rates for
different services. The main
issues relevant here are as follows:
Whether on boarding stevedoring charge is included in freight?
On board labour charges levied by the MBPT.
Recovery of ground rent.
These issues are dealt with in the following paragraphs.
(viii). The UNCTAD definition of ‘Liner terms’ says freight includes the cost of loading onto and discharging from the vessel. Based on this definition, the BCHAA has strongly argued that on board stevedoring cost for loading and discharging containers from the vessel cannot be a component of THC.
The document of P&O Nedloyds produced by the BCHAA also contains the
same definition of ‘Liner terms’.
The MBPT has also endorsed the argument that on board stevedoring is a
part of sea freight and not THC. The
MBPT has explained that inclusion of this element of cost in its proposal is
only in the light of the Lines refusal to accept its inclusion in freight.
It is noteworthy that the IBPCC definition of THC does not include
loading / unloading in the ambit of THC.
In a representation filed by the MANSA about composite berth hire at the
MBPT (which has been dealt by this Authority separately) it has clearly
mentioned that freight under liner terms includes on board stevedoring.
The Karmahom Conference has, however, argued that the Trade
does not pay liner freight so it cannot demand liner terms.
It is relevant that the Karmahom Conference and the CSLA have not denied
the UNCTAD definition of Liner terms.
They have only argued that freight can be fixed other than on liner terms.
The Karmahom Conference has also pointed out cargo can be accepted on
Free In / Out (FIO) terms as well. The
MANSA has, however, claimed that part of stevedoring cost is
included in freight.
We do not find any reason why the universally accepted definition of
Liner terms made by the UNCTAD cannot be accepted.
A ‘liner’ is a vessel plying a regular trade / defined
route against a published sailing schedule. All the container lines, or at least a majority of
them, operate liners. There
can be an argument that if FIO terms are prevalent, the charterer should
have the freedom to arrange for loading / unloading containers.
In that case, he will pay for terminal services direct to the
service-providers and not to the Lines.
The BCHAA and the WISA have produced credible evidence to show that
freight includes on board stevedoring.
The Lines have only argued that freight collected by them is not on liner
terms. This mere disclaimer
cannot be sufficient to counter the strong arguments of the BCHAA & WISA,
which relied on the definitions of an UN body, a leading Shipping Line
and the IBPCC. Further, the BCHAA’s claim that on-board
stevedoring is included in the freight in case of break- bulk and this
break-bulk is now containerised deserves consideration. The Lines have to
prove with evidence that on boarding stevedoring cost is not included in their
In view of the position explained above, it becomes clear that on
board stevedoring cost is included in ocean freight. If it is reckoned within both freight and THC, it is
only a double counting of same element.
If this is allowed, it will only amount to unjust enrichment of
the Lines. Since the THC is
to be regulated where freight is not, it is reasonable to eliminate the
cost of on board stevedoring from the stevedoring element of THC.
That being so, on board stevedoring cannot be a component of THC.
(ix). The proposal of the MBPT to regulate THC stems from
the need to increase its on board labour charges; and, its fear
that such increase may result in steep hike of THC by the Lines.
The on board labour charges are being levied by the MBPT.
Legally, it cannot collect any charge not notified by the
The on-board labour charge relates to supply of erstwhile BDLB employees
for on board work. The BDLB
has been superseded; and, its employees have merged with the Port
Trust. The MBPT has also
admitted that the erstwhile BDLB employees, after their absorption in the
Port Trust cannot go back to the DLB, even if that body is revived.
This shows that the on board labour supply is done by the MBPT and the
employees in question are MBPT employees.
It is noteworthy that all employment schemes formulated by the erstwhile
BDLB have been revoked. The
mere fact that accounts are kept separately and the Chairman (MBPT) exercises
the power of the erstwhile BDLB cannot be reasons for the MBPT to fix its own
rate for supply of on board labour without the approval of this Authority. Legally, the Chairman (MBPT) representing the
superseded BDLB is an entity with no employee.
It cannot fix the rates for supply of MBPT employees for on board work.
We are inclined to accept the proposed revision of on board labour
charges for the purposes of disposing of the THC proposal. The MBPT is, however, directed to come up with an appropriate
proposal for fixing on board labour charges within three months from now.
While formulating such a proposal for the consideration of this Authority,
it will be worthwhile for the MBPT to examine the possibilities of prescribing a
‘per tonne’ or per ‘per TEU’rate
instead of the traditional method of labour levy system.
Some of the major ports and even an existing DLB has already switched
over to a per tonne rate for on board charges.
The BCHAA, WISA and the CII have alleged that ground rent is
collected by the Lines twice – once in the THC and again as a part of CDC.
The Karmahom Conference has argued that ground rent has been split into
two components and realised accordingly in THC and CDC.
The position explained by the Karmahom Conference shows that the average
dwell time considered by them is based on a period when the Mumbai Port as
handling more than 5 lakh TEUs per annum and the congested facilities as a
result of that. The position
has drastically changed at least in the last two or three years, but
still the Lines appear to be pursuing with an outdated average figure. The CSLA argument that the THC is an average cost and can
vary between individual Lines cannot be accepted to mean that the average should
be with reference to a peak extraordinary situation.
The average needs to be reviewed periodically in the light of changing
volumes and cost.
This Authority had already passed an Order on 12 May 2000 about
regulation of Container Detention Charges (CDC).
The proceedings in that case clearly showed that ‘ground rent’
was collected as a part of CDC. Since
this Authority did not admit CDC for a statutory regulation, it observed
that the double recovery of ground rent both in THC and CDC would be taken up as
a part of regulation of THC by it. In
the relevant Order, it was indicated that no ground rent would be
admitted as a component of the THC if it is found to have been included as a
component of the CDC. The
MBPT, the BCHAA and the WISA have clearly brought out that ground rent is
included in CDC. The
Karmahom Conference has also admitted this position.
That being so, as decided by this Authority earlier, ground
rent need not be admitted as an element of THC.
Since various service components of THC are regulated and CDC is not,
it is convenient to monitor non- recovery of ground rent through THC.
The Karmahom Conference has mentioned that it has excluded the entire
ground rent element from THC revised w.e.f. 4 Dec.
2000. This change made by
the Lines is in right direction and also confirms the allegation made by the
Trade bodies that this element has been double counted so far.
Eventhough CDC does not fall under the regulatory ambit of this Authority,
it is to be noted that the Karmahom Conference has now revised CDC to prescribe
only five free days from the day following the date of landing of containers
irrespective of the place of delivery.
Earlier, the free period under CDC commenced from CY or nominated
site. Considering the facts
that the Vessel agents / Lines control movement of containers from pre-stack to
CFSs and the MBPT follows General Landing Date (GLD) concept to levy storage
charges, there is little justification to allow free time from the
following date of landing irrespective of place of delivery. It has also to be stressed in this context that utilisation
of the ‘free time’ shall commence only after the container
reaches a delivery point.
(xi). The MBPT has given detailed reasoning for the
proposed rates. The proposal
has been circulated to all concerned for comments.
Before the second joint hearing, all the user organisations have
been specifically requested to comment on the reasonableness of the cost
estimates made by the MBPT for different elements of THC.
The Karmahom Conference mentioned at the joint hearing held on January
2001 that it would comment on the costings later but even four months thereafter,
it has not furnished any comments. It
is noteworthy that an opportunity has been given to everyone to comment on the
cost estimates and no one has challenged them so far, except the BSA Ltd.
about stevedoring cost. Stevedoring
labour cost is that charge realised by the Port and hence we have no reason to
reject Port’s estimate on this account.
The MBPT has given detailed logic of individual estimates and again we
have no reason to reject them on our own.
(xii). It is relevant here to discuss the various elements of
THC and the rates proposed by the MBPT therefor.
Port related Costs
(aa). Ground rent :
This item has already been exhaustively dealt with under sub-para (x)
above. Since it is not to be
a part of THC and the Karmahom Conference has already deleted it from the THC,
no further discussion is necessary.
The MBPT, however, proposed inclusion of this under THC.
To this extent, the port’s proposal is not accepted.
(ab). Wharfage on
container (not containerised cargo):
This will be levied as per notified Scale of Rates of the MBPT. This charge is denominated in US$ terms.
The argument of Karmahom Conference that THC requires frequent revision
due to exchange rate fluctuations as a result of dollar denominated port cost is
valid. The issue of dollar
denomination of container charges, in general for all ports and in
particular for the MBPT, needs to be analysed afresh and the existing
practice requires to be reviewed. Since
such a review will involve time and will have prospective application, it
will not affect the instant proposal.
(ac). Shore labour charge :
This charge is for the shore labour assigned for stuffing / destuffing at
port CFSs. This charge is
also to be realised as per the tariff approved in the Scale of Rates of the MBPT.
(ba). On board stevedoring:
The position with respect to this element of service has already been
discussed in sub-para (viii) above.
This element cannot be a part of THC. The
MBPT is, however, to initiate immediate steps to include on board
labour charges in its Scale of Rates.
(bb). Stuffing /
destuffing: This represents
cost for on-board (erstwhile BDLB) labour assigned for stuffing/ destuffing work
at CFSs. This rate shall
also be levied as per the tariff in the Scale of Rates.
Till that happens, the rate proposed by the MBPT is approved as an
This charge is applicable only in case of LCLs stuffed / destuffed in
port CFSs. The BCHAA has
objected to this charge contending that forklifts are brought by Trade.
The MBPT has, however, mentioned that the forklifts used is
essentially a part of stevedoring gear and generally provided by Stevedores.
The MBPT has also added that most of the time consignees bring forklifts
and to that extent the stevedores need to reduce THC.
So, this rate is approved subject to the condition that it is
leviable only when the stevedore actually provides the forklift.
The MBPT has considered only on way trip to
workout costing eventhough logically it can consider two way movement – if not
all 100% trips at least 60% of the trips.
Fuel consumption rate estimated appears to be higher.
Since cost per move has been worked out with reference to total cost and
total moves, there appears no need to give any weightage to long trips
and workout a higher rate for such trips.
The Port has also allowed a 5% contingencies in the cost. The Karmahom Conference has pointed out Lift on / off charges
are THC element but not proposed by the MBPT. The MBPT has clarified that he proposed transportation cost
includes lift on / off charges. Eventhough the fuel price considered is
Rs.17.04 per litre which has gone up since submission of the
proposal, there is no need to revise the rates proposed by the MBPT in
view of the inbuilt cushions available in the cost estimate as explained above.
The rate proposed by the MBPT is approved.
Significantly, the transporters who participated in the joint
hearings have also not objected to the rates proposed.
(xiii). As has already been mentioned, Customs related
components in the THC do not come under the scope of regulation by the Authority.
Eventhough the MBPT has covered most of the related items of THC,
it appears from the arguments advanced by the BCHAA that at least the elements
survey fee and documentation charges have not been considered by the MBPT for
proposing ceiling rates. The
BCHAA has clearly indicated that survey fee is borne by the Trade direct.
The MBPT has also mentioned that there is no justification for levying
survey fee on cargo being stuffed (into containers).
In respect of break bulk cargo, both BCHAA and the MBPT have
indicated that survey fee is collected as a part of sea freight and not
documentation arises in the context of various terminal services.
The charges for documentation are accordingly to be regulated.
The MBPT has way back in January 1999 intimated the MANSA to levy
documentation fee only with the prior approval of the Port.
In the instant proposal, however, the port has not proposed
any rate for this service. Since
the examination of admissibility and determination of quantum of these charges
will take sometime, we do not want to hold up the main proposal for such
thing to happen. The MBPT
is, however, advised to further examine these two charges and come up with an
appropriate proposal. Till
that happens, the existing position will continue.
(xiv). The MBPT has requested that there shall be an inbuilt mechanism
to review rates periodically at least once in a year.
From the foregoing analysis, it becomes clear that rates for most
of the service elements of the THC are to be recovered as per tariffs in the
MBPT Scale of Rates. With
the tariffs for on board labour is decided to be included in the Scale of Rates,
the transportation cost is the only major element, which will not be a
notified item in the Scale of Rates.
This Authority has prescribed a norm for estimation of costs for
determining port tariffs and accordingly allows a two-year cycle of validity.
That being so, the elements which are governed by Port’s
Scale of Rates will have a validity co-terminus with the Scale of Rates.
In case of transportation, the MBPT may review the cost position
annually and propose adjustment of tariffs.
Since the ‘on board labour charge’ in the instant case
is approved as an interim measure, it will have validity till this
Authority approves a final rate for inclusion in the Scale of Rates of the MBPT,
after considering a proposal to be submitted by the MBPT in this regard.
(xv). As has already been mentioned, the Karmahom
Conference’s argument about the need for frequent revision of THC due
to dollar denomination of Port tariff is valid.
Since these charges are to be recovered through THC at the same rate
approved in the Scale of Rates, the Lines may convert these charges into
Indian Rupee at the time of billing based on the same exchange rate adopted by
the Port for billing the Lines. This
procedure appears to be reasonable when seen in the perspective that THC is a
recovery of cost incurred by the Lines.
(xvi). The Karmahom Conference request to allow administrative cost
and taxation also as element of THC, on the face of it, cannot be
accepted. This Authority
cannot prescribe any such rate under the given provisions of the MPT Act.
The rates proposed by the MBPT, however, include provisions
for items like ‘contingencies’, which take care of such
(xvii). The Lines argument that the MBPT shall provide all terminal services
or arrange such services cannot be accepted. Under the Act, a Port Trust can perform all the listed
functions or it can authorise private operators to do them.
Lines cannot force the Port to undertake all the services.
When services are provided by the private (authorised) operators,
service charges are payable to them direct and not to the Port Trust.
The Port Trust cannot act as a collection agent.
In any case, the MBPT has assured that it will organize the
terminal services, if it becomes absolutely essential.
We do not consider that prescription of a ceiling rate for different
terminal services, that too as warranted by the relevant statute,
can change the position altogether from the one existing now.
We are sure that the service-providers will also realise that adhering to
the legal prescription and the actions taken thereunder, is a basic
condition for carrying on business at the Mumbai Port.
(xviii). The question of whether THC is market driven or to be regulated has
been discussed and various arguments advanced by the different parties.
This question itself is irrelevant.
The law requires it to be regulated by the Authority.
If they find necessary, the Lines should approach the Government
for amending the law. Agitating
this issue before the forum of this Authority is of no relevance.
Likewise, the MANSA’s explanation that THC is a
negligible portion of the value of goods is also out of context.
In the result, and for the reasons given above and based on a
collective application of mind, this Authority approves the following rates for
the service providers authorised by the MBPT under Section 42(3) of the MPT Act
subject to the condition that the MBPT will enforce these rate while authorizing
them. As a result,
these rates only can be realised at the maximum as elements of THC at the Mumbai
|Port CFS Stuffed / destuffed
|Factory stuffed / destuffed
|Export and Import
per Scale of Rates
On shore labour
per Scale of Rates
On board stevedoring
in ocean freight
Stuffing / destuffing* (including 5% contingency)
* interim rate
Only when forklift is actually provided.
S. Sathyam )