The Container Freight Stations Association of India (CSFAI) has, in its communiqué/reply to JNPT, expressed its inability to offer further discounts or waivers. It also explained why some of the notifications are not applicable to its members:
Given below are a few key excerpts from the communiqué:
Now vide your captioned letter to CFSAI, our Member CFSs are being asked that Ministry of Shipping, DG Shipping’s advisories that guidelines must be followed and ground rent ought not to be levied. This is resulting in a great deal of difficulty for our members. In this regard we wish to submit following:-
Container Freight Stations function as per the guidelines issued by the Customs Department in Notification No. 26 of 2009 referred to as Handling of Cargo in Customs Area Regulation (HCCAR), 2009. It is pertinent to note that none of the Circulars/Guidelines/Letters issued by the Statutory Bodies was issued under the Handling of Cargo in Customs Area Regulation, 2009 and none of the directions can be classified as “regulations” issued by the Customs Department/other authorities, under the Handling of Cargo in Customs Area Regulation, 2009.
It is submitted that a CFS is regulated only by the HCCAR and not by the TAMP; hence circulars issued by the DG Shipping to Major Ports cannot be extended to a CFS. Hence, even if the DG Shipping directs Major Ports not to levy storage charges or directs liners not to levy detention charges, the same directions cannot be extended by JNPT or other authorities to direct our member CFSs not to levy ground rent/demurrage charges, even after services of storage of goods have been rendered. It is respectfully submitted that our rates are published and we are charging only the said rates and are not charging any excessive rates. As a matter of fact, most of the importers enjoy concessions and work far below the tariff and in addition also enjoy free days to the tune of 19-15 days (Covid-19 or no Covid-19).
The CFSAI communiqué further made the following points:
We wish to reiterate the fact… that during the entire shutdown period due to Covid-19, in JNPT ex-im logistics chain, CFSs have been functioning uninterrupted, albeit with limited resources and are perhaps the only other stakeholders in supply chain, apart from ports and terminals, who have helped maintain the supply chain. The very fact that 1,04,000 TEUs have been evacuated from terminals during the lockdown period in one month is a testimony to CFSs functioning. In view of above, we wish to submit the following:
Understanding the criticality arising out of the immediate lockdown, CFSAI members, as a gesture and to show solidarity, voluntarily accorded 10 days waiver of ground rent from 22nd to 31st March 2020. Further, they are favourably considering additional waivers for essential cargoes related to Covid-19 on case to case basis.
CFSs in JNPT alone have evacuated over 104,559 TEUS from terminals, against which importers have taken delivery of about 30,254 TEUs. Despite the waiver offers as listed in para above, very few importers came forward to evacuate. While others, under the guise of difficulties, have been approaching authorities like JNPT and pressing for demurrage or ground rent waivers from the custodians. On one hand for custodians like CFSs the costs are mounting up exponentially to service the trade, and they are saddled with request for waivers.
The question arises when 25 to 30% of the importers with full facilitation for ex-im movement across the country can clear their imported containers, why not the others? CFSs have managed resources at huge extra cost.
It is pertinent to note that majority (almost 70%) of importers work with CFSs on bilateral contracts and enjoy huge discounts and way below the printed tariff. Moreover, in almost all the cases they also enjoy additional 10-1 5 days free time.
CFSs are facing severe cash flow issues as their financials work on the turnaround of containers per month. With import deliveries down by 75-80%, our members have expressed fear that they are staring at no income but huge expenditure and they are all saddled with serious cash flow issues.
CFSs are employing close to 25,000 skilled and unskilled labour. On humanitarian grounds CFSs have been supporting them and would like to continue doing so. However, with severe cash flow issues, this would be a big challenge for most of the CFSs. Further, authorities consistently pressurising CFSs to offer waivers despite huge increase in costs is putting them in a dilemma.
In actuality, the advisories from various authorities are turning out to be counterproductive. Importers are getting actually incentivised by the waivers as they feel why should they inherit risk and come out during pandemic, though facilitated by MHA and authorities. They have nothing to worry as they rightly believe their cargoes are lying safe with custodians “FREE OF COST”. Why should they use their resources, cash, Custom duty, etc.?
With consistent evacuation from terminals and importers not taking deliveries, CFSs are almost full to brim. The authorities need to take cognisance of the fact that by encouraging so-called “unlimited waivers”, CFSs and ports will start choking faster.
Lastly, empties are needed by exporters and empties will be available only after import containers are de-stuffed. Longer the waivers and freebies offered, more and more shortage of empties for exports. Shipping lines will surely not import empties for catering to exports. They would rather have blank sailings and save thousands of US$ as vessel related charges. Going forward, this will impact the entire exim trade.
Keeping above in mind, it is a fact that the ports, CFS and ICD terminals have stood shoulder to shoulder with the government in ensuring evacuation and to keep the ports functional.