Tuesday, September 20, 2011

Container Freight Bottlenecks Continue As Surcharges Rise

Indian Christmas Trade Faces Setbacks - Again
Shipping News Feature

INDIA – Late last month another action by workers at the port of Chennai brought both export and import freight shipments to a standstill. In what appears to be an increasingly common situation a small matter between two individuals, one a port worker, the other a freight haulier, ended with hundreds of containers backed up for over five miles as drivers boycotted the port.

Such flashpoints are not uncommon in the subcontinent and the end result is to add to the delays already often experienced at the congested facilities. From the last week exporters found themselves facing a surcharge hike to $65 - $75 per 20 foot box whilst importers faced an even worse situation when the curiously named ‘Chennai trade recovery surcharge’ reached $140 per TEU, effectively doubling the previous rate.

The spectre of corruption which currently haunts India and debases the country’s status in the eyes of the world also affects Chennai port and the Government run authority even has a ‘Hot Line’ number to report such activity but it is the constant industrial action which is cited by shipping lines and freight forwarding agents as the reason for the delays and increases in cost.

With several of the larger container vessels in a queue outside the port at least two vessels have been diverted to Colombo and feeder services used to tranship cargo to Chennai according to local reports. Beside the strikes many say that the surrounding infrastructure needed to support the heavy throughput of containers by the two terminal operators DP World and PSA (which only fully took over the Chennai International Terminal Pvt Ltd (CITPL) facility from Sical Logistics last year)is inadequate when the terminals are running at full capacity.

Last year the congestion around this time of year severely dented the capability of the port to handle the Christmas trade, some of which is already under way. That resulted in closure to export cargo whilst the backlog was dealt with, the kiss of death to the freight handling companies and haulage operators who rely on a steady trade.

There are major plans under way for new developments at Chennai to support the city’s position as a major commercial centre with a third box handling terminal scheduled to be developed by 2018 and recently a second gate was opened to the docks in a bid to free up the flow of containers but unless Chennai can resolve its ongoing labour relations many importers and exporters may consider the raising of surcharges again and the constant interruptions to trade a suitable time to review future options.

Photo: Export containers on trucks queuing at the CITPL container terminal run by PSA