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Chennai Port offers new Concession in VRC for EXIM Transshipment Containers

Chennai port has announced sizeable concessions to the tune of 70 per cent on Vessel Related Charges (VRC) on coastal vessels carrying Transshipment cargo in a bid to encourage aggregation of EXIM cargo at the port, an open invitation to the Mainline shipping vessels to include Chennai port in their itinerary in a big way.

It has been decided to grant a flat concession of 70 per cent on Vessel related charges of Chennai Portís Scale of Rates for Coastal vessels carrying transshipment containers. The concession will be increased to eighty per cent if the particular service reach (Chennai port) 25 voyages in a year.

Similarly, for foreign vessels, a concession of five per cent on Vessel Related Charges will be given in addition to existing concessions while handling transshipment containers, an official release of the Chennai Port said. The port release expressed confidence that these concessions will give further encouragement to EXIM transshipment containers in Chennai port.

With the implementation of these concessions, it is expected that transshipment of Indian containers which present is happening in neighboring international ports like Colombo and Singapore is expected to be attracted through Chennai port.

Chennai port has conceived the idea a few months ago after the nearby Krishnapatnam Port achieved success in the transshipment business for the last one year. The new private port in Southern Andhra Pradesh started aggregating transshipment cargo from Haldia and Kolkata ports. Shreyas Shipping line, a domestic operator was assigned the task of ferrying the cargo from the West Bengal ports. These cargo, were otherwise moved to Singapore for their onward journey to various international destinations. The mainline vessels which call at Krishnapatnam port picks up the cargo.

Chennai Port has now thrown its bait. The idea of aggregation of EXIM transshipment cargo was conceived in early 1980s by the state owned shipping corporation. The port chosen by the SCI was the VOC Port Tuticorin. However the project did not take off due to bureaucratic hurdles.

At present nearly eighty per cent of Indian transshipment cargo especially from the east coast ports are transshipped through Colombo, Singapore and Port Klan ports. Out of this nearly 43 per cent is handled by Colombo alone. An Indian shipper has to shell out of at least one hundred US dollars per TEU when they transship their cargo through Colombo or Singapore. Exporters operating on thin margins are seriously affected by the international transshipment as their competitiveness of their goods get compromised.

Government of India has been taking several measures to increase the transshipment of containers through Indian ports. The recent relaxation of Cabotage Law by the Government of India is one such effort to make Indian ports transshipment hubs. Under this scheme the government has permitted foreign flag vessels to pick up Indian coastal cargo which was otherwise the preserve of domestic shipping lines.

The cabotage relaxation is expected to bring greater competition to the feeder market and reduce feedering rates encouraging the use of Indian ports and terminals for aggregation and transshipment purposes which may benefit local importers and exporters. The cost of handling will come down for exporters.


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