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Free time given to the coastal trade should be increased to seven days from the present two days: Mr. J.J. Thomas

Author

(Interview Continued)


Sagar Sandesh: Tuticorin port as a major port has been in existence in South Tamil Nadu for the past forty years. The area has abundant power supply and skilled labor. Land for setting up industries is not a problem. But industries are not coming up in the region despite the entire infrastructure you need to start an industry. How do you explain the phenomena?
Mr. P. Jeyanth Jason Thomas: The city lacks air connectivity. The city has a small airport and limited flights as of now. Only ATRs could land at the airport now during day time. The runaway is being expanded to allow landing of bigger aircrafts and night landing facility is to be introduced. Land acquisition for Airport expansion projects are at final stages of execution.
The local chamber of commerce is pressing early execution of Madurai-Tuticorin Industrial Corridor which includes dedicated railway line. The doubling of railway tracks between Madurai and Tuticorin is likely to be completed in a few years.
SS: What has been the progress of the Coastal Industrial Zone promised by the Shipping Ministry to be set up near Tuticorin port? Has it taken off or got stuck like other industrial zones in the country?
Mr.P.JJT: The developed lands offered by the Port are not attractive to the industries as cheaper land is available in the vicinity to set up industries.
SS: What has been the contribution of Tuticorin port to Coastal Shipping?
Mr.P.JJT: The port has made significant contribution to Coastal Shipping. Cargo like cotton, tiles, chemicals, wheat and pulses moved from ports in Gujarat to Tuticorin. On an average, three ships carrying coastal cargo arrive at the port every week. They carry six thousand TEUS which can be easily increased to12,000  TEUS a month, provided the Port administration took steps to increase the free time to the trade.
Free time given to the coastal trade should be increased to seven days from the present two days. This has been the demand of the trade for the past several years.
SS:  I am told the Tuticorin port has devised an innovative software to enable the exporters to get quick GST refunds, Can you elaborate.
Mr.P.JJT: Since GST came into force, exporters had lot of challenges in getting IGST refunds from the Customs authorities. One of the key reasons for the delay is due to Export General Manifest+ errors, committed by the trade. The Tuticorin Customs Brokers Association, in consultation ;with the stakeholders devised two unique software which helped the exporters to file error free export general manifests so that they could get the refunds from the Customs within two months. The software unique to Tuticorin Port has helped the exporters to improve their cash flow.

A view of Tuticorin port
 
 
The practice followed at Tuticorin port at that time when GST was introduced was that the Customs brokers hand over a copy of shipping bill to shipping lines and thereafter the shipping lines type the Export General Manifest ( EGM ) and transmit the same to the Vessel Operator. And they file the EGM.  The typographical errors during preparation of EGM data resulted in mismatch with shipping bill data in ICEGATE and thereby resulted in EGM error.
To rectify the EGM errors coordinating with the Shipping lines, the Vessel Operators and Customs was extremely difficult at that time. With the pressure mounting on Customs brokers for quicker release of  IGST refunds and the challenges faced by customs brokers in rectification of EGM errors made the Customs brokers association  think about an alternative to mitigate the difficulty and facilitate the process.
The thought process was to capture the EGM data electronically at the time of filling the Shipping bill and transmit the same to the Shipping Lines Electronically.
Tuticorin Customs, which had permitted up to seven day time for filling the EGM subsequently, issued another public notice which mandated filling of EGM prior to the sailing of the vessel.
Moreover, Tuticorin Customs put in a procedure wherein the EGM should have particulars all the Containers and all the Shipping Bills, and only after verification, the ships will be allowed to sail out. This seriously impacted the advantage of Tuticorin port, which allowed Direct loading of Containers till about seven hours prior to sailing of the Vessel.
Due to the sudden and drastic change in Operating Procedure, the Shipping lines preponed the Gate in cut off and it affected the traffic moving out of Tuticorin especially the garments, perishable cargo such as Onions, vegetables and Sea foods.
EGM PRO devised by a private firm in association with the Tuticorin Customs Brokers Association was a right solution at the right time.
1       As data is captured electronically, EGM errors have drastically reduced (from Hundreds of errors per vessel to hardly five to six errors per vessel)
2       As data is captured and transmitted electronically, the EGM preparation time got drastically reduced and vessel Operators are able to comply with the rule of filling the EGM prior to sailing of vessel as well as extend cut off for direct loading even after vessel berthing and even up to five hours prior to the sailing of vessel.
Informatively, the EGM PRO was developed by a software company named Inspire in association with Tuticorin customs brokers association.
One more mechanism was also devised CODEX by the Tuticorin Chapter of National Association of Container Freight Stations.(NACFS)
Codex is a software platform based on barcode technology was developed by NACFS Tuticorin chapter and it captures the key information of Container Freight Station stuffed and Factory Stuffed export containers handled at CFS such as shipping bill number, Container number in the CFS Gate out pass.
After GST came into force and IGST refunds got delayed due to EGM errors, Customs and Port too facilitated a data capturing system at the Port gate to capture the relevant data for export containers arriving from Special Economic Zones, Inland Container Depots and by Rail too.
Codex developed a wonderful process transmitting the EGM related data to MLOs and vessel operators.
This facilitatedÖ.
1.     The vessel operators to compare the EGM data received through Codex platform and EGM data prepared using EGM PRO, get the mismatch report and enable them to achieve higher accuracy of EGM data before filling it into Customs Systems.
2.     The Customs authorities to compare the EGM data in Codex platform and EGM filled by vessel operators for the particular vessel, evaluate and issue Port clearance of vessel.
Codex was developed by a software company by name Kale Logistics in association with National association of container freight stations Tuticorin chapter.
The implementation of these software, first of its kind to be implemented by a port in India has helped exporters to improve the cash flow to their company as the refunds were made available by the Customs on an average of less than two  months.


Summary of the complete Interview


Summary of the interview with Mr Jeyanth Thomas President Tuticorin Customs brokers association.
The VOC Port at Tuticorin which had earned all the laurels that go with a successful major port like flourishing container trade, three mainline services calling at the port connecting the East Coast of United States, Europe and a direct service to Chinese ports via Singapore besides registering high growth in coastal shipping during the last decade is now a feeder port to Colombo operating seven sailings a week to Colombo, besides a weekly service to Jebel Ali.
Taking advantage the problems of the Port, Cochin port poached its hinterland in Western Tamil Nadu by offering hefty discounts directly to shippers on Containers. Consequently the port lost about 2500 TEUs in volumes per month. Ban on extraction of granite and rare sands like garnet sands and illuminate also caused considerable loss to the container volumes handled.
The closure of the copper smelter of Sterilite has also contributed to loss of business for the port.
Mr Jeyanth Thomas, President of VOC Port Tuticorin customs brokers association who has been associated with the port for the past two decades explains the various facets of the portís development journey in the last three decades..
The port situated near the landís end with limited hinterland had handled nearly seven lakh TEUs during the last financial year. The two terminals at the port handled nearly 3.5 lakh TEUs during the first six months of the current financial year. However the volumes handed by both the terminals account for fifty per cent of the capacity. This is the pattern in the most of the container terminals in the east coast. The private ports in the region are however trying to buck the trend.
The port had made forays into container business way back in 1999 when PSA ĖSical commissioned an exclusive terminal for handling containers. From a volume of 1.5 lakh TEUs per annum during the initial years, the terminalís turn-over increased four-fold in the first ten years.
The terminal sharing the revenue with the port is based on royalty model, one of the very few ports in the country, opting this particular method of sharing revenue. As the terminal handling charges were fixed low, the terminal pressed for revision of rates within three years of operation. This was however, was turned down by both the Port and the Tariff Authority of India. The legal battle between the port and the terminal continued and soon the terminal claimed that more volume of containers they perform at the terminal, more revenue they lose.
With the terminalís productivity was steadily dropping, trucks which used to be cleared in three hours for handling of cargo inside the port took 10 to 12 hours creating a man-made congestion.
The move to start a second container terminal was put on hold and tenders called for the purpose were withdrawn in 2008 on grounds of world-wide recession. The trade started picking up volumes around 2010 when the port faced a peculiar situation with cargo piling up at port premises with less capacity in the terminal to handle them.
Meanwhile the mainline services operating from the port started skipping the port due to lack of adequate draft. While the main line service ships needed a draft of at least fourteen meters, the available draft in the port was around 10.5 meters in 2005,
The first liner to skip the port was the weekly direct service to East Coast of United States including New York. The next to go was the service to Europe run on weekly basis. The last main liner to call of Tuticorin port was the service to Chinese ports via Singapore and Port Klang, The vessel operator said the service is not commercially viable and therefore wound up.. This happened around 2009. After this development, the Port became feeder port with seven sailings to Colombo per week and a weekly service to Jebel Ali.(Dubai)
On transshipment business, he said the port cannot compete either with Krishnapatnam private port or Colombo since both the ports have distinct advantages over Tuticorin. (Krishnapatnam has emerged as a leader in transshipment business in the region handling 2500 TEIS a month.)
Besides attracting big container ships because of being a deep port, Ships from Krishnapatnam have the advantage of moving directly to the far-east ports while from Tuticorin port they have to circumnavigate Sri Lanka to reach the same destination.
Since transshipment requires operation of multiple ships at a time, the terminal should have sufficient length for the operations which is not available in Tuticorin port..
Colombo being an established player in Transhipment business catering mainly to containers coming from the East coast ports of India. Colombo portís deepest available draft is eighteen meters and on an average most of the container berths have 15 meters draft. The Dakshin Bharat Gateway Terminal in VOC Port Tuticorin has declared a draft of 13.1 meters draft. This is the deepest berth in the port.
Summing up he said the port in the past did not take correct decisions at the right time. He cited the instance of the decision to scrap the tender for second container terminal in 2008 cited World-wide recession when the trade was picking up in the port.
 Timely measures if taken to increase the draft could have seen the continuance of main line vessels calling at the port. Sorting out the revenue sharing problems with PSA-Sical in time instead of legal option could have improved productivity; scrapping of Outer harbor project sanctioned in the 2014 Union budget and not giving shape to Optimization of the inner harbor project.
Lack of rail connectivity to Tuticorin port is not a major issue for container traffic but it is certainly required for transporting bulk goods. A major port of the government has a single railway line sharing both freight and passenger trains to the nearest commercial city of Madurai. The coastal railway line from Chennai to Tuticorin was sanctioned ten years ago by the railway but is yet to take off. The doubling of railway track from Madurai to Tuticorin was announced two years ago but there is no work on the ground by Rail Vikas Nigam Limited, entrusted to undertake the project on behalf of Southern Railways..
As for movement of containers, the trade is content with the road connectivity to link the hinterland. But to cater to incremental growth in port traffic, the trade requires six lane road to Madurai, Salem, Karur,Tirupur and Coimbatore. The existing two lane road from Dindigul to Coimbatore should be immediately upgraded to four-lane.
The trade in South Tamil Nadu favors early completion of Sethu- Ship Canal Project which remained abandoned for the past eight years. With the early completion of the project, the coastal shipping in the region will get a boost. The trade could increasingly use coastal ship option in preference to roads since the canal project will reduce the journey from East to West Coast ports by one and half days. This will considerably reduce the ship freight for coastal cargo.
The Direct Port Delivery of imports and Direct Port Entry of exports designed by the government to cut transaction costs will not make much headway in VOC Port due to local conditions. The direct port delivery which has been in vogue in major ports for the past one year accounts for hardly one per cent of the imports in the port. According to the trade estimates, hardly 20 per cent of exporters could switch over to direct port entry since the export cargos require inspection by enforcement agencies.
Though the major port has been functioning in the region for the past forty years besides the availability of abundant power, land and cheap labor, industries have not come up in the region due to the absence of a full-fledged airport with night landing facilities. The Airport expansion work is expected to take off shortly since the state government has completed the land acquisition work recently.
The Shipping Ministryís industrial zone project along the VOC port also has not made much headway because of the availability of cheap land around the port.
Unlike other major ports, Coastal Shipping has done well at VOC Port. Three ships from Gujarat arrive here every week carrying cotton,Tiles, Chemicals, Wheat and Pulses. The volumes handed are 6000 TEUs a month.  The volume could easily be increased to 12,000 TEUs a month provided the port administration increases the storage free time from the current two days to seven days.
The VOC Port Tuticorin has an interesting incentive to offer to Exporters. The Portís Customs Brokers Association in collaboration with a private firm and portís stakeholders developed two distinct Softwares which would help them to get the GST refunds within two months.