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A stage reached when the terminal did more volumes they lost more revenue: Mr. P. Jeyanth Jason Thomas

Sagar Sandesh: What has been the performance of the two container terminals of the VOC Port Tuticorin during the last financial year, their capacity and their utilization over the years?
Mr. P. Jeyanth Jason Thomas: The two container terminals PSA- Sical and Dakshin Bharat Gateway Terminal in the VOC Port have handled 6.9 lakhs TEUs during the last financial year 2017-18 as against the installed capacity of 13 lakh Teus. The terminals have been working at around fifty per cent of their capacity for quite some time.
Both the terminals have handled around 3.5 lakhs TEUs during the first six months of the current financial year from April to September 2018.The turn-over has been more or less the same as the last financial year
SS: Container traffic has not picked up in the port. Are the terminals facing any problems?

PSA SICAL Container Terminal at Tuticorin Port

Mr. P.JJT: PSA SICAL Container terminal in the port was commissioned in 1999. The port was handling containers prior to the setting up of the terminal by a shore to ship arrangement. When the Singapore based PSA terminal set up shop at the port, gantry cranes were pressed into service.
Starting with a volume of 1.5 lakhs teus per year, container turn over at PSA Sical Terminal shot up by four times in the first ten years of its operation.
Under the Royalty model being tried out for the first time in the Indian ports, the rates were telescopic. The terminal handling charges permitted to the terminal was very low and said to be lowest in the country. During the third year of the Operation, the terminal raised the issue of revision of terminal handling charges with the port Administration, The issue was referred to Tariff authority. The revision was not conceded.
 In fact the Tariff Authority brought down the terminal handling rates by fifty per cent around 2003 saying the rates charged was on the high side. The terminal thereafter lost interest in enhancing the output.
A stage reached when the terminal did more volumes they lost more revenue.
The terminal went to Madras High court seeking remedy in 2011. The terminal contended in the Court that while their terminal handling rates were frozen by the tariff authority, the royalty rates went up. The court ordered the freezing of the royalty rates charged by the Port administration.
Since there was no solution to the issues raised by the terminal and legal battle ensued, Container handling at the terminal reached a saturation point. The draft at the terminal remained around eleven meters. A modern container vessel which entered the market in 2005 cannot enter the terminal because of draft restrictions.
Meanwhile the move to start a Second container terminal at the Port was put on hold in 2008 due to World- wide recession. The tender floated for the purpose was cancelled. In hindsight it was a wrong decision when the container trade in the port was gathering momentum.
Meanwhile the trade in the port started growing around 2010. The Port was dependent on the PSA- SICAL Terminal which was not keen on increasing the output. There was cargo but no capacity in the port to handle during 2010-11.
The three gantry cranes at the PSA terminal used to make ninety moves an hour. It gradually came down to fifty moves an hour. Container trailers which used to get cleared within three hours inside the port started taking 12 hours for clearance. Because of the policy issues, a Man-Made Congestion was created at the container terminals of the Port by the Operators.
The vessel operators were advised by the terminal to plan their cargo accordingly taking into consideration reduction in output.
The Second terminal Dakshi Bharat Gateway terminal was commissioned in 2016 with a capacity to handle seven lakh TEUs a year. The terminal handled 2.5 lakhs teus last year and is expected to touch four lakh TEUs during the current financial year. The terminal has a draft of 12.5 meters. At present, the draft has been increased to 13.1 meters.
SS: When Tuticorin port faced capacity constraints, how did Cochin Port take advantage of the situation and diverted cargo to the Kerala port?
Mr. P.JJT: During 2010-11 when the EXIM trade was facing difficulty in Tuticorin port, Cochin port snatched the opportunity by starting a vigorous marketing drive in a bid to divert the cargo from the Tamil Nadu to Kerala port.
As FOB costs were rising due to reduced productivity in the container terminal in Tuticorin port, the trade became dissatisfied. At this point Cochin port came out with an aggressive marketing strategy to wean away the trade from Tuticorin port.

Vallarpadem container terminal

Cochin portí Vallarpadem container terminal offered incentives directly to Tamil Nadu Shippers to wean away the trade from Coimbatore, Pollachi, Tirupur and Erode from making shipments through Tuticorin Port. The port offered a discount of Rs three thousand for 20 foot containers and Rs five thousand for forty foot containers by way of rebate in Terminal Handling Charges.
When the concessions were implemented by the Cochin Port, captive cargo of Tuticorin port from Western Tamil Nadu started drifting to the Kerala port. The cargo lost to Cochin include Coir piths from Pollachi, garments from Tirupur, bed sheets from Karur and products of Tamil Nadu Papers and Newsprint Corporation near Karur.
Kerala government also swung into action with pro active measures for the trade by tackling the delays in the Walayar check post. The waiting period for the Tamil
Because of the Cochin portís strategy supported by the Kerala government the Tuticorin port lost around 2500 TEUs per month. This was a body blow to the Tuticorin port.
The Container Corporation also tried its best improve the fortunes of Cochin port by starting direct services from Cochin port to Coimbatore and Bengaluru. These services were operated for 2 to 3 years. But the service was not a success and failed to make an impact on Cochin Portís container turn over.

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