Govt may allow Major Ports to fix marketlinked tariffs As per the Shipping Ministry's new draft guidelines for setting tariff at the Major Ports, the government-run facilities may soon be allowed to fix their own tariff based on market conditions. A long-standing demand, especially of private operators at Major Ports, the proposed change would enable them to effectively compete with non-major and private ports. Major Ports, it is learnt, might be able to fix market-linked tariffs which could be higher than the ones recommended by the Tariff Authority for Major Ports (TAMP). Presently, developers are not permitted to charge higher tariffs than what has been recommended by TAMP. However, fixing market-linked tariff would be allowed only once a year. The Major Ports would be allowed to revise their actual tariff once a year and the new rates would come into effect from April 1, according to the guidelines. Major Port Trusts would have to inform TAMP at least 90 days in advance if the proposed actual tariff is higher than the reference tariff. According to the Ministry, the developer would also have to share a part of the incremental revenue with the Port Trust in case of increased revenues by charging higher than stipulated tariffs. However, in case the terminal operator decides to lower the tariff, he does not have the option of paying reduced revenue share compared to what was proposed in the bid. KPCHAA seeks local MP's support against proposal to make certain Customs Act violations non-bailable The Kandla Port Custom House Agents Association (KPCHAA) has asked the Member of Parliament (MP) from Kutch, Ms Punamben Jat, to oppose the changes proposed in the relevant provisions of Customs Act Section 104 in the recent Budget. Under Section 135 of Section 104, certain offences are proposed to be made non-bailable: * Evasion or attempted evasion of duty exceeding Rs 50 lakh * Prohibited goods notified under Section 11 which are also notified under sub-clause (c) of clause (i) of sub-section (1) of Section 135 * Import or export of goods which have not been declared in accordance with the provisions of this Act, and the market price of which exceeds Rs one crore * Fraudulently availing of or attempting to avail of drawback or any exemption from duty provided under this Act if the amount of drawback or exemption from duty exceeds Rs 50 lakh In a communiqué to the MP, KPCHAA expressed the fear that the departmental officers in the field would come with preconceived notions of the trade having done something wrong, leading to them being non-transparent in their dealings and overzealous in exercising their powers, in the process raising the possibility of exploitation of the trade and corrupt practices. Therefore, stressing that these offences should not be made non-bailable, the communiqué urged Ms Jat to oppose the move in Parliament and also enlist the backing of the Leader of the Opposition for the purpose. Shipping industry initiative to wean Somali youth away from piracy MOL, NYK, "K" Line, Maersk, Shell, BP and Stena have announced their joint collaboration with the United Nations Development Programme (UNDP) to provide $ 1 million to support job creation in Somalia. This collaboration is the first step in an initiative, launched in February 2012, designed to make a contribution to the rebuilding of a stable Somalia and thus reduce the risk of piracy. The UNDP will focus on supporting long-term youth employment with the aim of providing viable employment
alternatives to piracy for Somalia s youth in the agriculture, livestock and fishing industries. For example, this funding will support the creation of a business development centre for local entrepreneurs. The funding will also help the UNDP to build up local youth facilities to encourage community collaboration and mutual support. The UNDP hopes that this initiative, led by the shipping industry, will facilitate establishing the foundation for a future generation in Somalia that has choices and no longer supports or condones piracy. The initiative also intends making available additional funding of $ 1.5 million to support other capacity building projects in Somalia. Shipping interests among those affected by draft UK residential property tax changes International accountant and shipping consultant, Moore Stephens, has said that many overseas companies, including some connected to shipping interests, will be among those affected by draft legislation from the UK government proposing changes to the taxation of UK residential property valued at 2 million or more. Among other things, companies resident outside the UK will, for the first time, be liable to capital gains tax (CGT) on such property, with effect from April 6. The measures in the draft legislation include CGT at a fixed rate of 28 per cent on disposals of UK property owned by so-called non-natural persons (NNPs), including those resident overseas, and an annual residential property tax (ARPT) on such properties where they are held by NNPs. Various entities are classed as NNPs, principally companies, but the definition does not include trusts. This means that a property owned directly by a trust will not be subject to the new charges. These changes were announced in the March 2012 UK Budget but, following lobbying, the government has allowed properties to be re-based to April 6, 2013, so that only gains from that date onwards will be caught by the charge. Non-resident companies will be liable for CGT in respect of any chargeable gain accruing for a period where the property has been liable to ARPT. Previously, companies resident outside the UK were not liable to tax on gains unless they were trading in the UK. Mr Gill Smith, a tax partner with Moore Stephens, says, "The government s original proposals would potentially have taxed gains accruing since 1982, and involved the need to consider restructuring before April 2013. The rebasing to April 6 has bought a little time, but structures still need to be reviewed and valuations obtained." The ARPT will apply to ownership of interests in residential property valued at more than 2 million. The charging structure falls into four bands, starting from an annual charge of 15,000 for properties valued between 2 million and 5 million, and rising to 140,000 for properties valued at more than 20 million. Charges will be updated annually in line with the Consumer Prices Index. Railways planning five new freight corridors The Railways is mulling building five new dedicated freight corridors to ensure faster transportation of goods, it is learnt. According to the Economic Survey 2013, four of the proposed corridors are the East-West Corridor (Kolkata- Mumbai), North-South Corridor (Delhi-Chennai), East Coast Corridor (Kharagpur-Vijayawada) and South Corridor (Goa-Chennai). Feasibility studies have been undertaken for these four freight corridors and a pre-feasibility study for the fifth Chennai-Bengaluru Freight Corridor has been proposed, the Survey said. These new corridors are expected to increase transportation capacity, reduce unit cost of transportation and improve service quality. Meanwhile, the eastern dedicated freight corridor (1,839 km) connecting Dankuni near Kolkata with Ludhiana in Punjab, and the western corridor (1,499 km) connecting Jawaharlal Nehru Port with Dadri/Rewari near Delhi are being implemented.
Asia-Europe container traffic sees temporary rise in Jan. Container volumes rose for the first time in about a year on the Asia to Europe westbound trade in January to 1.3 million TEUs, an increase of 2.5 per cent compared to the same month a year earlier, according to the Container Trades Statistics (CTS) price index. The index, compiled by two German research houses, records the container throughput of 39 ports worldwide. It showed that total box traffic last year fell by 4.8 per cent on this key global trade route. Container volume growth in January was primarily attributed to the Chinese New Year holiday falling later this year in February. Growth in westbound volumes during January triggered a rise in freight rates, albeit temporarily. The CTS price index rose from 77 in December to 82 in January. Asia to eastern Mediterranean and the Black Sea trade recorded an increase of 6.8 per cent year-on-year in January to 225,772 TEUs. The trade to north Europe was up 2.3 per cent to 850,219 TEUs, but western Mediterranean and north African volumes fell 0.5 per cent to 222,112 TEUs. Dry container volumes on westbound services outperformed reefer containers, rising 2.7 per cent year-on-year compared to a decline of 5.9 per cent for reefer traffic, according to reports. However, according to the latest statistics from the Shanghai Containerised Freight Index, the upward momentum of January has died down. At the beginning of March, spot rates on the westbound trade to north Europe fell by eight per cent week-on-week, while rates on services from Asia to the Mediterranean shrank 10 per cent. In north Europe, spot rates have declined 14 per cent since the end of January, casting a shadow over the plans of container shipping lines to introduce a general rate increase from mid-march of $ 700 per TEU, the reports said. Cargo growth at Major Ports slips further y-o-y; movement however seen in award of PPP projects: ICRA Concerns over cargo handling at Major Ports intensified with a 2 per cent year-on-year (y-o-y) de-growth being registered in volumes to 135 million tonnes in the period October-December 2012 (Q3 FY 13). While on a quarteron-quarter (q-o-q) basis, volumes were up by 2 per cent, given that Q3 is generally a period of high cargo activity in the port sector, the growth rate was quite modest. Cumulatively for the period April-December 2012 (9M FY 13), the total cargo handled at Major Ports aggregated 405 million tonnes, 3 per cent lower than the volumes in the same period of last fiscal. On the regulatory front, efforts to free Major Ports from tariff jurisdiction have picked up in the recent past with the Ministry of Shipping (MoS) deliberating major policy changes in order to improve the investment climate and speed up the pace of capacity expansion. If this comes through, it could be a major regulatory shift for the sector and could bring significant upside to Major Port entities and terminals operating therein, says the latest ICRA analysis. A favourable development in the port sector has been the increased pace of awarding projects. However, given the plethora of execution challenges which continue to plague the sector, the actual translation of these to capacity and improvement in operating standards is still expected to be a long drawn affair. In terms of new project awards, while the progress was lacklustre up to H1, there has been a pick-up in activity in H2. As per the Ministry, 22 projects (PPP + non-ppp) have been awarded thus far and it is striving to achieve the target of 42 projects, as identified by the PMO, by the close of the fiscal. In what can be considered another favourable development, a new security clearance policy has been framed by the MoS to ensure time-bound security clearances for port projects and operators, the report observes. In the port services sector, the container train business has come under some pressure in the recent past due to the twin effects of steep hike in haulage charges by the Railways, entailing a cumulative increase of 31 per cent in two tranches December 2012 and February 2013. Given
the current moderation in ex-im container cargo movement and the already low competitiveness vis-à-vis road transportation affecting prospects in domestic container movement, the recent hike in haulage charges has further made operating conditions difficult for container train operators, according to the report. Reefer Container Transporters Welfare Association formed Transporters handling the movement of reefer containers from all over Maharashtra have formed the Reefer Container Transporters Welfare Association (RCTWA) on February 16, for the welfare of transporters. The body is headed by Mr Sanjay Potdar, President of Nhava Sheva Container Operators Welfare Association (NSCOWA). The new Association is affiliated to the Nhava Sheva Container Operators Welfare Association, said a release. Dredging Corporation in talks with ports to raise funds for dredgers State-owned Dredging Corporation of India is talking to some cash-rich ports to raise money for buying two 9,000 cub mt capacity dredgers at a cost of about Rs 1,200 crore. With 60 per cent of its fleet of 15 dredgers over 20 years old, the firm is looking to replace its aged assets to improve overall productivity. We are trying to work out an arrangement with some of these ports under which they would provide a part of the funds for the new dredgers and we would pay them back through dredging of the ports, said D.K. Mohanty, Chairman and Managing Director He said there was a positive response from some of these cash-rich ports, which also required significant maintenance dredging on a regular basis. These ports include Paradip, Kandla, Visakhapatnam and JNPT. The company came out with a public issue of tax-free bonds on Friday to raise up to Rs 500 crore to finance acquisition of one of the three 5,500 cub mt capacity dredgers it has on order. The first of these was received last year, while the second is expected to join the fleet in June this year and the third in January-February 2014. While the first two of these dredgers are being procured through ECB borrowings, it has chosen the bond route to finance the third, although the coupon rate is slightly higher than the ECB interest rate. Each of these vessels costs about Rs 550 crore. Apart from trying to raise money through ports, DCI would also consider euro loans to finance the two new dredgers, Mohanty said adding, We currently have a debt of about Rs 550 crore and our networth is about Rs 1,400 crore. We have some headroom to raise funds. Commerce Ministry sets 8 % trade growth target for China in 2013 China has set a target of eight per cent for this year's growth of foreign trade, which is two per cent lower than last year's target. This is a mark that China is shifting its focus from growth speed to quality and efficiency, said Beijing. China posted a robust growth of 26.7 per cent in its trade value in January. Exports increased 25 per cent. But the Ministry of Commerce said the market conditions this year remained challenging. Though US' economy is recovering and the Euro debt crisis has been slightly eased, unemployment is still high. Risk is increasing as "quantitative easing wars" are spreading worldwide, which might push up bulk commodity prices and speed up the flow of hot money into the emerging markets. Trade protectionism is also growing, especially in the high-end industries. The competitive strength of China's exports, which mainly rely on manufacturing and processing products for overseas brands, is shrinking as cost is rising. Government to set up panel to frame incentives for Coastal Shipping A panel will be set up to draw up incentives for greater movement of cargo through coastal shipping and inland waterways than road or rail, union Shipping Minister G.K. Vasan said.
Mr. Vasan said after participating in the 121st meeting of National Shipping Board (NSB), "A high power committee will be set up to formulate an incentive scheme to encourage movement of cargo by coastal shipping or inland waterways." According to him, transport of goods by sea is the most economical and environment friendly model as compared to rail or road but it is a challenge to bring about a shift in the attitude of people towards Coastal Shipping. He said another committee will be set to review the oil spill at the ports. In order to recover ships that get grounded or to prevent them going adrift, Vasan said one emergency towing vessel (ETV) each will be stationed at Mumbai and Chennai Ports before the monsoon season. On the issue of the Mumbai based Pratibha Shipping whose ship got grounded and six sailors lost their lives trying to escape in a lifeboat, Director General of Shipping Gautam Chatterjee said: "The licences of six ships of the company's nine ships has been cancelled." He stressed that Directorate General of Shipping issues licences to ships and does not have any powers to impound or auction off the vessels for non-payment of dues. Chatterjee said he does not have the figures as to number of licences that have been cancelled and the number of ships against whom complaints of non-payment of dues are there. He said despite the shipping sector going through a turbulent times, his Ministry is utilising the period to build up port capacity, streamlining of various activities of Directorate General of Shipping and bringing more sectoral reforms.