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i-maritime news letter

Gains from coastal cargo movement - 2012-01-31

When the imperative is to move truckloads of goods from roads to rivers, barges and coastal ships, efforts are stymied due to various reasons, and diverted to areas involving conflicts of interests, so that a status quo can be maintained. Is it that truckers' associations are so powerful, and ship-owners aren't persuasive enough, or is it political indifference? As such, from a policy perspective, governments in developed countries such as the UK, Europe etc, have mandated pollution and traffic/congestion reduction as primary goals, and drawn up policies and subsidies to sustain such efforts. Subsidies, invariably — if not properly handled and disbursed — foster inefficiencies, and skew costing to create mark-ups for participant beneficiaries. The Twelfth Five-Year Plan, reportedly, isn't giving impetus to promote and support shipping enough. There are enough examples from the US, Europe, UK, Canada, and Australia to learn from.
Technology — starting with the Global Positioning System (GPS) — its promotion, and upgrading can give immense benefits. This is especially relevant in the case of shortage of truck drivers — they have to keep records of work and rest hours — which is an issue in the US. The peninsular nature of the subcontinent imparts a direct door-to-door advantage to the road sector, in timeliness, transit times and even costs to a certain extent; inventory in transit, for sure. Hence, marginal savings won't enable one to wean cargo from roads to water without some other sufficient incentives. All aspects and nuances of current coastal shipping provisions and practices need to be critically considered and assimilated, for coming up with plausible effective changes. The Merchant Shipping Act preserves it for Indian shipping; it also permits foreign ships to be chartered in when suitable Indian ships aren't available for the dates, duration, purpose etc, with the technology required for specific operations. Considering the cost disadvantages of flying, manning and operating under Indian flagging, a cost freight/premium is granted to Indian ships more than foreign ones, evidently in the tanker sector. The Customs, too, considers ships with coastal licenses trading under their domain to be under national laws and taxes, calling for conversion to coastal, and once again to foreign, charging duties on bunkers used on the coast. Essentially, it is a matter of jurisdiction. As such, coasters cannot exploit duty-free bunkers and the like. Reduced port charges and some concessions during the decades have ensued. But being a capital-intensive industry, the main differentiator is the daily/capital standing cost, as compared with foreign flags. Opening licensing to pass on such advantages will go against the grain of economics, competitiveness and policies in place. True, the trade, shipper/receiver, citizen, consumer will benefit if coastal trade is thrown open to all and sundry. As such, it is fair to say that the Merchant Shipping Act is adequately provisioned. Let us hope that changes will be ushered in the right way, so that it will be a genuine respecting of the rule of law.

Source: Hindu Business Line