Congestion @ Chennai Port

For over a year now, Chennai port's two private container terminals have been facing cargo congestion problems affecting the trade. But the situation is far from returning to normal.

Frequent strikes by vehicle operators carrying containerised cargo and poor road connectivity to the port have led to the congestion. This has delayed delivery of cargo to customers abroad.

Every sector has been badly hit by the congestion but the worst affected have been apparel exporters who start their annual shipment of cargo to the US and Europe from September, ahead of the Christmas and New Year season. Factories in and around Chennai make garments for such major brands as Timberland, Marks & Spencer, Talbots and Ann Taylor.

Clients are asking suppliers to avoid shipping out consignments through Chennai, said an official of a large garment manufacturing factory inside the Madras Export Processing Zone (MEPZ).

It all started last year, on November 13. Trailer operators carrying containers stopped plying their vehicles, protesting against the beating up of a cleaner by some residents in North Chennai. These residents are agitated over container trailers plying dangerously on bad-road conditions on the Ennore-Manali highway, posing a risk to people.

“The roads are still bad and there is no alternative route for the truckers,” said Mr S. Raja, a truck operator. The Ennore-Manali highway is vital for the movement of vehicles in and out of the port.

The National Highways Authority of India, along with the Tamil Nadu government, is engaged in widening the highway. The Chennai Port Trust and Ennore Port Ltd are partners in the special purpose vehicle created for this project. This project and the elevated road corridor from Chennai port to Maduravoyal are important for Chennai port's growth.

However, their progress has been very slow, said Mr A.V. Vijayakumar, President, Chennai Customs Clearing and Shipping Agents Association.

The stoppage of vehicle movement, non-motorable roads and availability of only one gate for entry and exit of trailers have slowed down movement of vehicles to and from the terminals. These frequent problems have snowballed into a major congestion — with huge yard inventory and long waiting by ships, said Mr Vijayakumar.

Two months ago, nearly 17,000 boxes piled up at the terminals, against the normal inventory of 7,000 boxes. The two terminals had no space for vehicle movement, he said.

With export boxes not arriving on time at the terminals, the container ships sailed without loading their full quota or waited outside the port's anchorage for two to three days for a full load.

Normally, a ship gets a berth on arrival but it now takes over a week. Similarly, a vehicle carrying a container usually makes two trips a day between a container freight station, located outside the port, and the container terminal.

However, vehicles have been able to make only one trip a day in the past three months. To restore normalcy at the terminals, the stakeholders associated with the containerised trade decided to suspend exports for four days from October 13. This was to speed up the evacuation daily of about 2,500 boxes, each 20 ft long.

“We had to hold the cargo at the warehouses, which were already choking, or at the factory,” said Mr A.M. Gopinath, General Manager (Commercial), Celebrity Fashions. Also, the Tuticorin port could not accommodate all the excess cargo going from Chennai; this created more problems for exporters. The situation in Mumbai was also bad, with delay of seven to eight days.

The need for better road connectivity and more gates at the port was taken up with all the major government officials in the Centre and State. “We are yet to see any concrete measures being taken,” said Mr Vijayakumar.

The delay in delivery to clients is affecting the financial cash flow of exporters, said Mr Vijay Mahtaney, Managing Director of Ambattur Clothing.

The export supply chain works like this. The shipment, which is normally sent as a ‘Freight on Board' option, is dispatched from the factory to a freight station. After getting export clearance from Customs officials, the goods are loaded into containers and transported to the terminal.

The delay mainly happens on this stretch. Once the containers are placed on board the ship, the shipping lines provide a document called Bill of Lading to the exporter. This document, which has cargo details, is produced to the buyer for getting payment, Mr Mahtaney said.

A number of companies that transport goods by container are frustrated with what is happening at the port but are helpless, he said. They still feel Chennai is the only option for the trade due to its proximity to Singapore and Colombo ports, he said.

Delay in delivery of goods affects the reputation of suppliers, said Mr J. Franklin, Senior Vice-President, Pearl Global Ltd, a large garment manufacturing unit in the MEPZ. “We are bleeding due to the delays,” Mr Franklin said. Two major buyers in the US asked Pearl Global to avoid using Chennai port completely. The company used Tuticorin port to send the shipments, he said.

Tuticorin, which also has a private container terminal, is an alternative for exporters. However, this doubles the transportation cost, eroding margins, said Mr S. Surya Narayanan, Executive Director and CFO, Celebrity Fashions.

Chennai will lose its status as a regional container hub if the support infrastructure outside the port is not improved. The Kattupalli port, being built by L&T is expected to be operational early next year. Some of the users from Chennai could move to Kattupalli, located next to Ennore port, said Mr Vijayakumar of the Chennai Customs House Agents Association.

Courtesy: Hindu Business Line