The new legislation – Merchant Shipping Bill (MSB) 2020 – is intended to replace existing policies that were enacted decades ago under the Merchant Shipping Act (MSA) 1958. The MSA is set to be repealed .
Policymakers have set the stage for a regulatory framework aimed at creating greater transparency in the pricing of ocean carriers for export-import and domestic freight transport – an issue that has always been complex and acrimonious.
“Any service provider or agent, in respect of any Indian vessel or other vessel operating in coastal waters, in connection with import, export or inland transportation, shall specify all inclusive freight in the bill of lading or any other transport document, in such manner and manner as may be notified,” the draft document states.
“No service provider or agent shall levy any freight charges other than the all-inclusive freight specified in the bill of lading or other transportation document.”
The Container Shipping Lines Association (CSLA), the local representative voice of foreign carriers in India, has been quick to question the wisdom of the government’s regulatory approach to the industry which is caught in several challenges amid the problems caused by the Covid-19 pandemic.
He argued that such action would only go against established and accepted free market principles in the logistics landscape, and asserted that the determination of ocean freight pricing was entirely dependent on the market forces of demand and supply, and that the government should not intervene in this field.
“Freight rates should not fall within the purview of the Shipping Bill as it interferes with a commercial agreement between the shipping line and its customer,” CSLA said. “It is ironic that this freight regulation proposal comes at a time when the government has moved to deregulate tariff rates at the 12 major state-owned ports.”
The AAPC said policymakers must recognize that what they aim to achieve through price regulation will prove counterproductive.
“Let the market play its part,” the association said. “The Merchant Shipping Bill 2020 proposes to consolidate all these charges into one all-inclusive freight, which will cause the trade to loop. It will create less transparency than more.
However, the Indian National Shipowners’ Association (INSA) has a different view of the proposal. “I don’t see why it would be difficult to set an all-inclusive freight rate and only charge the shipper that,” said INSA CEO Anil Devli.
“Has anyone stopped to ask for the perspective of the poor exporter or importer who has to deal with the uncertainty of freight costs and a complete lack of transparency on the total cost of exporting or importing goods?
Devli noted that the carrier’s variable or incidental charges often give shippers “too much of a pinch,” citing a recent example of a 20-foot shipment from Mundra to Europe attracting nearly $1,700 toward a range of charges. premises at destination, without any prior advice.
Stakeholders have until December 22 to submit comments on the new policy, after which it will be sent to parliament for approval.
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