Uncleared cargo in containers is a national liability

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We need to look at this menace with urgency, saysCapt. P. S. Rath, CMD, Econship Tech Pvt. Ltd.

 

A large number of containers with cargo are left uncleared – especially in the third world countries. You dont come across this as a problem in countries where the institutions are reasonably efficient and non-partisan. You see them where the institutions are weak and beset with over-regulations. India, Pakistan, Bangladesh, Iran, South American and African ports would top the list. In countries like Indonesia, Malaysia and Thailand, its way lesser. And in places like Singapore and Hong Kong, its almost non-existent. This is a general pattern we can see the world over. At the same time, institutional weakness and overregulation are not the sole reason behind all the abandoned containers. There are other reasons like consignee going bankrupt, market crash in certain cargo, out-of-specs or damaged cargo, commercial disputes, downright frauds on taxes or money laundering, and dumping of waste. And again, these reasons are mostly a result of weak institutions afflicted with overregulation or are exacerbated by them.

Lets look at the issue from an Indian perspective. Walk into any CFS or dock. You will see many such containers eating up a whole lot of precious space and rotting away for years. But it is not as simple as it appears. You may be thinking – alright, its a loss for the CFS, dock, or the shipping line. So whats the big deal! Its not that big a deal? Think about the Beirut explosion. Uncleared cargo exploded withcatastrophic violence. 200 citizens were incinerated and 5,000 injured. The port and an important commercial hub of the city was flattened. The government resigned. In India, too, we have had many explosions and casualties due to such uncleared cargo. They were not as big as the Beirut one. But are we not sitting on time bombs?

Trauma & misery

Now think of a small trader who has put all his capital in importing cargo to India. Now, his cargo is stuck. What could he do? He simply goes broke. Its like losing all his lifes savings. Trauma & misery. I cannot forget the incidence, when an importer threatened to jump out of our office on the 7th floor unless we could deliver his cargo that was stuck. Its heart-wrenching to see people lose all their savings this way. We dont bother because its just an individual and his family who are not visible to the public. However, thats not the end of it. When cargo is stuck, it hurts many other areas. The government loses taxes. The money paid to the overseas supplier is lost forever as an outgo of hard currency. When there is a loss to the overseas supplier, he looks at us in a very poor light. In one of the blogs, I came across one shipper describing Indians as thugs because he could not call back the cargo rejected by the buyer.

Then there is another heavier cost. Overseas shippers are aware that anything landed in India is impossible to call back. So, India is a safe haven to dump nuclear wastes to toxic materials. Just consign these wastes to any random entity in India and sit tight. Its that easy. The innocent shipping line will run from pillar to post for no fault of his. Ultimately, the cargo will be sitting among a hoard of other uncleared cargo and rot away to perpetuity. And this has horrendous costs to our health, environment, the economy and our future generations. Then we have the cases where perishables get into paper trouble, leading to complete loss of cargo and capital. Uncleared cargo is thus a huge national liability – hundreds of times the notional loss faced by the importer or a shipping line or a CFS.

You must have heard this nagging umpteen times. Rich are growing richer. The poor are getting poorer. Its so brazenly true. Its no fault of the rich. The poor keep making the same mistakes and go poorer. The rich keep doing the same right things and keep getting richer. As a nation, we should not keep making the same mistakes and cry foul at China for doing way better than us. We must identify our problems and fix them first. We need to fix this menace of uncleared cargo and the resulting liability. While devising a strategy, we must take into account the fact that we cannot make our administrative institutions strong and non-partisan overnight. Public pressure and compulsive politics would slowly do that. In the meantime, we need to look at this menace with a lot of urgency. The government needs to set a target not to allow overstay beyond 90 days and safe-keeping of explosive, inflammable and radioactive cargo.

Hazardous cargo & amnesty

Explosive, flammable, toxic and radioactive cargo should be mandatorily cleared from the port in 48 hours. Those that are highly explosive or flammable should be directly delivered from/to vessel to vehicle. There should be licensed, dedicated CFSs for such cargo. Those CFSs should not handle any other cargo. They should be at least 100 km away from the outer periphery of the cities or towns. They need to have adequate safe infrastructure to handle any accident. Before unloading from the vessel, the consignee should give a guarantee to the shipping line to clear the cargo in 15 days, failing which the cargo should be allowed to be shipped back to the original shipper with all costs on consignee. Any cargo, including non-dangerous cargo, that is not cleared in 90 days should be mandatorily shipped back to the original shipper – with no questions asked. When (non-perishable) cargo value per container is more than $100,000 or more (this value can be increased by 5% each year to allow for inflation in the future), and does not come under further certification from any government department(s),it can be put for auction after 90 days.

In the meantime, all the past stranded containers should be given an amnesty scheme of duty and d&d cut for a specific period of time. This will bring the volumes down. Whatever is left behind should be suitably disposed of or destroyed. This disposal or destruction system should also be prescribed rationally. As an example, we came across a case where the destruction of a cargo of mineral water amounted to an exorbitant sum. This is ridiculous. First of all, mineral water need not and cannot be destroyed by the laws of physics. Its a dumb thing to attempt to destroy water. Secondly, you should not have a few monopolies in the business of destroying cargo – who get this privilege to abuse and exploit. Its a murky affair. Once a year, all shipping lines should be made to declare a list of containers with cargo of more than 90 days to the authorities – that could not be shipped back to origin for justifiable reasons. The shipping lines should be given the first right to suggest the process and mode of disposal or destruction for each such cargo. These lists should be vetted by a team of experts. Where the experts think that the suggestions are not appropriate, they can suggest an alternative. The process should be time-bound to 30 days. The destruction work should be open to all contractors and should be undertaken under supervision.

International examples

Lets see what other smarter ports do. Singapore and Jebel Ali force and facilitate the shipping lines to take back the containers of more than 30 days. Its so easy. No questions asked. Just take back. Malaysia allows the shipping lines to take backafter giving satisfying justifications, while Singapore and Jebel Ali would help you in the process. Its smart. There is little to gain in holding onto a dead cat. Sooner you dispose of it, the better it is. The longer you keep, the stinkier it becomes.