PSA International slashes handling capacity

SLASH: Singapore’s PSA International, which operates a container terminal at Tuticorin Port in southern India, has slashed its handling capacity 20 per cent to protest tariff levels imposed by the government.

PSA operates the Tuticorin terminal as well as Sical of Chennai. PSA has reduced its annual handling capacity to 300,000 TEU, down from 377,000 TEU achieved last year because high taxes make the terminal commercially unviable.

The decision comes after a request by PSA to raise vessel-handling charges at the terminal was turned down by the Tariff Authority for Major Ports. Instead, the authority told the company to cut rates 50 per cent.

“The decision by the Tariff Authority for Major Ports in September 2006 to halve Tuticorin Container Terminal’s revenues has made the terminal commercially unviable because the much reduced revenue per twenty-foot box will not cover the cash operating expenses and royalty payments for every container handled,” said unidentified PSA executives.

It noted that the reduction in capacity will lead to “severe delays” for India’s fourth largest container terminal. Ships will be forced to divert cargo to other ports, leading to higher costs for freight forwarders.

PSA’s Tuticorin Container Terminal, which is designed to handle up to 450,000 TEU, had signed an agreement in 1998 with the government-run Tuticorin Port Trust to pay royalty on the basis of container traffic handled by the container terminal.