November 7, 2006
India port congestion causing delay in wheat deliveries
Global trading companies who contracted to supply wheat to India are now claiming demurrage from government-owned State Trading Corp (STC), due to acute congestion at ports that is delaying the unloading of shipments, industry and government officials said Monday (Nov 6).
"Two of the three shipments delivered by us so far have run into costly delays and we have claimed demurrage," official with an international trading house that has sold wheat to India said.
He said the claims are unlikely to be settled soon due to procedural issues involved.
As STC imports wheat on behalf of the government it has referred the matter to the food ministry.
"STC has communicated the demurrage claims to us," a food ministry official said.
Currently it takes around 10 days for an imported wheat cargo to get a berth at Kandla port and up to 15 days in Mundra--both on India's west coast. Normally there isn't any waiting time.
"The matter (payment of demurrage) will be settled in due course," said the government official.
However, officials at exporting firms say the entire delivery schedule is in a mess because of the rising number of shipments in major ports across the country.
Problems are particularly acute in Kandla and Mundra.
"The maximum number of shipments were sought at Kandla and Mundra because they have facilities for anchoring panamax shipments carrying up to 75,000 tonnes wheat each and a faster rate of discharging cargo compared to other ports," said the government official.
He said this led to a lower cost of imports.
This has resulted in most shipments getting concentrated in one or two ports.
Wheat exporting firms detest the argument.
"The government has reduced the price of importing wheat by getting it delivered at these ports but its inland cost of distribution at centres across the country is going to go up," said an official of a global trading firm.
He said demurrage that runs into US$20,000 a day will also add to the costs.
