Shipping Trade Act to check middlemen

The shipping ministry has given in-principle approval to the proposed Shipping Trade Practices Act, a legislation aimed at tightening control over shipping industry intermediaries.

The Act, which covers aviation, rail freight and road transportation, is likely to come up during the Budget session of Parliament. The legislation will bring under its scanner charges, including documentation and surcharges filed by shipping lines, railway operators and airlines.

"The shipping ministry is preparing a Cabinet note on the proposed Act after consulting with the law and commerce ministries. We are now refining the Act to set up a legal and consultative mechanism," outgoing Shipping Secretary D T Joseph told Business Standard.

Airlines, shipping lines, shipping agents, freight forwarders, terminal operators, container freight stations, inland container depots, Container Corporation of India, cargo consolidators, transporters, stevedores and shippers will come under the purview of the proposed Act.

It includes provision for mandatory registration of all intermediaries and penalties. It also specifies procedures and modus operandi for arriving at rates for services provided by intermediaries through a process of consensus and conciliation.

The Act is drafted on the lines of rules and regulations of the US Federal Maritime Commission (FMC). The director general of shipping will coordinate its execution. Joesph said a shipper had the right to know the rationale of the surcharge imposed by an airline or shipping line or even Concor.

"The government has no plans to control or interfere with freight fixed by service providers. It is a consultative mechanism in a legal framework to curb fly-by-night operators," he said.

Joseph said the government was also planning to set up a three-member grievances redressal panel, including representatives from the judiciary, administration and trade.

However, a section from the shipping industry, including container lines and logistics service providers, alleged that the proposed Act was overlapped by 8 to 10 different legislations.

"Though the objective of the Act is to weed out the service providers that exploit trade and charge exorbitantly, the overlapping of several Acts will make things tougher. The involvement of the judiciary in grievance redressal mechanism will delay decisions," a shipping representative said.

But a shipper said the Act would ensure transparency and quality of service at competitive and reasonable rates, besides accountability.

"The Act will curb abnormal increase in transaction costs as platforms of container shipping lines are placing a series of surcharges without prior notice. This will regulate the terminal operators too," he pointed out.

A shipping ministry official said there was no going back on the decision to enact the legislation. "The government is not against any category of people or organisation, but it is in the interests of the country as a whole and for the shipping industry in particular. There is a need to have a monitoring and regulatory dispensation in the form of a statute or Act," he added.

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READY TO SAIL

The Act aims to tighten control over shipping industry intermediaries

The legislation will bring under its scanner charges like documentation and surcharges filed by shipping lines, railway operators and airlines

It includes provisions for mandatory registration of all intermediaries and penalties