Change of Service Tax on Prepaid Ocean Freight to India

The Government of India Ministry of Finance, through its three new notifications dated 13 April 2017, has shifted the responsibility of discharge of Service Tax on ‘Freight paid at Origin’ from the person in-charge of the Vessel to the Importer of goods, in India.

“… [I]n respect of services provided or agreed to be provided by a person located in non-taxable territory to a person located in non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India, person liable for paying service tax other than the service provider shall be the importer,” the Ministry of Finance said in its revised decree issued last week and slated to take effect April 23.

“… [I]n case of foreign shipping lines, their services being exports from their home country, are zero-rated in their home country and thus have suffered no taxes. Further, the foreign shipping lines do not get registered in India and do not follow the provision of CENVAT credit rules,” the amendment notification stated. “Hence, [the] benefit of conditional exemption will not be available to them and service tax will be paid [levied] on full value of services.”

As a result, invoices issued by those carriers for prepaid freight would be subject to a service tax of 15 percent instead of the 4.5 percent previously announced.

This is effective on all shipments with Bills of lading dated on or after 23 April 2017.

Please contact RCL Agencies  representative at 973-779-5900  if you have any  questions.

Indian Dockworker Strike Postponed

Trade unions representing dockworkers at various major (or public) ports in India reportedly agreed to postpone a nationwide indefinite strike scheduled for April 19 until May 12, according to a report in the Journal of Commerce.

The decision of strike postponement came after preliminary talks with officials from the Ministry of Labor this Monday.

At the meeting, the chief labor commissioner suggested union representatives have another round of negotiations with officials from the Indian Ports Association (IPA) on April 21 in an attempt to reach a settlement, port sources told JOC.com.

As we reported earlier, the strike notice was jointly issued by a consortium of seven leading national labor federations calling for changes in the Major Ports Authority Bill 2016. The bill would eventually lead to total privatization of India’s major ports and their roughly 50,000 workers.

The following  ports that may be affected include Kolkata, Paradip, Visakhapatnam, Chennai, Tuticorin, Cochin, New Mangalore, Mumbai, Jawaharlal Nehru Port Trust, Kandla, and Mormugao.

Stay informed with RCL Agencies updates about global trade and international shipping.

Shanghai Yangshan Port Congestion

Please be advised that the congestion at  Shanghai’s Yangshan deepwater port has increased by more than 40 percent since the beginning of April  and could last until mid-May, the Journal of Commerce reports. The congestion is affecting mainly the Asia-Europe, trans-Pacific, and Asia-Australia trade lanes

The average delay per vessel from April 16 to April 18 has grown by 42 percent to 53 hours compared with week before, and by 41 percent compared with the first week of April, CargoSmart analysis shows.

Very foggy conditions, which can last for several days along the affected region in China, is the most immediate cause of the delays, as ships are unable to reach port and are being rerouted.

Besides bad weather, other factors have combined to cause  congestion.  A large number of containers from Hanjin Shipping, which collapsed last year, remained in the port taking up space. A second reason was the service and terminal changes that accompanied the Alliance re-shuffle starting April 1st  and the third reason  is the capacity mismanagement among the major terminal operators within Yangshan, where one operator has idle capacity and the another is buried in boxes and ships.

Many ships from other carriers remain at sea,  waiting for conditions to improve before attempting to enter the port.

The Shanghai International Port Group has been trying to address the capacity issues and has been shifting some port calls from Yangshan to its other terminals in the city. However, as the busiest container port in the world, the sheer volume of boxes moving through the terminals are difficult to manage even when everything is going right.

RCL Agencies will continue to monitor the situation and provide more updates. Please be guided accordingly .

Moving Customs E-Clearance from St. Petersburg Faces Opposition

The Russian government has pushed ahead with plans to situate the Federal Customs Service’s e-customs clearance for the Russian northwest in the port of Bronka despite shipper and marine terminal operator opposition, the Journal of Commerce reports.  The Center for Electronic Declarations at Bronka (ECD) will be located  at Bronka , this is 37 miles from St. Petersburg, Russia’s busiest container port.

Customs shows no sign of moving the ECD, which will stay in Bronka at least until the middle of 2018, according to Alexander Getman, head of the North-Western Customs Administration.  Testing of the CED has been successful and there have been no technological problems or delays, Getman said.

According to terminal operator UCL Holdings this  will increase costs and transit times because much of Russia’s customs documentation must still be in hard copy form.

Terminal operators that have voiced opposition to the changes, including Global Ports, have said that housing the e-customs center in Bronka could force them to increase their rates 5 to 7 percent.

Shippers can still handle customs clearance issues at St. Petersburg, but electronic customs declarations will be phased out at those locations in favor of the Bronka CED over the next several months.

Need help with shipments to Russia?  RCL has extensive experience shipping in and out of Russia – contact us today for assistance with your shipping needs!

India Tries to Avert Nationwide Strike

The Indian government is trying to avert a threatened nationwide strike by unionized dockworkers  starting from April 19th that would impact supply chains, the Journal of Commerce reports.

The call for an indefinite industrial action beginning April 19 has been given by a consortium of labor groups representing dockworkers employed at major, or public ports as protest against a reform of major port trusts through new legislation dubbed the Major Ports Authority Bill 2016.

The dockworker unions have already served an official strike notice to respective port authorities and the Ministry of Shipping, highlighting their concerns and charter of demands.

Senior officials from the ministries of labor and shipping will enter talks with union representatives April 17 to review workers’ charter of demands, according to the latest government communique.

The labor unions fear the reform program would lead to privatization of port activities in a phased manner and in turn, a loss of jobs and social security for the workers.

The new port legislation, which already has been cleared by the union cabinet, broadly aims to replace port management under boards of trustees with independent boards that will have the power to fix tariffs and make major investments.

“With a view to promoting the expansion of port infrastructure and facilitate trade and commerce, the proposed bill aims at decentralizing decision-making and to infuse professionalism in governance of ports,” the government said in a previous statement.

RCL Agencies will continue to monitor the situation and provide more updates once available. Please follow us for more updates.

Gioia Tauro Port Strike April 13th and 14th

Please be advised that the port stevedores labor union has announced a strike at the largest Italian port Gioia Tauro, for April 13th -14th.

The parties involved are doing all possible to minimize to avoid the strike and reach the agreement.

RCL Agencies will continue to monitor the situation and provide further updates once available

Russian Highway Toll Increase Lower than Planned

The Russian government has decided not to double tolls for federal road use as part of the Platon electronic toll collection system thanks to strikes and protests by truckers.  The tolls will still increase 25 percent to 1.9 rubles ($0.033) per kilometer (0.6 miles) starting April 15th, the Journal of Commerce reports.

The lower level of increase makes it less likely that shippers will move volumes to Russian rail operators as some shippers and transportation analysts have predicted.

While the government has decided not to hike tolls as high as first planned, it may still tinker with toll rates and could introduce a system whereby truckers pay less the more miles they travel.

The lack of competition in the rail sector and the concerns over pricing have allowed trucking to become the dominant form of domestic cargo transportation in Russia, with 88 percent of the marked compared to rail’s 12 percent share.

Russia’s busiest domestic route, between St. Petersburg and Moscow, illustrates the cost advantages of trucking. It costs 42,000 rubles ($745) to move a container between those destinations, compared to 49,000 rubles ($870) by rail.

Need help with shipments to Russia?  RCL has extensive experience shipping in and out of Russia – contact us today for assistance with your shipping needs!

Russia Establishes Rules for Ocean Carrier Pricing

The Russian Federal Anti-Monopoly Service (FAS) together with global container lines has completed the development of the first set of special rules regulating carriers’ in the local market, according to information provided by the Journal of Commerce.

Establishing the new rules is part of a recent settlement between the FAS and ocean carriers regarding allegations of a cartel on the Asia-St. Petersburg trade in 2012 and 2013.

The new rules underscore a recent trend of greater government investigation of  pricing practices of the world’s leading ocean carriers. That came less than a year after container carriers settled with EU trustbusters to revise their pricing practices following an antitrust probe.

The new Russian rules call for the end of carriers publishing general rate increases and puts into law the requirement that container lines conduct contract talks individually with customers and not share information about such talks with other carriers.

The design of other rules is currently ongoing.

Russian shippers support the changes, saying that they will prevent the use of general rate increases by one carrier as a signal to others that they should raise rates.

Need help with shipments to Russia?  RCL has extensive experience shipping in and out of Russia – contact us today for assistance with your shipping needs!

US Bill Reintroduced to Prevent Labor Slowdowns and Disruptions

US lawmakers have reintroduced legislation that would redefine labor slowdowns at US ports as unfair labor practices, effectively enabling the federal government to crack down on disruptive labor maneuvers and “injured parties” to demand monetary reward for damages incurred.

The same legislation was introduced once before, in June 2015, without ever making it out of the Senate. None of the bills make it clear who would be the ultimate arbiter to make the distinction between an unlawful work slowdown or a lawful reduction in dispatched labor.

The Republican senators that introduced the bill last week specifically cited the 2014 and 2015 West Coast dispute between the International Longshore Warehouse Union (ILWU) and terminal operators with the Pacific Maritime Association (PMA). There’s no official estimate, but retaliatory labor and employer actions two years ago cost the US economy billions of dollars and left cargo stranded for weeks on end.

Although port operators have argued that the unions use go-slow tactics to gain leverage in coastwide contract negotiations, like those in the 2014 to 2015 dispute, the labor groups themselves maintain slowdown allegations are hearsay. Groups such as the ILWU do often base decisions, such as the reduction in the dispatch of skilled labor, on health and safety claims.

The Prevent Labor Union Slowdowns, or PLUS, Act would allow shippers, terminal operators, and transportation providers to seek double augmented damages resulting from slowdowns and recover attorney and expert witness costs. Ostensibly, the threat of such suits would also discourage slowdowns from occurring the in the first place.

“By qualifying the ‘slowdown’ tactic as an unfair labor practice, this bill will ensure businesses can continue to import and export their goods regardless of these disputes,” said Sen. Jim Risch, R-Idaho, who reintroduced the bill alongside Sens. Mike Crapo of Idaho and David Perdue of Georgia.

It is unclear how effective such legislation would be, as it designates no arbiter who could decide if a slowdown had occurred, or if a union had reasonably reduced dispatched labor.

Stay informed with RCL Agencies updates about global trade and international shipping.

 

Indian Dockworkers Threaten Strike Action in April

India’s major ports face a new threat of labor stoppages in April after the government cleared new legislation reforming the public port system, the Journal of Commerce reports.

Labor groups representing dockworkers employed at major Indian ports has voted to stage an indefinite nationwide industrial action starting April 19 to press for changes in the Major Ports Authority Bill 2016.

The new law, which is set to replace the Major Port Trusts Act 1963, will transform major port trusts into independent companies with greater operational and financial autonomy and deregulate pricing so they can better compete with private rivals, commonly known as minor ports.

Dockworker unions are expected to serve a 15-day strike notice to respective port authorities shortly. In the meantime, labor leaders exhorted workers to hold extensive campaigns across the country to highlight the core issues.

RCL Agencies will  continue to monitor the situation and provide further updates once available