All you need to know about the Freight Rate regulations by Government in 2020

Freight management tips for your business

The trade sector of every country is not a part of the private business circle that comprises traders. Its functioning impacts the economy of the country and also the market conditions.

And since the traders are always driven by their personal goals and business strategies, government intervention becomes necessary to maintain sanity in the sector.

The traders are also answerable to the customs department, the Ministry of Trade and Commerce, and other higher authorities. Therefore, after the COVID-19 pandemic hit India in the first week of March, the government intervened and laid out certain rules and regulations regarding the freight charges and billing systems. As a part of the shipping industry, you must know about these changes and comply accordingly.

The implementation of national lockdown, the need for maintaining social distancing, and the introduction of contactless documentation in every department inclined the government to introduce certain rate regulations.

These regulations were to ease the impact of ever-rising freight charges and costs. If you need to know about the recent charges for freight, try keeping track of the changing trends and market demand patterns.

Government rules and regulations help in maintaining the systematic flow of the trade market.

Merchant Shipping Bill 2020: The First Move

You must have heard about introducing the Merchant Shipping Bill that the government drafted in November 2020. The motive behind issuing this bill was to replace and repeal the old Merchant Shipping Act (1958) and the Coasting Vessel Act (1838). The bill is in the public domain to judge and record all the experts’ and traders’ reactions about the same.

Therefore, you may or may not agree with the bill’s ideology and terms, but it will soon affect if the government goes with the majority. The major points that must be in your knowledge about the bill are:

  • The bill aims to incorporate the rules, regulations, and trade practices that the other successful countries like China, the USA, and Singapore follow.
  • The authorities feel that adopting such practices may benefit the growth of the shipping industry of the country. You can go through the details and freight charges of the countries mentioned above to understand what the government intends to do with these new regulations.
  • To promote the ease of doing business, the bill’s implementation will remove the need for having a general trade license for transportation through Indian vessels.
  • The traders can pay freight charges and complete all the electronic media documentation with their CHA’s help (Customs House Agent). The government is making efforts and channelizing resources in this field to enhance the shipping experience.

There are many such steps and decisions taken in this regard to promote the welfare of the shippers and traders in India. You should go through the shipping blogs and online journals to understand the impact of this bill on freight charges.

Freight Regulations Under the Bill

In the Merchant Shipping Bill, the government also moves forward to regulate the freight charges and implement a few rules to benefit the budding traders and Indian shipping lines.

  • The shipping service providers and agents operating in the coastal waters using any Indian vessel or international vessel must mention all the inclusive freight charges in the Bill of Lading.
  • This rule is also applicable for inland logistics providers who deal with any other transport document that serves as a part of the shipping industry.
  • There are strict guidelines in the bill that specify the restriction on adding any form of cost under the name of freight charges, apart from the ones known to the traders.
  • The central government, or any other regulating body authorized by the same, is entitled to prescribe any terms for the Bill of lading insurance. That is, the shippers cannot charge the insurance independently.

The Reaction of Industry Experts and Players

Most of the shippers in the Indian trade industry have criticized this move of the government. There are comments by many explaining why the authorities should not try to control the freight rates or the Bill of Lading. Every person in this sector knows that trade practices are already affected by the national shortage of containers, as most of the traders have to rely on international sources.

  • “Freight rates are the concern of the shippers and merchants as it is a bilateral agreement between the two, so the government should not intervene in this process.”, said Sunil Vaswani, Director, Container Shipping Lines Association.
  • He also claimed that Indian trade would lose much business as the traders will divert to other countries to serve their personal needs.

The government regulations are still under scrutiny, but you should keep an eye on the clock and keep an eye on the updates. The more active you stay with this affair, the more ahead you will find yourself from your competitors. Take assistance from your shipping service provider to seek help if needed.

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