articles | 13 March 2013

Shipping agents want control of Limassol Port

Shipping agents are seeking to take over the operation of Limassol port, offering a reported €32 million to buy out the Licensed Porters Association (LLPA).

The Cyprus Ports Authority, which regulates matters concerning licensed porters, has given the green light for negotiations between the two sides. A meeting took place at the Cyprus Ports Authority on Monday, where the Cyprus Shipping Agents Association presented their offer to the LLPA, and are now awaiting their response.

It’s understood the €32 million – considered quite a large sum by those in the industry – covers goodwill, buying out the licenses held by the LLPA and the annual fee paid to the Cyprus Ports Authority. The ports authority is said to be favourably disposed toward a new operator coming in, so long as the fee paid to it is reasonable. Sources said initially the shipping agents had proposed a 50-50 share between them and the LLPA, but the offer fell through due to disagreements over who would retain management.

The LLPA is a collective of businesses employing longshoremen for transportation of freight from the ships to storerooms and their safekeeping during their storage until delivery. They procure the equipment - such as forklifts - and supervise the collection of cargo from ships, which they transport, sort out and deliver to the consignees. The longshoremen themselves are self-employed.

On-and-off talks between the shipping agents and the LLPA have been going on for almost a decade. They were on the verge of a deal in 2008 but the agents had pulled out due to difficulties in securing financing from the banks. Industry sources said the shipping agents would likely do a better job of running the ports if only because it is in their best interest. By contrast, the LLPA has no stake in the volume of traffic; if their revenues happen to drop, they can make up the shortfall by hiking up the loading/unloading fees charged to shipping lines.

This is precisely what has happened in recent years, the same sources said. Due partly to the global economic crisis, cargo traffic at Limassol port has dropped by about 1 to 1.5 million tonnes compared to 2008. The LLPA apparently made things worse by charging higher loading/unloading fees, driving away a number of shipping lines. Because of the high shipping costs, many shipping lines have chosen other destinations – such as Port Said – over Cyprus as a transit centre.

Labour relations are another issue. Due to collective agreements currently in force, longshoremen refuse to work extended shifts, meaning that normal service is often disrupted. It’s understood that the shipping agents intend to alter the longshoremen’s terms of employment should they take charge.

The agents’ bid for running the port comes amid a police probe into suspected fraud involving the LLPA. The investigation relates to suspected over-invoicing for equipment purchased by the LLPA, as well as to totally bogus invoices. Reports said the total over-invoicing amount could run in the millions.

Source: Cyprus Mail

 

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