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Tuesday, September 20, 2011

Cabotage - What is it ?

E 6 is the European route running from the southern tip of Sweden at Trelleborg into Norway destined to Finnmark.  Running a length of 3140 km the route ends close to Norwegian border with Russia.   Sure you know the NH 7 – National Highway 7 in India that runs through the states of Uttar Pradesh, Madhya Pradesh, Maharashtra, Andhra Pradesh, Karnataka, and Tamil Nadu.  This road covering North South corridor runs over 2369 km.

--  and one of the many  differences  between these two roads arising out of usage  is ‘cabotage’.  Have you ever heard this term ?    The dictionary meaning of this noun would :  1)   Trade or navigation in coastal waters. 2. The exclusive right of a country to operate the coastal trade or  the air transport.  Cabotage  is the transport of goods or passengers between two points in the same country by a vessel or an aircraft registered in another country.  In the road haulage industry 'cabotage' is the right, on a temporary basis, to operate road services in another member state.

Cabotage is commonly used as part of the term "cabotage rights," the right of a company from one country to trade in another country. Most countries do not permit cabotage by foreign companies.  Economically, cabotage regulations that limit trade to domestic carriers constitute a form of protectionism.   In the United States,  Section 27, also known as the Jones Act, deals with cabotage (i.e., coastal shipping) and requires that all goods transported by water between U.S. ports be carried in U.S.-flag ships, constructed in the United States, owned by U.S. citizens, and crewed by U.S. citizens and U.S. permanent residents. The purpose of the law is to support the U.S. Maritime industry.

Whence no cabotage right exists,  on a hypothetical service from Dubai to Bangalore via Mumbai, a Foreign Carrier cannot offer carriage of passengers from Mumbai to Bangalore, even when seats are empty.  Only those passengers who had boarded at Dubai can travel upto Bangalore.  To understand this better take a simpler road carriage  example, there are roads running between States – and if you are to move goods from Chennai to Nellore which is around 175 km and would take less than 3 hours, one would employ a Road Transport carrier who would carry the goods to destination.  That the Carriers Act 1865 became Carriage  by Road Act  2007 and this statue would regulate such transportation is entirely outside the purview of this article.

When goods are entrusted to a carrier, the carriers have certain rights and liabilities which are regulated under such Transport Acts.  On acceptance of goods, the carrier becomes responsible for carriage safely to destination agreed upon.  There will be liabilities arising out breach of duty – the primary of them being the carriage as also safety in delivery at destination.  Unlike our Asian continent, where there is little of regional cooperation,  Transport in Europe provides for the movement needs of over 700 million people  and associated freight. The political geography of Europe divides the continent into over 50 sovereign states and territories. This fragmentation, along with increased movement of people since the industrial revolution, has led to a high level of cooperation between European countries in developing and maintaining transport networks.  There are many Organisations and Treaties extending to Countries bringing them under one roof and agreements transcending National frontiers have developed allowing people and vehicle movement across the borders of Nations.  Road, rail, air and water transportation are all prevalent and important across Europe.  Freight transportation has a high level of intermodal compatibility and the European Economic Area allows the free movement of goods across 30 states.In most countries, roads carry the European route designation beside national road numbers. Other countries like Belgium, Denmark, Norway and Sweden have roads with exclusive European route signage (Examples: E 18 and E 6) while at the other end of the scale, British road signage legislation does not make provision to signpost E-route numbers.

Just after the present Test Series with India, England went on to a play an One-off One dayer with neighbouring IrelandIreland is an island to the northwest of continental Europe. It is the third-largest island in Europe and the twentieth-largest island in the world.  It is separated from Great Britain by the Irish sea.   The island is divided between the Republic of Ireland, which covers just under five-sixths of the island, and Northern Ireland, a part of the United Kingdom, which covers the remainder and is located in the northeast of the island.  Though Ireland is an entity by itself, if you want to travel to Ireland, you can do so by car using the ferry crossings.  The travel  route is  Hook of Holland – Harwich, after which you drive to one of the ports at the Irish Sea in about 6 to 8 hours.

There is now newsreports that  Irish lorries are being impounded in west coast UK ports by the government, which claims Irish hauliers are operating illegal cabotage. In practice, a number of Irish companies send unaccompanied trailers to Liverpool, Fishguard, Pembroke and Holyhead, where they are collected by Irish drivers who have stayed overnight near the ports. The contention of UK Govt is that the trailers should be collected by British hauliers.   The Irish Road Haulage Association contends that it is sensible for the Irish drivers driving load across Irish sea to stay in Britain collect Irish trailer on their way back.  They are persuading for classification of four relevant ports as international, so that existing cabotage rules will not apply.   At the moment, an Irish haulier is allowed to make three journeys in the UK – but any trip involving a UK port is considered one of those three trips.   If the ports were classified as international, they wouldn’t count, so collection from, and drop-off at, a port would not be seen as domestic movements.

Such policy of protectionism is new to UK but not Worldwide going by the Sec 27 of the Jones Act.  Under Indian Cabotage Regulations, movement of coastal trade is reserved for Indian flag vessels and operation of foreign vessels in Indian waters is restricted.   Indian regulations require all Indian ships and foreign ships chartered by Indian shipowners, to acquire trading licenses from the Director General of Shipping, prior to proceeding to sea. Although foreign vessels are permitted to ply in the coastal trade of India under license, in practical terms, attaining such a license is difficult inasmuch as the foreign companies are required to establish non-availability of Indian Flag vessels that meet with the specifications of the foreign vessels seeking the license. Moreover the license is of a temporary nature and upon renewal, similar compliances may be required.
Photo courtesy : Hurol Hekimbasi

The coastlines and trade in such zone being of such strategic importance, they were recognised in earlier years also.  The act of sailing along the coast is called ‘caboter’ in French.  It is stated that in the 16th century itself, France legally limited their lucrative coastal trade declaring that only French ships could trade in French ports.   Many countries followed it including the Turkey and the Turkish maritime sector has Cabotage Act.  In Turkey, the cabotage law was adopted in 1926.  This restriction is believed to benefit the citizens as a privilege by protecting the native traders against foreign flagged vessels.   This law provides only Turkish citizens to operate and have the right to carry goods and passengers  in inland rivers, lakes, the sea of Marmara and the straits, all-black water and the land remaining in the gulf waters.  For this reason,  in  Turkey, the day of 1 July each year,  is celebrated as "Maritime and Cabotage Day".

With regards – S. Sampathkumar

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