Poti logistic companies strike against the monopoly
17 April, 2014
Poti logistic companies strike against the monopoly
Employees of 42 freight carriers operating in Poti Port of Georgia started a warning strike on 4 April to protest the monopolist position of APM Terminals, which owns and operates Poti Port. The Ministry of Economy and Sustainable Development of Georgia promised to clear the situation to satisfy all sides, however, no solution was drawn as of yet. The strike halted Poti Port working process for 2 hours, however, this was just a warning for larger protests to come soon
if APM Terminals, which owns and manages the Poti Port together with its adjacent Poti Free Industrial Zone, does not stop the monopolist practice that poses threats to all 42 logistic companies based in Poti to go bankrupt and leave their 5 000 employees jobless.
APM Terminals is a unit of Denmark’s A.P. Moller-Maersk, the largest container ship operator in the world, which acquired 80 percent of the port in April 2011 from RAKIA UAE. The point is that Maersk terminal is located in the Clearance Economic Zone (CEZ), created by the State in 2011 for custom clearance procedures. This has put the said terminal in a privileged monopolist position. In 2011, the State made it mandatory to implement customs clearance procedures on all imported cars at this terminal only. Starting this May, all cargos are expected to be cleared only at these Maersk terminal, owners of other terminals say. However, there is no official law giving this kind of exclusive right to APM Terminals, which obviously enters into other logistic activity as well and will become a full logistics market monopolist soon. This will end up by shutting all the 42 companies based in logistic service in Poti down. According to Irakli Iashvili, Chairperson of the Supervisory Council of East Gate Group affiliated with the French-based CMA CGM [the third largest container transportation company in the world], all 42 companies are in compliance with Georgian labor code and warned their employees a month ahead about the impending bankruptcy and job closure. Employees got nervous and went on a warning strike to attract the attention of the State, which is the only one who can solve this problem.
As a matter of fact, the problem with logistics in Poti started in 2011 when the former government deployed state-owned CEZ throughout Georgia to ease business life, while private terminals said it killed the competition because CEZ seized their cargos. Since 2011 the State obliges shipping companies via verbal order only to implement customs clearance of cars at CEZ alone. As the power shifted in 2012 the problem only aggravated: Ministry of Finances made the requirement on car customs clearance procedures at APM Terminals exclusively legal, while unofficially allowed them to handle all cargos starting from 1 May 2014. As the Revenue Service of the MOF informed Georgian Journal, the law does not prohibit customs clearance procedures of any cargo, except cars, at other terminals. However, terminals report on the vicious practice of customs officers, mandated by a verbal order from upper ranks, never coming to other terminals to implement the lawful customs clearance. Administration of APM terminals waives any kind of monopolistic activity away and swears they pursue the best world practice to expand the port infrastructure.
Logistics companies repeatedly appealed to all instances of the Georgian government including to the Prime Minister and the Business Ombudsman to take the market competition under their personal control, but their voice remained unheard. This time, Ministry of Economy heard the voice. Dimitri Kumsishvili, Deputy Minister of Economy and Sustainable Development, visited Poti strike last week and promised to prevent the emergence of a monopolist.
“We will continue negotiations with APM Terminals in a way that APM Terminal might expand its business and at the same time lets other businesses operating in the port go ahead with their activity,” Kumsishvili stated. MOF, which supervises customs affairs, keeps silent.
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