A reworked customs policy regarding direct port delivery (DPD) operations — announced in April and intended to create a level playing field for third-party logistics providers (3PLs) operating container freight stations at Jawaharlal Nehru Port Trust (JNPT) — has generated an apathetic response from terminal operators. JNPT handles the majority of India's container freight.
As the scale of DPD handling — under which pre-approved importers can clear their freight directly from the wharf within 48 hours of landing at the port — substantially increased and, in turn, proved to be a growth disruptor for the port-based logistics industry, customs authorities at JNPT lifted a previous notice restricting storage of DPD containers left uncleared by consignees at the wharf beyond this timeline, to a single, port-designated off-site depot, and reopened that business opportunity to all storage yards in and around the port.
The Container Freight Station Association of India (CFSAI), the umbrella body of warehouse logistics providers, however, said there has been no noticeable, broader shift of DPD cargo, due to the above rule change, thus far — except for the roughly 4,000 TEU per month provided by APM Terminals’ Gateway Terminals India.
“We held meetings with Nhava Sheva International Container Terminal and Nhava Sheva (India) Gateway Terminal, [both operated by DP World], and we were informed that they are complying. However, there was not a single box under such category for any of our CFS [container freight station] members,” the group said. “We somehow find it difficult to believe.”
At the same time, CFSAI stated that following its intervention with JNPT, port-operated Jawaharlal Nehru Container Terminal offered to put in place necessary logistics rearrangements to facilitate such DPD diversions.
The association, which represents 27 CFS operators, also urged authorities to deal with terminals’ disinclination toward that wider DPD logistics operation, at the upcoming stakeholder review meeting.
India’s ease-of-doing business goals
The government has a two-pronged goal under the ease-of-doing-business program: decrease dwell times at the port with speedier cargo clearance and reduce logistics costs via the elimination of so-called intermediaries in the supply chain ecosystem.
The results are, by and large, encouraging, as data collected by JOC.com show JNPT has steadily increased its DPD volume, with that percentage hitting a new high of 40.6 percent in July. Dwell times at the port — which typically cause congestion — have also improved considerably, but rail-related clearance issues lately have impacted the overall progress on this front.
To tackle that tardiness in the clearance of railed freight to/from inland container depots, JNPT intends to bring down, in phases, the allotted free storage time for cargo handled by road from the current seven days to three days. Stakeholder consultations are under way regarding this proposal.
Looking ahead, the government wants JNPT to transact as high as 80 percent of its imports via DPD, which will further increase the challenges facing 3PLs who essentially operate on a single-port market basis, unless they radically remodel their service offerings. This sentiment was shared by dominant market research firm CRISIL in a recent analysis.
“To offset this [setback], CFS operators are expected to focus on alternative revenue sources from allied logistics and transportation services,” the agency, a unit of credit evaluator Standard & Poor’s, stated.