Stepping up its reform pace, the government of India has devised a new import handling plan to supplement the much-publicized direct port delivery (DPD) program.
Authorities have called on various stakeholders to examine the proposed fast-track/streamlined last-mile/last touch logistics plan for inland container depots (ICDs) — dubbed “direct inland delivery” or DID — which they believe will prove to be another major boon for hinterland shippers striving to reduce logistics costs in a hyper-competitive market environment.
Cites DPD’s success
In a communique to customs authorities nationwide, India’s Central Board of Indirect Taxes & Customs (CBIC), under the Ministry of Finance, highlighted the enormous success DPD has achieved regarding cargo dwell time improvements at Jawaharlal Nehru Port Trust (JNPT) and related cost benefits for exporters/importers with the marginalization of supply chain intermediaries.
“Going by the success of DPD at JNCH [Jawaharlal Nehru Customs House] and encouraging figures at other gateway ports, CBIC intends to implement a similar concept at ICDs,” the board stated. “This procedure [DID] would be applicable for the ICD-bound containers only after entry inwards have been granted at the gateway port.”
CBIC stated that the share of DPD cargo at JNPT has dramatically increased — to 40 percent from just 5 percent two years ago — and that with steady trade growth, the impact in absolute terms is much more significant.
Listing proposed procedural compliances, the board said importers registered under DID will have to complete documentation and duty payments prior to goods arrival at their designated ICDs and that stakeholders should consider offering tariff incentives for DID containers, in lieu of free storage days that apply under the normal delivery practice.
“There is a need to take up this aspect with the respective custodians so as to devise a tariff structure [which acts as a financial incentive] where importers voluntarily opt for DID clearance for pre-identified containers, rather than avail the free period at ICD as non-DID containers,” CBIC said.
Further, the agency said stakeholders will need to take into account cases where all containers manifested on the bill of lading do not arrive in a single shipment — a frequent occurrence at ICDs — and suggested custodians extend DID to all manifested containers, including those yet to arrive, subject to other compliances.
Under DPD, customs-accredited clients can clear their imports directly from the wharf within 48 hours of freight landing at the port, which obviates the shippers’ need to shift containers to an off-site container freight station (CFS) for storage and customs clearance — a long-time practice at JNPT, due to limited on-dock yard space. With JNPT shippers increasingly opting to use the speedy, direct process to take advantage of cost benefits, which customs officials put at about 30,000 rupees (about $436) per TEU, so-called supply chain intermediaries no longer enjoy the bargaining power they had in the past regarding cargo storage and associated logistics functions there.
Statistics collected by JOC.com show JNPT handled 545,365 TEU of DPD shipments, out of 1.7 million TEU laden imports during the year, representing 32.4 percent of JNPT volume.
DPD — competition for logistics providers
With authorities intending to achieve an 80 percent DPD share at JNPT in the years ahead and vigorously extending the program to other major and minor ports, there appears to be what industry analysts call an “existential crisis” for port-based logistics providers, particularly those engaged in the operation of CFSs, unless they radically remodel their service offerings.
In addition, shippers’ participation in the direct port entry (DPE) program — facilitating speedy gate-in of factory-stuffed exports — is steadily gaining momentum, with state-owned Jawaharlal Nehru Container Terminal logging a 77 percent DPE share in fiscal 2017-2018, statistics show.
Notwithstanding the third-party logistics provider disruption caused by reforms, the new, supplementary import plan is a clear sign that the government is extremely keen on eliminating supply chain hurdles, as the emerging market economy develops and expands.