Concerns delay India’s advance manifest rules again

Concerns delay India’s advance manifest rules again

Throughput at major public ports in India increased 8.3 percent year over year to 8.2 million TEU during the first 10 months of the country's fiscal year. Photo credit: Jawaharlal Nehru Port Trust.

Unresolved compliance concerns from ocean carriers and other supply chain stakeholders have forced Indian authorities to further delay enforcement of the country’s Sea Cargo Manifest and Transhipment (SCMT) Regulations 2018, a revamped customs program akin to the United States’s 24-hour advance cargo declaration.

Customs officials have already pushed back the start date for the tighter rules twice, from August 1 to November 1 and then to March 1, with the last being even touted as a “firm” deadline. However, with mounting trade pressure, authorities have given the shipping community another reprieve, this time until August 1, 2019, on enforcement of the SCMT program.

Under the revised mandate, carriers are required to submit manifest data in an electronic format and considerably prior to a vessel’s arrival at or departure from Indian ports. Import general manifests (IGMs) must be filed prior to the vessel departing from the last foreign port of call, while export general manifests (EGMs) need to be submitted prior to the vessel sailing from the Indian port of loading. Currently, IGMs are generally filed 48 hours before vessel arrival for long-haul voyages and about 10 hours prior for short-haul routes, such as feeder and coastal services. For EGMs, carriers currently have three days for online filings and seven days for manual submissions from the vessel sailing time.

Industry pushback

Local trade groups — most notably the Maritime Association of Nationwide Shipping Agencies-India (MANSA), which represents local ship agents, and the Container Shipping Lines Association of India (CSLA), the local umbrella organization of foreign shipping lines — have pushed back on the new rules as overly onerous, asking government agencies to reconsider the manifest filing timelines.

During a Jan. 18 interactive session at Jawaharlal Nehru Port Trust (JNPT), industry representatives reiterated their concerns about the new regulations, which they argued would disrupt regional supply chains.

“The requirement as proposed under the SCMT regulations may lead to short-landing or overloading of [a] number of containers as against advance manifest committed prior to departure from last port of call,” MANSA said. “There is also a likelihood of the vessel changing the rotation of ports being called upon and the vessel may call upon another port for loading more containers before calling upon the port mentioned in the advance manifest.”

Stakeholders also worry that the SCMT order puts the onus for compliance squarely on authorized carriers, with no material role for related supply chain intermediaries such as customs house brokers. “It is a concern that such restrictions would most likely, inter alia, (i) increase the cost of doing business and consequently increase the consignee’s costs; (ii) lose out on the economies of scale and efficiency by entering into the business which may not be the competency of shipping lines; (iii) delay the logistical chain of the delivery of containers to the consignee; etc.,” MANSA said.

The group also sought a minimum one-month trial period prior to full enforcement of the advanced customs program and to leave current systems in place alongside the new program for six to eight months to ensure the flow of trade in the event of hiccups in implementation. “Further, it is requested that no penalization or liability is imposed on the authorized sea carrier during such period,” MANSA said.

Maersk Line (India) and CMA CGM (India), two of the busiest carriers in trade to and from India, did not immediately respond to JOC.com’s requests for comment regarding their preparedness for the SCMT rule.

Balancing efficiency and security

The customs reforms complement a raft of digitization and other pro-trade efforts India has rolled out, not only to shore up supply chain efficiency, but also to target potentially risky shipments for safety and security screening. Those efforts include deploying a radio-frequency identification (RFID)-enabled self-sealing method for factory-packed export shipments, restricting dwell times for export-import cargo to 24 hours, and increasing shipper participation in direct port delivery (DPD) and direct port entry (DPE) services.

Given the high priority placed on transport cost improvements, the government has also put forward a draft logistics policy for stakeholder comment. India’s import and export costs currently constitute between 14 percent and 18 percent of its GDP, compared with about 9 percent in the United States, 10 percent in Europe, and 11 percent in Japan, and New Delhi wants to bring that figure down to 10 percent to help make domestic goods more competitive globally.

“India also has a skewed modal transportation mix, with 60 percent of freight moving on roads, which is significantly larger than in key developed economies,” the provisional document announcing the advance manifest program stated. “The primary aim of the National Logistics Policy 2018 is to enable integrated development of the logistics sector in the country. It aims to inform, clarify, strengthen, and prioritize the key objectives, focus areas and the governance framework for logistics in India. It also clarifies the role of the various stakeholders including central ministries, state governments, and other key regulatory bodies.”

Courting outside investment

The larger goal behind those reforms and other trade-centric measures is to position India as a more attractive investment spot than other emerging markets. The effort seems to be paying early dividends, as global port terminal giant DP World has set up a $3 billion investment platform in partnership with the government of India to pursue interests beyond its core port and terminal infrastructure verticals, including freight corridors, special economic zones, inland container terminals, and cold storage offerings. Under this initiative, the company earlier this month broke ground on a 44-acre free trade warehousing zone at JNPT.

“Our investment will contribute to the region’s economy by connecting business from our global network, creating domestic employment opportunities and enabling world trade,” DP World chair and CEO Sultan Ahmed Bin Sulayem said in launching the inland logistics project. The Dubai-based group holds six terminal concessions in India.

The Maersk Group is also bullish about long-term growth prospects for the emerging Asian economy. The carrier has been beefing up its end-to-end logistics offerings, especially for reefer trade, in an effort to establish a larger footprint in the Indian market.

Increasing demand is also evident in a steady improvement in container volume at India’s major public ports. New data collected by JOC.com show major ports’ combined throughput at those ports increased 8.3 percent year over year to 8.2 million TEU during the first 10 months of the Indian fiscal year (from April 2018 to January 2019).

(Story updated to reflect August 1 extension date)