India allows ports, terminals to charge $2 per container RFID fee

India allows ports, terminals to charge $2 per container RFID fee

Jawaharlal Nehru Port Trust.

Above: Jawaharlal Nehru Port Trust (JNPT). Photo credit: JNPT.

Real-time supply chain visibility has been a priority for shippers, but a mandatory radio-frequency identification (RFID) fee for container tracking may prove to be a burden for cost-conscious exporters/importers, battling intense competition.

With the government setting a firm Sept. 30 deadline for all ports and terminals to join the RFID program, the national port regulator Tariff Authority for Major Ports (TAMP) last week issued a decree allowing stakeholders to apply a “mandatory user charge” of 145 rupees (about $2) per container, except for transshipment and coastal cargo, transacted through the network.  

The bottom line for shippers: all shippers must pay the RFID fee, which is collected by terminal operators. Five percent of this fee goes to ports/terminals, with the remainder forwarded to the administrator, DMICDC Logistics Data Services (DLDS).

The additional fee rule took effect July 3 and will remain in force until March 31, 2019, the order stated.

“Based on the communication received from the MOS [Ministry of Shipping] to make the levy of MUC [mandatory user charge] applicable to all the major port trusts and private terminals operating there, this authority agrees to incorporate the provision relating to levy of MUC in the scale of rates of all major port trusts and private terminals,” TAMP said.

However, the authority said stakeholders have the option of providing the digital tracking technology at a lower tariff, in consultation with the service provider.

JNPT added RFID fee in April 2016

Jawaharlal Nehru Port Trust (JNPT) was the first to adopt the RFID technology and shippers there have been incurring this extra user fee since April 2016.

DLDS — a joint venture between India’s National Industrial Corridor Development and Implementation Trust and Japan’s information technology firm NEC Corporation — is tasked with providing RFID tagging and tracing services. The program allows exporters and importers to track goods in transit through the port to inland container depots (ICDs), container freight stations (CFSs) and to end users, thus decreasing logistics costs, as a result of improved predictability and optimization of cargo flows.

Being the service provider and network administrator, DMICDC is responsible for setting up related infrastructure, including RFID tags, at respective ports for import containers routed through the system. Trade sources told JOC.com that the tracking module is currently open to only import boxes handled by road, with electronic readers installed at key highway toll booths. Further, efforts are under way to extend the facility to freight storage locations, such as CFSs and ICDs. A full-fledged RFID operation at JNPT is expected in the coming months, according to sources.

DLDS, in a recent data analysis, said about 7.5 million containers to and from the western corridor have been processed through the RFID network, which also includes the Adani Group-owned minor west coast ports of Mundra and Hazira. Also, officials at Krishnapatnam Port, near Chennai, recently told JOC.com that the company is working with authorities to offer RFID tracking services. 

Integrated, digital logistics tracking — part of prep for increased volume

The idea of an integrated, digital logistics tracking tool stemmed from a government view that container freight handled through major west coast ports would increase dramatically following completion of the Delhi-Mumbai Industrial Corridor (DMIC), an Indo-Japan partnership initiative. The industrial project — originally an estimated $90 billion effort — is supplementary to Indian Railways’ Western Dedicated Freight Corridor — an intermodal transport route connecting Dadri, a key hinterland point near Delhi, to the JNPT harbor. The DMIC essentially calls for the construction of two greenfield ports in Gujarat and one in Maharashtra (both on the west coast), rail and highway connectivity to ports, logistics parks, and other supporting infrastructure such as power facilities.

To be sure, any additional cost for shippers and forwarders is a concern, from the government’s perspective, as it is vigorously working to decrese logistics costs in a very competive international trade market. However, recent cargo dwell time improvements at JNPT, following wider use of the RFID program, support a general argument that the larger benefits of digitization would justify that user levy in the long run. Moreover, initial results are encouraging: new data released by DLDS show that JNPT’s export dwell times decreased 9.4 percent while imports decreased 5.1 percent during April, compared with March.

Besides digitization, which includes paperless gate operations and an electronic, RFID-based self-sealing method for factory-stuffed export shipments, the government is considering several other new measures to increase port productivity. These include restricting dwell times for export-import cargo to 24 hours; and increasing shipper participation in direct port delivery and direct port entry services. 

 

**

RELATED STORIES:

New India import plan is to decrease supply chain cost, time

India sets deadline for nationwide RFID program rollout