** Sagar Sandesh print version ceases to be published from December 31, 2017. New look E-paper would be available from Jan. 1, 2018 onwards. free of cost.**

Container freight station operators face job loss as revenue volumes drop / port

The container freight stations an important component of the EXIM trade where the imports and exports from the port do direct for customs examination before reaching the ultimate destination the Port for exports and manufacturers for imports have lost considerable business during the last few months with the introduction of direct port delivery and direct port entry system for select customers as part of the ease of doing business by the port administration.

The DPD (imports) and DPE (exports) have picked up in major ports of JNPT, Tuticorin, Chennai Kamarajar where the EXIM trade have reduced their dependence on container freight stations resulting in loss of business .As revenue volumes of CFS dropped they have started issuing pink slips to employees and cutting down contracts.

On an average these container stations were handling five to six thousand containers a month but the volumes have come down by over fifty per cent in the last few months as DPD and DPI have picked up in ports. The Chennai port which was handling 20 per cent of the cargo under DPD doubled its turn over under this system in November last year according to M.S Arun chairman of the Chennai chapter of the National association of container freight stations. The DPD rates are very high in private ports of Katupalli  and Krisnapatnam near Chennai. The direct port entry of exports have not picked up in Chennai port due to paucity of space inside the port premises. But private ports are doing this in a bigy way.

Earlier, we were handling 4,500-5,000 containers a month. Since the DPD service, this has halved to 2,000 containers. We obviously have had to shrink operations,” said a spokesman of the private logistics company in JNPT port. Nearly 40 per cent of subcontracts have been reduced by us. This has led to indirect job cuts.

Surveyors, drivers, security, housekeeping and labour contracts are among the subcontract segments in the CFS sector. KerryIndev, with CFS facilities at JNPT, Chennai, Tuticorin and Puducherry, is a leading logistics service provider. It has 20 acres at Navi Mumbai, including 12 acres of container stockyard being used and over 2,000 employees As many as 32 container freight stations operate in and around Chennai and Kamarajar port.

DPD services allow importers and consignees to take delivery of containers directly from port terminals, without having to park these at a CFS, before being taken to factories. This service was introduced in February 2016 and is currently actively on at JNPT, Chennai and Mundra ports. Among the major ports, JNPT has the highest number of CFS facilities, of close to 35 operators. Due to this, an importer gets clearance for cargo in two to three days from the earlier eight to 10 days. Currently, JNPT has 1,249 registered members for DPD, from about 700 members when introduced in 2016.

Allcargo Logistics, Gateway Distriparks, Navkar Corporation, APM Terminals India and Balmer Lawrie are among those in the domestic CFS sector.

Globally, no port has a CFS industry catering to storage of cargo. Across the world, cargo is directly delivered from port to final destination. From the JNPT website, the share of DPD volume handled in December 2017 has gone up to 36 per cent of the total, from 27 per cent in February the same year.

“DPD has been a game changer but has a long way to go. All importers are still not ready and are still to adapt,” according to a Mumbai based shipping agent.

For CFS entities, the capital costs are very high considering the cost of urban land near the ports. With current land prices, it takes Rs 1.50-1.75 billion to set up a CFS near a port..

“The business environment is turning hostile for the CFS sector. There is already 50 per cent excess capacity and since revenue volumes are falling, no new player is coming to set up facilities, In Chennai area which caters to four ports ware housing and bonded storage is a serious problem. There is paucity of this facility and hence with little investment of buildings the existing CFS could convert themselves as godowns for storage.

The DPD system’s introduction featured in the World Bank’s latest ease of doing business report, which put India 30 notches higher than a year before. Encouraged, private and less congested container port terminals such as Krishnapatnam and Visakhapatnam ports are also offering DPD.

Chennai port has shown good traction in DPD right from the inception.. Currently, about 17 percent of the total cargo is under DPD and we aim to take it to 40 per cent,” said B Vimal, traffic manager at Chennai Port.


Copyright © 2018 PORT TO PORT - Shipping Services Portal ( Sagar Sandesh ). All rights reserved.

Follow Us