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Faster clearance of imports if it is through Direct Port Delivery at Chennai customs

The Direct Port Delivery of imports hardly took fifty per cent of the time in securing out of charge of clearance by the Chennai customs compared to the cargo routed through Container freight stations Mr Ramesh, Deputy Commissioner of customs said last week.

Addressing a meeting on Direct Port Delivery organized by the Chennai chapter of Confederation of Indian Industry at the Loyola Institute of Business administration the customs official said it took hardly 72 hours on an average for an out of charge customs clearance in the case of direct port delivery of cargo while in the case of routing it through Container Freight Stations, the time taken was around 142 hours.

He said the customs have taken several trade friendly measures including the installation of DPD portal giving information about all the stakeholders involved in clearance of cargo. About 17 per cent imports handled at Chennai port avails of the direct port delivery facility and the intention is to step it up to 35 per cent in the next few months.

EXIM trade has three options in Chennai port to handle imports including direct port delivery, direct port delivery routing through container freight stations and DPD CONCOR Option.

Industries like the automobile major BMW have opted for DPD CFS model since the automobile firm based in Chennai did not have adequate space to store the inventories in their factory premises. Hence the automobile unit preferred to use the Logistics facility provided by the Container freight stations.

The third option will be provided to the trade shortly when Chennai portís gate will be expanded to the Tondiarpet facility of Container Corporation of India. Customs have already given clearance for the project. COCOR will run regular shuttle services from the Chennai port to its yard in Tondiarpet from where the importers can take delivery of the cargo.

Mr Ramesh said the Direct Port Delivery system has been introduced by the government after India became party to the Trade Facilitation Agreement of the World Trade Organization. Logistics costs in India are found to be at an all time high of 14 per cent of the GDP and the aim of the government is to bring it down to ten per cent. Industries who import raw materials on a regular basis will benefit from the DPD model he said.

About 430 select industrial groups selected on a scientific basis in Chennai city are currently availing the DPD option and the feed- back received by the customs from them was encouraging. Many of them including T I cycles have reported that they have saved lot of money through this exercise.

Prof N Chandrasekaran of Loyola Institute of Business Administration said the direct port delivery provided the trade with paperless regulatory environment and could lead to reduction in transaction costs.

The DPD model is picking up fast among the import trade. Nearly 40 per cent of the total imports from the JNPT port at Nhava Sheva near Mumbai is through the DPD model. The new ports like Krishnapatnam and Kattupalli which have lot of a space in the port premises will easily switch over to direct port delivery compared to established ports, he said.

He also spoke about the challenges that DPD would throw including loss of aboutt thirty thousand jobs in the container freight station industry all over the country.

Mr Krishnakumar, giving the perspective of liner industry said DPD existed in different forms including the system of Green channels for imports introduced by the customs in various ports in 1988.

The system, he felt could have been introduced by the government after consultations with various stakeholders. The government had earlier promoted the concept of container freight stations to decongest ports. Now the business model of CFS is questioned by the same government. The container freight stations infrastructure provided by the industry is capital intensive. The cargo clearance system has successfully decongested ports in the past. Now the government has rolled out direct port delivery and the stakeholders have to bite the bullet.

Industries should be provided incentives to convert the existing container freight stations into standalone ware houses. Otherwise the city based ports with limited in built ware housing capacity will have problems in handling EXIM trade. As shipping companies, we welcome the move to introduce direct port delivery since this would help to improve the turn-over of containers.

Mr Joseph of DP world who spoke on behalf of the Container Terminals said the DPD would result in timely delivery of imports. The importer can plan the sequence of production with customs giving the additional facility of providing 72 hours time for the importer in the port to take delivery of their goods.

Mr Joseph said importers who did not storage facility could opt for DPD CFS model and therefore it is a win-win situation for the importers.

Mr Jeyaraj Thamburaj, a senior official of Kattupalli port said the port near Chennai has achieved 41 per cent of the imports through direct port delivery. The DPD turn over in the port is expected to touch fifty percent in the next three months.  The early completion of Outer Ring Road which would help seamless movement of traffic is expected to give a boost to this system of delivery from the port.

DPD is a big opportunity to attract trade for ports like Kattupalli since the movement of cargo can bypass congested arterials roads of cities.

The dpd, he said is a bonanza for the trade since this reduces transaction cost, increases the turn-over of containers and reduces congestion in roads.

Out of the 41 per cent DPD turn over in Kattupalli port, nearly 15 per cent of the cargo is taken delivery by the importers within 24 hours, 25 to 30 per cent within two days. Not all importers could resort to DPD and therefore the container freight stations will not go out of business. The CFSs will have to redefine their business model, he said.

Mr Murugaraj, General Manager, Container Corporation of India said out of 1.5 million TEUS of containers handled by the two terminals at Chennai port, the dpd accounted for 21 per cent. But the quantum handled through this method is likely to increase in the coming months.

The Chennai portís gate will soon be expanded to cover the CONCOR yard at Tondiarpet.  Concor will run shuttle services from the Chennai port to the Tondiarpet yard from where the importers could collect cargo after completing customs formalities. Road movement of containers from the Chennai port could be minimized through this model of clearance. The portís efficiency in handling containers will also improve. The customs have given clearance for this move and the procedure order is under process. He said movement of one rake would mean operation of 50 to sixty tractor trailers into Chennai port could be stopped.

The CONCORís Logistics terminal in the automobile hub at Sriperumpudur, which is currently a Special Economic Zone, will be converted into a domestic tariff area soon. The domestic tariff area could be used as container freight terminal.

Describing DPD as new wine in Old bottle, Mr S Nataraja, President Chennai Customs Brokers association said Containers handled at Chennai port were moved to Central Warehousing Corporationís ware house at Chitlapakkam for bonding way back in 1987. This was the first attempt to reduce congestion in the Chennai port.

There years later the Chennai Customs encouraged movement of cargo to importerís ware houses to reduce congestion in the port.

In the year 2002 select customers were provided with Green channel facility. When container handling in Chennai port touched one million TEU mark in the year 2005, the terminal operator appealed to custom brokers association to move the containers to container freight stations to tackle congestion.

The customs brokers association held an elaborate exercise of consultations with all the stakeholders by holding as many as seventeen meetings before a final decision was taken to move containers to CFSs. Like a Tsunami the containers moved from the port to CFSs. The system was successfully implemented for nearly six years.

IN the year 2011, a section of the importers felt that the logistics cost of movement of containers from the port to container terminals was proving to be high and hence the DPD as a concept was taken up to assist importers.  Mr Ganesh Ram Chairman of CIIís Logistics committee welcomed the gathering.

 

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