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The Rail connectivity issue needs to be looked into if the East Coast ports have to get adequate cargo

SS:  The Ports situated in the West Coast especially in Gujarat and Maharashtra are flourishing while the ones in the East coast are working only fifty per cent of their capacity. What kind of railway infrastructure is required to connect East coast ports with Central India and the National Capital Region which have emerged as manufacturing centers of the country?

ANS:  The rail connectivity from West coast ports and their hinterland have improved substantially over the years. It will get further boost when the Mumbai Delhi Dedicated Freight Corridor is commissioned. All industrial investments in the country are going towards Western India because of this infrastructure.

Congestion in some of the East Coast ports like Chennai have also contributed to Shipping lines moving to the West Coast. There was a time when Ninety five per cent of the cargo meant for Hyderabad or Nagpur used to go via the East Coast ports. Now one hundred per cent of the cargo, meant for Central India, is moving through West Coast ports

The only way to reverse the trend is to improve the rail connectivity between East Coast ports and their hinterland.

The government is talking of Chennai Bengaluru Industrial Corridor for quite some time. But the proposed corridor unlike the one between Mumbai and Delhi has no Dedicated railway track for freight. The same is the case between Visakhapatnam and Chennai Industrial Corridor.

Karnataka government is building a Multi Modal park on the proposed Chennai Bengaluru Industrial Corridor about sixty kilometers from Bengaluru. However the Park has no rail connectivity. The Park cannot be called Multi Modal unless there is rail connectivity.

The Rail connectivity issue needs to be looked into if the East Coast ports have to get adequate cargo. We have taken up the issue with the government several times at various meetings.

SS: The Direct Port Delivery of imports and Direct Port Entry of exports (delivery of cargo from the port to the factory premises with Minimum customs intervention) have taken off in a big way thanks to encouragement from the Customs. In the changed supply chain scenario in the handling of EXIM cargo, will not the role of Container Freight Stations and Inland Container Depots become redundant? Do CFS and ICDs have to change their business model and diversify into areas like Ware Housing and Cold Storage?

ANS: The Government has eased the Customs clearance part through direct port delivery of imports and direct port entry of exports. The clearance time has been brought down drastically, to a minimum level. Hence these schemes of delivery have taken off from major Ports in a big way.  The government has set a target for major ports to achieve at least forty per cent of the total turn-over through DPD and DPI. Some ports like Chennai have exceeded the target by achieving forty five per cent last month. The scheme is good for the Client.

But some customers other than big clients like Ford or Hyundai, especially on the MSME sector have space constraints to store cargo. They donít have space in their factory premises to receive imports directly. Because of this problems, even Customs cleared DPD containers which could have directly gone to the factory premises, land up in Container Freight Stations for storage. So there is a big shift in the pattern of cargo flowing into CFS and ICDs.

They not only handle directly imported containers, but also customs cleared containers which land up. Citing an instance Chennai port handles 45 per cent of the import containers through DPD. But at least fifty per cent of the customs cleared ones which could have moved directly to factories lands up at Container freight stations for last mile connectivity.

Hence the introduction of DPDs and DPIs has not affected the business of container freight stations or the Inland container depots.

But Container freight stations and Inland container depots are reorienting and reinventing their business models to face any eventuality in future. For instance many CFS companies have decided to create specific areas, where the infrastructure for handling customs cleared DPD containers, are created. We are also adding more ware-housing and storage space within the freight stations. There are around forty container freight stations in and around Chennai Port.

SS: Logistics is emerging as a major industry since manufacturers want to cut costs and bring down inventory costs. Since the Logistics costs in India are as high as 14 per cent of the GDP, What needs to be done to bring them down to realistic level? This has a direct bearing on the competitiveness of our Exports.

ANS: The government must take up the development of East coast ports to bring down the logistics cost. This will help to divert the cargo coming from China and far-East countries to east coast port rather than going all the way to west coast ports for onward movement to Central India and Northern states. Such a move will down the time as well as cost.

Direct port delivery and direct port entry will also end up cutting logistics cost. Implementation of projects like providing short road connectivity to ports through Sagar Mala scheme will also help in cutting costs.

The proposed eight lane Chennai Salem can also help in containing logistics cost. Salem which can provide excellent connectivity to South Tamil Nadu, Southern Karnataka and Southern Andhra Pradesh besides Kerala can emerge as Logistics hub of Southern India provided net work of roads are built to connect the city with  ports in the region like Tuticorin, Karaikal , Cochin and Vizhinjam.

Taking advantage of the location advantage of the city, a large number of ware housing projects have come up in around Salem during the last few years. There must be an organized way of developing Salem into a Logistics Hub.

The whole project should not end up merely by providing eight lane highway from Salem to Chennai. It is not as if that you go and drop your boxes (Containers) at Salem. The city should be linked with modern highways to provide connectivity to Tuticorin, Cochin and Vizhinjam ports besides Chennai. The projects should be integrated with Sagar Mala Scheme so that there is an overall development of the area.

The government should also set up a Multi Modal logistics hub near Salem with proper rail connectivity. Salem should be developed on Hub- Port Model.

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