DPD: Do­ing busi­ness with ease

Di­rect Port De­liv­ery (DPD) sys­tem en­ables im­porters and con­signees to de­liver di­rectly from port ter­mi­nals. CARGOTALK speaks to the vet­er­ans about how DPD is help­ing the in­dus­try and fa­cil­i­tat­ing CFS busi­ness.

Cargo Talk - - Front Page - KAL­PANA LOHUMI

As a part of ‘ease of do­ing busi­ness’, Jawa­har­lal Nehru Port (JNPT) had ini­ti­ated Di­rect Port De­liv­ery (DPD) last year. With this ini­tia­tive, the con­tain­ers are de­liv­ered straight from its port to the con­signees (im­porters), in­stead of ini­tially hold­ing it at a Con­tainer Freight Sta­tion (CFS), sav­ing time and cost in­volved. CFS is an off-dock fa­cil­ity li­censed by the Cus­toms De­part­ment to help de­con­gest a port by shift­ing con­tainer­ised cargo and car­ry­ing out cus­tom­sre­lated ac­tiv­i­ties out­side the port area. This con­cept came into busi­ness due to cus­toms pro­ce­dures and space con­straints at many of the coun­try’s ports. Hence, cus­toms clear­ance hap­pens at the CFS. But, with DPD, it is ex­pected to speed-up de­liv­ery of cargo con­tain­ers to im­porters/con­signees to check ex­tra cost and time in­volved in the clear­ances. Even JNPT was de­signed on the CFS model. Ex­plain­ing the con­cept of DPD, Capt Ram Iyer, Vice Pres­i­dent, Sea­horse Ship Agen­cies, shares, “In­dia has rat­i­fied WTO’s Trade Fa­cil­i­ta­tion Agree­ment and con­se­quently, the In­dian gov­ern­ment, with a clear aim to ex­pe­dite seam­less lo­gis­tics; dis­charge, move­ment, re­lease and clear­ance of goods in­clud­ing those in tran­sit, has em­barked on a path-break­ing DPD regime to en­hance ease of do­ing busi­ness.” “In­dian gov­ern­ment and cus­toms of­fi­cials are keen on en­hanc­ing the DPD lev­els to 40 per cent, and the trade in gen­eral in­clud­ing the CFSs and ter­mi­nals, etc., whole­heart­edly sup­port the same,” he adds. Now the ques­tion comes, ‘does this con­cept af­fect CFS’ busi­ness?’ takes a look at what is go­ing to hap­pen with the CFS busi­ness if im­porters/ con­signees can take de­liv­ery of the con­tain­ers di­rectly from the port ter­mi­nals and haul them to fac­to­ries with­out tak­ing them first to a CFS. Di­nesh Gau­tama, Pres­i­dent, Navkar Cor­po­ra­tion, in­forms, “The CFS busi­ness will con­tinue. It will trans­form with mod­i­fi­ca­tions to suit the chang­ing sce­nario. The CFSs have been set up as per the guide­lines is­sued un­der gov­ern­ment poli­cies for the de­vel­op­ment of the coun­try and will con­tinue to op­er­ate un­der the chang­ing en­vi­ron­ment.” “With en­hanced ca­pac­ity in In­dian ports sec­tor, DPD model surely was on the cards and like ev­ery other busi­ness, with a chang­ing en­vi­ron­ment, the ex­ist­ing CFSs will, over a pe­riod of time, need to re­align, re-en­gi­neer their ser­vices ac­cord­ingly to fur­ther en­hance their ser­vices to en­com­pass a whole range of al­lied ser­vices in the EXIM lo­gis­tics busi­ness. Most of the CFS ma­jors would have strate­gised and geared suit­ably to cater to evolv­ing changes,” feels Iyer. He adds, “Profit mar­gins of CFS op­er­a­tors have surely come un­der pres­sure and in the present sce­nario, one does not en­vis­age, new play­ers to come into this arena. Con­sol­i­da­tions, merg­ers and ac­qui­si­tions could be on the cards.”

Kalyana Rama, CMD, CONCOR, says, “The in­creased adop­tion of DPD and Di­rect Port En­try (DPE) fa­cil­i­ties at the var­i­ous ports of the coun­try is the

need of the hour. Port-led de­vel­op­ment is an im­por­tant cat­a­lyst for over­all eco­nomic growth and has a key po­si­tion in the sup­ply chain trade. Thus, in­creased share of DPD/DPE would suf­fi­ciently strengthen the sup­ply chain by sig­nif­i­cantly low­er­ing key pa­ram­e­ters such as de­liv­ery time, trans­ac­tion cost and trans­porta­tion cost. Thus, this would con­trib­ute to the in­creased com­pet­i­tive­ness of both the ex­port-ori­ented man­u­fac­tur­ing and trade ac­tiv­i­ties as well as the do­mes­tic mar­ket. With this back­drop and var­i­ous in­no­va­tive mea­sures be­ing taken by the gov­ern­ment to fa­cil­i­tate im­ple­men­ta­tion of this con­cept, the role of the CFSs around the ports needs to be re­vis­ited. The ICDs would be more rel­e­vant in the hin­ter­land, where they would pro­vide an ex­ten­sion to the sea­port by rail/road.”

Role of CFS in long cargo dwell time

Adds Gau­tama, “The CFS has no role to play in long cargo dwell time at all. As soon as the cargo is dis­charged from the ships, the CFS trail­ers make a bee­line for the ter­mi­nals and start evac­u­a­tion from the port to the CFS. If the con­signee is ready at any stage, hav­ing com­pleted the cus­toms for­mal­i­ties and get­ting ‘out of charge’ sta­tus, the cargo is handed over to the con­signee.” “As per a re­cent study, in an en­deav­our to re­duce dwell time of cus­toms au­thor­i­ties and en­deav­our­ing best, a slew of mea­sures have been en­sured, in­clud­ing manda­tory fil­ing of ad­vance bill of en­try, and there has been a sig­nif­i­cant de­crease in dwell time. As a re­sult, ground rent charges of im­port laden con­tain­ers, which con­trib­ute sig­nif­i­cantly to the bot­tom line of CFS, has also been af­fected,” shares Iyer. On the con­trary, Rao ex­plains why CFSs re­quire to re-visit their busi­ness model with the im­ple­men­ta­tion of DPD/DPE since short lead cargo would now not be avail­able to them. “The fa­cil­i­ties could be utilised for ware­hous­ing, cargo ag­gre­ga­tion/dis­ag­gre­ga­tion and stor­age of th­ese DPD/ DPE con­tain­ers which an im­porter/ex­porter may not be able to do so in his premises be­cause of paucity of space,” he adds. “Thus, as is ap­par­ent with some smart busi­ness reengi­neer­ing, CFSs can utilise the op­por­tu­nity thrown up with the im­ple­men­ta­tion of DPD/DPE to tap on the large busi­ness vol­umes avail­able. All the stake­hold­ers would re­quire to get sen­si­tised to the new sce­nario and re­de­fine their role in the re­newed sup­ply chain,” he con­tin­ues.

Im­pact on CFS af­ter DPD

“Yes! vol­umes han­dled by CFSs have been af­fected due to DPD. How­ever, one does not en­vis­age the for­tunes of CFSs to dra­mat­i­cally change and in fact, DPD regime could be the real cat­a­lyst to en­sure much de­sired im­prove­ment in qual­ity and ser­vice pa­ram­e­ters at CFSs, to re­tain and at­tract clients, as well as also en­sure a host of cost ra­tio­nal­i­sa­tion mea­sures and stay ahead in a highly com­pet­i­tive sce­nario,” feels Iyer. “The role of the CFS con­tin­ues to be the same. Un­der the DPD sys­tem, the cargo is taken di­rectly from the ter­mi­nal to the con­signee’s factory. Hence, the CFS does not come into the pic­ture. How­ever, if con­signee’s have any spe­cial lo­gis­tics re­quire­ments for stor­age and de-stuff­ing of ‘out of charge’ con­tain­ers, the CFSs are al­ways there to meet any spe­cific re­quire­ments of such con­signees,” Gau­tama ex­plained. “To­day, ports in In­dia are a place of ‘in­ter­change’ ba­si­cally just for load­ing and dis­charg­ing of con­tain­ers. All other func­tions like ex­am­i­na­tion, test­ing, stor­ing, and await­ing com­ple­tion of other for­mal­i­ties (ADC, chem­i­cal test­ing, PQ, FSSAI etc) can be done at the CFSs. Such func­tions of a CFS help in de-clog­ging the ports, as­sist­ing the con­signee to com­plete the for­mal­i­ties, and at the same time as­sist in the stor­age for ap­pro­pri­ate move­ment at re­quired stages to the factory. This helps main­tain the mo­men­tum at the fac­to­ries with­out the need for stresses in the sup­ply chain,” he says. “CFS op­er­a­tors are hope­ful that In­dia’s growth in con­tainer­ised trade vol­umes could surely en­sure that the vol­umes han­dled at CFSs are not sig­nif­i­cantly af­fected or al­tered with the in­tro­duc­tion of DPD de­liv­er­ies,” adds Iyer. Re­al­is­ing the im­por­tance of In­land Con­tainer De­pots (ICDs), Rama, adds, “Thus, the rel­e­vance of ICDs would re­main in­tact with more stress be­ing given for in­creas­ing the rail share for move­ment of cargo to the hin­ter­land. ICDs would fa­cil­i­tate the im­porters and ex­porters and have a large scope of tap­ping the grow­ing busi­ness vol­umes with the push to the ‘Make in In­dia’ cam­paign. Th­ese hin­ter­land ICDs would have to pro­vide fa­cil­i­ties such as mod­ern ware­hous­ing, value ad­di­tion ser­vices and fa­cil­i­tate all those ac­tiv­i­ties which are in line with the con­cept of Multi Mo­dal Lo­gis­tic Parks (MMLPs). With the im­ple­men­ta­tion of GST and the up­com­ing DFCs, th­ese hin­ter­land ICDs would play a ma­jor role in mov­ing the ex­port/im­port cargo from the sea­port to var­i­ous man­u­fac­tur­ing and con­sump­tion cen­tres in the hin­ter­land.” Adding to that, Gau­tama notes, “Ware­hous­ing is an op­tion in the sup­ply chain. But each CFS will have to look at its own strengths and func­tion­al­i­ties based on its ge­o­graphic lo­ca­tion vis-à-vis hin­ter­land.”

DPD could be a cat­a­lyst to en­sur­ing de­sired im­prove­ment in qual­ity and ser­vice pa­ram­e­ters at CFSs, to re­tain and at­tract clients The in­creased adop­tion of DPD and Di­rect Port En­try (DPE) fa­cil­i­ties at the var­i­ous ports of the coun­try is the need of the hour Un­der DPD, the cargo is taken di­rectly from the ter­mi­nal to the con­signee’s factory. Hence, the CFS does not come into the pic­ture

Capt Ram Iyer Vice Pres­i­dent Sea­horse Ship Agen­cies

Kalyana Rama CMD CONCOR

Di­nesh Gau­tama Pres­i­dent Navkar Cor­po­ra­tion

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