Do CTOS face bleak fu­ture?

In the re­cent NISAA con­fer­ence the prospects for the CTOS ap­peared any­thing but en­gag­ing. High cost and lead times, pol­icy is­sues, dwin­dling cargo vol­umes are re­sist­ing CTOS from mak­ing a head­way

Maritime Gateway - - Contents - By Vi­jay Ku­rup

In the re­cent NISAA con­fer­ence the prospects for the CTOS ap­peared any­thing but en­gag­ing. High cost and lead times, pol­icy is­sues, dwin­dling cargo vol­umes are re­sist­ing CTOS from mak­ing a head­way.

On 4th Jan­uary 2007, a his­toric con­ces­sion agree­ment was signed between the Indian Rail­ways and 14 con­tainer train op­er­a­tors. The con­ces­sion agree­ment was an im­por­tant move in the im­ple­men­ta­tion of Pub­lic Pri­vate Part­ner­ship (PPP) between the Govern­ment and the pri­vate par­ties. The then Rail­way Min­is­ter de­scribed the agree­ment as a win-win sit­u­a­tion for the par­ties con­cerned, i.e. the Rail­ways, the op­er­a­tors and the cus­tomers. Now af­ter al­most a decade, the sheen of the con­ces­sion agree­ment ap­pears to have worn off. Where do the pri­vate Con­tainer Train Op­er­a­tors (CTOS) stand to­day?

In the re­cent NISAA con­fer­ence the prospects for the CTOS ap­peared any­thing but en­gag­ing. Cargo vol­umes had dwin­dled - ced­ing the ground to road­ways. It was in 1981 that the first con­tainer ship­ment moved to an in­land des­ti­na­tion in In­dia by rail. To­day there are 18 CTOS with 430 rakes and 90 ter­mi­nals between them. How­ever, since then the pen­e­tra­tion of con­tainer­i­sa­tion in In­dia has been 55 per cent as op­posed to 75 per cent to 80 per cent in other coun­tries and pri­vate CTOS have not been able to make much head­way.

CONCOR, which had se­cured a beach­head in in­ter­modal move­ment, seemed to have forged ahead from the pack. Kalyana Rama, Man­ag­ing Di­rec­tor, CONCOR, said that they were plan­ning to in­crease the size of fu­ture de­pots from the cur­rent 40 acres to 200 acres. It plans to de­velop 100 lo­gis­tic cen­tres and 20 MMLP all over the coun­try.

The ba­sic prob­lem to­day was that there was no tran­sit as­sur­ance for cus­tomers and cargo vis­i­bil­ity, he said. In or­der to over­come this short­com­ing, it had com­menced con­tin­u­ous cargo vis­i­bil­ity for all the ship­ments han­dled by CONCOR. It would also pro­vide in­ven­tory of all con­tain­ers loaded or empty, un­der-stuff­ing or de-stuff­ing, in tran­sit etc, lo­ca­tion-wise to all their cus­tomers. This in­for­ma­tion would be pro­vided ei­ther through mail or through an app in their phones for all its lo­ca­tions.

While CONCOR was forg­ing ahead, the other CTOS, have not been as pro­gres­sive. Ra­jasthan, Pun­jab and the NCR have be­come the largest con­trib­u­tors to the re­gion’s exim busi­ness. “One would have ex­pected that the move­ment of cargo would in some way be a mat­ter of na­tional pri­or­ity,” said K Sathi­anathan, Man­ag­ing Di­rec­tor, Dis­tri­bu­tion Lo­gis­tics In­fra­struc­ture. Un­for­tu­nately that is not the case. To­day there has been a de­cline in exim move­ment of con­tain­ers into north­ern In­dia.

The same view was echoed by Amit Ku­mar, Di­rec­tor, Pres­tine Lo­gis­tics Pvt. Ltd. The north had not at­tracted the kind of cargo that could be car­ried through in­ter­modal­ism. The Pri­vate Freight Ter­mi­nal pol­icy has been changed five times in five years. This stymies in­vest­ments to these schemes. Amit Ku­mar said that the 4-5 year de­lay in set­ting up some mul­ti­modal parks in the NCR had re­sulted in flag­ging en­thu­si­asm for fund­ing from banks, which then look at other sec­tors. To­day bank loans for the sec­tor have be­come a prob­lem.

The cur­rent land ac­qui­si­tion prob­lems have also ag­gra­vated the sit­u­a­tion. It was im­pos­si­ble to ac­quire 200 acres of land for de­vel­op­ment of MMLPS.

Out of 18 con­tainer train op­er­a­tors in the field, about 5 to 6 have wound up op­er­a­tions. APL Linx has ex­ited from Lud­hi­ana due to over­ca­pac­ity in that re­gion.

Noth­ing had changed in the last 25 years, says Pankaj Sharma, Head of Lo­gis­tics, Honda Mo­tors. The ba­sic cus­tomer re­quire­ments of cost and lead time con­tin­ues to dog them even to­day. The cost in­curred in bring­ing a con­tainer from Ja­pan to Pi­pavav was less than shift­ing the con­tainer from Pi­pavav to the hin­ter­land des­ti­na­tions. A ship­ment from Thai­land reaches Pi­pavav in 12 days but takes an­other 12 days to reach Dadri, giv­ing lo­gis­tics heads like Sharma sleep­less nights.

Due to these prob­lems the last fac­tory com­mis­sioned by Honda Mo­tors was at Ta­pukara in 2008, af­ter which

no new fac­to­ries have come up in North In­dia. Like­wise, he said Maruti moved to Gu­jarat. Yamaha to Chen­nai. Honda Mo­tor­cy­cle & Scooter In­dia Pvt Ltd (HMSI) moved to Gu­jarat and Ben­galuru. No­body wants to come to the north, Sharma said.

To­day bu­reau­crats are even ques­tion­ing the need for ICDS and CFSS in hin­ter­land areas, says a ruf­fled Man­ish Puri, Man­ag­ing Di­rec­tor, APL In­dia Linx who had at­tended meet­ings with the bu­reau­crats. DPD (Di­rect

Port De­liv­ery) and DPE (Di­rect Port En­try) is fur­ther draw­ing away cargo from the north. Go­ing for­ward sev­eral mea­sures taken by the Govern­ment would go against move­ment of cargo to the north.

The port led de­vel­op­ment, one of the pil­lars of the Sa­gar­mala project, would see a ma­jor­ity of in­dus­tries shift­ing to coastal states. This would also see a de­mo­graphic shift to those areas. There are im­me­di­ate goals to in­crease DPD from cur­rent level of 37 per cent to 50 per cent by April 2018. DPD would be made manda­tory for AEO cus­tomers.

Cus­toms au­thor­i­ties at Jawa­har­lal Nehru Port Trust have made it eas­ier for ship­pers to take ad­van­tage of the DPE scheme meant to speed ex­port traf­fic and re­duce lo­gis­tics costs. Cur­rently, fac­tory-stuffed ex­port con­tain­ers for five spe­cific cat­e­gories of man­u­fac­tur­ing units are al­lowed to gate-in with­out a “Let Ex­port Or­der,” or LEO, cer­tifi­cate at In­dia’s busiest con­tainer gate­way.

All these mea­sures do not au­gur well for the CTOS. San­jay Bhanushali suc­cinctly stated the predica­ment faced by them when he said “is­sues have not changed much but the depth of is­sues have changed over the pe­riod of time.” The cargo trac­tion that was ex­pected did not ma­te­ri­alise. The way of get­ting the cargo to the hin­ter­land had to be ef­fi­cient and less costly.

Clearly, the govern­ment’s ef­fort with the Sa­gar­mala project is to sift man­u­fac­tur­ing away from the hin­ter­land to coastal states so that there is ef­fi­ciency in cargo move­ment. Are the grandiose plans of cre­at­ing CTO to take cargo from the hin­ter­land to the ports now be­ing shelved? For CTOS to sur­vive, the num­bers have to re­duce and ef­fi­ciency has to be­come much greater. Would con­sor­tium or con­sol­i­da­tion work?

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