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?
Krishnapatnam Port records 88 per cent rise in container handling in FY18
- The port plans to become a key transshipment hub on the east coast
- Rail connectivity to Maharashtra to start from May 2018
- Total cargo handled by the port in FY18 registered at 45 MMT
- Total number of containers handled by the port in FY18 – 4,81,408 teus
- The port has witnessed a stark rise in solar shipments
Krishnapatnam Port Company Limited handled 45 Million Metric Tonne (MMT) of cargo in 2017-18 (FY18) thus, achieving a 25 per cent growth over 36.10 MMT handled in the previous fiscal. The company witnessed a record 88 per cent rise in the number of containers it handled at 4,81,408 teus vis-àvis 2,55,439 teus during the last fiscal. Total bulk cargo handled by the port stood at 37 MMT.
Coal, Iron ore and Granite dominated the cargo portfolio handled at Krishnapatnam Port. It is now aspiring to achieve an impressive 52 MMT in bulk and 2 lakh teu in containers this fiscal. The port has planned a total investment of $3 billion of which 1.23 billion has already been invested for development till date with second phase of expansion underway.
On the occasion, Anil Yendluri, Director and CEO said, “Favourable government policies and handling of new cargo such as sand, steel products and agri-commodities have added to the growth of our shipments. Cargo in Andhra-Telangana, north and east Karnataka, besides eastern parts of Maharashtra which were earlier going to other ports have witnessed an instant cost advantage availing route optimization, multimodal connectivity, and competitive pricing after they switched to Krishnapatnam Port.”
“Our world-class technology driven infrastructure further reiterates our claim to offer the most convenient and trade efficient gateway on the eastern periphery of the country,” he further added.
The number of vessels visiting the port rose by 22 per cent to 1290 vessel calls in 2017-18 as against 1061 vessels registered during the same period, last year. With government’s push towards solar energy, the port has also witnessed a sharp rise in solar related shipments. It has successfully concluded 13,084 feus of solar cargo for the year FY17-18. With excellent rail connectivity in the states like Telengana and Bangalore the new connectivity from Nagpur, Maharashtra beginning this May 2018, will offer an additional spurt in shipments.
