India’s Expanded Import Reform Intensifies Pressure on 3PLs

Besides emerging as a “hot spot” for container transhipment freight to and from South India — capturing as much as 70 percent of that market last fiscal year — the Krishnapatnam Port appears to have generated sizeable shipper interest in the direct port delivery (DPD) program that Indian authorities see as an effective, long-term remedy for rising cargo dwell times and resultant port congestion issues.

Statistics collected by JOC.com show the alternative, privately operated minor cargo hub transacted nearly 70 percent of its laden import shipments via DPD in fiscal 2017-2018, which ended March 31, with that volume pegged at 54,653 TEU during the year.

That rapid progress is a clear sign that the benefits of DPD are percolating through relatively smaller hinterland markets, after northwest shippers using Jawaharlal Nehru Port Trust (JNPT) steadily increased their participation in the ease-of-doing-business plan, following vigorous stakeholder efforts and trade roadshows.

Direct port delivery’s advantages

Under DPD, customs-accredited clients are able to clear their imports directly from the wharf within 48 hours of freight landing at the port, which obviates the shippers’ need to shift containers to an off-site container freight station (CFS) for storage and customs clearance — a long-time practice at JNPT in the wake of limited on-dock yard space. With JNPT shippers increasingly opting to use the speedy, direct process to take advantage of opportunities to minimize logistics costs in a difficult market environment, so-called supply chain intermediaries no longer enjoy the bargaining power they had in the past regarding cargo storage and other related functions there.

Sensing the danger of being marginalized in the supply chain ecosystem at JNPT, some of the dominant third-party logistics providers (3PLs) have strategically extended their logistics reach to new, smaller locations. However, with these locales — such as Krishnapatnam — also actively joining the DPD program, due to intense government push on productivity improvements, it remains to be seen how the relocation strategy will play out for the business model-threatened community in the long run. That said, expanded operations appear to be a viable short-term bet, as dominant port-based 3PL Gateway Distriparks Ltd., with a new 48-acre CFS site at Krishnapatnam, boosted its fourth-quarter volume 8.2 percent to 105,066 TEU, from 97,104 TEU in the October-December quarter, after previous declines.

“GDL Group has shown strong resilience in the competitive market,” Mumbai-based GDL said in a statement.

Krishnapatnam secures scrap import freight-related approval

At the same time, Krishnapatnam is striving to attract more import traffic and to that end, the company this week announced it secured special government approvals and deployed advanced Rapiscan systems for handling scrap import freight, which the company claims will dramatically speed customs examinations.

“It’s an excellent service offering convenience and benefiting customers, customs, and the port alike in terms of time, cost and efficiencies,” Krishnapatnam Port CEO Anil Yendluri told JOC. “With improved TATs [turnaround times] and enhanced efficiency, the service offers immense value and huge savings across the supply chain whilst providing a fool-proof security system.”

In addition to sophisticated marine infrastructure, Krishnapatnam has strong rail-road connectivity — operating three weekly intermodal train services connecting hinterlands, and boasting a three-hour truck turnaround rate. Also, the privately operated minor port has joined hands with Container Corporation of India to launch a direct weekly rail shuttle service between Krishnapatnam and Nagpur, a major inland point in the central region, ostensibly with the goal of capturing cargo moving via JNPT.

Officials also told JOC.com that the company is working with authorities to offer radio-frequency identification (RFID) technology-enabled container tracking services — designed to facilitate real-time cargo location visibility — whereas the use of RFID sealing tags for factory-stuffed export shipments is already under way at Krishnapatnam.

“It has been our priority to embrace the best practices and the right technologies offering the advantages of increased productivity,” Yendluri added.

Krishnaptnam Port, about 112 miles north of Chennai, encompasses two berths with a combined berth line of 2,150 feet, an 89-acre back-up area, nearly 5,000 ground slots, and a 1.2 million-TEU annual capacity.