The Hindu Business Line : Hurdles to getting air cargo moving

Trade members associated with air cargo have expressed concern over the decision of the Ministry of Civil Aviation to reduce the free period for cargo clearance at airports to three days, from five, effective October 1.

They say it will be difficult to clear cargo in three days, given the infrastructure bottleneck at airports and delays in getting clearances. The reduction only helps private airport operators and not the trade.

With the increase in cargo volume, the trade was planning to ask for an increase in free time, to seven days from five. The reduction has come as a shock, said a trade source.

Recently, trade members took up the issue with the Director-General of Foreign Trade at a meeting organised by the Federation of Indian Export Organisations in Chennai. They argued that the reduction in free period was done without improving the infrastructure at airports.

From flight touchdown

According to Mr N. Siva Subramaniam, Chairman, Air Cargo Agents Association of India, Southern Region Council (ACAAI), the free period should be in terms of hours from touchdown of the flight and not calendar days.

When a flight lands a few hours before midnight, an entire day of the three-day free time is lost after midnight even though no activity would have taken place. Effectively, there are only two days left to clear the cargo. The Ministry’s order of September 28 states that for export cargo, free period for airlines is reduced from four working days to 48 hours, whereas free period for exporters is retained at 24 hours. Thus, the total free period available will be 72 hours.

Any cargo handled and stored at an international gateway should have a reasonable free time for completing formalities of the carriers, customs and custodian. “We will not be able to complete the formalities in a day,” the source said.

‘Detailed study needed’

Further, when tariff for handling cargo at gateways was determined, a reasonable cost of storage is also factored in, considering the normal time taken for completion of ma0ndatory formalities.

Any shift to reduce or increase the dwell time needs a detailed study that takes into account the infrastructure, process time, manpower resources, equipment availability and investment cost, said Mr Subramaniam.

Process time should also be benchmarked considering infrastructure equipment availability. If at the end of the study it is decided to increase the free period, then there is scope for increasing basic handling charges, he said.

On the contrary, if there is a reduction of free period, then the tariff should also be proportionately scaled down as the storage factored in the handling rate will be reduced.

The present reduction in free time only increases the revenue of the airport authority without any effort on its part to improve efficiency or increase infrastructure facility. The two extra days of storage would automatically add to its revenue.

During earlier revisions of storage charges and in discussions, the trade was of the view that out of the free period of five days, the Airport Authority takes at least two days to complete its formalities — documentation, data entry or physical handling of cargo. Hence, importers get only three days of free period, he said.

The Electronic Data Interchange connectivity among the customs, airports, airlines and cargo agents should be put in place before any reduction in free period was enforced. This would enable fast clearance of import cargo, he said.

Airport accountability

According to Mr Asad Caasim, Managing Committee Member, ACAAI, the reduction in free time is uncalled for and is against the interest of trade. However, the trade may not object if the free period starts from the time the cargo is readied for delivery.

This should include depalletisation, segregation, data entry up to binning — which is data entry in airport authority system for storage of cargo in the earmarked location. “If this is implemented, then there is an accountability of the airport authority also and their failures cannot be passed on to trade. In the absence of any such accountability, it would be the trade that would suffer without any fault on their side,” he said.

Unlike major ports, that are governed by the Major Ports Act, which empowers each port to formulate its own tariff, the rates for handling/free period for airports are as per the directions of the Ministry of Civil Aviation. Hence the uniqueness of airports, infrastructure limitations, space constraints, equipment and manpower resources are not considered.

“Applying the yardstick of airports such as Mumbai and New Delhi to other airports, including Chennai, will not be in the interest of the trade,” he said.

Performance benchmark

Mr J. Krishnan, Chairman, Expert Committee on Logistics, Madras Chamber of Commerce and Industry, said benchmarking the performance of various agencies, and penalties in case of non-compliance, is not in place in India. In some of the international airports, the custodians commit to deliver cargo within two hours if it arrives on a passenger flight and eight hours if it arrives on a freighter. This is not so in India.