The Hindu Business Line : Domestic container traffic in a jam

INDIA'S international trade in containers, both imports and exports, posted an impressive and steady growth in the past few years to touch 4.2 million TEUs in 2004-05. Between April and October this fiscal, the throughput was 2.6 million TEUs compared to 2.4 million TEUs in the corresponding previous period. But what about domestic container traffic?

Sadly, the state of domestic container traffic, that is, containerised traffic generated in one part of the country for distribution in another part, leaves much to be desired. First, no reliable data is available on the size and composition of the traffic. Worse, available figures confirm that the volume of domestic container traffic is negligible compared to international traffic.

For example, in the case of the country's leading container leasing company, which offers containers on lease for domestic movement, more than 10 per cent of its total holding of a little more than 10,000 containers always remain idle, for whatever reasons.

A look at the Container Corporation of India (Concor), a major transporter of both international and domestic containers. In 2004-05, it handled 3.5 lakh TEUs of domestic traffic compared to 1.37 million TEUs of international traffic. In other words, international traffic accounted for nearly 80 per cent and domestic traffic a meagre 20 per cent of the total throughput.

Of the 55 inland container depots (ICDs) and container freight stations (CFSs) owned and run by Concor, only nine are exclusively devoted to handling domestic traffic while another 18 handle both domestic and international traffic and the remaining 28 only international traffic.

Why this is so? Concor sources say that the organisation was launched primarily to cater to the requirements of importers and exporters, that is, international trade. It started handling domestic traffic from 1998-99.

However, both Concor and the container leasing industry sources feel that the mindset of the country's corporate houses is largely responsible for the present situation.

Barring a handful, majority of the decision-makers in the corporate sector are yet to realise the full import of transporting their consignments by containers across the country.

Also, there is no facility to manufacture domestic containers. A handful of units that manufactured containers a few years ago have all pulled down their shutters. However, the emergence of China on the scene made all the difference. The Indian container manufacturers, including a public sector company, after having failed to match the competition thrown by China, had no option but to close down.

The problems facing the domestic container sector are many. The market is fragmented, infrastructure inadequate, laws complex and technological aids insufficient. In international trade, there is standardisation of products, processes and procedures for handling containers.

Ships, ports, terminals, handling equipment, documentation, everything has been standardised in such a way that containers can be handled in any port of the world without any difficulty. Unfortunately, this is not so in the domestic movement.

A large number of containers are transported by road and there is no standardisation of vehicles for their movement. There are various types of vehicles made by several manufacturers, the specification of each being different.

As a result, various types of containers, ranging from a low of 10-tonne capacity to 40-tonne, are on the roads.

Then there is the problem of overloading. The road conditions and the implementation of rules and procedures as laid by regional transport authorities vary from one State to another. Also, compared to international trade, the movement of empties in domestic trade is greater. This adds to the cost.

Interestingly, India's domestic container traffic scene presents such a dismal picture at a time when the country is being touted as the land of opportunity for logistics service providers all over the world.

This is because there has been a rise in the demand for logistics services, largely driven by the growth of the economy, which was 7.3 per cent in 2004-05 and is predicted to grow between six per cent and seven per cent in 2005-06.

The country's logistics market, valued at around $14 billion in 2004, is expected to grow at a compounded annual growth rate of about seven per cent.

What is the hope, then, for those engaged in the domestic movement of containers? First, the country's corporate sector must change its present mindset.

Business groups need to understand that they can be winners by opting for containerised movement of their goods even within the country.

Also, new ground must be broken. Goods transported to neighbouring countries by road could be sent in containers.

The potential for container movement in inland water routes and along the coast must be explored and tapped. Whether containers can be used unconventionally in areas such as rural health, mobile hospitals, Defence and even in disaster management, can also be examined.

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