Adani Logistics to shut ICD Kanech at Ludhiana

P Manoj Mumbai | Updated on May 26, 2020

Use ICD at Kila Raipur to serve Ludhiana trade

Adani Logistics Services Private Limited, a unit of Adani Logistics Ltd, will shut its inland container depot (ICD) at Kanech in Punjab’s Ludhiana district from June 25, in a first clear sign that a steep fall in export-import (EXIM) container volumes due to the pandemic has started to hurt dry port operators.

The Ludhiana market generates a throughput of about 25,000 twenty-foot equivalent units (TEUs) a month.

“In the same catchment area of Ludhiana, there are seven ICD’s including CONCOR and GatewayRail Freight, serving a market of this size and those volumes are even further down due to the pandemic,” said a container industry consultant.

“What will happen is with the pandemic hitting the industries and trade, some ICD’s will be closed going forward. People who thought that economy will continue to grow at a big pace, so they said ok if not in two years, then in 3/4/5 years they will start making money. But with the outbreak of COVID, all those projections have been pushed back by at least 2/3 years. That is the reality which will start hitting a lot of people. That would be the basic reason behind the closure of ICD Kanech,” he added.

The ICD at Kanech came under Adani’s fold after it acquired Innovative B2B Logistics Solutions Pvt Ltd from private equity firm True North for an enterprise value of ₹331 crore in March last year.

In a public notice issued on Monday, Adani Logistics Services informed its customers that it will stop accepting EXIM cargo at the Kanech ICD from June 25. The company also said that it will be applying for the de-notification of the custodian ship under Section 45(1) of Customs Act.

Adani Group (Logistics Division) said it will continue to serve Ludhiana trade through another fully functional facility - ICD Kila Raipur - and urged customers to plan their EXIM shipments accordingly.

An ICD is an off-dock facility licensed by the Customs department to help decongest a port by shifting containerized cargo and for carrying out customs-related activities outside the port area.

A big player like Adani closing down an ICD brings out the kind of stress on the bottom line of all the dry ports in the country due to the impact of COVID, the consultant mentioned earlier said.

Adani Logistics may convert the ICD, which has a rail siding, into a private freight terminal/purely domestic terminal or a warehouse.

The fixed cost of running an ICD involves paying the salaries of Customs officials posted at the facility by the company, estimated at some Rs 2 crore per annum.

“Why should Adani run two ICDs to serve Ludhiana area, incurring huge costs. When volumes are not there, it doesn’t make sense,” the consultant added.

Published on May 26, 2020

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