CII pushing for another terminal at Mumbai port

CII has been pushing for another port terminal at Jawahar Lal Nehru Port Trust (JNPT) of capacity 200000 TEU (twenty equivalent units) a year to decongest the port. More than 50 per cent of the upcoming Western dedicated freight corridor from Tughlakabad to JNPT passes through the Western region.

“We have urged the government to declare areas for warehousing zones, declare integrated logistics parks as infrastructure projects and simplify customs procedures,” said Mr. Tushar Jani Chairman, CII committee of Logistics and Chairman Blue Dart Aviation. “We have also been seeking competition among various service providers,” he added.

“Cost of transportation is not an issue,” said Mr Jani. It is the finance cost (buying two instead of one), carrying cost of inventory and infrastructure costs which actually upset the equation.

There is discrimination even when logistics service providers go to the railways. Concor IR's own company gets a container rake at much cheaper rates than private operators and this jacks up cost. “We have been demanding all these for the last two years but no one's listening,” said Mr Jani.

Forty per cent of the domestic cargo is marshalled at Bhiwandi. More than 50 per cent of the container traffic passes through JNPT. One third of India's air cargo is routed through Mumbai airport. About 70-75 per cent of sea cargo goes through the western region.

“The western region is seeing the development of many new ports especially Hazira and Dholera in Gujarat; Dighi and many more in Maharashtra,” said Mr.Jani.

Consumption pattern in India follows a crescent route. For instance, Ahmedabad, Mumbai, Pune, Delhi – Jaipur and Chennai- Bengaluru to name a few and Bhiwandi is the fulcrum around which domestic logistics revolves around.

PPP model Flawed

There is a basic flaw in our PPP model. Entities quoting the highest revenue win the bids instead of those who would bring down the total cost to the end user. 36 per cent of Mumbai airport revenues go to the government and 46 per cent of JNPT revenue also goes to the government. They are obliged to provide infrastructure facilities said experts.

As on date trucks wait for an average of three hours at every toll gate or octroi post increasing the turnaround time for every trip undertaken. Financing costs will automatically come down once this taken care of. Experts said that the mindset of the Indian customs authority should change. They always speak in a tone as if exporters and importers are causing a loss of revenue to the government.

Manpower Challenges

The biggest challenge that logistics in India is going to face going to face is manpower. The industry requires another 7.5 lakh people by 2015 but the government does not seem to pay any attention to India's largest employer because it is a highly fragmented industry.

There are 1.5 million truck operators with four trucks each. Every truck has at least two drivers and two cleaners making it a total of six million people employed directly. In addition if we take indirect employment such material handling staff and those providing various services to these truckers the number would nothing less than eight million.

With even basic necessities like night shelter and facilities like toilets and baths to do their daily chores lacking, there is no incentive or operators to invest in technology upgradation and skill development.

The laws are archaic and bifurcated and there is no uniform multimodal transport policy framework in place. A logistics provider can be charged under four different acts for negligence. The business though is slowly uniting itself.

There are challenges with respect to connectivity at ports and infrastructure at Bhiwandi. CII is working on a paper that talks about the impact of the unified goods and services tax (GST) on Indian logistics. The immediate impact of this will be felt by warehouses as their pattern will drastically change. Goods will hence forth be warehoused at the factory, at the state border or close to the customer as application of GST entails a levy only when the state border is crossed.

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