CONCOR Solution to Trailer Congestion at Chennai Port

Source: http://www.sagarsandesh.com/epaper/ dtd June 27, 2012

If the proposal by the Container Corporation of India Ltd (CONCOR) Southern Region to evacuate both export and import TEUs from Chennai Port to CONCOR’s new inland container depot (ICD) at Tondiarpet (about 10 km distance from port) receives a strong support from the trade, it would certainly save the historical port in the east coast of India from perishing in the perennial problem of congestion.

Making a presentation about CONCOR’s plans for shipping trade during the one-day National Conclave on Shipping, organized by the Federation of Indian Export Organizations (FIEO), in Chennai on June 18, Mr V Kalyana Rama, Chief General Manager, South Central Region, announced that CONCOR has planned to introduce daily service to Chennai Port to evacuate and also to move in containerized cargo.

“We are presenting a solution to the perennial congestion problems in the Chennai Port, which is affecting the trade at large and movement of containers in rail-line would certainly reduce trailer traffic to and from the port,” Mr Kalyana Rama said.

He also announced that CONCOR has fixed a tariff of Rs 6500 per TEU, which includes the terminal handling charges (THC) at both ends.

Further elaborating the top official’s announcement for the EXIM trade to Sagar Sandesh, Mr N Sreekumar, Group General Manager (C&O), CONCOR-Southern Region, said, “Under the proposal, which is cost effective too when compared to moving containers on road using trailer lorries, we are planning to run three services to the Chennai Port everyday and with it, we would be able to evacuate about 540 TEUs at both ends.”

The necessary clearance from the Chennai Customs has been obtained for the CONCOR’s Tondiarpet ICD facility and we are ready to provide a sustainable as well as concrete solution to the congestion, which is affecting the Chennai Port’s business, said Mr Sreekumar.

Commissioned in January 1992 as CONCOR’S Container Freight Station at Tondiarpet, the facility was recently rechristened as inland container depot (ICD) to cater more ports in the east as well as in the west coast.

Well connected by road and rail, the ICD is spread over 75 acres and is the nearest such facility from the gateway Port of Chennai on the northeast side. It has a full length rail siding with a holding capacity of 65 wagons.

“We are in contact with all the port users as well as the different trade bodies that comprise various EXIM traders in the region. If we receive good support from the trade and trade volumes go up, CONCOR would certainly increase its services to the Chennai Port in the near future,” Mr Sreekumar added.

For the EXIM traders’ community, the new service by CONCOR has come as a blessing during the upcoming peak export season.

Speaking to Sagar Sandesh, Mr A Shunmugam, a Chennai-based small-time exporter, said, “The service proposed by CONCOR would be a great boon for us like exporters, who most of the times ends up with paying more for transportation of containers through trailer lorries owing to congestion and waiting time at the Chennai Port.”

According to rough estimate, more than 15 lakh containers move in and out of Chennai Port every year and if the CONCOR’s new services receive good support from the trade, it would certainly reduce pressure on trailers to evacuate all TEUs on road.

CONCOR ANNOUNCEMENT:

Krishnapatnam Port: Three services a day

Chennai Port: Daily

Vallarpadam Port: Bi-weekly

Karaikal Port: Weekly

Bright future for Dry Bulk segment in Maritime Trade: Expert

Published in Sagar Sandesh edition dated May 23, 2012:

“With the demand for ocean transportation of coal/ ore in India/china that is bound to increase in the coming years, the future for dry bulk segment in Indian maritime trade is positive”, Mr K Shankar, President –Shipping in the India Cements and the Chairman of Institute of Marine Engineers (India) Chennai Branch, has said.

In an exclusive interview to Sagar Sandesh, Shankar, who has more than 40 years of experience in the shipping industry, shared his views on several issues in the maritime trade including the growing piracy menace and also about the future plans of India Cements’ Shipping division to reach numero uno position in the trade in the Southern Region.

Excerpts of the interview…

Q: Tell us about the India Cements Shipping division, its vision?

Mr K Shankar: Shipping and India Cements have come a long way together. Our Founder, Shri.T.S.Narayanaswami, a visionary was one of the pioneers in South India in identifying shipping to be a profitable business.  He was keen to implement the then declared National Policy of improving growth of Indian Shipping and thus placed India Cements very early on the Indian Shipping Industry map by entering shipping business through SISCO-South India Shipping Corporation in 1964.  He thus helped South India gain a rightful place in Indian Shipping. The formation of SISCO was a record in corporate promotion in the South due to his imagination and initiative.  Financial arrangements were enabled for the acquisition of five vessels by December 1966 and their operation in the global tramp trade.

India Cements continued to have a good presence in shipping as ICL Shipping Limited.  During the early 2000s, with consolidation and focus on expansion of the core business, the industry witnessed a decline in ICL’s presence in Shipping.

While shipping business per se depends on the availability of cargoes, cargo owners who have abundant cargo also enter shipping so as to insulate themselves from freight market fluctuations as also to ensure the security of their supply chain.  While there are points both in favour of and against a cargo owner in being a ship owner with the advantages of sticking to the core competency and the lack of understanding of key variables in shipping being against, the possibility of having a greater control over logistics and higher certainty in decision making has encouraged many a cargo owner to take charge of shipping.

Today India Cements has got a cement production capacity of about 14 MnT and the annual cargo imports are close to 1.2 Mn T, all of which are transported by sea.  With captive power plants set-up to meet the power needs, the cargo requirement is only bound to increase.  India Cements have also invested in coal mines in Indonesia to meet their import needs.  With power requirements in India set to grow multifold in the coming years and with the growing aversion to atomic power stations worldwide following the disasters witnessed in Japan, the ocean transportation of coal is set to increase much more than the earlier estimates.  With a control of such large volumes of cargoes, ICL strategically re-entered Shipping in 2008 with the acquisition of 2 handy-size vessels, Chennai Jayam and Chennai Perrumai. These vessels have carried import cargoes for ICL in the past and have also been suitably employed outside to leverage on higher freights whenever available.  India Cements has been continuously seeking such opportunities so that the group benefits from better returns at all times.

Given the growing demand for power in India and the increasing demand for coal both in India and worldwide, the demand for ocean transportation of coal is expected to increase for a long time in the future.  India Cements with its own shipping division and a fleet of vessels is thus well-poised to take advantage of this demand.

Q. Has the shipping division recorded the anticipated growth since its inception?

KS: Shipping business since re-entry in 2008 has been a value addition to the group as a whole since they have carried import cargo for ICL and employed outside to leverage on higher freights whenever possible.  With growing demand for import cargos, our ships will be mainly deployed for our own captive trade and India Cements with its own fleet of vessels is thus well poised to take advantage of the demand.  We have recently signed a MOA for the acquisition of a TESS 52 – Tsuneishi 2001 built 52K Supramax vessel that will be taken delivery by us shortly.  This will be a value addition for our captive trade requirements.

Q. If we see the shipping companies profile in India, most of them are anchored in Mumbai only. Why South India lacks in it and what has to be done?

KS: If you are looking at the traditional maritime history, yes, you are right in saying that the shipping activities those days were centered around Mumbai.  Those days, shipping companies preferred to operate out of Mumbai as a matter of convenience and proximity.  But in these days of advanced technology and communication options, there is no need for any shipping company or its activity to be centered around Mumbai or Chennai.  In today’s world, an organization requires an efficient database, excellent communication system and global access with advanced technology that is readily available to handle ship related matters.  Hence, it is unnecessary to focus on where a shipping activity has to be based in order to efficiently run its operations.

Q. What is the present scenario of dry-bulk segment in the maritime trade? How do you see the future for dry bulk segment?

KS: It is an accepted fact that the future maritime trade will be focused towards India / China inspite of the sluggish economy and the markets.  In the long term, India’s growth in infrastructure, power & energy sectors is a certainty that cannot be avoided or postponed.  There is a huge demand for dry bulk movement of coal.  Most of the large business houses like Reliance, TATA, Adani, Essar have been investing into ship owning for supporting their captive cargo needs.  Hence, the demand for ocean transportation of coal is bound to increase for a long time into the future.  There are over 847 billion tons of coal reserves worldwide while oil and gas reserves are equivalent to around 50 years with current production levels.  In India, there is a huge power deficit and all leading industrial houses have ventured into setting up major power plants both for their captive needs and for trading in power. These power plants are coal fuelled with steam coal imported mainly from Indonesia, Australia and South Africa.  Hence, the demand for dry bulk segment in India can only increase in the future.

 

Q. In your view, which is economical and safer– moving cargo in dry bulk or container?

KS: There are different types of ships meant for different types of cargo. For example, liquid cargo, gas, chemical; these are carried by specialized tanker vessels, adaptable for the same.  Similarly there are specialized vessels meant for dry bulk or general cargo such as dry bulk carriers, container vessels, break bulk vessels, general cargo vessels, etc.

We cannot generalize and compare between the containerised cargo and the dry bulk cargo in terms of operational safety or economy.  For example, if I have to ship my cement in bags, I would prefer to do the shipment in containers whereas if I have to import my coal for captive requirement, it has necessarily to be on a bulk carrier vessel.  The thumb rule is the higher the capacity of cargo in one shipment, the cheaper will be the freight cost. In other words, my freight cost or the cost per ton of coal moved in a 52K Supramax vessel in one shipment will be more than the cost per ton of a 75K parcel of coal carried on a Panamax vessel.  This is the basis with which the trader purchases coal from the seller and customize same for the required needs and offer the buyer the best solution.

Q. With the world slowly moving towards sending cargoes in boxes for more safety, do you have any plans to procure vessels for moving containerized cargo?

KS: You may be aware the Tamil Nadu State Planning Commission’s XII Five year plan sub group on Inland Water Transport Services envisages National Waterways NW4 to be completed in seven years.  Such a project envisages a potential bulk cargo movement of 11 Mn tons per annum of coal, cement and rice movements on smaller vessels through the Inland Waterways having restricted draft.  This will be a long term boost to trade and industry.  Once this becomes the reality, the need for smaller vessels suitable for Inland Waterways navigation with specialization in containered cargos cannot be ruled out.  Possibly we will look at for our movement of cement as containerized cargo.

Q. What is the share of Shipping division in overall company’s business portfolio?

KS: The demand for shipping is a derived demand i.e., unless there is a demand for goods far away from the location where they are available, there will not be a demand for shipping.  Shipping is capital intensive business and requires a consistent availability of cargo for both profitability and sustainability.  As far as ICL is concerned, the cargo requirement is bound to increase and we won’t be found wanting for transportation of such large volumes of cargo in today’s highly volatile market.

Q. Is Indian ports are equipped enough to meet the growing demand?

KS: I am not satisfied with the growth of the port infrastructure to suit the growing demand of industry. The pace of development is extremely slow.  We have no other option, but to accept the administrative hurdles, the facilitator / end user mismatch.  Let us hope that the result is not too far ahead.  I am sure, the Industry will tide over the shortcomings and that all the ports will adapt to the growing demand of industry sooner than later.

Q. How do you see the threat of piracy in mid-seas? According to latest reports, Somali pirates slowly moving towards Indian Ocean as they are running out of more options near Horn of Africa.

KS: The menace of piracy continues unabated in spite of naval presence in the gulf of Aden regions and merchant ships are frequently given guidelines to comply with the best management practices that includes establishment of ‘citadel’.  35 percent of total numbers of ships transiting the waters deploy security guards.  Providing security guards on board the vessel is a matter of serious concern. The recent incident of Italian ship held back at Kochi (released few days ago) on this account is a glaring example.  The merchant ships carrying arms will lead to many hassles trading in international waters and the ship owners are left to evaluate their own risk assessment.  There are many private maritime security companies offering these services.  I doubt if this will be a permanent solution. Like terrorism, piracy is an evil.  United Nations and IMO must recognize this as an international peril and declare war against piracy and adopt a resolution to combat piracy in general and their operational base in particular.  Security forces should target and destroy the piracy base and cripple their activities in an orderly and effective manner.  The international community will wholeheartedly welcome this.  I am really concerned about the seafarer’s plight and dread the miseries that they need to undergo if and when under captivity.

Q. As a shipping industry expert, what is your advice to young seafarers?

 KS: My advice to the young seafarers of today is – “you are your own teacher. Choose your own mentor. Do what you can with total professional commitment and sincerity and learn the good values of professional conduct and attitude during the initial stages of your professional career”. That foundation shall be your worth that will keep you in good stead in your professional career.

Indian Freight Forwarding industry: Multi-national’s entry– a task or challenge?

Published in Sagar Sandesh, May 16 edition:

Indian Custom House Agents (CHAs), who works as a bridge between Customs on one side and clients – the EXIM trade on the other side, are facing an uphill task of remaining in the service race after the entry of multi nationals into the Indian freight forwarding industry.

Though a section in the trade see it as a task, the Chennai Custom House Agents’ Association – (CCHAA), one of the oldest such associations in the country, sees it as a clear challenge and an opportunity to steer toward success.

In an exclusive interview to Sagar Sandesh, A V Vijayakumar, president of CCHAA and vice president of the Federation of Freight Forwarders’ Associations in India (FFFAI), the national apex body of Customs House Agents’ associations established at various custom ports and airports in India, spoke about the challenges and future of the CHAs.

Excerpts of the interview…

Q. Tell us about the CCHAA?

A V Vijayakumar: The Chennai Customs Clearing & Shipping Agents Association was formed in the year 1958 for the singular and noteworthy purpose of bringing together all Custom House Agents and to make them well organized in seeking support from all trade bodies to promote their interest for the common good of the community.

Everyone engaged in Customs Clearing & Forwarding business, had endorsed and welcomed the need to have an association.

The determination to unite and promote brotherhood among the professional colleagues and to carryout purposeful activities with wholehearted co-ordination and support of all resulted in the dawn of the Chennai Custom House Agents’ Association – CCHAA.

 

Q. What is the role of Custom House Agent in the trade?

A V Vijayakumar: A Custom House Agent (CHA) is a bridge between Customs on one side and clients – the EXIM trade on the other side.

Till the year, 1984, CHA in India were accepted by each of the Commissionerate of Customs depending on the requirements but without any specific government guidelines or regulations.

In the year, 1984, the Custom House Licencing Regulation (CHALR), 1984 was formulated by the Govt. of India, Ministry of Finance, Department of Revenue and thus a legal entity for appointing and working of CHA was formed.

From the year, 1984 onwards (this Regulation was subsequently amended after two decades in the year, 2004) all CHAs have to comply certain specific requirements spelt out in the Regulation.

Q. Are CHAs are mere bridge or experts in their field?

AVV:  Globally, CHAs ( known as Customs Brokers in certain countries) are professionals who cater to EXIM cargo with expertise not only Customs formalities in each of the region but they are also experts in maritime laws and practices, packing procedures, vessel operations, cargo handling and all other exim cargo related activities.

In fact the expertise extends to Packing, Storage, Stowage, routing including providing shortest transit time between origins to destination ports with cost effectiveness.

Conventionally this expertise of the CHA was largely used by the exim trade more so for the unlimited knowledge of Rules, Regulations and Procedures of the regions for cross border trade.

CHAs become very handy for their knowledge of import and export rules of Customs.

 

Q. What is the status of CHAs after India opened its sectors after globalization?

AVV: In India after the mid 80’s, economic frontiers were opened with the liberalized policy of the government by opening the gates for free trading.

 

As a result of this, the regulation and restrictions for import or export were drastically reduced and coupled with the need for following the global order of reduced import duties.

 

Q. Is CHAs need to improve constantly?

AVV: Expertise on policy and tariff related matters alone could not be the hallmark for the CHAs.  Hence, there was a need to expand to other activities including Freight Forwarding, Transportation, Cargo Handling/Storage and a host of other cargo related activities as there was an expectation from the EXIM trade that CHA should offer value added services.

 

Q. What are the challenges Indian CHAs facing now?

AVV: After the India’s economic liberalized policy, like in all other professions, multi nationals entered the Indian freight forwarding industry, which later became a challenge to the whole Indian CHA activity.

With the entry of multi-nationals in Freight Forwarders, the dynamics of the functioning of CHA was forced to change.

 Q. What were those changes?

AVV: From establishing themselves as a Customs and cargo expert to file and process documents with Customs and provide valuable knowledge on the regulatory practice and tariff related activities, CHA had to become a Logistic Service Providers for survival.

It is in this background, the challenges are faced by the CHAs to face a testing time.

 

Q. How could Indian CHAs survive the changed scenario?

AVV: For the survival, the CHAs should necessarily expand from a knowledge-based support provider to an infrastructurally-able value added service partner of EXIM trade.

Customs, in the meanwhile, introduced an Electronic Data Interchange (EDI) System which is a platform for electronically transferring data from the importer /CHA to the Customs authorities.

From the normal paper-based process, it has become online facility and hence for survival, CHA should necessarily have both infrastructure, financial and manpower resources to meet the new system of data transfer.

While multi nationals of large freight forwarders, who are also CHAs, have the resources to generate/create their own infrastructure and software to facilitate the change, Indian CHA need to meet the challenges with their limitations.

Q Are the Indian CHAs took that challenge?

AVV: Despite the fact that resources are available in plenty, an Indian CHA is still scores over and performs better as they do not work within the contours of 9 to 5 working style.

Q. What are the other challenges Indian CHAs facing?

AVV: There is also a big challenge in providing infrastructural support for allied activities for EXIM cargo which includes transportation, storage, freight forwarding and other services.

The world has already moved towards third party logistics. In order to meet such demands the Indian CHA continues to provide such facilities even by outsourcing some of the activities like Storage, Warehousing, Transport, etc.

Many CHAs have also started creating their own transport facilities and some have storage and warehousing capabilities.

 

Q. What are the constraints CHAs facing while delivering their duties?

AVV: Enhancement of capacity at ports and terminals is not aligned with the growing trade volumes. Ports and airports across the country are constrained in their expansion due to various factors.

However, the Indian trade has doubled in their growth in the past few years while the ports and airports have become slow, sluggish and are burdened with various factors including long period for implementation of project.

The road connectivity to the ports and airports have become bottlenecks and there appears to be lack of concerted effort to create infrastructure facilities including connectivity with the Ports and Airports for the future.

 

Q. Does the CHA meets the last-mile-connectivity challenge?

AVV: This is another challenge faced by the CHA on a day- to-day basis as the last mile connectivity is deemed to be the responsibility of the CHAs.
Thos is illustrated best by ports like Nava Sheva and Chennai, who are the first and second largest Container Terminal Handling Ports of the country.

Unless the infrastructure improved to meet the growing demands of EXIM trade, the challenges will continue and the pressure on CHAs will continue like a relay race, where the expectation and stress is always on the runner in the last leg.

 

“We have survived many challenges (in the past) and will continue to move forward despite the hurdles. Our profession is recognized at times of crisis and forgotten thereafter but to put it in a nutshell immortalized words of Alfred Lord Tennyson is borrowed – Men may come and men may go but I go on forever …” concluded A V Vijayakumar.