A Comparative Analysis of Container Security at Dry Ports in India and Europe

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1 A Comparative Analysis of Container Security at Dry Ports in India and Europe By Hong Yan and Girish Gujar The Hong Kong Polytechnic University Hong Kong Jolanta Rekiel University of Amsterdam The Netherlands Mukul Jain Rail Vikas Nigam Limited Annual Conference International Forum on Ports, Shipping and Airports, Hong Kong,

2 India: An Overview India is considered as one of the top three countries with maximum growth potential behind US and China. India s International Trade growth is impressive, with exports worth Billion USD and imports worth Billion USD. However India was ranked 49 by the world bank on the logistics performance index. Due to underdeveloped infrastructure the logistic cost of Indian economy is over 13% of GDP as compared to under 10% in the EU. 2

3 Major Ports of India DELHI MUNDRA KANDLA PIPAVAV JN PORT MUMBAI MORMGAO NEW MANGALORE COCHIN KOLKATA HALDIA PARADIP VISHAKAPATNAM CHENNAI ENNORE TUTICORIN 3

4 Containerization and India s Foreign Trade. India s container traffic recorded a 14% CAGR during Containerization share of about 11% of total cargo at major ports in increased to 16% in ; this share projected to rise to 22.7% by All ports container traffic projection envisages growth from 4.61m TEU in to 17.98m TEU in (15.10 m TEU at major ports and 2.88 m TEU at new intermediate ports). 4

5 Security: Ports compared to Dry Ports The ISPS Code (International Port Security Code) provides a legal basis for maintaining high security levels in Ports No such code for Dry Ports. Result: The container cargo security requirements at Dry Ports differs in each country. Within India also each Customs region has different yardsticks (within broad guidelines) 5

6 Service Providers for Container Transport in India Multiple Service Providers in the supply chain Freight forwarder (Customs House Agent or CHA) Shipping Line Road Transporter (Factory to Dry Port) Dry Port Operator Container Handling Contractor Warehouse/Storage Cargo Handling Contractor (Stuffing/Destuffing) Customs Container Train Operator (could be the Dry Port Operator) Indian Railway Port. and a similar chain at the destination 6

7 Security Laws for Container Transport in India Multiple laws regulate the security of cargo during inland transportation by rail in India. Result -lack of accountability amongst the service providers. Example- Rail transport of container under the Railways Act of 1989 Bill of lading issued under the Indian Carriage of Goods by Sea Act (COGSA) of 1925 Multimodal Transportation of Goods (MMTG) Act in

8 Legal Regime for Container Transport in India The internationally recognized transport documents, such as the FIATA Multimodal Transport Bill of Lading or the COMBICON documents, are not recognized by the Government of India. Consignor assumes total liability for the contents through the mandatory Goods Forwarding Note as per Indian Railway Act. Indian Railway, does not assume any liability for the content, nor does it assume any liability for the delay in delivering the cargo No specific provisions in any act to ensure that the carrier (Railways or Shipping Line) undertake Due Diligence w.r.t. the contents of the container 8

9 Liability of Dry Ports in India The contract between the user and the dry port operator is purportedly covered by the Indian Railway Act. The Railway Act is silent about the rights and responsibilities of the dry port operator The act does not saddle the dry port operator with the responsibility to exercise due diligence while conducting stuffing/de-stuffing operations. It is debated that the Customs having certified the cargo are responsible for it. The Customs Act is silent about such issues. As such everybody concerned absolves themselves of any liability and hence do not accept the liability for security 9

10 Important Provisions for Security in Dry Port of Europe Customs Security Programme (CSP) covers activities supporting the development and implementation of the security measures. Authorized Economic Operator (AEO) concept introduced by in 2006.(vide Community Customs Code (Regulation (EC) n 648/2005 of 13 April 2005, Regulation 1875/2006) Dry Ports would have to meet safety and customs handling requirements to qualify for the AEO status. AEO provisions standardizes a number of security-management measures for EU's external borders. 10

11 The Extended Gate Concept of Europe Seaports instead of Dry Ports influence the hinterland flow of containers both ways. Seaports decide the mode of transport. Seaports assume responsibility for safe and secure delivery of containers. Seaports are ISPS compliant. Seaports derive competitive advantage. 11

12 Extended Gate Concept All customers (importers, exporters and forwarders) of GA shipping lines can deliver and pick-up full and empty containers with the destination and origin Rotterdam. These containers will be barged on a frequent basis to and from Rotterdam. ECT Rotterda m internal transport ACT Amsterda m

13 Conclusion Lack of visible and certified security system in India is resulting in poor patronage of dry ports. A dry port is not liable (including to third party) for ensuring the correctness of the cargo particulars declared by the consignor. European dry ports have much stricter guide lines for container security The concept of Extended Gate Concept has helped in reducing ambiguity with regards to responsibility and liability for container security 13

14 Thank You for Your Attention Any Questions? 14