IFCCI LOGISTICS & MARITIME COMMITTEE ROUND TABLE MEETING WITH DIRECTORATE GENERAL SHIPPING

Transcription

1 IFCCI LOGISTICS & MARITIME COMMITTEE ROUND TABLE MEETING WITH DIRECTORATE GENERAL SHIPPING Page 1 of 9

2 FOREWORD India has emerged as the fastest growing major economy in the world as per the Central Statistics Organization (CSO) and International Monetary Fund (IMF) and it is expected to be one of the top three economic powers of the world over the next years, backed by its strong foundation and initiative taken by the government. On the same line, we need to focus more towards strategizing things at hand to maintain the status quo thereby supporting and enhancing the end to end supply chain network. The ups and downs in the process handling systems needs to be straightened with the robust guidelines and procedure to help all the stakeholders in the pipeline. Maritime transportation is a derived demand whose main purpose is to support trade, business and commerce whether global or domestic, whether cargo or people. An estimated 89.5% of global trade is carried by sea. As per UNCTAD figures, in 2016, world seaborne trade reached a volume of 10.3 billion tons with a predicted expansion of 3.2% between 2017 and In the year 2018, Ministry of Shipping allowed foreign flagged ships to carry containers for transshipment along with a revised Model Concession Agreement (MCA) was approved to make port projects more investor-friendly and make investment climate in the sector more attractive. Project UNNATI has been started by Government of India to identify the opportunity areas for improvement in the operations of major ports. Also, the capacity addition at ports is expected to grow at a CAGR of 5-6 per cent till 2022, thereby adding MT of capacity. In order to achieve the smooth functioning of the Logistics and Maritime Sector, we have approached companies working under Indo- French trade lane to seek out their issues along with possible solutions to discourse with Dr. Malini Shankar, Director General of Shipping. This surely can bring us one step closer to the ease of doing business in India. This roundtable conference of IFCCI Logistics and Maritime Committee with Directorate General of Shipping and this report has benefited from the contributions of numerous organizations and individuals. I would like to thank IFCCI team members for all their efforts in collaborating this round table conference. I would also like to express my sincere gratitude to all the participating companies who have provided their feedback and devoted their valuable time to this endeavor. I also thank Singhania and Company our partners who has supported in their own remarkable way for this initiative. Vaibhav Vohra Chairman, IFCCI Logistics and Maritime Committee Page 2 of 9

3 1. SHIPPING AND PORT SECTOR IN INDIA Government of India has taken various initiatives to boost and re-model the Shipping and Port sector in India by providing fast track investment and other business friendly policies in this sector. A Foreign Direct investment of up to 100 percent and an augmented shipbuilding and ship repair policy has led to huge investment opportunities in India. The Indian Government s determination to revamp the sector can be seen in its effort to modernize and develop ports under the Sagarmala Project, the introduction of the Major Ports Bill which will provide for a greater autonomy to port boards for quick and transparent decision making and the revision in the Model Concession Agreements for Public Private Partnership Projects in major ports to make an investment in Port Sector more attractive which will further provide great impetus to the Shipping Industry in India. However, there still exist many impediments in the daily operations in the shipping sector which are acting as major barriers, hindering smooth transition of trade via sea and affecting the Ease of Doing Business initiative of the government preventing foreign companies from investing in India. Thus, these issues require urgent attention of the Shipping Ministry and needs to be addressed accordingly. Page 3 of 9

4 RECURRING CONCERNS Page 4 of 9

5 2. RECURRING CONCERNS 1) ISSUES RELATING TO THE JAWAHARLAL NEHRU PORT TRUST ISSUE RELATING TOINTER TERMINAL TRANSFER Inter terminal transfer is a major challenge faced by the companies with JNPT particularly with PSA since it is the newest terminal and there is no inter terminal transfer agreement of PSA with other terminals. As a result of this, other terminals charge additional lift on / lift off charges and other transportation charges as additional service request when rail containers are to be moved to PSA Terminal. Due to the terminals not working together additional costs are incurred by the customers for transfer within the terminal. CONGESTION AT THE JNPT TERMINAL Due to traffic restrictions and erection of barricades by the police at JNPT have disrupted the movement of EXIMcontainers to and from JNPT, causing traffic blocks inside and outside the port. Due to this heavy congestion at the JNPT terminal, export containers in transit miss the vessel cut-off date and hence needs to get offloaded at the buffer yard resulting in detention and yard storage charges. The delay in dispatches and additional cost burden due to detentions make export uncompetitive. Thus, this leads to delay in arrival of the products causing stock out situation during peak period. DWELL TIME CHARGES FOR INLAND CONTAINER DEPOT (ICD) BY RAIL CONTAINERS Due to issues within the Rail Infrastructure and Container Train Operators, import containers are not evacuated on time to the respective ICD location. This has resulted in Ports and Terminals, slapping the lines with additional storage. There is no fault of shipping lines in this case, since lines have completed and carried out all the nomination formalities, and it is the container train operator who has defaulted in timely evacuation of import laden containers. Thus, the Shipping lines urge the ports to NOT charge the ground rent to the lines, but levy it to the train operators. DMICDC Logistics Data Services (DLDS) in its productivity analysis reports thatrailed imports incurred an average dwell time of hours during June, 2018, compared with hours in May, The dwell time for railed exports was hours, versus hours, respectively. According to the report more than 50 percent of train-bound import containers at JNPT are taking greater than five days for clearance, resulting in higher dwell time.the high dwell time has impacted both the average dwell time of JNPT and India s ranking in the World Bank s evaluation for trading across the border. Page 5 of 9

6 2) LACK OF INFORMATION VISIBILITY Shipment tracking and cargo monitoring is also one of the top concerns of shippers.with the advancement in technology in the Shipping industriessuch as artificial intelligence, global positioning systems, and radio-frequency identification tags, it is required from the government to use the technology for the better navigation and status of container location. Higher visibility is expected by most parties but that s especially true of beneficial cargo owners (BCOs) moving sensitive or high value cargo, who require close supervision and full end to end service. Most of the Companies are facing the issue related to Information required by the Exporter and Importer related to containers is not available as visibility on rail out schedule and expected arrival time is not there as well as it is difficult to get any information on periodic basis. This has increased the concern of the product owner as they are not able to check the status of their containers. Proper information is not available related to shipment tracking which causes concern in the mind of exporter and importer as they have no idea when the product will reach to the destination. 3) HIGH LEAD TIME BETWEEN SEA PORT TO DRY PORT Companies import 80% the consignment into Tuglakabad port (TKD) from various ports like Mundra, Pipavav& other dry ports in India. Last year, the rail out time of the containers from sea port to TKD was 4-5 days last year. This year the rail out time drastically increases to 8-10 days which made delay in delivery of containers. This is due to poor road and rail system which increases the time periodof transferring of containers from sea port to the different ports in India. The long waiting time of the trucks outside the different dry ports also increases the time of the containers to reach to the importer. There are instances when container trucks have reached the TKD port but have to wait outside the gate of the port due to limited spaces and slow work done at the port site. 4) PROCESS OF PAYMENT OF LIGHTHOUSE DUES AND REFUND OF LIGHT DUES WITH REGARD TO THE DIRECTORATE OF LIGHTHOUSE & LIGHTSHIPS Under the initiative of ease of doing business, the Ministry of Shipping decided to make the collection of lighthouse dues online to enhance transparency and efficiency in the payment process. This process was introduced to ease the payment of lighthouse dues and avoid delay caused by manual mode of payment, enabling ship owners to secure prompt light dues clearances from the Customs and port authorities. However, the current process of payment of lighthouse dues are not user-friendly and very often vessel voyages are missing from the payment screen, which means that the companies have to approach Customs to pay manually via the Demand Draft. Thus, what is required is to build a Page 6 of 9

7 robust system, so that payment process is easy for the shipping lines. Payment gateway on the Directorate General of Lighthouse & Lightship (DGLL) system does not work effectively as most of the time there is an error in making payment. A better hassle free payment system is needed so that all the ports and vessel combinations are covered under it. 5) COLLECTION OF E- PAYMENTS & REFUND OF LIGHT DUES Applying for refund is also an issue as the DGLL website takes too long to complete the refund process. Currently, CMA CGM is facing the issue related to refund of INR 13, 00, 000which is due from the DGLL. A quick and efficient process regarding the repayment is required to make ease of business more effective in India. 6) LONG STANDING CONTAINERS The issue related tolong standing containers has been a pertinent issue which has been associated with the Shipping and Logistics Industry for a long time. Delay in clearance, lengthy documentation procedures and a lack of timely availability of rakes are the key problems identified by the traders that has made trading costs significantly high. The delay in movement of containers has been compelling importers to pay demurrage charges, which often pushed logistics costs. The long line of standing containers outside the gate of JNPT, TKD and other ports increased the cost of the logistics price an also delayed the product to the end user during peak times. A good connectivity of road and rail will make the export and import faster as well as save the extra cost incurred by the shipping lines. Simple clearances of the container documents will also improve the issues relating to long standing of the containers. 7) VTMS CHARGES LEVIED BY GMB All the vessels calling at Gujarat Ports are subjected to payment of INR 6.60 (plus GST) per GRT as Gujarat Maritime Board Charges. This is a huge cost burden on the lines and thereby on the end customers. Essentially this is a duplicate payment, since Light house dues are already collected by the authority to carry out the same job function. Industry demands that the VTMS charges may please be abolished. 8) ARBITRARY CHARGES LEVIED BY CONTAINER CORPORATION OF INDIA (CONCOR) OF INR 1500 PER TEU WITHOUT ANY VALID REASON ON EVERY SECTOR. This cost slapped on the lines shall be recovered via the Inland Haulage Charge from the customer thus increasing the logistics costs for the end customer. Representations were made to CONCOR against levy of this cost. However, CONCOR has refused to change their stand. 9) DWELL TIME CHARGES FOR ICD BY RAIL CONTAINERS Lately it is noticed that due to issues within the rail infrastructure & container Train operators, import Page 7 of 9

8 containers are not evacuated on time to the respective ICD location. This has resulted in Ports and Terminals, slapping the lines with additional storage. There is no fault of Shipping lines in this case, since lines have completed and carried out all the nomination formalities, and it is the container train operator who has defaulted in timely evacuation of import laden containers. Shipping lines urge the ports NOT to charge ground rent to the lines, but levy it to the train operators. Page 8 of 9

9 INDO FRENCH CHAMBER OF COMMERCE & INDUSTRY MUMBAI French Bank Building 4th Floor, 62 Homji Street Fort Mumbai Tel Fax contact@ifcci.org.in SINGHANIA & COMPANY ADVOCATES AND SOLICITOR MUMBAI Suite 102/103, 10th Floor Jolly Maker Chambers II Nariman Point Mumbai Tel mumbai@singhanialaw.com Website DELHI DLTA Complex RK Khanna Stadium 1st Floor (Gate 3) 1, Africa Avenue New Delhi Tel contactdelhi@ifcci.org.in CHENNAI Old 27, New 66 III Street, Abiramapuram Chennai Tel contactchennai@ifcci.org.in BANGALORE Unit , 13th Floor Prestige Meridian II, No. 30, MG Road Bangalore Tel contactbangalore@ifcci.org.in Website Page 9 of 9