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Progress in dry port development at JNPT

The Jawaharlal Nehru Port Trust (JNPT), the country’s major container port, is swiftly moving towards becoming one of the top 10 container ports in the world. JNPT, which handles 55 per cent of the total major ports’ container cargo in the country, has evolved from being a bulk cargo terminal in 1989 to becoming the country’s leading container port today. The port handled 4.5 million twenty-foot equivalent units (TEUs) of container traffic in 2016-17, accounting for more than 50 per cent of the total container traffic handled at major ports during the year.

As of June 30, 2017, there are 236 functional (169 container freight stations [CFSs] and 67 inland container deports [ICDs]) and 52 under-implementation ICDs/CFSs in the country. Of the total functional CFSs, 34 are in Nhava Sheva, accounting for a 20.12 per cent share in the total number of CFSs in the country.

In a bid to become the hub port on the western coast of the country, JNPT is building its infrastructure capabilities. It has been implementing ease of doing business initiatives to enable a business-friendly environment for export-import (exim) traders and thereby achieve the ambitious plan of handling 10 million TEUs of container capacity by 2022.

The vision of the government’s Sagarmala programme is to reduce the logistics cost for both domestic and exim cargo with minimum infrastructural investment. The concept of port-led development is central to the Sagarmala vision. One of the four pillars of the programme – port connectivity – is the development of dry ports. As a part of the Sagarmala programme, JNPT has initiated the development of four dry ports – Wardha, Jalna, Nashik and Sangli.

Background

A dry port is a hinterland facility, which is directly connected to one or more seaports by one or more means of surface transport such as rail, road or inland waterways. It consists of facilities such as container yards, warehouses, railway sidings, cargo handling equipment and administrative services for exim clearances.

“Dry ports have been set up in the form of ICDs in India wherein the goods are containerised, cleared by customs and other documentation completed so as to provide a one-stop solution to the trade. These ICDs have facilitated the exim container business and improved prospects for container ports in India. For example, of the 8.44 million TEUs handled at major ports in fiscal year 2016-17, about 10.9 per cent (0.92 million TEUs) of containers were handled in ICDs, as per the data of the Indian Ports Association,” says Jaideep Ghosh, partner and head, transport, leisure and sports, KPMG in India.

“With globalisation, an increase in trade, and the development of multimodal transport systems, maritime trade-related activities which were earlier concentrated around ports have gradually moved closer to inland production and distribution centres in the country. These centres function as dry ports and are referred to as ICDs and CFSs,” adds  N. Ramakrishna, general manager, marketing and sales, Kribhco Infrastructure Limited.

Progress so far: Upcoming dry ports around JNPT

In a bid to provide effective logistics services and improve cargo throughput at the port, JNPT is developing four dry ports, at Wardha, Jalna, Nashik and Sangli districts of Maharashtra.

Wardha

The proposed dry port at Sindi in Wardha will offer logistics services to the industries in the Vidarbha region, including steel processing, fertilisers, automobiles, building materials, electrical and engineering, paper, pharmaceuticals, and food processing, among others.

The dry port is proposed to be constructed over an area of 350 acres in a phased manner at an investment of Rs 5 billion. Phase I of the project will involve the development of around 25 hectares of the total area at an estimated cost of Rs 1.8 billion (including private investment of Rs 790 million).

It is estimated to handle 7,000-9,000 TEUs of traffic in the next five-seven years. Taking into consideration the geographical location advantage, upcoming road and railway connectivity projects, increased focus on warehousing and other ancillary industries in the region, traffic is expected to gradually increase to around 30,000 TEUs by 2030 (medium term). The dry port will have the necessary facilities to be the one-stop shop for exim-based industries such as customs clearance facilities, warehousing space, cold storage, liquid storage, truck terminals, etc.

The foundation stone for the dry port was laid on October 2, 2017. JNPT will develop the port on public-private partnership basis and is expected to issue bids for the same soon.

Jalna

Proposed to be set up in Jalna district in the Marathwada region of Maharashtra, the dry port is expected to cater to the entire Marathwada region consisting of Aurangabad, Nanded, Parbhani, Latur, Beed, Hingoli, Jalna and Osmanabad districts.

It will be constructed over an area of 180 hectares in a phased manner. Phase I involves the development of approximately 60 hectares. Apart from catering to the logistics needs of JNPT, the Jalna dry port is expected to facilitate the development of the steel industry in Jalna and Aurangabad by reducing the cost of import of steel scrap, support the export of various agricultural produce (maize, cotton, etc.) and support export of output from the food processing industry – oil mills, protein units and the seed industry. It will also assist in the implementation of the large-scale projects announced in the region – Phase I of the Shendra Bidkin Industrial Area, development of three special economic zones (SEZs) in the Shendra region and another SEZ in the Waluj area, among others.

As of December 2017, the detailed project report of the project has been prepared and ground works have started.

Nashik

First proposed in November 2016, the dry port will be developed at Niphad in Nashik district of Maharashtra. It is estimated to entail an investment of Rs 5 billion and will be a rail-based dry port. As of December 2017, 100-110 acres of land has been made available for the port. Construction work is expected to commence after the completion of land acquisition for the port. Meanwhile, the dry port has been facing resistance from the Nashik District Industries and Exporters Association claiming that a second dry port is not required in Nashik district.

Sangli

The Sangli dry port has been planned to be developed at Ranjani village in Sangli district. The land available for the port is approximately 2,500 acres. Presently, the prefeasibility study of the project is in progress. Construction work is expected to commence one year after finalisation of the land acquisition process.

The way forward

In view of the increased interest shown in developing ICDs, CFSs and air freight stations under Sagarmala, the central government has planned to overhaul 300 dry ports to resolve infrastructural constraints faced by exporters and importers. The Ministry of Commerce will be undertaking an assessment study of the laws governing dry ports, their subsidies and funding patterns, and streamline them with other ports in accordance with global practices. The assessment will compare ICDs and their functioning in about 10 countries.

However, “the success of a dry port is dependent on good quality infrastructure, strong transport linkages and availability of various facilities/offices for exim documentation and clearances. These facilities could be testing labs, packaging centres, etc. The offices required are customs, banks, certifying agencies, etc. A successful dry port needs to provide a comprehensive support ecosystem including a strong IT backbone for seamless documentation and cargo movement,” says Jaideep Ghosh.

In addition, dry ports in the country are facing an uncertain future as the government has introduced the direct port delivery (DPD) scheme to speed up the delivery of cargo containers to importers/consignees. Under the DPD scheme, containers are moved directly from the port to the customers instead of directing them to CFSs, to reduce the transaction time and costs associated with exim trade.

On the other hand, a CFS is an off-dock facility licensed by the customs department to help decongest a port by shifting containerised cargo and carrying out customs-related activities outside the port area. CFSs are often used by importers as an effective way of inventory control instead of dumping huge shipments in their factories. The business model of CFSs will need to be relooked at to ensure their viability and sustainability. Even if DPD becomes widespread, there will still be services such as the consolidation of less-than-container-load cargo, where CFSs could be useful.

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