The Container Freight Stations Association has asked the government, which is working on a new multi-modal logistics policy, to allow CFSs to handle more logistics services, especially domestic cargo so that their idling space can be gainfully engaged.
As per the association, the 160-odd CFSs across the ports have been operating at around 40% capacity on one hand, and on wafer-thin margins on the other, as most containers are directly delivered to consignees now.
Due to the increased DPD (direct port delivery) and various Customs-initiated reforms like RMS (risk management systems), all the CFSs are largely underutilised.
They are currently functioning at around 40% of their functional capacity. Earlier as much as 70% of containerised imports were through CFSs, which after the DPD began in 2016, is down to a paltry 25% now.”~ Umesh Grover, secretary-general of the Container Freight Station Association
Further, he said that over 50% of all imports are through DPD facility today which has massively brought down delays and cost for importers, but was quick to add that there is also a problem of over capacity of CFSs, with 160 stations now. Each CFS has can handle 500 TEUs of cargo.
Another reason for the losing business is the introduction of RMS by the Customs, which as taken away 60% of the non-DPD business.
He said, that under the RMS regime, almost 60% of the shipments do not need Customs clearance. There is another issue of fees which have just halved from INR 10,000 per day to under INR 5,000 now, he said.
Grover feels that the new logistics policy should allow CFSes to utilise their excess capacity by handling non-exim cargo, especially domestic cargo bound for coastal shipping this could help tide over the crisis of falling business volume and the plunging margins, which have fallen by over 50 per cent from the pre-DPD days.
He added, that the under-utilised CFS capacities can be leveraged to handle non-exim cargo in addition to exim (export-import) cargo by creating virtual boundaries for tracking cargo and personnel movement.
He further said CFSs with a land bank of 25 acres and more should be allowed to provide value-added services like bar-coding, packaging, labelling and repackaging, which can help improve their bottom lines.
CFSs should also be allowed to be used as air freight stations instead of creating new facilities, Grover said that adding light fabrication activities should be also permitted in CFSes which will assist the MSME sector.
“The new logistics policy should allow CFSs with over 25 acres of space to handle multi-modal logistics involving air, road and rail, though only a few of CFSes have a railhead connectivity,” Grover said.