In 1998, the concept of Custom bonded trucking was introduced in India. Although the sector has proved its worth time and again, the segment has still been struggling throughout the years to be widely accepted by the industry. In the feature below, we explore the reason behind the segment’s slow pace of adoption, its benefit to the air industry, and what the future beholds.
The concept of bonded trucking hit the nation almost two decades ago. While it was a popular segment in the foreign lands, especially the West; in India, it was not catching up the expected pace. While one relies on the movement of export and import cargo to reach the final destination safely via trucks, the final link; Custom bonded trucks ensure completion of the last link and deliver satisfactory completion of the contracted work with security.
Despite being considered as an extended arm to the airlines, Custom Bonded trucking has not been widely accepted by the industry due to the hindrances that are encountered.
While speaking on the hiccups towards its adoption, Dileepa BM, CEO-Bonded Trucking, Shreeji Translogistics Ltd. talks about the initial struggles faced by the segment.
He says, “In the initial days, we had to struggle a lot to convince airlines to adopt bonded trucking systems. In the last 20 years, there are a lot of developments that happened in bonded trucking. Initially, only a few airlines were using bonded trucking. But now, bonded trucking has become an essential service to all airlines in one or the other sector. In the initial days, there were no proper roads, no GPS facility to track the trucks, transhipment permissions were manual. We needed to get our bond re-credit also manually.”
Apart from this, the lack of a centralised custom bonded permission covering all airports, higher costs compared to regular trucking and myriad documents specific to each airport are few key challenges that have continued to be a stumbling block in its adoption.
Among the other challenges, bonded trucking has always been questioned
about its high cost. It has been noted that in bonded trucking, the consolidation of cargo for different locations cannot be done in one truck under one customs seal making, due to which the bonded trucker cannot carry mixed load resulting in a higher cost.
Narendra Wadhwa, Executive Director, Pelican Air Private Limited addresses the reasons that are responsible for the high costs. He says, “Since terminal operators have their cost structures to respect, bonded truckers have no option but to factor in additional costs like royalty, TSP, cost recovery, bank guarantee to customs and insurance into their prices. This prima facie is over and above what a regular trucking company would charge.”
Mr Dileepa also justified the same, by addressing why bonded trucking is costlier than the Normal Trucking due to the high risk that is involved. He further compares the same to domestic flights. He says, “It’s very cheaper compared to domestic flight cargo rates. Also, in Bonded Trucking we are cargo 150 to 200 tons in ONE DAY but domestic flights cannot do it. We can carry ODD dimensions cargo also.”
Although cost is considered the prime hindrance in the adoption, Mr Wadhwa points out how by utilising bonded trucking, airports can lead to increased volumes owing to a faster evacuation of import cargo, or by bringing in more cargo from other markets. It will subsidise the additional cost of bonded trucking by increased revenue that the terminal operator
would otherwise not get.
Bonded Trucking: Contributing to the growth of Air Cargo
Custom bonded trucking is ideal for air cargo as it not only boosts the volumes but also eases the administrative work with imports and
exports of cargo.
Speaking on the contribution of Bonded Trucking on the growth of the Indian Air cargo sector, Mr Wadhwa pointed out the important role played by bonded trucking in expanding the reach of airlines.
He explains, “85% of the approx. 900,000 MT airfreight exports from India are moved from just 5 airports viz. BOM, DEL, MAA, BLR and HYD. The picture is quite similar in the case of inbound airfreight as well. However, if one looks at where the industry clusters are located, you will notice these are quite widespread across the country.”
Bonded trucking inspects cargo and seal container by customs at inland container terminals and then moves it to the airport, where it is put in a bonded area before being loaded onto an aircraft which ensures cargo safety especially when cargo carries valuable items like vehicles, jewellery, money or government contracts. Further, it helps air carriers avoid an intermediate transhipment.
This is an abridged version of the original story that appeared in the August issue of the Logistics Insider magazine. Click here to read the complete and unedited story.