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Container freight station operators face job loss as revenue volumes drop

Direct port delivery service gains customers after being introduced at Navi Mumbai, Chennai and Mundra

Aditi Divekar  |  Mumbai 


With the direct port delivery (DPD) service at gaining traction, (CFS) operators near the port are cutting jobs as revenue volumes drop amid high capital costs.

“Earlier, we were handling 4,500-5,000 containers per month. But since the service, this has halved to 2,000 containers (per month). We have had to shrink operations,” Jude Fernandes, vice-president of KerryIndev Logistics, told Business Standard. “We have reduced nearly 40 per cent of our sub-contracts. This has led to job cuts in the industry,” he added. Surveyors, drivers, security, house keeping and labour contracts among others are part of the sub-contract segment in the CFS industry. KerryIndev Logistics with CFS facilities at JNPT, Chennai, Tuticorin and Puducherry is a leading logistics service provider holding 20 acre space in Navi Mumbai, including 12 acres of container paved stock yard and 6 acres of empty container yard. The company has over 2,000 employees and owns more than 200 fleets of of containerised, break bulk and Over Dimensional (ODC). The service allows and consignees to take delivery of containers directly from port terminals, without having to park these at a before being taken to the factories. This service was introduced in February 2016 to improve ease of doing business and is currently actively carried out at the Jawaharlal Nehru, Chennai and Mundra ports. Among the major ports, has the highest number of CFS facilities of 35 operators. Due to this fast track delivery system, an importer secures clearance for the in 2-3 days, against 8-10 days earlier. freight Source: Parliament papers Currently, has 1,249 registered members to avail the facility, up from 700 members when it was introduced in 2016. Companies such as Allcargo Logistics, Gateway Distriparks, Navkar Corporation, and Balmer Lawrie are part of the domestic CFS industry. The domestic CFS industry is structured in a manner where nearly 60 per cent of their clients are which use their facilities for longer duration of about 8-10 days while the balance is housed by exporters where the is for a much shorter duration.

With increasingly availing of the service, it is this major portion of CFS operators’ revenue volume that is taking a hit. According to per website, availing the service results in saving Rs 15,000-20,000 per container for an importer. “With so many CFS operators at JNPT, there was stiff competition among the players. With service gaining traction, it is a double whammy for operators as volumes are taking a hit,” explained Hitesh Avachat, senior manager at Though the service has gained traction at JNPT, the country’s largest container port, it has not yet had the desired effect, say industry experts. Globally, no port has a CFS industry catering to storage of All across the world, is directly delivered from the port to the final destination. According to the website, the share of volume handled in December 2017 has gone up to 36 per cent from 27 per cent in February of the same year. (see chart). has been a game changer no doubt, but it has a long way to go. All are still not ready for and are yet to adapt to this change,” explained Vivek Singh Anand, president of the Mumbai and Nhava-Sheva Ship Agents Association (MANSA). As for CFS players, the cost of capital is high since these facilities need sizeable land parcels to set up stations within the port town. At current land prices, it takes about Rs 1.50-1.75 billion to set up a CFS near the port, say experts. “The business environment is turning hostile for the CFS industry. There is already 50 per cent excess capacity and since revenue volumes are falling, no new player is planning to set up facilities,” said Umesh Grover, secretary-general of the Association of (CFSAI). The system, which featured in the ease of doing business report, has put 30 notches higher. Encouraged by the same, even private and less congested container port terminals such as Krishnapatnam and Visakhapatnam are offering services. has shown good traction in from the beginning. Currently, about 17 per cent of the total is under service and we aim to take it to 40 per cent, but this depends on volumes and so we have not set any timeline,” said B Vimal, traffic manager at

First Published: Sat, January 13 2018. 21:21 IST