JNPT's direct-port-delivery service to have no impact on CFS businesses

Jawaharlal Nehru Port Trust (JNPT), which aims to bring 80 per cent of its cargo under the direct-port-delivery (DPD) system, does not see any impact on the businesses of 33 container freight station (CFS) housed within the port premises. 

“We are doubling port capacity to 10 million TEUs from 4.8 million at present by 2022-2023. Due to this, the CFSs will continue to have reasonable share of business for themselves as increased cargo volumes will need warehousing to some extent,” JNPT chairman Neeraj Bansal told Business Standard.

Currently, 40 per cent of JNPT's cargo is under the DPD system. DPD is increasingly being accepted as the optimal way of transporting cargo directly from the port to the importers leading to sizeable transaction cost savings as usage of CFS (container freight stations) is completely eliminated in this process.

Last year, the DPD system, which featured in the World Bank ease of doing business report putting India 30 notches higher, was initiated at JNPT and Chennai ports where container congestion had been the highest.

“Customs is simplyfying processes to speed up delivery and hence the role of CFSs will come down but this is also opening new opportunities for CFS owners to convert their facilitaties into warehouses and add value added services such as food parks, which  is already running in a small way at present,” explained Bansal. “We do not see loss of business for them." 

Navkar Corporation, Gateway Distriparks and AllCargo Logistics among others are some of the big CFSs housed at JNPT.

The fourth container terminal which is expected to double its handling capacity at JNPT, the phase-I would add 2.4 million tonne equivalent units a year capacity, while the second phase that will take the additional capacity to 10 million to be completed by 2022.

The terminal, jointly being developed by JNPT and Port of Singapore Authority, would be able to dock mother vessels, handle the biggest container ships and cranes that can reach 22 rows wide. The total cost of the project is estimated at Rs 80 billion, making it the highest foreign direct investment in the ports sector.

Meanwhile, globally, no port has a CFS industry catering to storage of cargo. All across the world, cargo is directly delivered from the port to the final destination.