06-07-2018

Addition of 4th terminal to help expand capacity to 10 million TEUs by 2022: JNPT chairman

In a conversation with Moneycontrol, Neeraj Bansal, chairman, Jawaharlal Nehru Port Trust (JNPT) talks about the trust's target for FY2018-19, being leader in direct port deliver (DPD) mechanism and changing business dynamics for container freight stations (CFS).

Edited excerpts:
Q) Major ports in India have been performing exceedingly well quarter-on-quarter basis. JNPT has been among the top three ports that handled highest traffic (volume basis). The port closed FY2017-18 by handling over 48 lakh TEU container traffic. What are your plans for FY2018-19 with respect to cargo handling, revenue etc?​

JNPT closed the financial year 2018 at a record level of 4.83 million TEUs and the annual growth of traffic too has been good over the last few years. With the addition of the 4th terminal and capacity addition, JNPT is capable of handling up to 7.5 million TEUs and the total capacity will go up to 10 million TEUs by 2022.

JNPT is also expanding the necessary infrastructure in terms of deepening of navigation channel, 6 or 8 lanes road corridor, dedicated freight corridors, centralised parking plaza and other facilities to meet this new challenge. The port trust recorded highest ever profit before tax of Rs 1,440 crore and record operating profit of Rs 1,120 crore during FY 17-18. With the coming up of 4th container terminal and other initiatives like dry ports, special economic zones (SEZ), Port is poised to see higher cargo handling and profits.

Q) Direct port delivery now constitutes approximately 39 percent of your cargo handling. How do you plan to take it forward in FY19?

DPD is a win-win situation for export-import (Exim) trade as well as other stakeholders as it results in substantial saving of both time and cost to the trade. JNPT, although not designed to cater to this mode of transport, decided to take up the system with a view to reduce congestion and also ensure faster movement of cargo from the port. Today, JNPT has achieved close to 39 per cent cargo clearance through DPD system. We plans to increase DPD share further as trade is overwhelmingly in favour of DPD model. As of now, there are more than 1,600 importers who have been given permission to clear cargo under DPD facility. JNPT expects this number to go up significantly in the coming months and the share of DPD to go up to about 70 per cent.
… But, transporters have continuously expressed discontent regarding DPD coupled with decision to give four transport firms the tender to carry goods over five routes. What is the present situation? How do you plan to solve it?
With a view to reduce congestion and implement ‘ease of doing’ business at JNPT, we thought of a transport solution in which technology-led Uber like model will result in faster movement of cargo from the port. For this, a very transparent process of tendering and selecting transport operators for five routes were conducted. There is some misunderstanding among a section of transporters who fear that their business will get impacted adversely. However, a dispassionate view would suggest that all transport operators can be absorbed by the four logistics companies selected to transport the cargo.

In fact, more and more transport operators are aligning with these four operators. The new transport solution is in the larger interest of trade and the economy as the process will help smooth, controlled and seamless movement of cargo from port to the destination. Both import and export community will benefit in the long run and thus contribute to the growth of the economy. JNPT is trying to bring a change and as always it takes time and understanding for the success of a new system and JNPT is confident of making the new process a success.
Q) While, it is true that reducing dwell time at ports is important to support Exim trade, the move to have direct port delivery is being seen as a dent on CFS operations. How do you look at the situation? Can we reach an equilibrium?

JNPT and shipping ministry is trying to take all stakeholders into confidence and implement the DPD which is trade friendly initiatives resulting in significant reduction in cost and time. The CFS requirement will be there to cater to less than container load (LCL) cargo. CFS operations along with warehousing demand too will grow as the capacity addition in JNPT to 10 million TEUs will naturally result in more demand for all logistics support at port.
Q) Are you suggesting that CFS operators need to tweak their business models to adapt to changing business environment? Are we staring at a shift in the way goods are shipped and transported in India?

Business dynamics keeps changing and it is natural that if a system has to protect itself from becoming redundant or obsolete, it should keep changing itself to meet the new challenges. Logistics costs in India are comparatively higher by global standards and there is an immediate need to bring logistics costs down to make the economy more efficient and compete at the global level. In that sense, there is need to change the way we are doing business.
Q) It has been reported that dry ports, CFSs and others facilities might see a cut in their numbers. Do you stand by the move? What can be an alternate move for it?

JNPT is setting up four new dry ports to connect hinterland to port and also increase the supply of cargo from different parts of the country. JNPT is currently developing dry ports in Wardha, Jalgaon, Nashik and Sangli in Maharashtra which will boost the local manufacturing units and agriculture. CFSs volume too will grow as the volume of business itself grows. Through this initiative port is increasing container cargo volume in India. Such increased volume will create enough opportunities for all stakeholders.
Q) How are things going forward with the six firms that won plots at JNPT SEZ? What is the present status of the economic zone?JNPT-SEZ being developed on 277 hectare land has started attracting sizable investments and already 6 firms have won plots. Tendering process for another 15-20 plots of land is currently in progress and we expect good response from the manufacturing sector. JNPT is building the necessary infrastructure and it is expected that global firms and large corporate groups from India too will find the facilities attractive to set up base at the SEZ.

Source: Money Control

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