Increased expedited freight through major Indian ports

Credit JNPT.

The scale of imports of goods cleared through the Direct Port Delivery (DPD) system in major Indian ports is expanding.

DPD is an expedited channel for Customs-approved customers or importers – better known as Authorized Economic Operators (AEOs).

They can pick up cargo directly at the dock within 48 hours of landing, instead of shipping companies sending boxes to a container freight station for later delivery. It essentially marginalizes or eliminates the role of supply chain intermediaries – effectively customs agents.

At Jawaharlal Nehru Port Trust (Nhava Sheva), the share of DPD transactions reached 60% between April and January (the first 10 months of the 2021-22 financial year), compared to 56% the previous year. By volume, DPD handling amounted to 844,675 teu, out of 1.41 million teu of imports this fiscal year, compared to 776,980 teu and 1.37 million teu respectively in 2020-21 .

In Chennai, during the period April to December, PSA Chennai saw 36% of loaded imports transit through DPD, while DP World Chennai’s share was 43% and increasing sequentially.

Similarly, the Direct Port Entry (DPE) model for factory-loaded export shipments does not require shippers to route containers through a container freight yard for customs clearance and obtain “let export order” before being stuck in the port terminal. JNPT’s April-January DPE handling reached 43.5% of those exports loaded, according to port data.

The government logic behind DPD and DPE is to reduce logistics costs and create greater transparency in the supply chain ecosystem. To this end, terminal handling fees and other ancillary charges levied by container companies have been a contentious issue, prompting regulatory interventions in recent years.

To address these concerns, port customs authorities have opened a direct payment window for THC collections by terminal operators so that shippers or consignees, in theory, do not face additional costs ashore in plus ocean freight charges.

Amid recent Covid-induced capacity shortages, India’s Directorate General of Shipping in September called on carriers and other supply chain players, including freight forwarders, to stop charging priority loading fees for goods moved to/from inland container depots.

In response, however, the Container Shipping Lines Association (CSLA) argued that carrier charges were completely transparent and that exporters always had the option of settling freight charges directly with the rail companies.

“In fact, the shipping lines are the only ones whose fees are in the public domain and even posted on their respective websites,” the AAPC said. “The right of priority also, if any, was, in exceptional circumstances, at the request of the exporter.”

Although the industry still has a long way to go before certain tariff offers are available to shippers, business enablers such as DPD or DPE are having a positive impact on port dwell time levels, critical to the smooth flow of goods.