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Maritime News Service

Better infrastructure can boost productivity at container freight stations - 2012-04-03

Chennai has the maximum number of container freight stations (CFSs). There are 28 in operation with three more to be set up soon. The CFSs are located in North Chennai, especially near the industrial zone of Manali, serving both Chennai and Ennore ports. But the moot questions are: Does Chennai really need so many CFSs and is there enough business for them all? Or have the operators set up the facilities anticipating ‘mega' growth in container traffic in and around Chennai in the next five years?

Talking to a cross-section of people in the shipping industry revealed that the players feel there will be enough business for the many CFSs. However, if the anticipated projects, including the Rs 3,800-crore mega container terminal in Chennai port, are delayed, then the CFS operators may be in big trouble. The CFS operators are confident that business will remain ‘bullish' for the next ten years. “We have take a big gamble by creating the facilities, keeping in mind the long-term container growth at various ports,” said an official of a large CFS. As per the business plans, the combined container traffic from Chennai, Ennore and L&T's Katupalli ports will increase by about four times, to around 8 million TEUs from the present 1.6 million TEUs in the next five years. The annual handling capacity of Chennai port's mega container terminal is expected to be 4 million TEUs; the Ennore container terminal will handle 2.4 million TEUs a year and the Katupalli port developed by L&T will have a capacity 1.8 million. The Katupalli project is almost ready (much of the equipment has been installed); and the bidder for Ennore has been identified, while the Chennai terminal is still at the bidding stage.

Import/ export goods are stored in the CFS area till they are examined and cleared by the Customs, thus reducing congestion in the actual port area. Clearance of goods for delivery, warehousing, temporary admissions, re-export, temporary storage for onward transit, outright export and transhipments take place from such stations. Clearance of goods from a CFS is an important activity for the trade in respect of export/ import cargo as it is the final Customs contact point. In Chennai, the 28 freight stations handle 1.6 million TEUs. However, in Mumbai, only 18 box freight stations cater to traffic of over 3 million TEUs. In Chennai, it costs nearly Rs 25 crore to put up a CFS, which is typically put up over 5-10 acres. In Mumbai, however, the CFSs are spread across 20-30 acres and are better equipped than the stations in Chennai, said an industry source. Says V. Upendran, president, National Association of Container Freight Stations, the growth or decline of a CFS depends purely on efficient container handling at the port. At the Chennai port, container handling by private players improved by 20 per cent last year. This was reflected in the higher number of containers handled.

The market size for container logistics in the country is estimated at Rs 10,000 crore, of which business at inland container depots and container freight stations accounted for one-third. “There is huge potential for growth,” said Mr Upendran. The present CFS capacity in Chennai is 11,500 ground-slots. This translates to storing around 150,000 TEUs (in three-high stacks). The average monthly import is 65,640 TEUs, with yard utilisation being 43 per cent, said an official of a leading CFS in Manali. Of the 28 CFSs, the top 12, including Concor, Sanco, AllCargo and German Express, have ground-slots to store 9,000 TEUs. These 12 stations garner nearly 85 per cent of the imports. The monthly average of imports handled is 46,576 TEUs, leading to 44 per cent utilisation. The ideal capacity utilisation is 70-75 per cent for efficient operations. The top 12 CFSs will try to garner at least another 30 per cent of the market, putting pressure on the smaller players.

Traffic growth is expected to be sluggish. The emergence of Krishnapatnam port should also be taken into account, though with organic growth and higher containerisation, the demand situation could improve. The Chennai shipping trade has borne the brunt of bad infrastructure for the last decade. Despite this, growth in container handling was around 20 per cent. The success of a CFS will depend not only on better port performance but also on good road infrastructure. This will speed up the movement of vehicles between the CFS and the port, said Mr Upendran. Shortage of Customs' officers to be posted at the CFSs continues to be a major concern for the industry. Often, one officer needs to shuttle between the various CFSs. This delays the clearance of cargo. “If such delays are avoided, productivity at each CFS can improve by nearly 10 per cent,” said a freight station official.