JNPT can see 10-15% growth in cargo this fiscal: Neeraj Bansal

Jawaharlal Nehru Port Trust (JNPT) saw a 7.4% rise in container handling last fiscal and with the first phase of the fourth terminal becoming fully operational, the volumes are likely to see double-digit growth. JNPT chairman-in-charge Neeraj Bansal, in an interview with Ateeq Shaikh, speaks about the various initiatives being taken by the port and the expansion plans.

JNPT has appointed four logistics firms to transport containers on five routes. What was the need to come up with this?

The cost and time taken for Exim (export-import) trade are very high. Exim trade suffers from this serious problem. World Bank in its report showed that India's ranks 146 out of 190 for trading across border, that's an area of concern for the government and Ministry of Shipping. If the logistics costs are high, it robs the advantage of exporting. Similarly, if I am importing, the raw material becomes expensive and the cost gets passed on to the consumers. If you look at the logistics cost, it is almost 12% (of Exim trade) for India vis-à-vis the developed nations where it is 9%. A few studies have been conducted by parliamentary committees and Customs department; one problem area was the container freight station (CFS) model where it took longer time for the cargo to reach the factory. Cargo used to be kept at freight stations for six to seven days, and now by having transporters, this time would get shortened, resulting in economic benefits.

Can the decrease in time also be attributed to direct port delivery (DPD)?

Yes, five to six days get saved due to DPD. If cargo is coming five days in advance at the factory, one will maintain lesser inventory. Therefore, it has a cascading effect; the interest component, capital and other things get locked up to maintain that inventory. It's a huge saving for the importer. On top of that, there are savings in logistics cost due to DPD and delivery by these transporters. Our workings show that there is an average of Rs 10,000 savings per container (box) because of DPD. If you look at JNPT, it is designed for CFS-based model. Now, if I want to do DPD to a large number of clients, probably the system won't support it. The only positive was that I was giving delivery of these 25 lakh containers to these CFSs. So can there be a switch through which I can provide these containers to the importers? But the moment importers base goes beyond a point - like earlier we used to deal with 20-25 importers, this number has gone beyond 1,600 and in the coming years it can go to beyond 2,500-3,000 - so serving 3,000 clients via DPD model will be very difficult for us. That's why we need a switch to maintain efficiency and operate the port to the optimum level and provide DPD to maximum clients. That's why the need for having DPD transport has come up, under which we are picking up one transporter for one particular route. We have mapped our 1,600 DPD clients on five routes starting from JNPT. The initial idea was we should get a switch, but subsequently, we realised that it can be a pure game changer for the entire logistics. We appoint a transporter for each route, but apprehensions come up that will it lead to monopoly. For that, we have fixed the rates that are market rates for these routes.

Are the rates linked to inflation? Will there be an annual increase?

Yes, they are linked to inflation by factoring in vehicle maintenance, fuel prices, etc. Another idea was that we shouldn't superimpose a new model which will disturb the balance of the port ecosystem. So we tried that local players should pitch in for the system and also realign. If you get another 2,000 trucks from outside, then probably a few will become jobless in this process and they will get moved out of the system and it will create a chaotic situation. We put tender conditions to allow joint ventures and aggregators so that local players realign. Ownership is about 25% of trucks required to run on a particular route and the rest they can aggregate. This model can further be improvised by dividing this entire stretch into smaller routes so that trucks' and drivers' availability becomes certain. For example, for 1,000 kilometre from JNPT to Nagpur, we can create loops of 300-350 km each. This will further improve operational efficiency. We can keep on improvising in the existing tender too. In this transportation sector, there has been no technology, no transparency, no end-to-end solution. It is absolutely unorganised. This model is providing one strong logistic set up, pre-determined rates, service commitment, technology platform for end-to-end visibility of container movement through mobile tracking, grievance redressal system. The tenders that had come up on some routes had rates which were 18% lesser. On one route, it has come 10% less than existing market rates. Besides, there's lot of load on the road. The biggest challenge is how we can reduce load on the roads. From 4.8 million twenty-foot equivalent units (TEU), JNPT's capacity has become 7.2 million TEUs after PSA International's first phase of the fourth terminal became operational and it will go to 10 million TEUs once the second phase is completed. So in the next five to six years, the number of trucks will get doubled. Can system afford this? One side is port logistics, along with that there's huge space requirement for the society. A fine balance between the two has to be maintained. I believe this model provides us with that balance as with a lesser number of trucks and same infrastructure, we can cater to increased workload as JNPT is on a growth curve.

In the last one year, this system faced opposition with a petition being filed. Do you anticipate any hindrance in the operations?

We took a lead in getting the system, as somebody has to do it eventually. Our duty is to run the port, but we are going beyond that and looking at smarter solutions for Exim trade. We believe if I create more value for the trade, the trade will have more loyalty towards the ports, so it's a win-win situation for both of us. Oppositions will always remain. Whenever you come out with any kind of solutions there are little apprehensions. Our endeavour will be to allay these kinds of fears. We are not duplicating assets, but realigning the same resources. Idling of trucks and containers is a big issue. So an empty container has to be returned to the shipping line. When an operator delivers imported cargo in a container, the truck has to wait for two days, which is wastage of time and resources. This model takes care of that as they do not have to wait for two days, and in return, will pick up container it had delivered two days ago. Shipping lines are unable to streamline as multiple transporters are working everywhere. With the new system, in return, he will pick up the export box, helping even the shipping line. Empty container movement is a big nuisance and waste of money; we can significantly cut down on that.

In last fiscal, JNPT handled 7.4% more containers. With fourth terminal operational, what kind of growth are you looking at?

The real cargo increase will happen this year with Bharat Mumbai Container Terminal (BMCT) fully functional. Now, the volumes will come up. Earlier, JNPT was having less supply and more demand, now we have over-supply. Realignment of cargo on the West coast has to happen. We are sure that if we are bringing in these kinds of economic benefits, more cargo can come to JNPT. This is also marketing for me to get more cargo. I think a double-digit growth of over 10% should easily happen. I am giving you a realistic figure. In Gujarat, the growth is 10-15%. The same kind of growth can happen at JNPT.

There was a petition at Bombay High Court on arbitration between JNPT and PSA International, concerning an earlier contract for the fourth terminal.

There was an arbitration award against the port. The High Court has set aside that award. Our case becomes alive again. Now PSA International has moved the Supreme Court challenging High Court's verdict and we are waiting for the hearing. High Court's order is very detailed and we are confident about that. The arbitrator had said that as the concession agreement was not signed, the arbitration clause cannot be invoked as there is no signing of the agreement or contract between the two parties. High Court has said that signing of concession agreement was merely a formality as one participates in tendering process, bids are filed, successful bidders emerge, etc. The moment concession agreement is to be signed, and if one refuses to do it, the arbitration clause can be rightly invoked. This means that my claims become valid again and quantification has to be done for that. Our claim is of Rs 450 crore and interest component.

When is PSA International commencing their second phase of BMCT works?

They are expected to start by the year-end. Till date, there isn't any official communication on the subject with us. It is on the basis of what I have heard. They have to complete all the work by 2022, and they have enough time for it.

For free trade and warehousing zone (FTWZ), has PSA International, too, shown interest like DP World?

A number of players are showing interest. There are prominent names is all I can say. For that, we have to float a tender. The bids should happen in the next two to three months. FTWZ should happen on around 45-50 hectares of land. We are looking at freezing FTWZ area as per our port's requirement. We have already auctioned six plots that are purely for the manufacturing sector. Honourable minister's idea is that all local player requests should be entertained. So, we are coming up with a new tender for our domestic players. The third tendering will be for FTWZ.

What's the update on planned satellite ports at Vijaydurg and Rewas?

The government is keen on Vijaydurg Port. For Rewas, valuation is being worked out, it is in the final stages.

And what about Wadhawan Port?

A detailed project report is being prepared. The findings till now show that it is a feasible project and it will be the biggest ever port in India at 400 million tonne per annum.

JNPT and Mumbai Port Trust (MbPT) had entered into an agreement for coastal cargo.

MbPT has floated a tender for that, it's a joint tender. Both the ports share a common channel and are situated on either side of the channel. The idea is to de-congest cities and not for business. The cargo that is city-bound goes to Bhiwandi for cheaper warehousing and comes to the city. If the cargo is taken away from roads, congestion of 80,000 TEUs or almost 200 trucks would go away. MbPT is opening up its warehouses to handle the same cargo.

Outside JNPT, national highways are being widened to handle increased capacity. How much work is through?

Around 40% the work is done. By mid-2019 six/eight-lane corridor will be ready. This will provide a huge evacuation corridor for the port. Our endeavour will be for dedicated cargo movement. If that happens, the cargo coming in and going out will become seamless. This widening is being done keeping in mind the second phase of Bharat Mumbai Container Terminal that will happen by 2022.