PAPER FOR 3rd NATIONAL CONFERENCE On EMERGING MARKETS: GROWTH, OPPORTUNITIES & CHALLENGES ON 1ST AND 2ND FEBRUARY,

2013 by Dr. S. Radhakrishnan College of Business Management P-16 MIDC,Butibori, Nagpur-441108, Maharashtra

Contemporary Area: International Business Topic: Critical Analysis of Containerized Movement in India Author: Prof. NITESH GIRI Assistant Professor, Dr. S. Radhakrishnan College of Business Management, Nagpur. nitesh.dsrcbm@gmail.com , nitesh.giri2000@gmail.com

Abstract:
Purpose: The aims of this paper are: Globalization transformed the transport sector and the national boundaries have become permeable to penetration by trade, creating the need for flexible transport solutions. Intermodalism and containerization were the by-products of this era and were poised to metamorphoses transport of "general cargo", moving it 'seamlessly' through sea and land arteries.
In the 90s India began an ambitious program aimed at the transformation of its economy towards a market driven export oriented system. Since then the economic growth of the country has been spectacular. The countrys foreign trade is more than 500 million tons and it is expected to grow every year at a rate of 12%. This places on the infrastructure sector significant challenges because in order to sustain such a rapid growth, the provision of a seamless, cost effective, Containerized movement with fully integrated multimodal transport system seems to be the only feasible possibility.

The aim of this research is to analyze the growth of containerized movement and Procedure and documentation for the containerized movement at inland container depot is the most important factor for the export and import of cargo. Its also help to analyze the multimodal transportation system in India and the challenges India facing because of lack of legislation, infrastructure limitations, operational deficiency and suggest measures for improving efficiency and operations. Keywords: Containerized Movement, Multimodal logistics, Infrastructural Development

1. INTRODUCTION
According to Council of logistics management: Logistics is the process of planning, implementing and controlling the efficient, effective flow and storage of goods, services and related information from point of origin to point of consumption for the purpose of conforming the customer requirement.

The purpose of this paper is to model transport operations of containerized movement on a network. A motivating scenario is that of containerized movement of import and export goods to and from Central Region of India. In at least one major stream of such movements there are competing modes of movement, viz. road and rail. This paper attempts to set up the framework to analyze operating strategies transporting decisions and the infrastructural development in these a competitive environment. Ironically containerization was introduced in India in 1966 by the Indian railway to provide door to door service to their customers. They used containers with a 5 ton payload However the International Marine Container failed to become popular right up to the late 1980s which in turn affected international trade growth. Hence the necessary infrastructure required for multi modal transport was never created till it was almost too late. (Kohli, A, K., 2002)
It was only in 1987 that the Government of India realized the importance of containerization and started constructing a satellite port at Bombay which commenced operations in 1988 and was christened The Jawaharlal Nehru Port (JNP) after the first Prime Minister of India. Subsequently a Corporation was created by the Indian railways for inland haulage of containers by rail called CONCOR which constructed the first ICD at Tughlakabad in New Delhi. Containerization has since grown substantially. Indian ports handled a total of 703542.00 TEUs in 1996 while it handled more than 2562297.00 TEUs in 2011, a significant growth of 350% in 12 years.

Fig: I

(Source: http://www.concorindia.com/corpFigure.asp) Fig: II

S. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Year ( From ) 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Year ( To ) 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 International 424741.00 491481.00 576790.00 664490.00 753368.00 905058.00 1031925.00 1251618.00 1376516.00 1556714.00 1715661.00 1977399.00 1854959.00 1882277.00 2018551.00 Domestic 278801.00 230238.00 225156.00 238661.00 291360.00 326775.00 351238.00 350501.00 351460.00 373848.00 389605.00 470370.00 453273.00 538970.00 543746.00 Total 703542.00 721719.00 801946.00 903151.00 1044728.00 1231833.00 1383163.00 1602119.00 1727976.00 1930562.00 2105266.00 2447769.00 2308232.00 2421247.00 2562297.00

(Source: http://www.concorindia.com/corpFigure.asp)

1.1 AN OVERVIEW OF INDIAN FOREIGN TRADE

Over the past quarter, exports (measured in $ Dollars) have grown by more than 21% on an average. Some commodities have enjoyed much faster export growth than others. Given below is the export performance of some top Products.

(Source: www.thehindubusinessline.com)
Over the past quarter, Import (measured in $ Dollars) has grown by more than 19% on an average. Some commodities have enjoyed much faster Import growth than others. Given below is the Import performance of some top Products.

(Source: www.thehindubusinessline.com)

Containerized Movement
Development in containerized movement over the recent years has given rise to the need for supplementary services such as Container Freight Stations and Inland Container Depots so that activities like De-stuffing, stuffing, custom clearances, storage, packaging, multimodal transport can take place and increased traffic can be easily handled at ports. An Inland Container Depots is generally located in the interiors cities of the country which are away from the ports. It is for transportation of goods from ICDs to service ports. Container Freight Stations is off-dock facilities which are located near the servicing ports, helps in free movement of the cargo and decongesting the port by shifting cargo and also helps in customs related activities outside the port area. Functionally, there is no difference between Container Freight Stations and Inland Container Depots as both are transit facilities offering services for containerization of break bulk cargo

Inland Container Depot:

Inland Container Depots are the dry ports which are equipped for handling various activities like temporary storage of containerized cargo as well as empties, custom clearance, factory stuffing and de-stuffing, road/rail transportation, bonded warehousing, temporary admissions, re-export, etc. This means that hinterland customers can obtain port services more conveniently closer to their region. In addition to managing and operating the sea ports, India Ports Authority manages 72 Inland Container Depots strategically located in different cities of the country. Inland Container Depots are a convenient shipping substitute extending port services closer to neighborhood customers. The depots are directly linked to the container terminal at the ports by rail provided by the Container Corporation of India (CONCOR). The CONCOR transports containerized cargo by rail to the various ports of the country. These ICDs provide an important link between international gateway sea ports to the vast hinterland. ICDs thus generate business opportunities, general employment and global competitiveness of the local industry.

Functions / benefits of potential Inland Container Depot (ICD) Advantages to the customer:
Inland Container Depots are local solutions for the foreign trade of the neighborhood area as they provide localized solution and proficiency to the predominant trade / industry of that particular region locally. Capacity utilization of port CFSs and dispersed nature of industry clustered in the hinterland is a hard reality that needs solutions in terms of local EXIM infrastructure in the hinterland.

The benefits of ICD are as follows: Bring Port services closer to hinterland customers- customers based in the hinterland can have access to the same services offered at the port without traveling all the way thus helps in saving time and money. Consolidation points for long distance cargo from / to port without detour. ICDs help decongest the container terminal at the port by reducing container dwell time through enhanced take-off of import containerized cargo for clearance at the ICD. In addition, the depots also facilitate for the dispatch of export containers therefore increasing container turn around time creating more space at the Container Terminal. Serve as an international transit facility for FCL / LCL (Full Container Load/Less Container Load) Ocean cargo and air cargo. Reduced level of demurrage and pilferage and virtually no detention of containers or cargo compared to port facilities. Provide safety and security to transit cargo - cargo transported by rail is safer and more. secure therefore ensuring the safe transportation of cargo to and from the port. Reduced overall level of empty container movement by using import empties locally for exports resulting in lower inland haulage charges both to importer/exporter. Competitive transport rates on account of volume benefits spread across all clients. Increased trade because of ease of operations and competitive transaction costs. Proactive support to EXIM trade constituents like transporters / CHAs / Shipping Line Agents to increase business/ market reach.

EXPORT/IMPORT PROCEDURE

The importer makes inquiry from potential supplier exporter sends catalogs and price list. Importers request for samples. 1. Exporter receives purchase order. 2. Importer arranges financing through his bank. 3. Importers banks send letter of credit. (Most frequently used form of payment).
4. Exporters bank notifies exporter that letter of credit is received.

5. Exporter produces goods. 6. Exporter arranges transportation and documentation. 7. Space reserved on ship or aircraft. 8. Documents produced, as required: (a) exporters license. (b) Shipper export declaration. (c) Commercial invoice. (d) Bills of lading. (e) Marine insurance certificates.

(f) Certificate of origin. 9. Exporter ships goods to importer 10. Exporter presents documents to bank for payment. 11. Importer has goods cleared through customs and delivered to his warehouse.

Export Procedures
Export of goods and merchandise from India moving in containers is usually done through rail from ICDs to gateway ports. A number of activities on the part of CONCOR/CWC the custodians, shipping line, customs authorities, and railways make up the process leading to the containerization and movement of goods by rail. The procedure begins at the ICD when the shipper or his authorized customs house agent approaches the selected shipping line for nomination of an empty container for his cargo. The shipping line nominates an empty container available at the ICD/CFS.

However, before this the exporter has to get ready about 20 commercial and regulatory documents associated with the pre- shipment stage of an export transport in the ICD. These include 11 commercial documents t hose required for effecting physical transfer of goods and their title from the exporter to the importer and the realization of export sale proceeds. There are 7 regulatory pre shipment export documents these are those which have been prescribed by different government departments in compliance of the requirements of various rule and regulations governing export trade such as export inspection, customs foreign exchange regulations etc. Most of these documents have been now standardized and aligned to the UN key layout format. The shipper or the agent prepares the documents prepares the documents and files them with the assistant collector of customs at the ICD/CFS. These documents are the same whether the cargo is going as a full container load (FCL), the cargo in one container or as less than container load (LCL), cargo along with other merchandise. The documents to be obtained/ prepared are; 1. Shipping bill: - Nine copies of the shipping bill are required to be prepared. Separate shipping bills as prescribed by the customs authorities are required for export goods ex bond, duty free goods, dutiable goods and goods for claim for duty drawbacks. The validity of shipping bill is of 7 days.

2.

Proforma invoice: - Five copies are to be prepared for the use of the customs, CONCOR and the exporter.

3. 4.

Packing list: - five copies of this document are prepared. Guarantee remittance (G.R.I.) forms: - this is prepared in duplicate. The original is retained by the customs and the duplicate is sent to the RBI by customs after processing of documents and finalization of the shipping bill.

5.

Letter of credit/ contract copy: - one copy of the letter of credit or contract with the importer is submitted to the customs.

6.

Central excise form AR-4 or AR-4A:- in case of cargo covered by central excise the shipper /CHA submits central excise forms.

7.

Central excise gate pass :- in case of the export cargo is covered by central excise the shipper/CHA submits central excise gate pass 1 or 2.

8.

Export inspection agency (EIA) certificate/ certificate of origin:- the shipper/CHA submits one copy of EIA certificate along with the documents which is returned to him after verification by customs. Duty exemption entitlement certificate (DDEC) book/Import Export pass book:- the shipper/CHA submits the DEEC d=book/Import-Export pass book along with the documents for customs verification/necessary endorsement.

9.

10. Advance License:- in case the goods are under re-export or 100% E.O.U. scheme the shipper/CHA submits a copy of advance license to the customs for verification and endorsement. 11. Shipping instructions:- single copy. As received from the buyer/importer. 12. Certificate of origin:- Single copy. 13. Certificate of Insurance/Insurance policy:- single policy. 14. Freight payment certificate:- Obtained from the shipping line as proof of the exporter having paid the ocean freight. The original copies of the shipping bill, invoices, packing list and G.R.I. Form is retained by the customs authorities. The remaining documents are returned to the exporter/CHA for carting of cargo into the warehouse.

Import Procedures
Containers carrying import cargo are received at the ICD by rail from the gateway ports. Whenever there is a CFS which is not linked by rail, the containers first arrive at the rail head and are then taken by road to the CFS where they can be de-stuffed. At the port of entry the shipping line presents the Import General Manifest to the customs authorities. The customs authorities at the port after checking send the originals of the Import General Manifest and transshipment permits to the concerned ICD/CFS. The port railway authorities also issue the Inland Way Bill for the container railed to the ICDs. On arrival of the rail flats at the ICD the containers are offloaded and placed in the import container yard. The Inland Way Bill issued by the port authorities are consigned to the Assistant Collector of customs of the ICD where the containers are off loaded. Therefore, after the containers are off loaded and stacked in the import yard, the customs release the Inland Way Bill. The shipping lines then approach the custodian for taking book delivery of the containers i.e., payment of freight, handling charges, ground rent and other dues, if any. The Inland Way Bill released by the customs is surrounded by the shipping line in original while effecting book delivery. The importer or the authorized CHA then files the following documents for import clearance: 1. Bill of entry:- Five copies. 2. Invoice: - Two copies. 3. Packing list:- Two copies. 4. The Bill of Lading:- Is filled in original duly attested by the importers bankers which is required for verification by the customs and is retained by them. 5. Certificate of origin:- To be submitted to the customs in original 6. In case of goods imported in India under a license, the importer files a copy of the import license along with other relevant documents. The customs verify it and return it to the importer after making necessary endorsements. In case of goods imported under open general License, a declaration to this effect is submitted by the importer for the customs. 7. Freight certificate:- One copy of the freight certificate issued by the shipping line is filed for customs verification and for the purpose for the assessment for the import duty on the cargo.

8. Literature/Technical write up on Imported material:- All available technical and other literature write up on the material and machinery imported is required to be filed. This is for customs reference and is returned to the importer/CHA after the finalization of the Bill of Entry. 9. Insurance Certificate:- One copy of insurance is filed along with other documents, for customs reference, verification and assessment of duty.

Problems at CONCOR
Customers face problems due to improper scheduling of rakes, especially for domestic transport. Unavailability of containers for domestic transport. Problem in finding the containers for stuffing. Inadequate customer interaction and communication problem with the customers.

OUR SUGGESTIONS

Proper stacking plan for Containers in both the yards and ICD i.e. the containers should be stacked according to the shipping lines. Installation of cameras in the yards and the warehouse both for security and for convenience in location of containers. The Customs dept is not automated and they should be linked with CONCORs system. There should be at least 2 rakes scheduled every week and it should be informed to the customers and associated agencies. The schedule should be followed. The old containers of the shipping lines can be purchased and can be used for domestic transport. Quarterly customer survey and feedback should be carried out.

BIBLOGRAPHY
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