“DRY PORT AS A LINK IN THE SUPPLY CHAIN, ITS

ROLE IN INTEGRATED INTERMODAL LOGISTICS

AND ECONOMIC DEVELOPMENT’’

22nd October,2013

Sajal Mittra - Director,

Blupith Consultancy Private Limited

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 THE GREAT DEBATE: DEFINITION OF AN ICD AND A
CFS
• An Inland Container Depot is a rail linked depot which is
more than 200 kms from the port ?
• It has an export and import shed and therefore has
customs or is a custom notified area. Logically it has a
Container Freight Station within its boundary ?
• Is any rail linked facility an ICD whether it has a CFS or
not? Logically then, can an ICD or CFS function
independently ?
• A rail linked facility is an ICD and road linked facility is a
CFS ?
• The debate raged between the Indian Railways on one
hand and the Ministry of Finance (Customs) on the other.
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THE GREAT DEBATE: DEFINITION OF AN ICD AND A CFS

•Functionally there is no distinction between an ICD/CFS as both are

transit facilities, which offer services for containerization of break bulk
cargo and vice-versa.
•These could be served by rail and/ or road transport.
•An ICD is generally located in the interiors (outside the port towns) of
the country away from the servicing ports. CFS, on the other hand, is an
off dock facility located near the servicing ports which helps in
decongesting the port by shifting cargo and Customs related activities
outside the port area.
•CFSs are largely expected to deal with break-bulk cargo
originating/terminating in the immediate hinterland of a port any may
also deal with rail borne traffic to and from inland locations.

•Keeping in view the requirements of Customs Act, and need to

introduce clarity in nomenclature, all containers terminal facilities in
the hinterland would be designated as " ICDs".

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An Inland Container Depot / Container Freight
Station may be defined as :
        A common user facility with public authority
status equipped with fixed installations and offering
services for handling and temporary storage of
import/export laden and empty containers carried
under customs control and with Customs and other
agencies competent to clear goods for home use,
warehousing, temporary admissions, re-export,
temporary storage for onward transit and outright
export. Transhipment of cargo can also take place from
such stations.

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•Custom’s jurisdiction issues -loss in local revenue.
Earnings would shift to Delhi.

•Custom House Agents-reduction in business.

Alternate options.

•Freight Forwarders-reduction in business.

Monopoly status diluted.

•Shipping Lines-increased turn round of containers

& re-positioning costs.
•Break bulk trucking fleet-reduced cargo off-take.
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THE SITUATION AS IT WAS THEN - 1

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 EXISTING PROBLEMS FACED BY COMPANIES INVOLVED
IN EXPORT/IMPORT
• Break bulk cargo prone to damages/pilferage.
• Industrial base very far from ports .
• Un-predictability of transit time from production
area to port CFS .
• All relevant import/export agencies based in port
area-no control over cargo of companies.
• Total dependency on freight forwarders and custom
house agents.
• Due to un-predictability large cases of shutout of
containers.
• Delayed payment from banks by 7 to 10 days due
non-availability of ‘shipped on board’ certificate.

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THE SITUATION AS IT WAS THEN - 2

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 INTERESTED PARTIES AT THAT POINT OF TIME
• Railways-new stream of traffic and its Public Sector
Undertaking-Container Corporation of India

AND LATER ON:

• The large business houses/companies based in northern

India.

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 CLEAR BENEFITS OF DRY PORTS/ICD’S
• Concentration points for long distance cargoes and its
unitisation
• Service as a transit facility.
• Customs clearance facility available near the centres of production
and consumption
• Reduced level of demurrage and pilferage.
• No Customs required at gateway ports.
• Issuance of through bill of lading by shipping lines, thereby
assuming full liability of shipments.
• Reduced overall level of empty container movement.
• Competitive transport cost.
• Reduced inventory cost.
• Increased trade flows.

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 CUSTOMER FEEDBACK
“C
ugh IC
D Sone urrently
o p
th r ere
rting ri, but w ices. Loni at throu we expo
x p o . Bu gh rt f
de wa
“Trie r and Re h their s
erv t sens t after TKD, D rom
D bu wou ible to KMP, i adri an
Jaipu inted wit ICD TK ity in ld use tw d
po use acil redu be econ NH 8 I ould be
disap urrently to use a f easy ce is o C
sues mical an Ds. It
We c be open there’s : ainers state relate d
ld if nt d to would
wou eemrana mpty co liners) oper
a inte
N
i
e f
ty of rge no. o es.” - Ric tions” r-
b i l e Ex
avail nce of la transit ti emrana
a m port
e er , N
se
(pre reduce cturer, d N H1
and Manufa
tile
- Tex

“80
-
to C 90% o
FS fo
pay at JN ur exp is th
e
cha ing PT. o it
on r ge s
15 % We rts go as
adi on. W atli
e
,
tim but extr do n direc iw
e c a o t Bh opti over P ,
ICD ly del annot as hau t min ly C D ic
se I onom mrana ighw t
ay
sho ivery com lage d e u
uld . Th p “W ost ec r Nee n the h of fas
c l en s e p romis m fe o
pre ated uranc ers.” di
e
- L a a ra e u r r op e ld c
rge nce e fast osed s
wou it is lo an as contai Bhiw
n a
Gar ” er s d f r ,
me a n ee lo rte
nt E we isposa Expo
xpo d Tyre
Gu rter, rge
rga
on - La

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CUSTOMER FEEDBACK

“At present, we do factory stuffing. However,

once volumes double, we would prefer ICD
stuffing which is not possible at TKD. At the
proposed ICD, we would require sufficient
warehousing space to cater to imports of steel
cases, stuffing 500 bikes a day and storing those
containers. Other requirements would include
EDI facility and efficient rail services”
Automobile Manufacturer, Manesar

“We choose an ICD based on the “As services, we would require

services it can provide. Apart from hanging facility for about 15,000-
the regular ICD services of faster 20,000 pieces, warehousing
clearance, provision of VAS would space for both stuffing and de
attract us towards using a stuffing, round the clock
particular facility. Fumigation is container handling service and
to name one” efficient rail services”
- Leading Rice Exporter, NH 8 - Garment Manufacturer

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GROWTH ALONG MULTIPLE ARTERIAL AXES LEADING
OUTWARDS FROM DELHI HAS PROPELLED NCR AS A KEY
ECONOMIC HUB
Delhi  State’s GDP grew at an impressive CAGR of
10.27%.
 The manufacturing sector contributes ~12% GSDP
JAMMU &  The per capita income of Delhi is more than
KASHMIR
double than that of the national average
HIMACHA
PUNJAB
L
PRADESH HARYANA State’s GDP recorded a CAGR of 12.73% between
Haryana 1999-00 and 2005-06 touching USD 22.4 bn
NH1 Axis
Secondary sector (manufacturing) contributed 34%
The state accounts for production of 65% of passenger
RAJASTHAN NH24 Axis cars and motor cycles, 50% of tractors and refrigerators

Industrial investments ~Rs 35,000 cr over last 6

NH2 Axis
NH8 Axis UTTAR years
PRADESH
The eight districts falling within NCR contribute
more than 65% to the state’s production:
Faridabad (30%), Gurgaon (27%)

Industrial investments of ~ Rs Rajasthan &

NOIDA, Ghaziabad, Greater NOIDA, Bhiwadi and Alwar
70,000 cr. in the last six years UP
are major industrial areas within NCR
The major industries include Electronics, Leather and
Source: IBEF Reports
Footwear, Automotive and Engineering
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 Export volume ~ 5,800 TEUs p.m. Import volume ~ 6,350 TEUs
p.m.

Rice, tyres, textile & garments and auto & auto Auto & auto components, metal & metal
components are the key commodities products and electrical & electronic items are
exported the key commodities imported

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 DEVELOPING AN ICD AND ITS JUSTIFICATION

•For the ICD/CFS to be successful, reduction in total transport cost is a prime

criterion, as there is a possibility of marginal increase in total handling cost per
box on origin to destination basis

•. This underlines the need for sound economic justification for setting up
ICD/CFS through a carefully evaluated traffic likely to be handled at the
proposed facility. 

•A survey/feasibility study must precede the setting up of all ICDs/CFSs

and copy of the report should invariably accompany the application for
setting up such a facility.

•Data for carrying out analysis could be from secondary sources and field
observations, structured over time and space. The latter is more realistic and
truthful.

• Prior discussions must be held with exporters, shipping lines, freight

forwarders, port authorities, concerned Commissioners of Customs/Excise etc.,
and their point of view fully reflected in the report.
 

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 DEVELOPING AN ICD AND ITS JUSTIFICATION
• The facility has to be economically viable for the
management and attractive to users; to the railways
for full train load movements; to other transport
operators; to seaports; to shipping lines; to freight
forwarders etc. & must have certain minimum amount
of traffic. The prospective entrepreneurs are, therefore,
strongly advised to study very carefully the viability of
the project from the container traffic availability point
of view.
• In the background of growing international trade, the
infrastructure facility may have to precede the actual
generation of demand. This is particularly important as
such facilities have a long gestation period for being
fully operationalised.

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FUNCTIONAL ICD – NOT WELL PLANNED

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REACH STACKERS BUSY WITH OPERATIONS

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RAIL MOUNTED AND RUBBER TYRED
GANTRY CRANES IN OPERATION

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 CURRENT ICD’S IN NCR REGION
Panipat

Loni
Patparganj
Gzb/Noida

NH-8

Dadri
TKD

Patli
i
ad
w

Faridabad
i
Bh
d
i an
ar
w
Re

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 ‘SHIPPERS UTILITY FUNCTION’
 Shipper’s utility function is mainly represented by the total transport
logistics cost.
 Transport logistics cost influences the final price of the export or the
import where the former will affect the competitiveness of Shipper’s
goods in world markets.
 Total logistics cost of acquiring, shipping and storing the product include:
- Inland transport cost
- Cargo inspection cost
- Commercial fees
- Loading/unloading costs
- Re-loading & re-handling costs
- Ordering costs
- Capital carrying costs in inventory
- Warehousing costs
- Cost of claims
- Cost of shelf life
- Cost of emergency shipment

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 ROLE OF ICD IN INTERMODAL LOGISTICS AND
ECONOMIC DEVELOPMENT
ICD’S fulfill the distinct requirement of inter-modal
container/cargo transport.
Satisfy the Shipper’s demand for a door-to-door service.
Make optimal use of surface transport and help the de-
congestion of ports.
Dry ports in the hinterland are expected to offer more
favourable conditions to shippers in terms of free time, storage
fees, customs services and other administrative and technical
operations
Offer easy and safe access to international shipping facilities in
the hinterland giving a boost to inland trading.
Assist in the reduction of overall cost of transit cargo to
landlocked neighbouring countries. Examples in the case of
India are the countries of Nepal and Bhutan.

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• Simplified procedures associated with a dry port and containerisation
means fewer ships and fewer officials involved in processing the required
documentation with fewer control points.
• Finer tuning of delivery schedules.
• Encourage the marginal exporter/importer with LCL cargo at a cheaper cost.
• Shippers evaluate the advantages and drawbacks of alternative hinterland
container logistics solutions against their supply chain objectives involving
various trade-offs.
• Shippers point of view of the port inland concept is case specific depending
on factors such as the type of goods, the level of inventory holding costs, the
service levels and marine pricing structures at marine and inland terminals,
the customs procedures and inspection rules, the capacity constraints and
the lead time for different operations.

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• Intermodal developments in port hinterlands demonstrate that market
players are constantly searching for ways to bundle cargo and integrate
operations along-with supply chain.
• Marine terminals are developing a tendency to work together and in a
seamless way with systems of re-worked inter-modal facilities in order to
increase their productivity and extend their hinterland.
• Meanwhile marine and inland terminals have begun to play a decisive role
in global production-distribution supply chain management strategies.
• ‘Port regionalisation’ –on going process of close interaction between port
maritime systems and inland freight networks.
• ‘supply chain terminalisation’-process of increased role of terminals in the
supply chain strategies of shippers.

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• Concepts such as dry port , extended gateway, modal shift, just in time
concept and trade facilitation are have gained momentum.

• Implementation of such concepts suggest a shift to sustainable transparent

solutions by the by the extensive use of trains and/or barges.

• Resulting in relevant benefits to all stake-holders in port hinterland container

logistics, representing a significant innovation dramatically changing the
layout, flows and scope of logistics networks.

• DRY PORTS AND EXTENDED GATEWAYS ARE EXPECTED TO

CONTRIBUTE TO:
 Enhance the hinterland accessibility and connectivity of seaports.
 Relieve congestion phenomena in seaports and over inland transport
networks.
 Promote logistics integration between different types of firms.

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 EVOLUTION OF THE ICD CONCEPT
ICD Operations led to the facility of factory
stuffing/de-stuffing.
Excise sealing concept
Random custom inspection
Model of out-sourcing duty collection to the ICD
owner.
Colour coding of cargo, its sensitivity; history of
company and type of cargo was developed as a
software for streamlining the process of customs
inspection.

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THE SHIPPER AS HE IS NOW !

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