Rise in logistics cost: Exporters stay away from ICD, Ngp

Source: The Hitavada      Date: 22 Jun 2018 12:45:28


Business Bureau

Although Nagpur is equi-distant from many ports in the country, it has failed to take the logistic advantage.
Sources attribute the reason to the sudden spurt in the rise of logistic cost which is keeping several exporters at bay from Nagpur to take the benefit, impacting about 27 per cent of total Exim business. CONCOR started its Inland Container Depot (ICD) at Nagpur in 1997. Majority of scrap, PTA, timber etc., were imported in 20 feet containers by the local industry. The same were used for exports of agriculture produce, , steel, refractories etc.
Likewise paper waste was imported in 40 feet containers and the same were used by the textile industry for exports.

Nagpur seemed to be blessed as the Exim business was growing. However, after passage of time, the Exim witnessed challenges like price fluctuation, unfavourable conditions globally which led to overall imbalance in the containers movement. “The import of companies like erstwhile Lloyd Steel, Timber traders and Indo Rama went down which led to paucity of 20 feet containers,” said Shivkumar Rao, Vice-President of Vidarbha Economic Development Council (VED).“Importers like Future Group, Paper Mills import their goods through 40 feet containers. Now, the situation is that there is surplus of 40 feet containers and there is acute shortage of 20 feet containers at ICD, Nagpur,” he pointed out.

The imbalance in the Exim trade has inflated the logistic cost. “For exports of steel and rice, empty containers became a biggest challenge. Empty containers are called from places like Mumbai, Aurangabad, Hyderabad etc. Railways is imposing charges on empty containers to be paid by exporters which automatically is increasing the cost of the goods,” he said.“It is high time that Railways waive off the charges to container train operators like CONCOR/DLI on carrying empty containers from various locations across the country to boost exports. In times, where fuel prices are hitting the roof, empty repositioning cost is an additional burden for the trade. For eg – Railways does not charge repositioning cost when providing BCN rakes for loading of various commodities at Goods Shed,” Rao said.

In the last six years, the logistic cost has surged by 50 per cent. “Nagpur is at equal distance from ports but it is facing peculiar problem. Adding woes to the Exim trade, the exports from JSW has been stopped. Also KEC is exporting its products not from ICD, Nagpur but through other factories. As the logistic cost has increased, exporters are not coming to ICD, Nagpur. The cargo is shifting from rail to road and not from road to rail as the logistic cost has gone up. Direct dispatch to port which had dropped dramatically over the last decade or so is again under consideration for the Exim trade,” Rao said.