Allcargo Logistics leases space in container freight station near JNPT.

In a clear indication that the beleaguered container freight station (CFS) business is back on track, Allcargo Logistics Ltd. has leased space in a CFS near the Jawaharlal Nehru Port Trust (JNPT). This is the company’s third such facility in the country’s busiest container port.

Mumbai-listed Allcargo’s move coincides with the decision of Swastik Enterprises Ltd., the entity that runs the CFS — Speedy Multimodes Ltd. — to back out of its earlier decision to terminate the operation and management (O&M) contract before it ends in 2026.

In November 2018, Swastik had notified JNPT of its decision to annul the 20-year O&M contract, after serving a notice period of six months.

“Volumes are back in CFSs, because the direct port delivery (DPD) scheme hasn’t really worked out so well as we all know. So, we have taken some space in Speedy, and if required, we may consider increasing our space in Speedy in the future,” Shashi Kiran Shetty, Chairman and Managing Director, Allcargo Logistics, told BusinessLine . “We may also consider developing some warehouses in one of our existing facilities near JNPT,” he added.

Allcargo Logistics reported a net profit of Rs. 50.43 crore in the December quarter against Rs. 32.21 crore a year ago, boosted by a 16-per cent volume growth in the multi-modal transport operations business and a 15-per cent volume jump in the CFS/Inland Container Depot (ICD) business. The firm’s revenue from operations jumped 22 per cent during the third quarter of FY19 to Rs. 1,803 crore from Rs. 1,480 crore a year earlier.

The 68-acre CFS of Speedy (located some 7 km away from the port) is owned by JNPT, but was given originally to D B C Port Logistics Ltd. on an O&M contract for 20 years beginning January 1, 2006. Hence, Speedy is the only CFS among the 34 servicing JNPT whose rates are regulated by the Tariff Authority for Major Ports or TAMP, the rate regulator for the 11 Central government-controlled ports.

In July 2016, D B C sold Speedy to a clutch of investors under the banner of Swastik Enterprises, after notifying JNPT of the decision. The sale coincided with a government move to bolster DPD of import containers landing at JNPT to cut cost and time for shippers, posing an existential crisis for CFS operators.

Under the DPD system, import containers are delivered directly to pre-approved clients at the port itself , reducing cargo dwell times and cost for shippers. Realising the limitations of the DPD model, the policy makers have re-modelled the cargo evacuation system, making the CFS the fulcrum.

The remodelled evacuation plan involves utilising technology to create a truck-trailer marketplace to optimise the utilisation of trailers and to de-congest the port by limiting the number of trailers that enter and exit the port. This, in turn, is expected to boost the capacity utilisation of the container terminals.

HBL