Category Archives: Shipping

The Indian port sector has been adversely impacted due to the Covid-19 outbreak and the subsequent lockdown introduced by India and other major economies. Although, the sector has been classified under essential services and has remained operational during the lockdown, the adverse impact on domestic economic activity as well as slowdown in global trade has resulted in steep contraction in cargo volumes at the major ports. Similar to the 22% decline in April 2020, May 2020 also saw a 22% decline in throughput. While, the decline was across major cargo categories, POL, thermal coal and container segment witnessed significant contraction. Ankit Patel, Vice President and Co-Head, ICRA Ratings, says, “The recovery in the port sector will be contingent on the pace of recovery of the domestic industrial activity and the global economy. Further, factors like changes in global supply chain pattern during the recovery phase will also have an impact on the cargo profile. Of late, anti-China sentiment has also been building up momentum, which could also be a headwind for the trade growth. The full year outlook for the sector remains negative, with volume contraction expected in FY2021. The recovery among the cargo segments should be relatively better for essential products like POL and thermal coal, which should be in line with lockdown relaxations and the pick-up in domestic economic activity, while for segments like coking coal and containers the recovery may be long drawn. ICRA expects that while general cargo throughput may witness ~5-8% contraction for full year 2020-21, the container segment may witness a decline of 12-15% during the same period.”

In order to cut India’s dependence on overseas hubs to send and receive container cargo, shipping ministry has decided to designate a port as a transshipment hub. The step has been taken under ‘Atmanirbhar Bharat’ (self-reliant India) initiative. The Ministry will pick the port based on the report submitted by a committee formed for the purpose of deciding the criteria for declaring a port and developing it as a transshipment hub. Container volumes handled at Indian ports in FY19 hit 16.5 million TEUs (twenty-foot equivalent units), with the Central government-owned major ports handling 9.8 million TEUs and private ports handling 6.7 million TEUs, according to the Ministry of Shipping.

The Singapore-headquartered shipping company Pacific International Lines (PIL) has introduced a new India service named China-India Express (CIX) connecting Tianjin and Qingdao in North China to Indian ports Nhava Shava and Mundra. With the maiden voyage to leave from Tianjin Port on June 5, the service also links Kaohsiung in Taiwan, Singapore, Port Klang in Malaysia and Port of Colombo in Sri Lanka. Rotation of CIX Tianjin – Qingdao – Kaohsiung – Singapore – Port Klang (West) – Nhava Sheva – Mundra – Colombo – Port Klang (West) – Singapore – Tianjin.

Federation of Freight Forwarders Association in India (FFFAI) has recently organised a webinar with M. Ajit Kumar, Chairman, CBIC to discuss the initiatives required for maintaining critical supply chain in India during the Covid-19 pandemic. Sharing the struggles faced by customs brokers community during the Covid-19 times, A.V. Vijaykumar, Chairman, FFFAI, says, “The customs officials and customs brokers both were in the frontline to make sure that wheels of economy did not stop due to the stagnation of import and export handling during lockdown.” Acknowledging the effort taken by customs brokers in this crisis, Kumar says “It requires lot of courage to work in these times; even in the initial days when there was no permission to move, customs house agents took the pain to help us in the crucial function of clearing essential goods supply which was required by the country that time.” Talking about the future plans, Kumar commits, “By the end of December 2020 we will ensure the faceless assessment of cargo pan India. We will try to see that there will be no physical contact required between any importer, exporter, custom house or custom broker.”

Amidst acute shortage of trucks in lockdown, Maersk has announced that it has ramped up rail services for manufacturers to help them move their cargo to ports for export. The company’s solution includes moving goods straight from the exporters’ manufacturing facilities on rail to the required port or moving the cargo first to the closest Inland Container Depot by road and then loading it on to rail. The advantages of moving cargo on rail have been more than just overcoming the unavailability of road transport. From the perspective of the customers, they get most of their logistics needs fulfilled at the one-stop-shop that Maersk is offering by combining ocean and landside transportation and offering integrated logistics solutions.

Considering the challenges faced by trade due to pandemic, the Central Board of Indirect Taxes and Customs (CBIC) has extended the 24×7 customs clearance facility at all airports and seaports till June 2020 in order to facilitate faster clearance of consignments. “Chief Commissioners are therefore requested to make proper arrangement for the same and deploy sufficient number of officers on 24×7 basis at sea ports, air cargo stations, Inland Container Depot (ICDs), Container Freight Station (CFSs), to name a few falling in their jurisdiction,” says CBIC. In February, CBIC had said 24×7 Customs clearance facility will be available at all sea ports and airports till May 2020 to address any congestion or delay or surge on of the prevailing conditions due to outbreak of COVID-19.

International Maritime Organisation (IMO) and the World Customs Organization (WCO) urged that trade by sea must continue to flow to maintain the continued provision of essential goods, including vital medical supplies, during the COVID-19 pandemic. Kitack Lim, Secretary-General, IMO and Kunio Mikuriya, Secretary General, WCO strongly urged customs administrations and port state authorities, together with all other concerned agencies, to establish a coordinated and proactive approach to maintaining the integrity of the global supply chain so that the flow of vital goods by sea is not unnecessarily disrupted. The joint statement comes as the demand for and the movement of relief goods (such as supplies, medicines and medical equipment) across borders is increasing dramatically. It notes that ports are being closed and ships denied entry, as travel is curtailed and borders closed to slow the spread of the disease and mitigate its impacts. Such restrictions, it says, may interrupt much-needed aid and technical support, and have negative social and economic effects on the countries concerned.

The service providers are facing a cash flow crisis because of not getting payments on time from their clients. To tide over the crisis, apex bodies; Federation of Freight Forwarders Association in India, Association of Multimodal Transport Operators of India and The Air Cargo Agents Association of India has decided that for the next six months, logistics service providers will handle shipments only against 100 per cent advance payments by their clients. Generally, the payment by an exporter or importer to service provider is done only after handling the shipment and paid in advance. The service provider pays the bill and waits for the payment from their clients.

CBIC has taken a number of measures to facilitate and expedite customs clearance process and making it more contact-less i.e. automated and online as well as paper-less in order to mitigate the unprecedented situation due to Covid-19 pandemic. These measures include the facility to clear goods on the basis of an undertaking (not bond), acceptance of electronic Country of Origin (CoO) certificate etc. These steps also complement the earlier reforms unrolled as a part of ‘Turant Customs’ such as online query module, eSanchit, web based goods registration, electronic processing of DGFT issued licenses, machine release of imported goods based on customs compliance verification and electronic transmission of PDF based first copy of Bill of Entry (BoE) to customs brokers and registered importers. The aforementioned reforms combine to expedite Customs clearances and reduce the transaction cost. At the same time, Board notes that the specific measures that reduce interface between the Customs authorities and the importers/exporters/Customs Brokers are especially relevant in these challenging times, to tackle the scourge of Covid-19 pandemic. In this direction, Board has now decided to enable electronic communication of PDF based Final eOoC (electronic Out of Charge) copy of BoE and eGatepass to the importers/customs brokers. This electronic communication would reduce interface between the Customs authorities and the importers/customs brokers and also do away with the requirement of taking bulky printouts from the service centre or maintenance of voluminous physical dockets in the customs houses. The Final eOoC copy of BoE and eGatepass copy will be emailed to the concerned customs broker and/or importer, if registered, once the Out of Charge (OoC) is granted.

The Cochin Customs Brokers’ Association (CCBA) sent a letter to the Chief Minister of Kerala to request for guidelines to undertake export/import clearance under lockdown period at Cochin Port. Like other parts of the country most of the factories are closed down and inter-state transportation is also blocked due to nationwide lockdown. In this letter, Alan Jose, President, CCBA and Vice Chairman, Federation of Freight Forwarders’ Associations in India (FFFAI), sought clarifications from the CM on the following: • Can Custom Brokers (CBs) staff travel around freely as most of them are commuting from nearby districts, because local police are restricting movement due to lockdown? They would possess ID Cards of ports, customs or ICTT (DP World) and an authorisation letter from CBs. • Other employees, drivers, etc. of CBs have to visit or contact various offices; customs, port, CFSs, ICTT, PQ, FSSAI, etc. for collecting various documents or certificates. Will relaxation in travelling be given to them by local authorities? What document should they produce for free movement in and around the state? • If the employees are travelling, they are more susceptible to the Corona infection as they are coming into contact with many people. Whether all the above-mentioned government and private offices, CFSs, ports terminal, etc. will be taking ample precautionary measures to protect the personnel entering their premises. According to Jose, “In Kochi CFSs, Empty Container Yards, DP World Terminal, Customs Documentation Center etc. are within a 1 km radius which could potentially become a hotspot for COVID-19 if it enters this circuit.” He also highlights that CBs staff would be travelling and interacting with various people in the whole logistics chain, and under the current …