• Congestion likely as truckers end strike over logistics reform at JNPT

    15 May 2018

    On May 12, cargo transporters hauling containers to and from the Jawaharlal Nehru Port Trust (JNPT), gateway to western and northern India, ended a 4-day strike which brought most of the port’s activities to a standstill. As about 85 per cent of freight at the port is moved by road, containers have piled up since May 9 waiting to be gated in and out of the port facility. This resulting congestion is likely to be gradually eased off throughout the week. While customers shipping via rail to the Delhi Inland Container Depot (ICD) remain unaffected by the strike, those relying on road transportation will likely experience shipment delays for both import and export containers. Customers across all sectors shipping cargo to or from western and northern provinces, in particular Maharashtra and Gujarat, should expect delays due to the strike action. To avoid congestion, some shipping companies may have omitted port calls and opted to divert cargo to alternative seaports such as Pipava, Mundra or Chennai, adding to shipping times as berthing spots, feeder services or trucking capacity may not be immediately available.

    Background

    Supported by local political parties, the protest of trucker groups was directed against a new logistics initiative by the government to implement direct port delivery (DPD) shipments at JNPT, which has come into effect on May 1. Under this program, four companies received exclusive handling rights for the transportation of direct port delivery (DPD) shipments. The main objective of the initiative is to allow pre-approved shippers to expedite import containers directly from the wharf within 48 hours of landing at the port. In the past, these containers had to be routed via one of the 30 Container Freight Stations (CFS) for storage and customs clearance, often involving delays and extra costs. Although this was widely seen as a positive step for improving port productivity and dwell times, the initiative may also have negative impacts on the revenue of CFS operators and Third-Party Logistics Providers, which have dominated the supply chain ecosystem at JNPT in the past. Trucker groups called off the strike after being assured by the four selected transporters that the implementation of the initiative would not proceed until the Indian Supreme Court has decided on the matter.

    Outlook

    Despite the assurance, no timeline has been announced as to when the Supreme Court may decide on the case, making this arrangement only a temporary solution. The situation remains volatile and may escalate should the verdict on the case be postponed or the four selected transporters decide to proceed with the implementation in the meantime. In addition, disagreement over existing wage structures and pension benefits between port workers and the government across all Indian public ports may provide grounds for further port disruption in the coming weeks. Major port unions have already called for a nationwide one-day strike on May 28, with an indefinite strike scheduled from May 30 onwards at India’s major ports including JNPT, Cochin, Mumbai, Kolkata and Chennai.

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