Container Logistics Cost: Myth Vs Facts

India’s logistics cost is high and there are several elements in the logistics chain which add to the logistics cost. Sunil K. Vaswani, Executive Director, Container Shipping Lines Association (INDIA) brings to the fore some of them

- Sunil K. Vaswani

While on the one hand, India aspires to be a USD 5 trillion economy by 2024-25, on the other, it's cost of logistics remains high at 14 per cent of the GDP, as compared to 8/9 per cent in the case of the developed economies of the world. The reasons for these are varied, some of which are commonly known while the others, although equally important if not more, are not generally talked about.

Here are some of the spots where the shoe really pinches:

HIGH PORT CHARGES

India's port charges remain amongst the highest in the world.

TOTAL PORT CALL COST of a vessel of the same size calling at Indian ports viz-a-viz the foreign ones – The Vessel Related Charges at Indian ports are far higher than those at Foreign ports. Vessel related charges work out to $108,437 at the New Terminals at Nhava Sheva ie BMCT / NSIGT & $64,592 at the Old Terminals at Nhava Sheva ie JNPCT / GTI / NSICT, as compared to $12,043 at P Klang, $16,158 at Jebel Ali, $17,235 at Singapore & $19,308 at Colombo. These charges at Indian ports will increase even further if the tariffs are revised.

TOTAL CONTAINER RELATED

COST – These costs too are much higher at the New Nhava Sheva Terminals (BMCT & NSIGT), Mundra & Pipavav, as compared to those at Foreign ports. Again, these costs at Indian ports could increase further, including the ones at the Nhava Sheva old terminals, should the Indian ports go ahead with a revision in their tariffs.

UNIT COST PER MOVE – Even at the existing rates, the UNIT COST PER MOVE, works out much higher (approximately double or even almost triple the cost) for a vessel calling at Indian ports, as compared to her calling at Foreign ports.