TRADLINX

Affected Ports: Kattupalli and Ennore
Operator: Adani Group

The roll-out of a new TOS by Adani at Kattupalli and Ennore ports has caused significant delays, impacting container handling and productivity for vessels serving India’s east coast. These disruptions stem from glitches within the TOS, which manages vessel, yard, and gate operations, creating bottlenecks that affect the entire supply chain.

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Issues Reported

Extended Delay Times

Document Processing Delays

• Equipment Interchange Receipts: Customs brokers report extensive delays in obtaining essential documents such as the “equipment interchange receipt” needed for empty container allocation.
• Form 13s: This document, required for trucks to enter terminals, has been delayed, causing congestion and frustration among carriers and customs service providers.

Increased Container Dwell Times

• Export shipments are facing delays in gate-in processing, while import delivery orders are not issued promptly, leading to increased container dwell times.
• This delay exposes cargo owners to additional charges as containers exceed their free storage time, incurring port ground rent and carrier detention fees.

Decline in TEU Throughput

• Combined TEU volume at Kattupalli and Ennore dropped to 134,210 in September from 139,437 in August, reflecting a downturn likely due to these operational bottlenecks.

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Financial and Operational Impacts on LSPs and Cargo Stakeholders

The logistical inefficiencies at these terminals have led to direct and indirect financial implications:

• Additional Charges: Cargo owners are now responsible for ground rent fees and detention charges for delayed containers. These fees accumulate as the system’s processing pace struggles to meet demand.
• Business and Revenue Losses: Delays in document processing and container movement have interrupted supply chains, potentially resulting in revenue loss for exporters and importers unable to fulfill schedules.
• Supply Chain Risks: With added time in transit, LSPs face higher operational costs, diminishing profit margins and impacting their competitive advantage.

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Strategic Recommendations for LSPs

• Leverage Alternative Ports or Routes: Given the TOS-related inefficiencies, LSPs may benefit from exploring alternative ports, especially if time-sensitive shipments are critical. Ports with fewer operational delays, such as Vizhinjam (Adani’s transshipment hub with rapidly growing throughput), could serve as viable alternatives.
• Develop Robust Contingency Plans: With the risk of additional delays and potential future glitches, LSPs should consider contingency plans, including adjusting shipment schedules or rerouting through alternative logistics networks if disruptions persist.
• Monitor Operational Updates Closely: Establish a system for frequent, real-time communication with port authorities, customs brokers, and ground transport operators to navigate these challenges effectively. A reliable tracking tool could help stakeholders receive timely updates on cargo status and adapt schedules proactively. Establish a notification system for receiving timely updates on any progress with TOS stabilization or additional delays.
• Assess Financial Risk and Factor in Added Costs: With heightened storage and detention fees, it’s essential to assess these risks proactively. Cost adjustments may need to be factored into service agreements with clients to account for potential delays.
• Consider Cybersecurity Measures: As technology glitches increasingly impact port efficiency, assessing cybersecurity and operational resiliency should become part of strategic planning. Cyber risks could further strain operational capacities if not addressed.

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Regional Trends to Note

• Increasing Port Infrastructure Investments: As demand for east coast ports grows, investments in infrastructure are essential. The delay in full system stabilization at Adani terminals could motivate stakeholders to pursue rapid infrastructure scaling.
• Growing Manufacturing Hub: Southern India, particularly Chennai, has attracted substantial investment in electronics and high-tech manufacturing, increasing the demand for effective port services. LSPs with a footprint in electronics logistics should closely track any resolution of these issues to better align with production schedules.

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Conclusion

South India’s port delays underscore the need for a proactive approach by logistics service providers. The operational issues at Kattupalli and Ennore emphasize the importance of adaptable and resilient logistics strategies, especially for stakeholders invested in the rapidly growing manufacturing hubs around Chennai. By implementing strategic adjustments and leveraging tools like real-time tracking, LSPs can mitigate risks and enhance their logistics performance in a dynamic and challenging environment.

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