Hyundai Glovis India Pvt Ltd, the Indian unit of South Korea’s Hyundai Glovis Co Ltd, has shuttered its container freight station (CFS) operations in Chennai as the success of the direct port delivery (DPD) scheme and the general decline in cargo force the in-house logistics unit of automotive maker Hyundai Motor Co to re-work strategies.
Hyundai Glovis India has surrendered its CFS licence, multiple sources including a Customs official told BusinessLine. “The CFS is in the process of getting wound up. It is waiting for the Customs Department to cancel a couple of bonds and return the deposit ahead of a formal announcement on the closure,” one of the sources mentioned above said.
Hyundai Glovis handle some 5,000 twenty-foot equivalent units (TEUs) a month, both for the captive use of the carmaker and for the ancillary units.
Introduction of DPD scheme
The CFS business in Chennai and JNPT were hit after the Centre introduced the direct port delivery (DPD) scheme, whereby containers landing at ports are taken directly to the factories instead of routing them through a CFS, to save time and costs.
Hyundai moves more than 90 per cent of its containers landing at Kattupalli Port to its plant through the DPD scheme. Hyundai Motors India stores as many boxes as possible within its plant — about 1,000 boxes are inside the plant at any point of time.
After the DPD started, Hyundai Glovis found that the CFS business was dwindling and commercially unviable. All these factors contributed to the closure of the CFS.
Since stopping CFS operations, Hyundai Glovis is routing its non-DPD boxes through other CFSs such as Sun Global Logistics Pvt Ltd and Gateway Distriparks Ltd.
“The CFS volumes in Chennai have dropped and hence, Hyundai has better bargaining power. Hyundai has huge volumes and CFS operators are willing to offer lower rates, so they make use of it,” said a CFS industry official.
Drop in volumes
The drop in volumes has forced three CFS operators out of business, leaving 27 CFSs to service the Chennai market, which had a market of about 80,000 TEUs a month. This has since dropped to about 30,000 TEUs a month. More CFSs are heading for closure, the industry official said.
The downturn in CFS business in Chennai has led Gateway Distriparks to sell its Chandra CFS to Team Global Logistics Pvt Ltd for ₹47 crore.
Mumbai-based MSA Global Logistics Pvt Ltd entered into a strategic alliance with Indian Corporate Business Centre Ltd to operate and manage its CFS in Chennai.