Digitisation is uncomplicating logistics for MSME exporters

NEW DELHI : Logistics have always been the backbone of international trade. With supply chains dispersed globally as businesses look for the least expensive and most productive sources to produce and move goods, the strength of a country’s logistics processes is critical for it to become a global manufacturing and export powerhouse. The black swan events like the Covid pandemic have only reinforced this belief among Indian exporters and the government in order to enhance logistics capabilities through digitisation on a mission mode as it targets to be a $5 trillion economy.

Gradually, the logistics process for exporters is shifting from a time-consuming and costly affair, which is manually driven, to a cost-efficient and time-saving measure with respect to packing, warehousing, transporting goods, and shipping through digital intervention at every step.

“Digitisation has played a very important role in logistics. Around 20 years back everything was manual while today all airports, seaports, inland container depots (ICDs), container freight stations (CFSs) are connected with a system. Even during Covid, all the documents, invoices, packing lists, paper filing with customs, terminal charges, handling charges etc., were managed digitally. This wasn’t possible earlier,” said Vipin Vohra, Chair, Civil Aviation Committee, PHDCCI and Chairman, Continental Carriers during a panel discussion at the SMExports Summit 2023 organised last month.

For instance, the Central Board of Indirect Taxes and Customs (CBIC) in 2020 unveiled a QR-coded shipping bill for end-to-end paperless exports. The bill is sent digitally to exporters after Customs clear export. This eliminates the requirement of the exporters having to approach the Customs officers for proof of export and makes Customs’ export process completely digital — from the filing of the shipping bill to the final order for export. The initiative was under CBIC’s Turant Customs programme aimed at reducing the time and costs for the importers and exporters in sending and receiving goods.

“Custom clearances becoming faceless, contactless and paperless is a great enabler that brings MSMEs on the same platform as large enterprises in shipping goods with ease,” said Nikita Singla, Associate Director, Bureau of Research on Industry and Economic Fundamentals (BRIEF) in the panel discussion on digitising logistics for exports. BRIEF is a research and consulting firm with a focus on policy research, diagnostic studies, program implementation, and industry and market research.

Not just the government, ports are also taking independent measures, said Singla. For example, Digital Docket Delivery (D-Cube) is a paperless and contactless solution for import operations by Mumbai port so that importers don’t have to run around with physical documents. “They just have to scan an app with D-Cube to get delivery of their cargo. So a lot is happening in the digitisation of export and import operations but maybe awareness is needed to use these measures,” she added.

As a single-point access for exporters or for all of India’s foreign and preferential trade agreements and for all agencies concerned, the government had launched a Common Digital Platform for Issuance of electronic Certificates of Origin (CoO) in 2019. A CoO is an international trade document for certifying that goods in an export shipment are wholly obtained, produced, manufactured or processed in a particular country. The new electronic platform allows for the digital exchange of CoO with the partner countries which wasn’t possible earlier.

These digital processes allow for reduced transaction cost and time for exporters. “Today, you don’t need to invest in various processes as an MSME. Some solutions are plug-and-play and available similar to software-as-a-service solutions. For example, for exporting carpets from Bhadohi city (carpet manufacturing hub) in Uttar Pradesh to Jebel Ali port in the UAE where our terminal is, you don’t need to reach out to multiple people and processes. Digitisation has brought the world really close. You simply go online, log in to a portal, choose a service, pay online and the container reaches to your nearest spot while all documentation is done at the backend,” said Akash Agrawal, CEO, Freight Forwarding, DP World Subcontinent in the panel discussion.

However, according to Animesh Saxena, Managing Director and CEO of the apparel manufacturer and exporter Neetee Clothing, there are a lot of gaps in the export process despite digitisation.

“For example, to move goods out from the Jawaharlal Nehru Port in Navi Mumbai, your cargo has to be there custom cleared seven days before the vessel leaves the port. Even when the container is stuffed, you are not sure whether it will go. The information flow is not seamless. You don’t get real-time data when the container is stuffed, moved out and handed over to the shipping line and is on the vessel,” said Saxena.

“Moreover, customs don’t work on gazetted holidays in India. So, to plan deliveries, I would suggest exporters have a government calendar with holidays in various states from where your goods will be custom cleared,” he added. 

Another challenge is around the country’s logistics cost which is around 13-14 per cent of its gross domestic product (GDP). Logistics costs include all the expenses with respect to procuring raw materials to paying a logistics company to help facilitate distribution including warehousing and inventory, transport and distribution, labour, equipment and supplies etc.  

In fact, during the launch of the National Logistics Policy in September last year, Prime Minister Shri Narendra Modi said, “From 13-14 per cent logistics cost, we should all aim to bring it to single-digit as soon as possible. This, in a way, is a low-hanging fruit, if we have to become globally competitive.” 

To help reduce the cost, Singla said BRIEF had suggested NITI Aayog to increase the share of railways in domestic freight movement. She explained: Every passenger train has two cargo wagons and most of them usually remain empty or underutilised. So we proposed an Uber-like model for businesses to book at least one cargo wagon online or through an app. This way the utilisation rate of the wagons can also be improved without putting more money into moving goods.

Importantly, to reduce the logistics cost, the ministry of ports, shipping and waterways had inaugurated a National Logistic Portal (Marine) in January this year to serve as a one-stop platform aimed at connecting all the stakeholders of the logistics community using information technology. The portal intends to be a single window for all trade processes of the logistics sector spread across the country covering all modes of transport in the waterways, roadways, and airways along with an online marketplace to provide a seamless end-to-end logistic service coverage.

Source : Financial Express