Road transport is the preferred mode for 60%1 of cargo movement in the Transportation & Logistics (T&L) industry. But India’s road network is congested due to poor infrastructure and slow down in transit causes a delay in the overall supply chain.
Two regulatory requirements are impacting the logistics companies and their customers in the country.
- The Central Motor Vehicle Rules (CMVR) 2016 legislates that (effective April 1st 20172)
- Car carriers will be limited in length to 18.75 meters.
- Trailers – the majority of which are enclosed in India – will need to be fitted with a sliding inspection window no smaller than 400x300mm to allow verification of their cargo.
- The implementation of the new E-way bill in 2018 will enable tracking of invoices generated against the actual movement of goods. (Read more to learn of the impact of the proposed bill on the supply chain world.)
The current landscape – transit delays and tracking of the actual movement of goods to curb tax evasion – requires a review of the role of the transporter in the value chain.
Shifting Patterns in the Logistics Landscape: A New Role for the Transporter?
Traditionally, the role of the transporter was limited to delivering goods to the destination location. With the implementation of the E-way bill, the transporter now has a vital role to play in the value chain. In this new role, the transporter is not only expected to deliver the goods to the destination location but also generate E-way bills on the National Informatics Centre (NIC) portal for all consignments exceeding Rs 50,000 and for sale beyond 10 km. In cases where the E-way bills are generated but goods are not transported, the transporter must cancel the E-way bill within 24 hours to avoid a penalty on incorrect or fraudulent invoicing of up to Rs 25,000.
In the 14-day trial run period in February, more than 28.4 lakhs E-way bills3 were generated by 11,581 transporters. The government expects 50 Lakh E-way bills to be generated on the NIC portal each day and this calls for all transporters to register on the NIC network effective immediately.
The generation of E-way bills not only puts pressure on the transporter to deliver the goods within the validity period to avoid penalty but also to improve the efficiency of the overall value chain. For example, for more than 1000 km the E-way bill is valid for up to 15 days. Transporters need to quickly adapt to this new technology that is the digital bridge to the supply chain world.
A Day in the Life of a Transporter
Technology will bring transparency to the entire supply chain and change the daily operations of a transporter.
There are foundational use cases for leveraging technology in implementing the E-way bill and track the movement of goods between the supplier, transporter and recipient as they flow through the supply chain.
Here are some examples which reflect a day in the life of a transporter post the E-way bill implementation.
Use case #1: Inspection and verification of goods – The transporter must comply with the rule that requires a minimum 400X300mm sliding, inspection window to allow verification of the loads in transit. Goods will be inspected only once during a journey. If a vehicle is intercepted, stopped or detained for more than 30 minutes, the transporter needs to upload this information in Form GST INS-4 on the NIC portal.
Use case #2: Acceptance or rejection by recipient – A recipient can accept or reject an E-way bill. An E-way bill is deemed accepted if there is no action by the recipient within 72 hours of the E-way bill being available on the NIC portal.
Use case #3: Multiple consignments in one vehicle – The transporter must generate an E-way bill for each consignment in one vehicle on the NIC portal. A consolidated E-way bill will have the serial number for each consignment in Form GST INS-2 to track all consignments at a vehicle level before the movement of goods. Individual recipients need to approve or accept each E-way bill on the NIC portal.
Use case #4: Change of mode of conveyance during transit – In case of a vehicle breakdown or change in the mode of conveyance during transit, the transporter needs to generate a new E-way bill which mentions the change in mode of conveyance. Before the transfer of goods from one conveyance to another, the transporter must submit the new Form GST INS-1.
Use case #5: E-way bill generated but goods not transported – In this case the transporter will need to cancel the E-way bill within 24 hours. Where the goods are already in transit or mode of transport is changed, the transporter cannot cancel the E-way bill.
All these use cases require the transporter to be connected to the NIC network. Are you ready to meet the new compliance requirement of the logistics industry?