Logistics: Now on the cusp of a new regime

The experts from the logistics industry came together, at an ASSOCHAM event recently to discuss the need for integrated logistics to bring down the costs, and the role of digitisation for improving SCM ecosystem.

India has a total road length of about 52 lakh kilometres (kms), out of this national highways’ length accounted for only 96,000 kms. About 40 per cent of country’s total traffic was plying on two per cent roads thereby leading to problems like increase in pollution and accidents. We had thus decided to increase national highways’ length to two lakh kilometres and have declared 1.75 lakh kms of road-length as national highway and in next three years to shift 80-85 per cent of country’s total traffic on four per cent of national highways. We are going to bring in a policy to promote use of alternative fuel which is indigenous and pollution free as it will help in saving lot of time, bring down logistics cost by 4-6 per cent, which is currently about 14-18 per cent. Nitin Gadkari Union Minister for Shipping, Road Transport and Highways, Government of India

The investment is happening in all the infrastructure sectors, be it ports, highways, air connectivity and not to forget DFC is also in the pipeline. Unless we are able to integrate the transport solutions, road, rail and river possibilities, the need of the industry to cut down the transportation cost will not happen.

In one of our studies, we analysed only two per cent of cars move by rail, however the potential it seeks is 40 per cent. The another potential area is horticulture. We need to develop the specific wagons for the cargo movement. The industry specific requirements for their transportation can be solved and the policy has also been announced on wagons designed for miscellaneous requirements. With this transportation cost will definitely come to the acceptable level. Rajeev Mehrotra Chairman RITES

Let’s not make logistics a rocket science. It’s fairly simple; movement of cargo from two places, i.e. a person who has cargo and a person who needs cargo. An end to end logistics in India is most required and brilliant idea. Being the recipient of the logistics services, what I believe is missing to achieve this is capability and desire to earn or acquire those capabilities. For instance, most of the big companies do not have capabilities in all the field which is required in end-to-end logistics. They are extremely good in one of them but for rest of the needs, they pick somebody else and do the end-to-end logistics. Kapil Rawat Executive Director - Logistics JSPL

Railway Ministry is focusing more on improving the infrastructure of Indian Railways to create a proper logistics and seamless movement of traffic. We are creating about 100 private freight terminals with private participation so that more and more traffic can come to the railways. We have planned to save about `41,000

crore from the energy bill and we have already saved about 10 per cent of that. The GST (Goods & Services Tax) has already created an uninterrupted seamless market through fiscal measures, now it’s time to create a physical connectivity through planning, integration, and private sector participation, etc. Suresh Prabhu Union Minister for Railways Government of India

Trade Facilitation Agreement (TFA) is an agreement which is going to decide how cargo will move across international borders in the coming years. In 2013, WTO came out with the draft world trade agreement, India ratified it in 2016 and on February 11, 2017, 111 countries in the world ratified the agreement. One of the pillars of which the entire agreement has been designed is trust between the exporting and the importing community and logistics players involved in cargo movement across the borders. The second pillar is transparency which means certainty to handle cargo across the borders. They have taken into account lot of security measures into account. All these terms such as DPD, deferred payment on import duty, single window, etc is originated from TFA only. Samir J Shah Chairman FFFAI

Some of the global trends that are happening in the shipping world are consolidation and digitisation. Consolidation is largely a function of scale in an effort to reduce the cost by buying the other company and becoming a larger entity. With the fragmentation in the country’s logistics industry, what I believe is that there has to be consolidation in the industry because that’s the only way to reduce cost with improved speed and manage the scale in favour of customer and in the interest of integration. Secondly, the way start-ups are bringing technology to the forum, is what the big old companies are not doing. They are bringing digitisation to operations to make them integrated and based on the data can manage solutions and come out with better ways of doing business efficiently. Shailesh Mor Director - Ocean Service (Mid East/Africa/ Indian Sub Con), Expeditors

Once we integrate and look at endto-end logistics, there are many solutions to logistics inefficiencies. Despite the fact that containerisation gives the flexibility, safety, ease of doing business in the handling of cargo and being one of the key parameters of reducing the logistics cost, the penetration of containerisation in India is very low. Government is also focusing on integrated logistics but there is a need to develop infrastructure at a fast pace to bring the benefits. With the improvement in infrastructure, programmes such as ‘Sagarmala’ will be benefitted. Lastly, with the GST there is a huge need for warehousing; this will require capacity building. Presently, there are issues with GST but hopefully we will be able to adopt the new system of taxation swiftly. Kalyana Rama CMD CONCOR

Intergrated logistics means integrating ports, railways, road, airways, and inland waterways and that will help in developing transport and shipping sector to contribute the country’s GDP. The urgency is to develop India’s logistics infrastructure that has been realised in the last decade. One of the identified bottlenecks for developing a robust integrated logistics infrastructure is the Indian coastline and river networks that has historically remained under developed. Adequate road and rail connectivity linkages to ports have also not been developed in tandem with the port development. Inadequate focus on developing coastal shipping and inland waterways for domestic movement of cargo has also skewed the modal mix of transport in the country. Saibal De Director & CEO, IL&FS Maritime Infrastructure Company & Co-Chair Inland Waterways Council, ASSOCHAM

Indian logistics industry is catching up but there is a lot of catching up still yet to be done. The question remains, what is there to catch up? First is cost reduction, which can be achieved with integrated, end-to-end and multi-modal logistics. Earlier, integrated logistics means combining road, rail and ocean transportation. Now, coastal shipping and inland waterways has come up, although they are yet to catch up. Road has 60 per cent of the total traffic and are already congested. Due to poor infrastructure rail takes more time, if compared to other countries. Hence, the entire chain gets delayed and the cost rises due to delayed logistics. Integration can work well for the industry. Secondly, soft issues like manpower are a concern. Processes are not standardised, and we have not invested in technology and manpower wholly. Sidharth Jena CEO Seagull Maritime