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.

Cargo Talk - - Front Page - KALPANA LOHUMI

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

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