All Roads lead to Hinterland
“The thirsty man goes to the well, the well doesn’t go to the thirsty man.”
This seems to be the new mantra for the shipping and logistic industry in India if its grand investment plans is any indication. All the major players are making a beeline to build infrastructure deep into the hinterland and right at the doorstep of the shippers. The next phase of economic growth will be driven by consumption in Tier-ii, TIER-III cities and rural markets. Companies who realized this are moving ahead to invest in digital and physical infrastructure in an effort to reach out to the hitherto neglected hinterland.
Under Sagarmala Programme,
Government has made plans to provide enhanced connectivity between the ports and the domestic production/consumption centres. More than 150 connectivity projects at an estimated investment of more than `2 lakh crore have been identified. Logistics companies are planning to leverage on this by dovetailing their facilities in to this mega plan.
The concept of integrated logistics infrastructure is donning on the industry. When you look at the logistics landscape of India first-mile and last-mile connectivity is what needed most. AP Moller-maersk has set up a chain of eight ICDS across India. Similarly, CMA CGM has six CFS in
India, mostly around port terminals and it is looking to invest in the warehousing and cold chains. DP World has plans to invest around $1 billion in India with logistics infrastructure being the major focus area. Similar trend has been witnessed in case of other industry heavy weights like APMT, Allcargo, JM Baxi and many other institutional investor backed investments have ambitious plans chalked out to invest into hinterland infrastructure.
However, these trends don't mean investment in port sector is getting dried up. A positive sign is around 13.71 million teus of containerized cargo was moved by India in FY17, an impressive upward growth of 11 per cent vis-a-vis FY2016. India’s total installed capacity now stands at 21mn teus with average capacity use of 65 per cent, on par with industry standards. In the last few years everyone went ahead and built ports. Definitely it has slowed down but still both government and private sector have grand plans to build more ports in future, which eventually we will need to keep pace with future growth. But for now, industry focus seems to be on identifying gaps in hinterland infrastructure and seize the opportunity to built infrastructure, which is urgently needed to support the growing needs of cargo movement.
This is definitely good news for shippers who often suffer because of poor infrastructure and bad connectivity. Meanwhile, the buzz of Indian logistics sector was also echoed at Davos World Economic Forum where Prime Minister reiterated, “Our objective is to reduce the logistics cost and transaction time for various activities.” R Ramprasad Editor and Publisher email@example.com
Ambitious plans chalked out to invest into hinterland infrastructure to serve the land locked regions.