A cure-all for the country
Development of coordinated infrastructure will contribute to making Indian products more competitive
that considers various modes of transportation cutting across state boundaries, and balances the slew of infrastructure investments with appropriate policy and regulatory reform measures,” shares Harpreet Singh Malhotra, CMD, Tiger Logistics. Commenting on the need for an integrated multimodal transport infrastructure, Prashant N Popat, Director, Velji Dosabhai & Sons, says, “To cut across modes of transport, administrative geographies, and integrate capital investment with regulatory and policy development, an integrated system is needed, as India’s transport networks are fast changing. Designing integrated transport networks and with logistics infrastructure under development, India is poised to reach a more desirable and efficient state in terms of logistics. Private sector can fill the investment gap in infrastructure funding and allow increased flow of public investment in economically and socially important projects to attain the desired competitiveness in the multimodal
logistics sector.” Nihar Parida, Holisol Logistics, says, “Though the government is supporting development of the multimodal logistics sector, it seems there is no coordinated effort from all the stakeholders to come together and develop an integrated plan. Much of the infrastructure is either away from the port or away from the place of doing business. The need is to look at it as an integral part of one value chain. The customs house or other authorities that are key to logistics end up not having proper infrastructure to operate. To attain competitiveness, we need to plan better and work on reducing cost and time. Major stakeholders, who are working with the customers, should work alongside the government to ensure we have infrastructure development plans which are beneficial for end customers.”
Ramesh Maimidala, CEO, Çelebi Delhi Cargo Terminal Management India, says, “Multimodal logistics plays an important role in making the movement of goods relatively seamless and cost efficient, and supports in continuous flow of operations in an optimal manner. It helps in minimising paperwork, unnecessary movement, pilferage and damage of cargo, and enables on time delivery of goods to the customer. In view of these factors and to meet customers’ needs for efficient, fast, cost effective and reliable transport of their goods, development of coordinated infrastructure in the multimodal logistics sector by establishment of multimodal hub and logistics parks will certainly contribute in making Indian products more competitive.” “We, at Çelebi Delhi Cargo Terminal, have also contributed to multimodal connectivity by starting RFS facilities to connect our terminal better with several hinterland locations and manufacturing regions. Currently, we have started RFS from Ludhiana, Kanpur, Indore SEZ1 & SEZ2, Noida SEZ & Ahmedabad. In future, we are planning to connect various other locations as well,” he informs.
Deployment of ITS is a great initiative, however, direct benefits can be analysed based on different factors
According to Piyush Kumar
Singh, Industry Expert – Logistics & SCM Sector, “It is one of the biggest hurdles that has cramped growth of the logistics sector. With globalisation, logistics is expected to play an increasing role in driving the Indian economy. The way to strengthen the Indian logistics infrastructure is about deconstructing the old and building a new rational equilibrium.” Listing the factors holding back the country to achieve integrated multimodal logistics, Mamidala says, “Integrated multimodal logistics can prove to be a solution for faster transit of goods, reduced logistics cost, and enhanced customer service level, however its implementation suffers with several roadblocks such as lack of infrastructure, lack of proper communication network during transportation of goods through various modes, poor road quality, traffic congestion, inadequate hinterland connectivity, approvals required from multiple ministries, intra-state taxes which increases the cost of transportation, inadequate real-time visibility, a large number of small and unorganised players, etc.”
Parida lists some key factors:
Multiple agencies responsible for different parts of logistics has made it un-integrated. Now, one agency has been made responsible though we are yet to see results. Fragmented operating players and fragmented service buying from customers. Complex documentation and regulatory requirements in different states of the country, though this seems to be easing with new initiatives like GST and E-way bill. The location of hubs determines rentals and operating costs, many a time creating huge variations from region to region, consequentially making it difficult for customers to have uniform landed costs. According to Popat, few of the factors are inadequate capacity at major ports, untapped potential of non-major ports, outdated equipment, lack of organised warehousing, heavy congestion at most major ports leading to higher vessel turnaround time, inefficient handling and long waiting time. He adds, “A similar situation exists at major airports in India, where we have numerous unused airstrips, lack of equipment for oddsized packages, and congestion at main airports, to name a few.” Singh says, “In the absence of a systematic and holistic approach, the use of different modes of transport has remained skewed and inefficient. Secondly, there is no single ministry to regulate the logistics sector, which is in dire need of being accorded the status of an industry. Equally pressing is the need to set up a National Logistics Commission to boost growth. Lack of coordination between central and state governments poses yet another challenge for the logistics sector to work holistically. Red tapeism makes both decision making and procedures slow and lengthy.” “Additional workforce is needed to meet the growing demand. It is also important to invest in their skill development to ensure quality and efficiency in services. A wide customer base has led to demanding expectation, including personalised solutions. There is little awareness about using proper modes of transport for different uses and about environmental concerns,” he continues. Reiterating the need for a single ministry, Malbarwala says, “There is lack of internal communication between all modes of transport at ministry level. Everyone is planning individually for their individual growth. As of now, all modes of transport are developing individually; new roads are being built, ports are being modernised, airports are being built, waterways are being developed, but it seems that there is no internal co-ordination in growth between these transport modes.”
Commenting on the plan to set up 35 MMLPs by the government, Malbarwala continues, “A 50-acre park requires approx. `200-300 crore for development. To make it successful, a single authority/ministry should plan, approve, and set up a time frame and common standards to identify the location and areas where they can be constructed along with monitoring implementation.”
PUBLIC PRIVATE PARTNERSHIPS
It is evident that the government is not only talking about MMLPs but also doing activities related to MMLP development in the country, in partnership with the infrastructure ministries like shipping and railways. The question remains, how public private partnerships in multimodal logistics parks can encourage their development. Parida believes, “The Indian PPP scenario as it stands today presents an optimistic picture. However, several bottlenecks and challenges have been encountered in PPP model development. Some of the major challenges are related to the regulation and availability of finance for the private sector.” According to Malbarwala, “The decision-making process in the public sector is slow as compared to the private, which is the root cause. The private sector is developing expertise, technical know-how, and gaining experience in handling its own business. Their expertise should be combined with public sector’s growth planning, which can give best results and encourage multimodal logistics.” “The development of MMLPs is an initiative of the government which focuses on reducing logistics costs in India, improving freight aggregation, distribution, storage, and creating various value-added services. It will contribute in transitioning from the current model of freight movement to hub-and-spoke model of freight movement. Therefore, the creation of world-class infrastructure for such multimodal logistics parks would require large investments, technological advancements, and efficient project management. To meet these requirements, making effective use of the capabilities of private players through public private partnerships has emerged as the most feasible and viable option for creating multimodal logistics parks, thereby resulting in quality service delivery to the customers,” says Mamidala. Popat adds, “In the last couple of years, the government has taken several initiatives to increase development of infrastructure projects with public and private partnerships, which has significantly reduced logistics costs in various sectors. Such JVs should be backed and encouraged by the government as this will help build state-of-the-art logistics parks across India and in this way, will encourage multimodal logistics.” Singh believes that these initiatives are expected to reduce India’s logistics costs and bring them closer to the accepted global benchmarks from the current high levels of 1314 per cent of GDP.
ITS ELEMENTS
The transportation industry JVs should be backed and encouraged by the government as this will help build logistics parks
needs to align with the new and emerging advanced technological processes and capabilities available in the market to strengthen the entire supply chain. Mamidala adds, “To make transport management more effective and to build intelligence into the existing transportation system, it is important to implement innovative tools such as enhanced usage of Radio Frequency Identification (RFID), Global Positioning Systems (GPS), data loggers, etc. The advanced intelligent transportation system tools will help in real-time monitoring of various modes of transportation involved and will help to establish an efficient, multimodal transportation system that connects various modes of transport and the transport management system through a robust technological network. Adoption of latest technology will also support in gaining a competitive advantage.” Parida notes, “Deployment of Intelligent Transportation System (ITS) is a great initiative, however, direct benefits from deployment can be analysed based on different sets of factors such as safety, flow efficiency, productivity and cost reduction, and environmental benefits.” Sharing the main purpose, Singh explains, “Intelligent transportation systems could be used to protect elements of critical road and rail transportation infrastructure. Protection of critical transportation infrastructure is a complex issue; it is not difficult to identify a large number of critical infrastructure elements.” “With help of ITS, we can save wastage of fuel and good amount of foreign exchange. Container management systems, security CCTV systems, weather information, GPS-enabled movement can guide stakeholders on transport movement, road blockages, etc., to plan resources,” stresses Malbarwala.
OUTLOOK
Talking about the potential of this sector in the future, Parida shares, “This segment is the future; it’s about consolidation of complete supply chain at a macro level. Consolidation clubbed with technology will reduce the cost and time, and enhance the business and help in growth of the economy. Let’s not forget, technology increases transparency and helps avoid cost of duplication.” “Efficient multimodal logistics cannot only save time and cost of stakeholders but accelerate goods movement. Demand of development of a sea port in South India is being heard, which could be a transhipment hub in the region. This would allow efficient cargo handling between short distance and long-distance traffic and earn revenue for the country,” shares Malbarwala. “Though it is a complex issue, it is not difficult to identify critical infrastructure elements as there are many systems that could be used
The way to strengthen the infrastructure is by deconstructing the old and building a rational equilibrium MMLP is the refined form of logistics parks, where various valueadded services are rendered
to make infrastructure and transportation safer. With everything going digital and government working towards getting transparency in every sector, there are a lot of projects that are developing, and building new systems could help users to manage traffic. This will be imperative for all the players to adapt to this change and be 100 per cent compliant with such systems in place as it is the need of the hour. If we don’t change with the time now, we would be left out far behind and later on, it will be impossible to catch up with the developing time,” emphasises Popat. Singh points, “Integrating ITS into the transportation planning process requires overcoming some obstacles and some changes in the business practices of many institutions. The major challenges in mainstreaming ITS into everyday operations of transportation agencies are institutional coordination and cooperation for sharing information and data, technical compatibility among ITS projects, human resource needs, and training and financial constraints and opportunities to involve the private sector.” “Most public agencies are aware of the challenges in mainstreaming ITS into the transportation planning process, where ITS projects are part of traditional transportation programmes on local or state-level to achieve the best output from transportation investments,” he adds. Malhotra says, “The wellperforming logistics parks can be determined and stand out from their peers through performance evaluation and can hence provide a benchmark for others to learn and further progress. MMLP is the refined form of logistics parks, where various value-added services are rendered in addition to rail or road-based transportation.”