Connecting India With Multi-Modal Logistics
Indian Transport & Logistics News|November-December 2019
Today, logistics cost in India accounts for 13-17 percent of the Gross Domestic Product (GDP) which is nearly double (6-9 percent) the logistics cost to GDP ratio in developed countries such as the US, Hong Kong and France. Much of these escalating costs are due to the absence of efficient intermodal and multimodal transport systems. But with the government giving infrastructure status to the logistics sector, development of multimodal transport networks and initiatives to set up industrial corridors and logistics parks, a massive transformation of the country’s logistics landscape is underway.
Surya Kannoth

Be it an aircraft manufacturer shipping critical aeroparts from Bengaluru to Seattle in the US, or a farm engaged in poultry and feeds transporting its fresh produce from Allepey to Mumbai, the role of logistics and transportation is of the essence. Bridging the gap between the producer and the consumer has many actors along the way comprising the entire gamut of transportation and material handling solutions, ranging from road, rail, air, port, trucks, shipping, containers, and extending to customs, warehousing, and many more elements.

India has traditionally had a tough ride when it comes to transport logistics, which is a direct result of poor connectivity between road, rail, air and port. While transport infrastructure is a critical component of industrial growth, for India to become the third largest economy by 2028, a lot needs to be achieved. According to the World Bank, logistics cost in India is rated among the highest in the world, a weak spot that the Indian government is looking to address with the Logistics Efficiency Enhancement Programme (LEEP), by which multi-modal logistics hubs will be developed throughout the country.

Within India, roads continue to be the most popular form of transportation accounting for over 60 percent of total freight movement. The country's rail network — fourth largest in the world —carries only 32 percent of cargo. Inadequate rolling stocks, non-availability of cargo hubs and capacity constraints are a major hindrance for the rail network from achieving its full potential.

According to the draft National Logistics Policy, a key focus area to reduce the logistics costs for key commodities is to facilitate modal shift for the long haul from road to rail, coastal shipping, inland waterways etc. It is critical to identify the average lead distance beyond which this modal shift should occur for the respective commodities. “Alternate modes which are more economical will be identified and encouraged. For example, for iron ore the most economical mode of transport up to 400-500 km is slurry pipeline, beyond 400km up to 11001200 km is rail, and beyond 1100 km is coastal shipping. Where feasible beyond 300-400 km, inland waterways are more economical. The aim is to promote cheaper alternate modes. This will also aid in addressing the environmental concerns associated with road transportation,” the policy document read.

Multimodal logistics parks pave way for reduced transportation costs

In a bid to enhance the logistical efficiency on India’s highway network, the transport ministry is planning a network of 35 multi-modal logistics parks which will account for 50 percent of the road freight in the country, according to a ministry proposal.

Different stakeholders in the country including MoRTH, CONCOR, DMICDC, state governments, etc. are independently planning the development of MMLPs. “There is a need to ensure that these MMLPs are developed at the right locations with appropriate value added services, mechanization, technology adoption etc. for effectively driving the logistics efficiency in the country and ensuring duplication of facilities at the same location is minimized,” stated the draft National Logistics Policy. According to the report, at present, there is a gap in the availability of MMLP infrastructure for enabling seamless multimodal freight transfer, providing world class storage and handling as well as delivering value added freight services. Even where ICDs' and CFSs' have been created, there is potential to improve their utilisation and performance.

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