Multimodal transportation or multimodal logistics has long been a subject matter of discussion with its potential to propel India’s logistics efficiency to newer heights. With proposals and implementations of MMLPs in progress, we dive deep into the proposed transformational effect in the country’s supply chain, the underlying caveats, points of contention and the road ahead as we consult the top stakeholders of India’s logistics and supply chain.
Deemed to be one of the most promising sectors of the Indian economy, the logistics industry has undergone a phenomenal evolution in India. Projected to expand through 2032 at a rate that is approximately 1.2 times the growth rate of India’s gross domestic product (GDP), it is hoped to be on an upward spiral with mega initiatives and implementations underway.
However, higher logistics costs in comparison to other leading economies have been disconcerting for India.
Setting up of Multi-Modal Logistics Parks (MMLPs) under the Transport Ministry’s Logistics Efficiency Enhancement Program (LEEP) is hoped to improve the country’s logistics sector by lowering overall freight costs, reducing vehicular pollution and congestion, and cutting warehousing costs, thereby redefining the industry as a whole.
Logistics parks with road and rail connectivity enable multimodal freight transportation which helps freight transportation on line haul (between hubs) to shift from road to rail and waterways (wherever possible), thereby reducing the freight cost.
Multimodal Logistics: A one-stop solution?
Is Multimodal Logistics the all-pervasive, single solution to propel India’s logistics efficiency to greater heights?
“It is not necessarily true. I think it depends on origin destinations pairs where semi modal transportation or multimodal transportation works. But obviously for cost effectiveness or environmental reasons, it is desirable to have multimodal transportation.”~Pawan Agarwal, Special Secretary to Logistics
The question of first and last mile delivery
“Transportation of freight by rail, coastal shipping or inland waterways is significantly cheaper than that by road. However, there is an issue of first mile and last mile connectivity in rail and waterways transportation, whereby you require transshipment facilities. The first mile and last mile often have to be done by road and if you add these costs, sometimes, it turns out to be more than road transport alone. So, while it is cheaper and environmentally better to transport freight by rail/coastal shipping or by inland waterways, it may not necessarily be cheaper overall and therefore, a few things are required to be done to ensure that we encourage multimodal transport”, the Secretary shares.
Mr Agarwal enlists three factors that can encourage multimodal transport, viz. Fixing the infrastructure by taking care of proper Transshipment and handling facilities, Putting processes and systems in place and thirdly, Promoting multimodal/inter-modal transportation among people who are used to moving their cargo in a certain manner.
He emphasises upon how promotional efforts are required to push freight transportation from road to rail and from rail to coastal shipping. “By itself, it may not happen”, he adds.
How can multimodal logistics play a prominent role in bringing down the overall logistics cost of the nation?
Cost-effectiveness is the first factor that comes to mind when one mulls over the importance of multimodal logistics.
Shantanu Bhadkamkar, President , Association of Multimodal Operators of India(AMTOI )speaks along these lines.
“Multimodal Transport has numerous dimensions and basic logistics infrastructure is perhaps the most crucial aspect which makes the multimodal Transport seamless, cost-effective and time-optimised. The convergence of various modes of Transport, at least three modes, with shared access & handling platforms will make the modal change seamless in a real sense, it is will reduce the cost and save time. The hub should facilitate competition among two or more modes, giving options to the customer.”~Shantanu Bhadkamkar, President , Association of Multimodal Operators of India(AMTOI )
Recent Developments on the Way to Multimodal (by Government/Private players)
According to a Ministry proposal, 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, with various stakeholders in the country including MoRTH, CONCOR, DMICDC in addition to the state governments independently planning the development of these parks.
The draft National Logistics Policy proposed the setting up of the Multimodal Logistics Park Authority of India as the nodal agency.
Sivasailam Narayanan, Former Special Secretary to Logistics sheds more light on this.
“If a beginning could be made with Railways joining the multi modal logistics initiative though a common acceptable documentation, we will scale up fast. Also shipping lines need to be brought under the common documentation of multi modal logistics which will bring down logistics cost significantly.”~Sivasailam Narayanan, Former Special Secretary to Logistics
Vishal Sharma, CEO – Cluster India and Indian Sub-Continent, DB Schenker sheds light on the subject and the recent strides that have been made along this direction.
“Multimodal is getting a lot of attention especially the route from India into Bangladesh. Currently, there are proofs of concept where trial runs have been completed, for example Kolkata to Benapole via Rail option, and likewise many trial runs have been planned. There is also an initiative around a Rail + Barge solution for which discussion is under way. The key benefits include transit time savings & double handling of cargo at borders.”~Vishal Sharma, CEO – Cluster India and Indian Sub-Continent, DB Schenker
Setting up of a Logistics Department under GOI:
A Logistics department has been commissioned by the Government of India, MOC & DOC for the development of the logistics Industry. This division will support the sector by way of policy changes, improvement in existing policies, identification and rectification of bottlenecks and introduction of IT based interventions.
“Technological support is being provided through the development of Logistics Portal which will serve as a transnational marketplace for B2B and B2C. A Logistics Data Bank has been commissioned to track containers on a real-time basis”, he shares.~Ashish Agarwal , CEO, Seros Logistics
The draft National Logistics Policy is replete with more such reforms and developments.
Vivek Arya, Managing Director, Rhenus Logistics India clues us on the expected developments associated with the Policy that is soon expected to be launched.
“There is a lot of buzz in the Industry about the much-awaited National Logistics Policy and complete roll out of various other Government initiatives like DFC, various other infrastructure projects, trimodal terminals using inland waterways, rails and roads. Along with this the laws and regulations governing logistics need to be simplified too.”~Vivek Arya, Managing Director, Rhenus Logistics India
Sam Katgara, Owner- Jeena & Company, talks about the setting up of the 35 MMLPs in India.
“The work has already begun on the detailed project reports (DPRs) for seven locations – Nagpur, Mumbai, Bengaluru, Chennai, Surat, Sangrur and Jogighopa (Guwahati). These locations would be developed from the point of view of external connectivity infrastructure, which means they would have rail and road connectivity, and where applicable, inland waterway connectivity to ports.”~Sam Katgara, Owner- Jeena & Company
With respect to Private players promoting Multimodal logistics, Mr Katgara shares,” Allcargo is developing a multimodal logistics park in Jhajjar, Haryana and it is going to be India’s largest rail linked logistics park”.
Record freight loading in 2020 through Rail
This year, the Indian Railways has achieved a significant milestone of pulling more freight traffic compared to last year’s level amid COVID-19 challenges, as per a Ministry of Railways statement in August.
On August 19, 2020, the freight loading was 3.11 million tonnes which is higher than last year for the same date (2.97 million tonnes). On the same date, Indian Railways also earned INR 306.1 crore from freight loading which is INR 5.28 crore higher than last year for the same date (INR 300.82 crore), as per the statement.
Notably, Indian Railways is going to promote Railways’ freight service, making traders, businesses, and suppliers aware of the benefits associated with transportation through railways. Apart from being an economical and environmental-friendly mode of transportation, it has led to additional benefits to farmers by keeping perishables fresh for consumption and introduction of special trains like Kisan Rail.
This is an abridged version of the original story that appeared in the September issue of the Logistics Insider magazine. Click here to read the complete and unedited story.