The year 2020, which threw upon us the most unexpected incidents, has brought about a great impact in the ways the society works and what it strives to achieve. It has been a difficult year for a lot of sectors, especially logistics as a result of the disruptions in the global supply chain due to coronavirus-induced lockdown. Covid-19 pandemic almost halted the international trade across borders. Though there has been recovery in cargo volume growth in last few months, the overall trade volume is unlikely to reach pre-covid level this fiscal.
Amidst gloom and doom in international trade, India’s logistics sector is at the cusp of a revolution with Government policies and development of key infrastructure projects likely to aid the growth of the sector in the next decade. The Government of India is working on the National Logistics policy to ensure cost efficiency and make the sector resilient through effective supply-chain mechanism and digitisation in place. However, the game-changer for the Indian logistics sector will be the implementation of Dedicated Freight Corridor (DFC).
DFC is a railway route, which is meant exclusively for freight traffic movement in two corridors with study. Currently, work is in progress for extending it to other important routes. This project will not only fasten the pace of cargo movement but also ensure a great contribution towards the environment; while minimizing the logistics cost.
Eastern and Western DFCs pan from longest locations and connect through states to ensure last-mile delivery at minimum cost and minimum CO2 emissions. The Western DFC starts from Jawaharlal Nehru Port Trust (JNPT) to Dadri and runs through 5 states connecting existing and emerging ports in Maharashtra and Gujarat with the Northern hinterland. Whereas, the Eastern DFC runs from Ludhiana in Punjab to Dankuni in West Bengal.
DFC will connect existing and emerging ports to the north-west hinterland and will provide complete transport solution to customers and development of multimodal logistic parks along the corridor. It will assist in conversion of freight movement from heavy road infrastructure to rail and also bring upon modern and innovative technology with improved safety feature. According to one estimate DFC will save 457 million tonnes of CO2 emission over 30 years period.
The primary purpose of DFC is to decongest already saturated road and rail network. The growth in Indian economy demands an additional infrastructure facility for the freight movement. DFC will provide a safe, reliable, flexible, economic and environment-friendly freight transport system which will make overall logistics smooth and efficient. During the last year, the logistics sector has sailed through evolution and the technological advancements in the sector has been a great relief. Although the challenges have given the sector an opportunity to grow and experiment, they have also pushed companies to accept change at a faster pace and become agile.
This is to give a perspective of fast paced evolution and the need to act on it within time. When we speak about advancement of technology and adoption of newer means, we also need to speak about the workforce. Since logistics is a human-force heavy sector, the need to empower and educate the human talent is immense. The pandemic has resulted in crisis of migrant labour and there is a severe shortage of manpower for infrastructure projects. The logistics sector should also focus on skill development aspects that will assist the industry players in sailing through this crisis calmly and in a resilient manner. Similar to the technological advancements, the advancement of manpower in terms of adaptability, agility, assertiveness and skill-set is crucial.
In order to benefit fully from the implementation of DFC route, Companies can contribute by parterning with DFCs and shipping ministries to handle single terminal bound trains, thereby erasing the need for intra-terminal transfers. Further to which the operating costs can be lowered to make way for competitive pricing. The transit time is expected to reduce from an average of 60 hours at present to 24 hours. Any new traffic of Road Railers & RORO will be promoted, this in will bring in increased frequencies with a mixture of Exim & Domestic traffic. 40% of the DFC route is expected to be built by 2021.
While we have seen adversities and challenges in the trade in the past, this year has overwhelmed us and paved a way for the sector to strategically think and align objectives and resources for a defined goal. While the pandemic stressed the sector, it also provided an opportunity for the sustainable growth of the sector through DFCs and EXIM trade.
The global shipping industry’s prospect for the next 12 to 16 months remains negative, as few companies’ earnings are anticipated to fall. Now is the time for global leaders in the sector to take necessary measures to secure the health and safety of the industry and to prepare for the eventual return to normalcy – hopefully around mid-2021. There are certain factors useful in the development of a strong and sustainable maritime sector, it will in conclusion rely on how different stakeholders optimise the opportunities being presented to them which remodel the sector into a growth engine for India.
This article has been authored by Jakob Friis Sørensen, Managing Director, APM Terminals Pipavav.