The overall growth of India in the last 2 years has provided momentum to the multimodal transport logistics sector. The sector has witnessed significant growth but lot more need to be done. Induction of new technologies, infrastructure development and regulatory reforms are some of the issues that need to be addressed on priority basis.
The International Multimodal Transport Association defines multimodal transport as -the chain that interconnects different links or modes of transport air, sea, and land into one complete process that ensures an efficient and cost –effective door to door movement of goods under the responsibility of a single transport operator, known as a Multimodal Transport Operator on one transport document . Thus transportation of oil or coal cannot be intermodal, but only multimodal because they will have to be “handled” at the time of changing modes. On the other hand, transportation of containerized goods like fertilizers or grains is mostly intermodal.
Status of multimodal logistics in India
The multimodal transport logistics concept in India has gained pace owing to the significant growth India has witnessed in the last two decades in all sectors including manufacturing and exports. This is primarily because the growth has applied critical pressure on the need to have seamless infrastructure to match this pace and to sustain it on long term. “While multimodal logistics has grown there is still much scope for development of good standards of infrastructure backed with simpler regulatory policies to boost growth further,” opines Samar Nath, CEO, DHL Logistics Pvt Ltd. This will help exporters and importers reduce their logistics spend to make them more competitive in the world market. Higher government interests and investments, direct or through PPP and BOT mode will not only improve efficiencies but also bring the total logistics spend down from the current 13% of GDP to more sustainable levels.
According to Keyur Gandhi, Director, Express Global Logistics Pvt Ltd, multimodal transportation will be the key in overcoming bottlenecks considerably. “But it needs to be looked in a holistic frame of logistics i.e. integration of infrastructure private as well as public near ports, such as CFSs, ICDs, to movements of LCL and FCL cargo; leveraging coastal shipping, which is one of the most efficient, cost effective and environment friendly modes of transportation within the country, compared to challenges of road and rail; and outsourcing 3PL and warehouse management services to experts for efficient management,” he points out.
According to a research paper by IIM, Kolkatta the annual logistics cost in India is estimated to be 14% of the GDP, which translates into US $140 billion assuming the GDP of India to be slightly over US $1 trillion. Out of this US $140 billion logistics cost, almost 99% is accounted for by the unorganised sector (such as owners of less than 5 trucks, affiliated to a broker or a transport company, small warehouse operators, customs brokers, freight forwarders, etc.), and slightly more than one per cent, i.e. approximately US $1.5 billion, is contributed by the organized sector. “So, one can see that the logistics industry in India is at a nascent stage,” points out Gandhi.
Technology must
Since multimodal transport involves multiple information points, a technology driven approach provides the much needed platform to integrate the multiple vendors into a seamless network for the customers. Indian companies have taken giant strides in recent times to match with the global pace. Having said that, there is significant scope for growth considering some of the unstructured points in the supply chain for example, warehousing, surface transport etc. where the proprietary approach of the smaller players has hindered the technological development of the industry. “The scope of the industry is enormous and minor easing of policies can not only make the environment more conducive but also attract the bigger global investors to our country,” exhorts Nath.
Latest innovations
There are some significant innovations that have happened. One such example is of trailer trains where the same vehicle can be used on the rail network as well as surface transport based on special air suspension wheels. The Ro-Ro is another significant example of the innovative approach that has gained pace for vehicular consignments that are driven by road to the sea ports for exports via sea route. “Also, there is a general sophistication and development that has been derived by a combined road-rail solution by drawing the competencies of both modes and providing the last mile connectivity,” says Nath. GPS tracker on surface transport is another example of seamless tracking on multimodal logistics that helps customers in a significant way.
Benefits of construction equipment sector
Like all companies, the basic need for construction equipment companies is to be able to reach the “action location” with minimum fuss in terms of pilferage, damages, loss of time and resources as well as reduced cost. Multimodal transport provides this one touch, single window to the companies. This helps them reach the remote locations with minimum hassles in terms of documentation and procedures. It is definitely cost effective as it derives best of efficiencies through economies of scales on all modes. Also, reduced liabilities due to lower pilferage and damage bring direct savings to their bottom-line apart from making them more competitive in their own domain.
Areas need to be improved
“The focus needs to be brought in to the “connectors” in our multimodal chain,” points out Nath. For example the shore, harbor equipment in ports (India) – are either ageing or inept in handling higher efficiencies and loads. Similarly, the approach and connecting roads, rail networks from/to our major gateways of EXIM often become detrimental to the growth impetus rather than being facilitators. Regulatory simplification needs to be introduced with reliable online data interchange between various regulatory authorities, such as customs, excise, octroi etc. to make it paperless and faster. The process simplification will have direct impact on the country’s trade outlook through reduced transit time and associated costs. Additionally, there is a need to focus on niche growth. For example, facilities and infrastructural growth for cold chain or over- dimension cargo across all modes will result in better industry connectivity and higher growth focus for related industries. This will also avoid the mushrooming of industrial growth nearer to the gateway port and push the growth into the hinterlands of the country.
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