BUILDING NEW CONVENTIONS
Multimodal logistics can be a game changer for movement of goods in the Indian subcontinent. Twinkle Sahita…
The transport and logistics sector are fundamental to the development of a country. In India, since the 1990s, the transportation infrastructure has undergone a significant change. While in the 90s, the demand for transport grew at an annual rate of 10 percent, in the last decade the demand in the transport and logistics industry grew along with the accelerating Indian GDP. This growth increased the demand for practically all transport services.
A country’s economic growth depends on the availability of a robust and seamless multimodal infrastructure. The speed of the movement of goods depends to a great extent on the various modes of transportation like rail, road, air, and sea.
Globalization, agile manufacturing and speed-to market delivery requirements are also driving the demand for multimodal transportation infrastructure. Intermodal transportation services are an integral part of supply chain management in companies requiring coordinated, continuous, flexible, and reliable transportation and are generating demand for new ports, airports, and rail and trucking terminals that integrate transportation and logistics services in order to facilitate agile business practices. An integrated approach to transportation, multimodal transportation can enhance the customer service level.
Among the various multimodal means, sea freight is a preferred way to transport large mass of freight. While air-transport is quick and reliable, it is also nearly four to five times more expensive compared to land or sea transport. Multi-modal shall bring about a greater reliance on non-conventional forms of transport like inland waterways while consequently increasing the emphasis on sea freight.
Inland connectivity is akin to veins and arteries which bring in and take out blood and the heart cannot function without this. Several ports in India are strategically placed on the coastline. However, ports lack development due to lack of inland connectivity either by road or rail. Developed economies have long realised the importance of inland connectivity and mature ports not only have connectivity into their own hinterland but also connectivity into neighboring states.
“The primary policy aim of India today has to be modal shift of cargo from road and rail to coastal shipping. This would be best aided if hinterland connectivity is more than adequate for all modes of transportation be it road, sea and rail. Using more than two modes of transportation for a single consignment adds to transport costs. For example use of Inland Water Transport (IWT) plus coastal shipping would be the ideal route from a factory to the end consumer on the coast or vice versa.”
“Port infrastructure including handling equipment and inland connectivity are paramount for the purposes of being able to ensure that the benefits of shipping, coastal or international, are relayed all the way to the hinterland,” says Anil Devli, chief operating officer, Indian National Shipowners Association (INSA).
India, with its massive hinterland, requires the best infrastructure in terms of connectivity for its ports. The ambitious Sagarmala project of the Government of India is an attempt to achieve this very objective.
The government’s ambitious Sagarmala project, which aims to develop port infrastructure along the country’s 7,500 kilometre coastline, is likely to see an investment of more than Rs 70,000 crore in coming years. The prime objective of the Sagarmala project is to promote port-led direct and indirect development and to provide infrastructure to transport goods to and from ports quickly, efficiently and cost-effectively. Therefore, the Sagarmala Project shall aim to develop access to new development regions with intermodal solutions and promotion of the optimum modal split, enhanced connectivity with main economic centres and beyond through expansion of rail, inland water, coastal and road services.
“The project includes modernisation of our ports and islands, setting up of coastal economic zones, new major ports and fish harbours. We expect that the total investment in the project would be to the tune of Rs 70,000 crore,” shipping Minister Nitin Gadkari said after chairing the first National Sagarmala Apex Committee meeting.
Unmesh Abhyankar, chief executive officer, Mundra Port says, “The port has significantly invested in developing and enhancing the connectivity. Today, the port has multi-modal connectivity through water, road, rail, air and pipelines. The port happens to have many firsts on this front too, which include first private rail network in the port, first road over-bridge, creation of log haul python rakes, operating double stack container trains.”
As the international trade primarily moves by sea, any economic swing has deeper impact on maritime sector. The economic crisis led to record decline in sea freight rates due to lower demand for transportation. This has, in turn, affected the ship building, repair and maintenance sectors.
“The legislations being implemented concerning Multimodal transport are already in place. There will also be scope for refinement, addition and revision, but the overall opportunity is visible. Coastal Shipping will be a game changer for India which has over 7000 kilometres of coastline that is almost half of the country. With roads and rail already under stress, this will be a more preferred and efficient mode of transportation,” says Captain Ashok Shrivastava, chief executive officer, Allcargo Shipping.
Despite these issues, logistics has a bright future in India. India has the geographical advantage of being well positioned to emerge as a hub for a variety of products. However, for a strategic growth in this industry, longstanding issues like improvement in road and rail infrastructure, creation of modern warehouse facilities and streamlining of customs formalities need to be improved.
Thus, multimodal on the move can help to achieve the objectives of organised logistics- reduction of inventory, economy of freight, reliability and consistency in delivery performance and minimum damage to products, and quicker response.