The Central Government’s drive to encourage integrated logistics and multimodal connectivity is a positive move to ensure the fast-paced development of the logistics industry in India. Not only will this bring efficiencies in domestic logistics, but will also boost EXIM competitiveness, making more international market available for consumption. Additionally, the government has ambitious plans to develop 100 PM Gati Shakti cargo terminals in the next three years to be located in many states in India. Our recently held seminar, on the sidelines of our annual Supply Chain Tribe Awards event, offered some interesting insights into this transformative landscape of multimodal transportation and recommended ways for companies to be the perfect partners in progress to drive the holistic growth. Excerpts…
What is the main principlebehind using multimodal?
Sanjay Desai, Co-founder & Regional Director, Humana International (S) Pte. Ltd.: Multimodal transportation is the physical process of transporting goods using multiple modes or types of transport like Road/Ocean, or Road/Rail/ Ocean for one shipment with one ownership and one source of documentation. In a Multimodal shipment the multimodal operator is Solely responsible for the entire goods, not only its individual parts till the goods are reached to end consumer.
Xerrxes Master, President, Association of Multimodal Transport Operators of India (AMTOI): Multimodalism is the only answer to an efficient supply chain model. Multimodalism consists of all walks of transportation – air, sea, rail & road. A Multi Modal Document is a single document showing two or more modes of transportation to ensure a quick timely delivery of goods. It's more or less based on a hub & spoke model as well or it can be via seamless flow of goods from sea to road or via rail. We always talk of the increasing costs of logistics and various figures are being quoted. NCAER has very categorically stated that the logistics cost is close to 8-9% and this can only be bought about by an efficient supply chain model via multimodalism. Multimodalism, in essence, is One Vendor One Document.
V Raju, Business Head & Sr VP – 3PL Contract Logistics, Avvashya CCI (All Cargo): The basic purpose of using a multimodal is to ensure cost optimisation, transit time savings and lesser hassles for the importer or user of the multimodal. The importer need not negotiate at every point with the shipping line, with the rail operator or with the truck operator doing the last mile. All these movements can happen on a single document (CTD), which is agreed and signed before start of the movement or journey of the consignment and each leg is taken care by the respective service provider, that is already determined.
What is the current status of Multimodal adoption in India? Are we realising its full potential?
Sanjay Desai: In the last five years, there is a tremendous push towards making India a transhipment hub. India spends about 15% of GDP as logistics costs nationally. A systematic logistics network is crucial to economic growth. To develop this sector, the Cabinet Committee of Economic Affairs mandated the Ministry of Roads Transport and Highways (MoRTH) to develop Multi Model Logistics Parks (MMLP) across the country under a broader national wide scheme called the ‘Bharatmala Pariyojana’. “The Gati Shakti Programme” launched by Central Government is a part of ‘Bharatmala Pariyojana’. One of the major pillars of Gati Shakti is setting up of (MMLP) Multi Modal Logistics Park in India, which will strategise the way we adopt and implement effective multimodal transportation across major highways connecting multi-city logistics centers at speed and optimal cost.
What are the benefits of Multimodal?
Sanjay Desai: Multimodal transport brings along multiple advantages, which make this logistical process one of the widely used systems in the world, especially in international markets covering long distances where there are multiple gateways / ports, etc. Let us look at a few benefits:
Reduce congestion in one type of transport: As this process makes use of multiple shipment modes, it helps to decongestion the traffic on one particular mode.
Facilitate easy exports using cross-border multimodal: International multimodal logistics helps a country to be competitive in the international market due to quicker and safer availability of goods for trade.
Optimised use of available modes and capacities: Since multimodal shipping involves more modes, it increases the number of available connections within the supply chain without having to wait for a specific time. It also minimises time loss at trans-shipment points and keeps the cargo moving in right direction.
Centralised documentation: Multimodal transportation reduces the burden of variety of documentation and formalities. Due to single ownerships, the burden of issuing multiple documentation and other formalities connected with each segment of the transport chain is reduced to a minimum.
Single party ownership: In a multimodal transportation, the consignor needs to deal with only the multimodal transport operator in all matters relating to goods, documentation, and or delay in delivery of goods during the entire process. This helps to have a focused communication in case there are issues associated with the shipment.
Reduces costs at various stages: The savings in money from costs resulting out of these advantages are usually reflected through freight rates charged by the multimodal transport operator and also in various other allied costs like, cargo insurance cost, destination & port charges.
V Raju: Multimodal currently stands as one of the best means for movement across seas, across the road and land infrastructure and also the best available means to ensure savings and time. Look at let's say about 20 years back, I remember when I used to work for terminals at Nhava Sheva, we used to find it extremely difficult to ensure a cargo that arrived from Europe, offload it at JNPT and then try and catch the train for ICD partly or ICD Garhi Harsaru in Delhi. We used to wait for days together just to get a booking. The main objective then was to transit to ensure that the transit time is the lowest but unfortunately, we could never get a booking because the number of rail services were the least at that point of time and the rates could really be very high at that time because there was no competition. There was only Concor, which used to provide us the rail services and then once it reached ICD, moving it to the factory or to the customers’ godown was another big Herculean task because we never knew when the train is going to reach Garhi Harsaru to plan further route. With multimodal, things have improved drastically. Companies can conclude a deal with the sellers, for instance, in the US., to move the material from his factory in Los Angeles on to the Port of Los Angeles. The transit time is planned. Their agents in India ensure that the goods move straight to Delhi or wherever they are destined through the rail services connected through one single document and ensure that it is reaching the destination mentioned in the single document – Combined Transport Document (CTD) or a bill of lading at the shortest possible time.
Therefore, the advantage is always with a buyer or with a consignee. There are also other parties who can avail of the advantages. In essence, you don't have to struggle with every single logistics service provider enroute. Multimodal ensures that there is a rapid service at the shortest possible transit time, the documentation process is quite simple – a single contract entered and either the buyer ultimately must only ensure and check on the transit times and the day when it is going to be delivered to him at the location nominated by him.
Going ahead, I think the Gati Shakti and also the National Logistics Policy are going to be pathbreaking initiatives and hopefully with a speed with which the Indian Government is moving around to bring down the logistics cost from a whopping 14% to about 8% and also with the Government of Maharashtra very keen on opening up multimodal parks across the state, we can expect some dynamic decisions to be taken and multimodal is definitely here to stay.
Rajat Sharma, VP – ISCM & Customer Service, Hamilton Housewares: There are multiple benefits of using multimodal logistics, such as lower transit time; higher confidence level on SLAs; cost saving on freight as well as inventoryholding; clarity of responsibilities & ownership between various partners; opportunity to use common integrated IT platforms and create higher visibility, etc.
How does multimodal differ from Intermodal?
Chetan Kumria, MD, XCELL Supply Chain Solutions (P). Ltd.: It has to be one document, then it becomes multimodal. If you are engaging different carriers, then it's a multicontract and Intermodal. As a shipper, if you are giving it as a multimodal transport, then the whole designing and optimising of the consignment has to be with the multimodal provider whereas in intermodal, the shipper has to do it himself. He has to build in resources, deploy the team and tools and in short, build that capability in-house. We should definitely use multimodal transportation because it is environment-friendly. If we move a cargo by air, per gram CO2 metric ton kilometer, it is about one thousand emissions. If we transport the same cargo through truck, it is 140 and by rail, it is 27, by sea, it is just 7.
Is it an industry agnostic solution or does it apply very specific to a particular industry or a category like biopharma vaccine?
Chetan Kumria: India has a spend of about 220 odd billion dollars on transportation, which by 2025, is poised to grow to about 330 billion dollars. That's a huge spend. Now out of this 40% of the spend is contracted and 60% is bought, which is largely Freight buying. If you look at the total landscape out of those 220 billion, only about 40 odd billion dollars would be part load market and the rest is full truckload Market. Now having analysed all this, Rail and Sea freight holds meagre 15 to 20% market share.
We have a long way to leverage this huge multimodal expanse. The good news is that the government has started paying due attention to multimodal and has started integrating ports, airports, highways, -- all under the Gati Shakti program, which I believe, is going to change the landscape of multimodal in India. This is the time where we are now getting into a landscape, which will be built for the future for the next 10 to 20 years and we all have a very key role to play. While the service providers will be getting ready, the infrastructure will be getting ready from the government side and the private players operating in the segment, the shippers will need to have that confidence to move their products through multimodal.
The pros and cons of moving through multimodal is that it can be used only for a longer distance. It cannot be used for shorter distance. Another key element I would like to mention is that the industry needs to engage with the third parties who will provide the multimodal transportation service. I think while we are building for the future, the companies will have to look at inventory optimisation as well because their lead times will increase if they are sending goods from North to South through a truck and a rail combination, the cost will reduce, emissions will reduce. I think these are the parameters that we all have to keep in mind when we are looking at it from an industry specific point of view.
What are the opportunities for multimodal in India now?
Xerrxes Master: With the Honourable PM’s initiative on Gati Shakti, Multimodalism is poised for a cataclysmic growth in the next decade. For the very first time in our industry’s history has a government taken such keen interest and initiatives to ensure that India is propelled to the top 10 Logistics Performance Indicators (LPI). A slew of projects have been announced including Multimodal Logistics parks across the country coupled with investments in rail, road and air infrastructure. There is no dearth of opportunities in the multimodal sector.
V Raju: Multimodal is different from what it was few years ago. We now have various services, at different locations, various service providers running to different locations pan-India, and the services are available on all days. Ease of booking is available with shipping lines, and agents help the cause of the importers. Thus, the importers can always avail of the facilities which by the day is increasing all over the country with better facilities at both the loading and unloading points. In addition, the transit times are brought down from what used to be with dedicated freight corridor also being developed at various important cargo hubs and consumption centres that support these multimodal movements.
Rajat Sharma: In a country like ours where the distance is something that you cannot ignore, we're moving goods thousands of kilometers across the Indian state borders. There is a fair amount of possibility even in the inland waterways, there's a huge possibility on the coastal waterways and there's shipment going on across the globe. Unfortunately, we have not seen a lot of speed and momentum in this direction. Let me take a recent example. We all are hearing a lot about this project in Varanasi, which is connecting the Eastern Freight Corridor, and is slated to offer a huge opportunity to people who are moving a lot of goods to East to North. As a matter of fact, manufacturing bases in the East have grown 250% in the last four years, imagine the kind of impact that we are creating and there is obviously a significant saving that everybody is looking at when they go and manufacture in that sector, whether it is for consumption in that sector or not but there is a chance to multiply that saving, which we are unable to capitalise on, owing to the fact that the freights are fairly higher. There are multiple benefits of using multimodal as there is time and cost saving for every industry vertical whether it is pharma or whether it is manufacturers or traders.
I would say organisations and supply chain professionals must refer to “Design for Multimodal Transport” usage to multiply benefits, when re-configuring their distribution networks.
How are the responsibilities aligned if there is damage of goods or if it is a loss? How do you decide that?
Xerrxes Master: Multimodal transport is governed by the Multimodal Transportation on Good Act 1993 (MMTG). It provides a regulation for multimodal transportation from any place in India to any place outside India involving two or more modes of transport on the basis of a Single Multimodal Transport contract. Thus, any untoward incident thereof, has to be as per the Law of the Land.
V Raju: Damage to consignment is a very important aspect in multimodal movement. The basic responsibility in multimodal movements for damages lie with the party issuing the CTD / Bill of Lading. However, this document always has a clause, which mentions the details on Limitation of Liability on behalf of the CTD issuing party. The location or point where the damage has occurred, how the damage occurred, when it got damaged, etc., becomes very important and then the survey report that shows the condition of the consignment becomes very important. Once this is done, the different service providers need to meet along with insurance service provider to discuss the damages and liabilities on each one of them.
Rajat Sharma: This is really a fairly complicated situation every time it occurs. With all the contracts and partnerships in place, when it comes to losing a couple of lakh rupees because of a particular consignment damage, there is always a lot of stress. I think erstwhile when we were operating intermodal, it used to be a fair amount of challenge: because to decide whether this damage has happened with partner A or partner B, used to be the biggest conflict. With multimodal, this challenge has been solved because now we have only one vendor taking care of the entire shipment from the start to finish, which is the biggest advantage that multimodal offers. A single multimodal way bill enables single point ownership and all concerned parties are clear on responsibilities during times of conflict.
How can the government play an enabling role or is playing the role of a catalyst in boosting multimodal in the country?
Xerrxes Master: The government plays a crucial role in promoting Multimodal transport. The government should ensure that the projects announced are completed well within the time limits and delivered as per the commitment. With the development of Multimodal Logistics parks, it is vitally essential that the hinterland is also developed to support the same simultaneously. It would also help if the government enables a tax-friendly regime for MTOs, thus propelling the growth of the logistics sector in India, thereby reducing the overall logistics cost and enabling India to propel to the top of the charts in the LPI.
Sanjay Desai: The government's drive to encourage integrated logistics and multimodal connectivity is definitely a positive move towards the progress of Logistics sector in India. In line with this, recently, in the Budget for financial year 2022-23, Government of India has announced the ‘PM Gati-Shakti National Master Plan’. Under this plan, multi-million dollar contracts will be awarded to quality players to develop Multi Model Logistics Parks (MMLP) across the country. The MMLP project is poised to develop state-of-the-art large scale warehousing facilities for different types of commodities, to become a one stop solution for all services related to cargo movement like warehousing, custom clearance, parking, maintenance of trucks, etc.
It will focus on a technology driven implementation for a state-of-the-art freight management system. It will have all the facilities like warehouses, railway siding, cold storage, custom clearance house, yard facility, workshops, petrol pumps, truck parking, administrative building, boarding lodging, eating joints, water treatment plant, etc. Many value-added services like packaging, repackaging, and labelling will be available in these projects
ROAD: The Road Transport Ministry intends to take the road building capacity from 32 km to 60 km. This will provide thrust not only to the development of the sector, but also the spin-off that will come to the economy.
RAIL: The railways is developing a new dedicated freight corridor which will ensure goods trains move faster and carry large amount of goods. The Kaladan Multimodal Transit Transport Project has also now been expedited.
WATERWAYS: There are 111 National Waterways of which 23 (5,200 km) have been identified with a potential for mechanism crafts and 16 are currently operational. The new waterways will play a significant role in overall growth and is expected to reach 140 million tpa by 2030. If we stack all these similar initiatives, India is going to be a wellconnected / network countries in the next 8-10 years.
V Raju: Multimodal movements can be ship-rail- road, road- coastal – road, road – rail-road, etc. In there comes the government support in ensuring rail services availability, improvement of transit time, loading and unloading facilities at both ends of the movement, coastal service development, roads and highway route development, dedicated freight corridor that helps movement of multimodal, encourage the multimodal through various practical measures, ease in settlement of insurance claims for the importers, etc.
Chetan Kumria: The government is all committed to enable the multimodal transport model and they have already, as a part of PM Gati Shakti program started the integration and upgradation of Waterways with Railways and Roadways and also started to invest in Highways and waterways infrastructure to enable the multimodal transport in India.
“As the government heightens the focus towards planning for recovery of the economic growth in the country, the need for developing an integrated, modern, and responsive logistics infrastructure has become more important than ever. The MMLPs can support greater regionalisation or glocalisation of the supply chain, prepare for volatility and unpredictability, and augment rather than replace the workforce through the adoption of modern technology. The development of MMLPs can be expedited by removing the complexities involved in its implementation, greater coordination for building multimodal transport infrastructure, and adopting a simplified model for private participation,” concluded Sanjay Desai.