Nothing could best describe the growing importance of multimodal transportation than the current situation where companies could no longer depend on their favorite mode of transportation – ROADS with the interstate borders sealed and the movement of goods coming completely to standstill. Yes, these are challenging times for not only industries but for every human being. But the way Indian Railways and India Post have set an exemplary model before all of us, will actually change the way we see our modes of transportation. At a time when commercial airlines used to only focus on passenger movements, today they have become the most important carriers of essential goods & lifesaving medicines as well as PPEs. Such times call for a great shift in the mindset and a greater shift in business models as the Hon’ble PM aptly called ‘Jaan bhi aur Jahaan bhi’ to devise the most efficient multimodal transportation model that is safe, sustainable, and fast enough to deliver to people’s demands in times of crisis and otherwise. This cover story delves with all such myriad challenges and present companies an opportunity to introspect and transform their supply chains…
Logistics is a $3.4 trillion industry globally and a robust channel of transport supported by infrastructure, technology & innovation in multimodal transport can substantially reduce cost and increase competitive advantage for exports, states a recent report by Grus & Grade. A Multimodal Transport System uses a combination of more than one mode of transport and integrates the scope and viability of simultaneous use of various inter-linked network of distribution and logistics channels. “An efficient and sustainable model, which uses various channels of transportation for efficient allocation and use of resources. This helps not only to reduce the lead time for delivery of goods & services but also encompasses financial and cost efficiency, on time delivery, warehouse and storage efficiency, information and communication flow as well as environmental protection (by reduced use of energy and fuel). The model also helps to contain risk of damages, wastage and pilferages,” remarks Ravi Soni, CEO, Grus & Grade.
Dr. KK Sharma, Head of Centre for Surface & Air Transport, Adani Institute of Infrastructure, elaborates,“Mckinsey & BCG reports noted in 2017 that based on the then growth rates, India could become the 5th largest economy by 2025 and the consumption expenditure would grow over 3 times. This would mean a huge growth in demand & hence economic activity that would require efficient logistics for smooth internal & external trade. The large Indian population & increasing incomes leading to greater demand would also attract a lot of global companies with consumption of goods & services. However, Indian logistics sector performance has not been up to the mark, inefficiencies are widespread, and the logistics costs and freight rates are one of the highest in the world as reported by World Bank. Multimodal logistics offers huge potential to reduce the logistics cost and make the economy more efficient.” Offering another perspective, Ravi Soni adds that as per World Bank Logistics Performance Index Report, all is not well as India slipped in the league from 35th position to 44th position in year 2018. The logistics performance index (LPI) is the weighted index of the country scores on the six key dimensions:
Efficiency of the clearance process (i.e., speed, simplicity, and predictability of formalities) by border control agencies, including customs
Quality of trade and transport related infrastructure (e.g., ports, railroads, roads, information technology)
Ease of arranging competitively priced shipments
Competence and quality of logistics services (e.g., transport operators, customs brokers).
Ability to track and trace consignments
Timeliness of shipments in reaching destination within the scheduled or expected delivery time.
The county faces multi-variant challenges in all the six parameters mentioned above. The bureaucratic hurdles supplemented with non-congruous legal framework are major roadblocks that are a hindrance to efficient model development. Apart from these challenges, the policy implementation, corruption and multiple state laws apart from central laws are key challenges. The sector also lacks appropriate investments as thee mega projects are capital intensive with long gestation period for being a profitable institution.
Sharply pointing the reason behind the limited adoption of multimodal, Rajeev Vijay, Executive Director - Government and Infrastructure Advisory, Knight Frank, said, “Multimodal transportation requires parts of journey to be carried in the most efficient way, efficient in terms of cost and time. Any interchange imposes a delay and cost penalty, which if significant, discourages people to use multimodal transportation. In India, the biggest multimodal park opportunity remains between road and rail for inland transport. Because of Railways’ tendency to encourage only Full rake loads, the market for less than train loads and less than wagon loads died decades ago; resulting in all that traffic shifting to roads. Owing to regulations in India (particularly prior to GST), the companies in corporate sector always found smaller consignments, smaller warehouses at multiple locations a better option than to consolidate freight and use a bulk mode to reduce cost of transportation. Hence the impetus or multimodal operation was not evident from both supply and demand side, other than for some select commodities.”
According to Eshaan Lazarus, Executive Director, Angre Port Pvt Ltd., currently, the share of rail transport is around 30-35% and road transport is around 60%. Water transport and air transport constitute a meagre 6-8% and 1-2% respectively. Multimodal is still at an evolving solution in India with different modes of transport at different stages of evolution. This share of rail, water and air must increase for Indian Multimodal Logistics to be utilized effectively. The biggest challenge is availability of reliable service providers who are willing to take the end to end supply chain within their scope which would then free up client time to focus on other functions more core to their business. In turn, this has resulted in a hesitation on the part of logistics teams to fully outsource key parts of their value chains. There is a need for development of infrastructure like Dedicated Freight Corridors (DFCs) in the country to improve hinterland connectivity and utilizing this capacity in the most efficient manner possible. For instance, Angré Port is facing issues with rail connectivity in the Konkan region as it is currently restricted to only north and south. Therefore, the connectivity for west and east of the region needs to be developed. In addition, rail head is required to be closer to the Port, as the current one is 50 km away at Ratnagiri. Solving these issues will enable efficient cargo transportation and a significant reduction in cost for our customers.
Dr. KK Sharma highlights that it is well recognized that movement of long-haul bulk traffic by road is less efficient than by rail. However, multimodal transportation especially through rail has always been an underutilized phenomenon for Indian companies for the following reasons:
Poor first-mile, last-mile & port connectivity: While the road network is ubiquitous, rail stations that have capacity to handle goods loading/ unloading operations may not be nearer to the customer locations.Same argument holds true at the destination locations, which could be a dry port or a seaport that is not served through a rail link. Multimodal transport in such cases would require multiple handling of cargo, thereby increasing costs, transit time and risk of mishandling.
Over saturation of important rail networks: Against a CAGR of over 50% of freight and passenger traffic growth over the decades, the Indian railway track infrastructure has just grown at about 3% CAGR for route kms and 6.6% CAGR for track kms. Even the high-density corridors have become over saturated despite addition in track km.
High rail freight tariffs as the Indian railways follows a policy of cross-subsidization of passenger tariff by freight tariff. Progressively over the years, Indian rail freight rates have become one of the highest in the world. Further there is rigidity in freight rates that do not change with the changing economic dynamics
Transit times are long and uncertain with freight train taking even up to 6-8 days for a journey of 2000kms.This happens because freight traffic is frequently subordinated to passenger traffic.
Poor customer service : Over & above the already known poor transit times, Railways does not guarantee on the transit time for freight trains. Often wagons are not available on demand and hence it is exceedingly difficult to plan finished good dispatches being dependent only on rail. Some goods require special wagons for transit that may not be available like project cargo, high value cargo, etc. Further, since Railways is a highly bureaucratic organization, the interfaces are difficult and often mired in procedures & poor customer service mentality. There are often issues of cargo security & theft in yards and en-route to destination.
Poor Rail terminal (Goods Sheds) quality: Infrastructure is old and hence quite often material waiting to be loaded or for last mile dispatch after unloading could be damaged because of heat or rains. In a lot of cases, they also suffer from issues of access and evacuation of traffic.
Railways mostly promotes rake loading due to issues of operational efficiency. Given the nature of fragmented, small size plants and distributed production capacities, most companies including the MSME sector are not able to order rake loads. There are other associated problems of requirement to keep high inventory in storage and waiting for transit goods.
Coastal shipping & inland water transportation is still in its nascent stages, hence poor in infrastructure and does not serve a lot of production locations. The destination location could be away from the water port and the goods may not be amenable to multiple handling. There are other issues of unpredictability of transit times as well. More than the shortcomings of other modes, the road transport is preferred for its own positives including door-to-door deliveries, minimal handling, easy availability of trucks in most cases, easy access to good storage points, greater predictability, better customer services, etc.
Vibhore Khandelwal, Manager – SCM, Hafele India Pvt Ltd., is of the view that every transportation company, regardless of vehicle type, is dealing with network saturation. New solutions are necessary to advance transportation methods, particularly when it comes to capacity.
Ocean freight makes up for more than 90% of international trade and is the cheapest mode of transportation today. But it is losing touch with current trade challenges due to a capacity crisis causing delays which themselves entail negative consequences.
Increasing the capacity of container ships is no viable solution to the problem because it also limits port capacity to receive larger volumes of cargo. It is rare to find infrastructure that caters to jumbo vessels with adequate installations for loading and offloading freight.
As for door-to-door deliveries, road transportation is by far the go-to option for flexibility and cost effectiveness. A shortage of truck drivers in both Europe and North America is, however, hindering development opportunities in the sector.
Rail freight has also reached its peak with high damage rates due to disparate infrastructure across Europe. A trade route world war is currently at play, backed by substantial financial investment.
EMULATING GLOBAL BEST PRACTICES
Global logistics hubs are along the major trade corridors in their regions, connected to major international transport networks, and contain highest concentration of prime logistics space in the region. Of the identified 30 global logistics hub some of them are New Jersey (US), Toronto (Canada), Mexico City, Sao Paulo (Brazil), Tokyo, Hong Kong, Shanghai (China), Singapore, London (UK), Paris, Dubai, Moscow, Rotterdam, Hamburg, Milan, Antwerp, etc. Many of these hubs lead the way when it comes to efficiency and automation, with entire container terminals, for example, end to end working with minimal human intervention, thereby minimizing downtime, errors, delays, etc., shares Eshaan Lazarus. “I hope that India can reach that level soon.”
Elaborating further, Rajeev Vijay, states, “The global experience suggests that such logistics facilities are not pure play logistics only but are dovetailed with light manufacturing, trading firms, company offices, educational and training facilities, etc. To enhance viability of logistics parks, it can be integrated with office and retails facilities to allow regular leasing income and at the same provide much more integrated environment to the companies operating in that area. This is important particularly in initial years as it can provide much needed income before the logistics operations ramp up.”
LOGISTICS POLICY DRAFT AND ITS SLATED IMPACT ON MULTIMODAL
Industry leaders hail the announcement of National Logistics Policy draft in unison as Eshaan Lazarus remarks, “The draft National Logistics Policy is a step in the right direction to transform the overall logistics industry. It aims to optimize the multimodal mix at par with global standards and ensure development of multi-modal infrastructure. The decision to develop multimodal logistics parks (MMLPs) will pave way for reducing costs by integrating all modes of transport and storage for different kinds of cargo – liquid, bulk, container as a one stop solution.”
“An ecosystem of MMLPs can effectively work as a hub and spoke model for cargo movement and address issues of incorrect and inefficient modal movement, fleet optimization, and practically develop a competent material handling infrastructure. All of these are indirect costs that the customer and economy bear today. It is high time that the current mode of point-to-point movement transforms to a supply chain visualized by hub and spoke freight model with MMLPs at the core of their design,” he adds.
Dr. KK Sharma seconds, “India has one of the largest and unfortunately highly fragmented transport & logistics sector. There is a silver lining there that every intervention has scope to bring about a very large positive effect. Multimodal logistics serves to interconnect different modes of transport – road, rail, air, water – and therefore improve efficiency and speed of goods movement. The economic growth in India has increased the demand for practically all transport services and further underlines the importance of providing an efficient multimodal logistics infrastructure in India that has a huge potential to provide the most efficient way of transporting goods over long distances.” Giving statistical insights, he highlights, “Due to India’s industrial growth, there is an increasing demand for container transportation. This should progressively lead towards increased penetration of containers into the break bulk cargo segment. The Indian ports handle around 9% of global container traffic and the domestic containerization level stands at around 40%. The Indian Ministry of Shipping estimates that the container traffic in the country would double in seven years from 15 Million TEUs in 2018 to 30 Million TEUs in 2025. It is important to note that containers have standardized dimensions. They can be loaded and unloaded, stacked, transported efficiently over long distances, and transferred from one mode of transport to another like container ships, rail flatcars and trailer trucks without the need to open. The handling system is also completely mechanized so that all handling can be done by cranes and special forklift trucks. All containers are numbered and can be tracked using RFID, IOT & computerized systems. Increasing use of containers through multi-modal transport would help Indian economy and allied sectors grow faster.”
Further, setting up of multimodal logistics parks would increase trade, improve quality & cost of services and create employment opportunities. Multimodal transport would also pave the way for a gradual shift from road to more efficient & less costly rail, marine & pipeline-based transport which would reduce environmental pollution as well as unit costs of transport. It is also expected that there will be more transparency and predictability for better planning across the logistics sector.
TECHNOLOGY PLAYING AN ENABLING ROLE
Technology is changing the traditional way of operations in most industries, not just ports and logistics. Digitizing the end to end workflow of cargo movement into and out of facilities will help eliminate all internal paperwork associated with this process thereby speeding up turnaround time and driving up efficiency. “At Angré Port, we have accomplished this by developing a cloud-based app, customized to our requirements. This app is extremely easy to create and train staff on, even shop floor staff who have never utilized any kind of software before, with the result that the entire development and training phase was completed in only 45 days. The takeaway is that now, more than ever, there are such tools available that can easily work in plug and play mode, to improve specific areas of the business quickly. This is a much better way of working rather than waiting for a full-fledged ERP to be implemented, for example, a process that often, fails,” shares Eshaan Lazarus.
Offering operational nuances, Dr. KK Sharma states, “Multiple characteristics of each transport mode places constraints on goods during transportation such as packaging, transportation conditions and storage. In a multimodal transport case, an added complication is the complex management of the whole process that involves different players such as freight forwarders, third-party logistic service providers, couriers, carriers of different modes of transport, MTOs, rail, sea carriers, port and intermodal terminal operators. Different technologies are deployed by each of these and that increases the importance of managing the communication process for proper coordination and the accuracy, flow and timeliness of information to ensure a smooth logistic delivery process. The range of activities that varies from resource management and port operations to fleet and freight management processes need to be supported by appropriate ICT solutions both on the hardware as well as software side.”
He adds that the need for real time and extended visibility across supply chains in a world of rising uncertainty and complexity in a multimodal environment is critical. ICT has a huge potential for efficient, effective and reliable real-time management and operations of multimodal freight transport. From the historic use of inventory management systems, transport routing, scheduling and billing systems, the increasing sophistication led to development of company specific Enterprise Resource Planning (ERP) systems in the 1990s which is now giving way to web-based systems designed for multiple participants to share a single system. ICT can address the needs of the various components of the multimodal transport through four groups of interventions as follows:
Freight resource management systems and applications for better operational efficiency, scheduling, fleet movement & route optimization
Terminal and port information and communication systems and applications for better network design, efficient operations & coordination at interchange points
Freight and fleet tracking and management systems and applications for better operations, inventory management and customer services
Integrated operational/ information exchange platform/ portal/ marketplace for better communication between stakeholders on a one-stop shop.
More recent technological advances including cloud computing, IOT, RFID, Data Analytics etc., are helping in:
Complete node to node vehicle/ consignment tracking through wireless communication technologies & devices such as smart mobile phones, QR code, RFID & IOT based smart container tracking
Big data, data analytics-based decision support systems that rely on real-time analysis
Better customer servicing through dynamic information sharing and improved compatibility & inter-operability of different ICT systems
Data confidentiality issues through cloud storage and better software capabilities
Reduction in cost of ICT adoption like cloud computing that enables the ICT systems to be hosted by a third party and user companies irrespective size of business, can just “plug in and play”.
Use of private social networks with all stakeholders for a more efficient one to many communication.
On the hardware front, newer engine developments, better fuel mix to reduce on sea pollution, better communication devices, waste management technologies, intelligent port handling equipment can be adopted limited only by the cost that the organizations can bear v/s the value derived. Raising a very importance point, Dr. KK Sharma asserts that while the technologies are developing at a fast pace, skilling of employees and finding new skilled employees both have challenges. Further, just knowing is not good enough, it is the practice that will lead to performance and there lies the importance of technologically aware and trained manpower.
According to Ravi Soni, on account of increase in transportation and logistics cost supplemented by a pressure to reduce greenhouse gases (fuel efficacy increase) technological innovation in rail transport becomes imperative. An innovation in IOT, ICT, AI, Digitalization, Blockchain, Augmented Realty is thus the need of hour for developing a sustainable multimodal transport network. For Instance, semi-Trailers dominate with more than 66% of transport volume, but less than 2% of these are equipped with vertical handlers and robotic cranes. There is a vast scope for development of material handling and automated crane in Semi-Trailer segment. Though many technological thought processes has done research in the segment, but none has gone beyond pilot test stage. Generation of e-Challans for faster movement of invoices, lorry receipts, shipment documents, bill of lading, etc. This improves efficient delivery of goods and service, improves quality check as well as reduces hassles to all parties involved in the transaction.
Blockchain technological application in intermodal transport system can be the next generation game changer. This will induce reliability, appropriateness and trust ability of real time data transmission for super-fast information flow and decision taking matrix generation.
Augmented Realty Glass is another technological revolution that will redefine the way logistics are staked, loaded and transported. This will reduce warehouse searching time and cost, damages and pilferage loss as well as timely delivery of orders.
Artificial Intelligence through its predictive and prescriptive analogies can determine demand and supply forecast, inventory movement vs container availability, pre & post shipment transportation gap analysis etc. This technology can be extensively used to create a harmonious inter-relationship between various modes of transport, space availability, dock availability.
Internet of Things (IoT) can be used to track inventory, suppliers and buyers’ stocks, in transit inventory tracking mechanism, GAP analysis and foundation for logistical connectivity on real time basis.
Cloud Technology will help in accessibility of data on multiple platform and vendors through one source. This improve data transferability while maintaining security and confidentiality.
NEW PROJECTS IN THE OFFING
The port sector is expected to get a boost with government’s emphasis on sea route under Sagarmala programme. India has one of the largest coastlines in the world and this has the potential of contributing significantly to the nation’s economic growth. Adds Eshaan Lazarus, “The primary objective of Sagarmala is to leverage the country's coastline and inland waterways to reduce logistics cost for all industries. If implemented effectively, the Sagarmala project will bridge the connectivity issues of the ports and help move the needle towards a true multi-modal cargo mix. Bharatmala, on the other hand, will ease congestion that has resulted due to over-dependence on road transport. It will further improve the efficiency of existing corridors through development of Multimodal Logistics Parks and bridge critical infrastructure gaps. Of the Projects under Bharatmala – ‘Economic Corridors’ has Mumbai (Panvel) - Mahad - Chiplun - Panjim - Karwar – Bhatkal section and in ‘Port Connectivity Roads’ Karad – Chiplun - Jaigad port road enhancement (SH-78) will benefit enhancing road connectivity to Angré port.”
Seconding his thoughts, Dr. KK Sharma, elaborates, “The focus of Bharatmala Project is on optimizing efficiency of freight and passenger movement across the country by bridging critical infrastructure gaps including development of Economic Corridors, Inter Corridors and Feeder Routes, National Corridor Efficiency Improvement, Border and International connectivity roads, Coastal and Port connectivity roads and Green-field expressways. First & foremost, this will lead India to be a country with world class road infrastructure with building of over 35000 km of highways at a cost of Rs.5.35 Trillion by 2022. For multimodal logistics in India, this is a huge step forward. The project will enlarge options, improve planning, access, flow, speed, predictability and reduce bottlenecks & logistics costs.”
He adds, “Absence of adequate logistics infrastructure is the biggest impediment to economic growth of a country. Bharatmala project will improve connectivity, average speed on road & life of vehicles thus leading to better predictability & planning of goods & passenger movement in India. This will help on both the demand and supply side of the growing Indian economy. Faster, farther & better reach to the difficult hilly region of the Indian North East region will significantly improve trade access to/from and socioeconomic development of that part of India. The more cost effective but hitherto heavily underutilized Inland waterways will be better connected to the larger road network thereby leading to great synergy.”
According to Dr. KK Sharma, setting up of Multimodal Logistics Parks will smoothen the Inter-Modal transition of goods. A larger & better road network will improve the traffic flow and thence speed of delivery by generating more options to travel and reduced load at the choke points at the geographical boundaries or nearer to larger consumption centres. The evacuation from airports, seaports and rail-road loading/unloading points would be faster thereby improving predictability of inter-modal goods movement. There are significant allied benefits including employment generation and positive externalities for the environment owing to using a lot of greenery, EV vehicles, solar energy & use of household & industrial wastes for road construction.
The 'Sagarmala Project' is going to complement the Bharatmala with a network of good-quality roads in coastal areas and areas adjoining seaports. It may be noted here that maritime logistics that includes goods moving by sea and inland water route could significantly reduce costs of bulk goods transport for internal consumption & external trade. An efficient maritime logistics network of well laid out ports along India’s vast coastline, commensurate port infrastructure and rail-road access through Sagarmala would also mean a multimodal transport network that would lead to huge savings in infrastructural investments that would otherwise be needed for achieving the logistics targets in the Indian economy.
CAPTURING IMMENSE OPPORTUNITIES
Expanding the consideration set of logistics options beyond simple road transport can throw up huge opportunities for cost saving, believes Eshaan Lazarus. Illustrating this with an example, he adds, “At one of our client locations in Goa, their raw material can either come from Factory A that is 30 km away or Factory B that is 400 km away. But the road freight difference between the two locations to our client’s site is hardly 50%, even though there is a 13X difference in distance between the two options. This is due to Factory A being in the midst of villages that do not allow for free cargo movement and transport unions that maintain a fixed freight. However, Factory A is on the riverfront, which enables the cargo to be loaded into barges, and thereby transported most of the distance by waterway, and the last 3 km by road. Adopting this multimodal approach has caused the freight from Factory A to come down by another 60%, thereby making it a much more economical option to source from.”
Eshaan Lazarus believes that having a single provider with a long-term contract and guaranteed service levels across the value chain allows supply chains to be immune to transportation rate fluctuations, frees up the supply chain team’s time to focus on other higher priority areas, and greatly reduces the need for storage space at client locations, since clients can stock cargo at the port, and the 3PL can supply it to them within a guaranteed lead time.
According to Rajeev Vijay, implementation of DFC gives railways an opportunity now to encash upon this opportunity to wean traffic at least on the DFC corridors. What it does require is timely and efficient movement of cargo/ container trains – all being tracked through technology to give certainty to logistics companies and users. The big question is if Railways is working to give comfort to the users of timeliness and reliability on delivery.
There has been interest expressed towards certain logistics park projects for e.g. the one closer to Dadri being implemented by DMICDC. It is in a good hinterland from market perspective, has direct access to Western DFC and to Eastern DFC through a short spur link, is fairly large in size and sits in an already established logistics ecosystem. What private players desire is unencumbered land, trunk infrastructure connectivity to the park including rail connections and more importantly certainty in policy. For them, the biggest setback is rules of the government change after a few years and they are left with a fait accompli to accept it. For private logistics park players, it is much easier to acquire private land, use road as an access and not be bound by any extra regulations. For them to develop larger logistics park, government should provide initial time bound support while it is under implementation and let private sector manage to exploit potential as per market forces. The government and in particular, Railways, will have to open up on this PPP approach; where Railways still continues with its legacy practices on having a control and multi layered decision matrix on every issue.
“Other than core economics of scale and distribution efficiencies advantage that logistics players and companies enjoy, the value adds are the biggest facilities that logistics parks offer compared to company owned or leased logistics facilities. The multi-modal logistics park environment allows users to consolidate supplies from several sources and turn it into a produce for market delivery pretty quickly. Sitting right within the market. Facilities like banking, insurance, legal, finance, IT, software, packaging and labelling, warehouse retail add significantly to the requirements. It allows logistics companies to use technology and skills ecosystem to operate in a highly enabled and competitive environment to deliver immediate, effective and efficient operations. The key is to have ability to deliver to customer on demand at the earliest,” adds Rajeev Vijay.
A PARADIGM SHIFT IN THE MAKING
Accelerated completion of the Dedicated Freight Corridors (DFCs) will enhance the share of rail freight in the country from the current 30% to around 60-70% as in developed countries. Hence, making them available to trade as early as possible will be a big boost. For Eshaan Lazarus, “The involvement of private players in multimodal logistics will help in efficient delivery of services. Specifically, players like ports that have traditionally worked in areas they are comfortable in within their four walls should step out and start offering multi model solutions to their clients. This approach will no doubt result in benefits for clients, as well as ports, in the form of sticky, long term business, as a supply chain manager likes nothing more than having a hassle-free solution he can rely on. Also, the demand from clients for single window end to end solutions will motivate service providers to enhance their efforts in this direction.”
According to Dr. KK Sharma, multimodal logistics by its very nature involves using of more than one mode of travel to help the goods, mostly packed in standard sized containers, reach from door to door in national as well as international trade. At each point where the goods move from one mode of transport to another, there is a requirement of goods unloading, checking that requires opening up the packages, repackaging, preparation of new documents, loading & dispatch. The same process may have to be followed at the point of the next point of change of transport mode.
The Multimodal transport addresses this complexity as it provides for the transportation of goods under a single contract document irrespective of the number of different modes of transport and the carrier is legally liable for the entire carriage. The process ensures reduction of the overall cost to the goods-owner making his products more competitive at the point of delivery. The Indian Multimodal Transportation of Goods Act, 1993 precisely facilitates the exporters on this front and give them a sense of security in transporting their goods. The Act lays down the standard terms and conditions so that only those who have the necessary expertise infrastructure and financial capability are allowed to undertake Multimodal Transportation in order that the interests of shippers are fully protected. Container transportation has become the most preferred multimodal transport candidate because of standardization in handling & moving.
Multimodal logistics requires support in order to deliver the value it is capable of. Adequate Logistics including railroad infrastructure is just a part of it. Other very important factors include availability of containers road-trailers & empty rail-wagons; coordinated port operations; speed of custom clearances at interchange points; proper unloading return coordination through use of IT & IOT; appropriate financial support to the sector; compliance & legal guarantees to contract & sub-contracts and speedy support by respective judicial institutions; and appropriate regulatory & ease of doing business & trade facilitation support.
PAVING THE WAY TO NEXT GEN MULTIMODAL TRANSPORT: A STEP TOWARDS TRANSPORT 5.0
Vibhore Khandelwal provides futuristic avenues to adopt multimodal, “Succeeding in tomorrows’ multimodal transport will be a collaborative game. From the start, organizations must think about ecosystems and multi-sided platforms.” The prima facie the factors need to critically evaluated and focused are as follows:
Workforce (Skill development): Shift to lighter and smarter workload and handing strenuous workloads to machines
Technology and IT infrastructure
Flexible supply chain to address dynamic and vulnerable consumer trends
Business strategies, models and tailored supply chains
Future readiness i.e. scalability
The last 100 years have brought multiple innovations to the transport industry. Each day, a billion people take a car, bus or subway, around 11 million passengers fly and nearly 200 million parcels are delivered. Everywhere, new entrants are challenging existing transport practices. Online providers leverage mobile to create new relationships with travellers. Marketplaces exploit peer-to-peer to move from a world of vehicle possession to one based on usage. New players use the power of real time data to offer personalized door-to-door travel and logistics services. Today’s changes represent immense opportunities for organizations to place themselves at the heart of next-generation multimodal transport ecosystems. Opportunities and focus for 2020 to next five years are more towards collaboration working and knitting people, processes and technology in one basket. More disruptive technologies will emerge. While some may only appear as dots on the horizon today, they will turn out to be transformational in the years to come. What could Multimodal look like in next 5-10 years to come? The mantra is going to be ‘Mobility-as-a-service’ or ‘Commuting-as-a-service’:
Putting a strong focus on Omni channel and multimodal customer experience 540°
To attract consumers, transportation will have to be more personalized.
Streamlining punctuality, serviceability and reducing costs
Not only transportation, rather the entire supply chain model has to be multimodal
Hyperloop trains/submarines and autonomous robot-taxis.
Building platforms and marketplaces for multi-sided collaboration (Cloud concept)
While the gaps remain, industry leaders are of the view that the Government has shown real intent towards bringing down overall logistics costs by enhancing the use of the country’s waterways. However, while coastal movement takes care of the long distance port to port movement in the supply chain, robust first and last mile systems are required in the form of DFCs. Giving an example, Eshaan Lazarus highlights, “In the Konkan region, DFCs that connect west to east are the need of the hour. Additionally, having wide and smooth roads, especially in the mountainous sections that are common in Konkan hinterland would reduce logistics costs for all players in the region. Lastly, creating a port led industrial zone which has concessional water supply, power supply, as well as land availability and perhaps even low interest rate funding for capex would really accelerate development in the region.”
According to Dr. KK Sharma, Nitin Gadkari, Cabinet Minister for Road Transport & Highways, while addressing India Integrated Transport & Logistics Summit 2017 had stated that high logistics cost is one of the major impediments to India’s economic growth. Inefficiency led high operational costs and resultant high freight rates lead to this poor state. On the positive side, the Logistics sector was granted infrastructure status in 2017 that is helping larger investments and more infrastructure lending at better terms. The rail-road infrastructure projects like Bharatmala, Sagarmala, Setu Bharatam, Rural Infrastructure development, Dedicated Freight Corridors, Inland water transport etc. are getting implemented. On the softer side, the Indian bridge management system for upkeep of bridges, Indian Customs EDI System (ICES) for automation of customs documentation process being operational at 134 major custom locations handling more than 98% of India’s international trade of import and export are all very laudable initiatives. The Kandla- North India & Kolkata- Guwahati-North East are great examples of the potential of multi-modal transportation. The private sector participation in port & airport development in the recent times has already started bearing fruits in terms of improving efficiency and augmenting capacity.
However, a lot more can be done by the government either through its own agencies or through private sector participation. Government needs to address the lack of appropriate logistics infrastructure including warehousing & cold chains, transport hubs through private sector participation. Better interconnectivity & integration would further reduce time & cost of multimodal transportation. Private businesses have the capacity to produce more wagons and trucks but the road conditions, excessive time on road, poor average speed of vehicles on the move, multiple checkpoints (road worthiness, weight checks, toll/tax collections etc.) & inordinate waiting time at interstate border check points all add up to inefficiencies that need to be addressed to improve load bearing capacity of road infrastructure. The insufficient and inefficient urban as well as rural public transport system also puts pressure on road and rail infrastructure which needs sure and urgent government attention. Indian infrastructure users have been poor in using information technology & other technology means to modernize its infrastructure and reduce lifecycle cost of operations. The RFID & FASTags based toll collection itself took a lot of time to get adopted when the technology was existing for decades. Appropriate policy push & institutional interventions are needed. For longer distance movement of bulk goods, railways need to increase their share. The Eastern (1856 km) & Western (1504 km) Dedicated Freight Corridors need to be operational on priority.
Though about 15 Private Freight Train Operators (PFTOs) are in the business, which can lease or build train rakes and also run their own Private Freight Terminals (PFTs), more investment in multimodal logistics parks, ICDs, CFS, Private Freight terminals are needed to augment loading capacity. Better incentive structure could induce more private investments here. The physical infrastructure at existing ports & airports in government domain need to be augmented. The private sector participation in ports and airports development has to pick up pace including more investments in logistics infrastructure including warehousing/ cold chains and private freight stations. Government can also contribute to expediting utilization of coastal shipping & Inland water transport ways and ameliorating the sectoral challenge of non-availability of adequately trained manpower.
Rajeev Vijay concludes, “For the government to bring down logistics costs, particularly post GST, it is important some of the landmark logistics parks be developed in India at right locations. There are many markets where there is a need for such facilities to make our industries more competitive. For anything to be successful in logistics, the primary requirement from such facilities though remains is the agility to meet the market requirements, which any successful logistics park must deliver.”
SUCCESS STORY In Varanasi, a freight village is being developed along the river to enhance the potential of Eastern DFC and to augment traffic capacity along the National Waterway 1. Inland waterways cargo movement has already started from NW 1 by PepsiCo, Dabur, Emami, IFFCO from Kolkata to Varanasi where a freight village is being developed to connect it to the eastern DFC.