Multimodal transport development

2.  We have seen India’s swift growth in last ten years. Despite the
growth has come from the service sector but the manufacturing
and the exports have also grown up to mark. Now a day’s
manufacturers outsource the logistics increasingly. But however,
the Indian logistics sector in different ways still wrap behind in
performance with the global standards. This is obvious from the
truth that India ranks as 46th of 155 countries in the World Bank
International Logistics Performance Index. Relatively, our
neighbor China got the 26th rank. 13% of GDP is the average cost
of logistics in India. Hence, there is a considerable need to invest
and advance efficiencies in the intermodal and multimodal
logistics sector in order to prevent the friction cost to obstruct the
preferred shifts. The main goal of the multimodal logistics is
designed to reduce the transit times, and avoid the congestion in
the overcrowded modes and lessen logistics cost.

3.  Infrastructure development
• Containerization
• Dry ports
• Port sector
• Inland waterways
• Road transport
• Dedicated freight corridors
 Regulatory reforms
• Multimodal transport act
• Private freight terminal policy
• Draft coastal shipping policy
• Cabotage policy
• Policy to authorize MTOs
• FDI
 Investment in technology
• Cloud computing
• Global positioning system
• RFID
• ERP
• Mobile technology

4. 1) Containerization:
 Containerization is the most significant driver of growth of multimodal
logistics. At the major ports the container traffic has nearly doubled in
the last 5 years. Globally, container traffic has grown at approx 10%
per year over the past 20 years.
 According to calculation, world’s container throughput will arrive at 1
billion TEUs by 2020, which is roughly double of the existing container
traffic.The emerging Asian & African Countries are anticipated to be
the chief movers in attaining this growth. Most of the shipyards are
crammed with orders for container ships of capacity over 10,000
TEUs.These container ships will figure a major part of the world fleet
in the approaching years.
 The advantages of containerization incorporate among others, least or
no damage to goods, optimum utilization of storage & warehousing
capacity, technology implementation due to mechanized handling
requisite for containers, lessening in transport time and end-to-end
delivery of goods, eventually leading to considerable cost savings.

6. 2) Dry ports:
 As on 30th June 2011, as per Ministry of Commerce a total of 247 CFSs/ICDs were
approved by the Inter-Ministerial Committee out of which 73 were under
accomplishment and the rest were fully operational.To hold up the planned
container terminal projects at major and non-major ports CFSs/ICDs are expected
to come up in their locality. According to a study, by the time all phases of the
Vallarpadam ICTT are commissioned, it is expected to build a need for about 20
CFSs in the region.

7. 3) Port sector:
 India presently has 12 major ports & 187 minor ports. Port traffic grew at 7.66% p.a. between
2005-06 & 2010-11.While non-major ports registered a double digit growth at 13.55%, traffic at
major ports grew only at 5.37%. Cargoes like the POL, iron ore, & coal represent a major
portion of traffic at both major/ non-major ports.

8. 4)Inland waterway:
 Presently only 1% of total inland cargo transport is handled by the IWT.There is
prospective for other cargo like coal, dry bulk, break bulk and containers to be
transported economically and efficiently through IWT.
 India has traversable inland waterways of almost 14,500 km, out of which 5,200 km of
major rivers and 500 km of canals are appropriate for automated crafts.

10. 5) Road transport:
 In India Roads has always been the primary mode of transport. India has approximately
42.36 lakh kms which is the largest road networks. Around 60% of the total freight and
approximate 87% of passenger traffic is carried by Indian roads According to the Road
Transport & Highways Department. Traffic is forecasted to rise about 8-10% p.a. The
superiority of the road infrastructure remains a big apprehension.

12. 6) Dedicated freight Corridors(DFC):

13.  A large portion of railway sidings is single line and is utilized by passenger as well as freight
trains.The sharing of railway sidings amongst the passenger and freight trains causes
disruption in the smooth functioning of the trains. Long waiting times and uncertainty of arrival
are the two primary reasons for the delay in time of freight goods.
 The DFC project is expected to tackle some of these issues.The government has already
sanctioned the Western Corridor (Mumbai to Dadri) and the Eastern Corridor (Dankuni to
Ludhiana) projects which have a total cost in excess of Rs. 45,000 crores. Studies have also
commenced to analyze the prospects of the East-West corridor (Kolkata-Mumbai), the North-
South corridor (Delhi-Chennai), East Coast corridor (Kharagpur-Vijaywada) and Southern
corridor (Chennai-Goa).
 The major objectives of the DFC project are:
 Increase the share of railways in freight transport.
 Build separate infrastructure for handling freight to enable a focused approach for developing
both passenger and freight business.
 Provide seamless connectivity to customers.
 Reducing unit cost of transportation through use of a competitive tariff structure Work on both
Western and Eastern corridors have started and both are expected to be fully functional by the
end of 2017.
 The DFC project plans to provide new services including:
• Roll-on Roll-off for all types of road vehicles which can piggy-back on wagons
• Triple-deck automobile wagon on Western corridor and Double-deck on Eastern corridor.
• Movement of over-dimensional consignments from ports to construction sites
• Setting up of new terminals with a “one-stop-shop”solution for all value added services like
warehousing, packaging, custom bonding etc.

14. 1) Multimodal transport act 1993
 The Indian government recognized the benefits of multimodal
transport way back in the early 1990s and came up with the
Multimodal Transportation of Goods Act in 1993 with the objective of
encouraging growth of exports from India.Through the Act the
government aimed at developing international multimodal transport
which would reduce logistics costs and thus make Indian products
more competitive in the global market.The Act established licensing
requirements, contractual terms (through the Multimodal Transport
Document) and liability regime.The Act was again amended in year
2000 to give more protection to exporters.
 There are still lacunae in the current version of the Act according to
trade. Several amendments have been proposed by the Association of
Multimodal Transport Operators of India, like obligatory registration
of MTOs with DGS, modification to the Customs Act to enable
seamless movement of goods, penalties for offences among others. It
has been estimated that these changes should reduce the transit time
for transport of goods by 40-50%.

15. 2) Private freight terminal policy:
 The policy aims to stimulate development of privately owned freight terminals on private land
for dealing with break bulk goods, parcel traffic and containers. Indian Railway’s goods sheds
are not in a good state, which is why they have gone for PPP mode of development. Under this
policy, PFTs are expected to provide goods handling, warehousing and other associated
logistics services to rail users and facilitate expansion of the 3PL sector. After the lukewarm
response to its original policy the IR restored it recently. CWC (Central Warehousing
corporation), CONCOR and several private players are looking to build and operate PFTs. If it
succeeds,it is bound to increase the share of rail freight transport.

16. 3) Draft coastal shipping policy:
 Along with various support services the proposed coastal shipping policy is intended at
enhancing the coastal trade with extraordinary spotlight on -coastal ships, River Sea Vessels
(RSVs),Inland Vessels (IVs) and Cross trade compatible vessels.
 Infrastructure: Building up more minor ports along the coastline, promotion of Ro-Ro jetties,
dedicated berths for coastal ships, ship repair facilities & dry-docks, LNG supply facilities,
dedicated warehouses for coastal cargo, rail/ road connectivity & deepening of sea channels at
minor ports.
 Financial incentives including subsidies:Implementing a hard line ship-building subsidy
policy, exclusion from certain taxes, lesser tariffs than foreign ships, subsidies for Ro-Ro and
repair jetties, fiscal incentives for small ports & setting up a Coastal Development Fund for
coastal ships.
 Resolving manpower issues:Getting to the bottom of problems with regard to manpower and
manning scales to organize for availability of sufficient and good quality manpower.
 Promoting modal shift from road and rail to coastal shipping: Improve cutthroat ability of
coastal ships and encourage the Carbon credit scheme.
 Data base and communication infrastructure: Establishing & retaining a robust
system/database for collection of precise data, publishing annual reports on coastal shipping,
developing a freight exchange and streamlining the multi-modal transport operations.The
above measures are expected to provide a boost to the coastal shipping in India.

17. 4) Cabotage policy:
 The Cabotage policy checks the coastal trade of a country. Few countries practice
absolute Cabotage law while others practice a tailored one. In India, the Cabotage
Policy is not absolute. It is regulated through provisions of sections 406 and 407 of
the Merchant Shipping Act, 1958.
 The original Cabotage policy required foreign ships to take a license for plying on
the coastline of the country. Coastal shipping thus had to be carried out only by
Indian ships or ships chartered by Indian citizens. Due to this and several other
reasons, a considerable part of Indian transshipment cargo was getting diverted to
Colombo, Singapore & Jebel Ali Ports.
 Recently the policy has been relaxed specifically so that ICTT,Vallarpadam would
attract transshipment cargo destined for Indian ports. It would allow containers
arriving there to be shipped to other Indian ports.Traffic growth at ICTT,
Vallarpadam, which was specifically developed to operate as a transshipment hub,
has been lack luster till now and significantly below estimates.This policy change
is expected to aid in growth of traffic at there and more importantly, reduce
diversion of Indian cargo traffic to ports in other countries. However, the flipside is
that domestic shipping companies may face severe loss of business.

18. 5) Policy to authorize MTOs:
 This policy was formulated to permit rail linking of ICDs by private parties other
than CONCOR and to allow them to move container trains on the same lines as
CONCOR for both international and domestic traffic. IR would provide the engine
and crew but the private players would own the trains. Sixteen players were
persuaded due to the privatization of container rail operation and brought in
investments of approx Rs. 2,000 Crore. Nevertheless, limitations have been sited on
private players to carry certain cargo such as coal, coke & some minerals.The
private players have to depend on IR’s infrastructure which, they argue, is not up to
optimum standards.They have to face strict competition from CONCOR, which is an
IR subsidiary and is present in this sector since a long time.
 In addition, haulage charges have been raised from time to time, the latest one
being that for pig iron and sponge iron, squeezing out profit margins of private
players. On the contrary side the IR keep up that it follows the cross-subsidization
guidelines by trying to receive additional from freight transport so as to be
competent to persistently providing cheap passenger transport.

19. 6) FDI:
 India allows 100% FDI in maritime infrastructure like ports, terminals, jetties, harbors,
merchant shipbuilding as well as in support infrastructure like warehousing, roads and
Inland Water Transport. Since, then there has been significant investment especially in
the ports sector by foreign players the major ones being those by DP World, APM
Terminals and PSA Singapore among others.

20. 1) Cloud computing
 Low cost footprint: Low up-front investment and small payback periods.
 Enables collaboration: It allows all the stakeholders in the supply chain to connect through
this software to work together on different phases of logistics management like planning,
forecasting & procurement efficiently and makes the system transparent & free from human
errors.
 Scalable: Because of the ease and agility of deploying these solutions, they are scalable to
meet volatile customer demands
 Integration: It increases supply chain efficiencies by integrating information on the same
platform.
 Real-time visibility: With all data regulated precisely on single platform, it’s easier for the
users to visualize real-time of inbound/outbound transportation and the prevailing shipments
in movement.

21. 2) GPS:
 GPS technology gives the details of the origin and destination of a
shipment. During transit, it helps in providing the exact position of
a consignment.There are sophisticated GPS maps and technology
available through which one can track the movement, and be
proactive to customers by informing about the shipment status and
expected delivery time.With the GPS systems becoming cheaper
and more advanced, by the day, many of the large and medium
sized logistics players have adopted GPS tracking systems for
their truck.
 In addition to tracking, GPS systems have also been found to be
useful to reduce truck breakdowns. In the event of a breakdown, it
minimizes the amount of time spent in recovering the vehicle by
sending service personnel located nearest to the vehicle to do the
repair job. Also, certain GPS systems allow setting up of preventive
maintenance alerts by calendar time, engine on-time or mileage
to notify the operator when the vehicles are due for maintenance.

22. 3) RFID:
Importance of RFID in logistics
• Allows the service provider to track items at each supply chain location, from plant to
consumer
• Protects against copying and counterfeit of goods by embedding a unique Electronic
Product Code into each item
• Proves the origin and improves handling of goods. Shippers can use RFID tags to
show robustness of a supply chain and to ensure greater security in processes
• Tracks the amount of goods in the supply chain and helps to save capital required for
distribution and warehousing storage costs
 RFID technology –
• Reduces the manpower requirement considerably
• Saves time as scanning of cases/items takes place rapidly. RFID can scan upto 1,000
boxes per second whereas bar coding would take a few hours to scan the same
number of boxes
• Has a high level of security as data cannot be hacked

23. 4) Enterprise Resource Planning
 ERP systems integrate several data sources and processes of an organization into a
unified system. A typical ERP system uses multiple components of computer software
and hardware to achieve the integration.
 ERP induces enough visibility in the supply chain so that an efficient work flow can be
established. By pulling together and sharing information from functions such as
purchasing, warehousing, and sales it helps to control costs.The only issue is that
installation and upgrades of ERP systems are very costly.
5) Mobile Technology
 The recent developments in mobile technologies allow companies to stay connected
anywhere, anytime. Many of the large logistics players have developed mobile
applications to allow anytime-access to information through almost any mobile device.
These tools provide immediate insight into the status of a shipment, making operations
run faster and smoother.These applications function on Apple, Blackberry and Android
platforms and are free-to-use.

24.  Challenges like the Poor Road Infrastructure,Institutional Barrier, Financial barrier Policy
Constraints impeding the development of intermodal transport.
 A need for Intermodal Linkage and Collaboration at national and regional levels
 Improve the Current aged Inter Modal Connections
 Promote co-operation between infrastructure planners
 Enhance the Use of Information Communication and Technology
 Enhance high rate of development in other sectors
 Modernize ports
 Role of Government in Facilitate multimodal Transport

25.  several initiatives have already been taken by the Government
and the private sector in developing intermodal/multimodal
transport. However, many issues still remain to be embarking
upon.Therefore the issues must be prioritized basing on whether
they can be resolved in short term or long term.
 The containerization for both domestic and EXIM cargo needs a
strong focus.There is need for accomplishment of Dedicated
Freight Corridor project without delays. Consequently on a long
run it will reduce logistics costs and increase railway’s market
share in freight transport.The Inland Waterways and Coastal
Shipping developments are to be focused and continuously
improve to increase business and attract more shipments.This at
the outset needs to come from the government by the way of
policy reforms and the subsidies or other financial inducement.
 Therefore both the Government’s right policy incentives and the
private sectors’ interest should go parallel for a long way to
stimulate the growth of the logistics and supply chain sector in
India.