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LogiQuest Season 2 - Challenges and opportunities in multi modal logistics in India

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At this juncture, we need a robust logistics and transportation management, thus multimodal logistics channel. The second runner-up team, Team Alpha & Omega, did an extensive research and presented the challenges and opportunities we have. They also featured countries who have them and what we can learn from them.

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LogiQuest Season 2 - Challenges and opportunities in multi modal logistics in India

  1. 1. Challenges and Opportunities in Multimodal Logistics in India Team : Alpha & Omega Saanya Mehra – MBA I (Operations) Debashish Chatterjee – MBA I (Operations)
  2. 2. FACTS ABOUT LOGISTICS IN INDIA India spends 14.4% of its GDP on logistics Freight transport growth - CAGR of 13.35% by 2020 Logistics costs are 14% of the total value of the goods Losses due to poor infrastructure are 4.3% of the total GDP India stands 35th on the Global Logistics Index STRENGTHS • Critical component in supply chain costs. • Contributes towards customer satisfaction. WEAKNESSES • Infrastructure Issues • Lack of Integration • Large no of unorganized players. OPPORTUNITIES • Ecommerce Boom • Focus on Make in India • Implementation of GST • Cold Chain • Good Monsoon • Infra Development THREATS • High fuel costs. • Government policies. SWOT ANALYSIS Source : World Bank Logistics index, 2016 and Standard and Poor’s Report, 2016
  3. 3. FACTS ABOUT LOGISTICS IN INDIA 60% 32% 7% 1%Freight Share Among Sectors Roads Railways Ports Aviation 47% 37% 13% 2% 1% Share in Revenue Generation Roadways Warehousing Railways Ports Aviation Source : Logistics Game Changer, Transforming India, KPMG, 2014
  4. 4. Transportation & Logistics efficiency indicators India Global Road Transportation Average truck speed (in kmph) 30-40 60-80 (Including China) Four lane road length (in kms) 7000 34,000(China) National highway length (in kms) 66590 1,900,000 Average distance travelled by a truck per day 200 kms 400 kms Air Transportation Airport waiting time – Exports (in hours) 50 12 Airport waiting time – Imports (in hours) 182 24 Aviation turbine fuel as a % of operating cost 35-40% 20-25% Ports & Sea Transportation Turnaround time at ports (in hours) 84 7 (Hong Kong & Singapore) Max Containers handled per ship, per hour 15 25-30 Throughput density (maximum) 45,000 TEUs / hectare 170,000-220,000 TEUs / hectare Inland Waterways 3% 47% China, 44% EU Others 3PL share of logistics 9 – 10% 57% Table 1 .Source: World Bank Logistics Index 2016 | Table 2. Source : Adding Wheels, KPMG GLOBAL SCENARIO OF LOGISTICS
  5. 5. MULTI-MODAL LOGISTICS Multimodal transport is the transportation of goods under a single contract, but performed with at least two different means of transport; the carrier is liable (in a legal sense) for the entire carriage, even though it is performed by several different modes of transport. Infrastructural Reforms Technological Investment Regulatory Reforms NEED OF THE HOURBENEFITS • Effective utilization of the modal mix • Drive down logistics costs • Reduces chances of pilferage due to containerization. • Reducing overall time in transit • Reduce carbon footprint and move towards the “green logistics”.
  6. 6. ROAD TRANSPORT CHALLENGES Poor infrastructure and quality of roads Last mile delivery, pricing per ton varies greatly, depending on the accessibility to a city Lack of training amongst Indian drivers, real time visibility is inadequate Intra-state taxes increase the cost of transportation Presence of mostly unorganized players (9:1 ratio) Higher CO2 emissions per tonne-km OPPORTUNITIES Rollout of GST to abolish inter-state taxes, so 3PL companies may set up warehouses based on savings from reduced transportation costs.  Construction of multi-modal logistics parks Usage of GPS and data analytics for optimized route analysis Promotion of fleet exchanges: Creating fleet exchanges similar to Stock Exchange or Commodity Exchange to bring together transport customers and transport vendors for the largely unorganized transport. Bringing together the unorganised players (eg: Truck Porter, TruckMandi,LetsTransport) Use of higher tonnage trucks for better efficiency.
  7. 7. RAIL TRANSPORT CHALLENGES Current average speed is a meager 25 kmph, although freight trains can clock speeds up to 160 kmph Overutilised – 7 long haul corridors – 27% of network but 50% of the traffic OPPORTUNITIES Creation of Dedicated freight corridors Time tabled freight trains Eastern Corridor: From Ludhiana to Punjab to Dankuni near Kolkata (1839 Kms) and Western Corridor: From Jawaharlal Nehru Port (JNPT) in Mumbai to Tuglakabad and Dadri near Delhi 1499 km. 3 proposed in FY 16 Budget(East-West, North-South, East Coast) Cost freight potential to drop from 1 rupee/NTKM(Net tonne km) to 0.18-0.53 Rupee/NTKM
  8. 8. AIR TRANSPORT CHALLENGES Much higher cost per tonne of material transported Last mile connectivity is not achieved Lesser penetration in Tier-2 and Tier-3 cities OPPORTUNITIES 1500 crores earmarked by government for 200 low cost airports in Tier-2 and Tier-3 cities. Reduction in Dwell time for air cargo. Evolving government policies. Evolution of green field airports. Development of infrastructure for transport of perishable items, till last mile.
  9. 9. WATER TRANSPORT CHALLENGES Lack of last mile connectivity and integration with other modes. There are inefficiencies in berthing, and delays in loading and unloading. i.e. high turnaround time of vessels.ƒ  There are delays in co-ordination between ports and the Customs authorities. There is poor hinterland connectivity and poor port- and land-side infrastructure and outdated equipment. Navigation channel restrictions do not allow bigger vessels to be berthed. OPPORTUNITIES Development of mega-ports. Improve capacity utilization: For ports that are potentially limited by the hinterland. Enhancing port infrastructure: Increased emphasis on upgrading both, seaside and landside infrastructure Development of an integrated system for inland waterways that also is connected to the roads and railways for last mile delivery. Sufficient number of vessels to handle bulk and container cargo. The Sagarmala initiative that aims at the modernization of ports will be a great move and will complement the Golden Quadrilateral project. Containerization to help bring handling costs down and promote multi modal transport.
  10. 10. A CASE IN EXAMPLE Savings to the tune of INR 4,000 per car transported via this mode. Transportation from Varanasi to Kolkata via NW-1, on 2 assigned vessels by IWAI (covering 1620 kms in 6 days) – 34 cars One double vessel can replace 50 typical road trailers, by carrying 300 cars at a time
  11. 11. WAREHOUSING CHALLENGES Issues in land acquisition due to capital intensive nature. Low level of customization in the warehouses. Inefficient operational staff that handles the warehouse. State of cold storage in India is not good. Lack of IT enablement to make operations efficient in warehouses. Over Utilization of warehouses. OPPORTUNITIES Implementation of GST: The existing landscape of fragmented, unorganized small go-downs will likely undergo significant reorganization. Development of new storage models and networks: The emergence of next-generation storage models such as multi- modal logistics parks (MMLPs), mega food parks (MFPs) and FTWZs must be aligned with the development of key infrastructure projects related to port, highway, and rail projects. Value added services to be provided with warehouses like cross docking, quality checking and repackaging. Development of free trade warehousing zones. IT enabled warehouses: Elevated Transfer Vehicle (ETV) or the Automatic Storage and retrieval system (ASRS) at the terminals to improve operations.
  12. 12. OPPORTUNITIES IN MULTI MODAL LOGISTICS For India • Single document clearance for all stages of multi modal logistics. • Triple and Double deck wagons • Roll on and Roll off system • Waiting docks for trucks and trailers • Developing hub and feeder operations at ports along the coast • Development of multi modal logistics parks • Better material handling equipment For Mahindra Logistics • Integrated IT system that forecasts and tracks • Fleet exchange system • Palletization of containers • Trucking Cubes: three standard sizes of containers • Reaching out to Tier 2 and Tier 3 Cities • Strategic alliances with railway and shipping corporation • Setting up one stop terminals for all value added services
  13. 13. SHIFTING TOWARDS A MORE BALANCED MULTI MODAL MIX Parameter Type 2010 2016-17 2020 1) Network components (Modes) Corridors (rail and water) ~4 Nos 2 /4 planned 7 Nos. Connectors (expressways) 5-7 26 / 25 20-30 Last mile links NA 750 2) Enablers Logistics Park 15 proposed 15-20 3) Asset efficiency % of toll booths with electronic tolling <50% 275/394 FASTags >90% 4) Investment allocations Water ~10% ~10% (share of spend) Rail ~40% 55.5% 50% Road 50% 44.5% ~40%
  14. 14. SAMPLE SUPPLY CHAIN MAPPING Point A (Origin Warehouse), e.g. - Manesar Palletisation (for quicker loading into containers) Route Mapped as per Loading points (Trucking cubes, WH 2, WH 3) Material transfer from rail to barge/vessel Material unloading + loading to Rail using cranes/reach stacker MMLP1 (Delhi NCR) Varanasi (for NW-1) Port of Kolkata Ready for export •Single tracking via integrated IT system (even for multimodal) •Combined invoice generation •Overall reduced cost benefits to customer •Reduced greenhouse gas emissions For export of textiles from Manesar to South Asian countries via Kolkata port
  15. 15. LEARNINGS FROM THE WORLD COMBIROAD, NETHERLANDS - • In Netherlands Combi-Road is used for the surface transport of containers. • It makes use of specially designed tracks which can be constructed as separate roads alongside existing motorways. • These are automatic unmanned electric vehicles. SMART WAY, USA • A US Environmental Protection Agency (EPA) initiative to reduce transport emissions. • Gave incentives to improve supply chain fuel efficiency by collaborating with freight shippers, carriers, and logistics companies. RIVIGO • Relay Driver System: Track amount of time driver can stay on road. • Reduces accidents and improves vehicle safety. • Trucks don’t stop and hence time for travel is reduced. LOGINEXT • Provides real-time visibility and optimization solutions to logistics companies. • Across different segments : First Mile, Long Haul, Last Mile and Reverse Logistics. • Track-A-Pack uses matchbox-sized trackers for hub-to-hub transports between cities. They are placed in shipment bags .
  16. 16. HYPERLOOP • Hyperloop is a proposed mode of passenger and freight transportation that propels a pod-like vehicle through a near-vacuum tube at airline speeds. • It is hoped that the system will be highly energy-efficient, quiet and autonomous. DUAL MODE TRUCK, JAPAN- Light Duty driverless trucks for urban freight in tunnels beneath the city Help improve safety and productivity and in reducing congestion. LEARNINGS FROM THE WORLD
  17. 17. THANK YOU

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