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We have seen Indias 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 days 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

Infrastructure development

Regulatory reforms

Dry ports
Port sector
Inland waterways
Road transport
Dedicated freight corridors

Multimodal transport act

Private freight terminal policy
Draft coastal shipping policy\
Cabotage policy
Policy to authorize MTOs

Investment in technology

Cloud computing
Global positioning system
Mobile technology

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, worlds 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.

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.

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.

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.

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.

6) Dedicated freight Corridors(DFC):

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
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.


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
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%.

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 Railways 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.

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.

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.

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 IRs 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.

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.


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, its easier for the users to
visualize real-time of inbound/outbound transportation and the prevailing shipments in movement.

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
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.

3) RFID:
Importance of RFID in logistics
Allows the service provider to track items at each supply chain location, from plant to
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

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

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

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 railways 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 Governments 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.