Challenges and Opportunities in Multimodal Logistics in India

Team : Alpha & Omega

Saanya Mehra – MBA I (Operations)Debashish Chatterjee – MBA I (Operations)

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.• Governme

nt policies.

SWOT ANALYSIS

Source : World Bank Logistics index, 2016 and Standard and Poor’s Report, 2016

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

Transportation & Logistics efficiency indicators India GlobalRoad 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 kmsAir Transportation

Airport waiting time – Exports (in hours) 50 12Airport waiting time – Imports (in hours) 182 24Aviation 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 / hectare170,000-220,000 TEUs / hectare

Inland Waterways 3% 47% China, 44% EUOthers

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

MULTI-MODAL LOGISTICSMultimodal 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

Technologi

calInvestment

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”.

ROAD TRANSPORTCHALLENGES Poor infrastructure and quality of roads

Last mile delivery, pricing per ton varies greatly, depending on the accessibility to a cityLack of training amongst Indian drivers, real time visibility is inadequateIntra-state taxes increase the cost of transportationPresence 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 parksUsage of GPS and data analytics for optimized route analysisPromotion 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.

RAIL TRANSPORTCHALLENGES Current average speed is a meager 25 kmph, although

freight trains can clock speeds up to 160 kmphOverutilised – 7 long haul corridors – 27% of network but 50% of the traffic

OPPORTUNITIES

Creation of Dedicated freight corridorsTime tabled freight trainsEastern 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

AIR TRANSPORTCHALLENGES Much higher cost per tonne of material

transportedLast mile connectivity is not achievedLesser 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.

WATER TRANSPORTCHALLENGES 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.� 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 infrastructureDevelopment 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.

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 carsOne double vessel can replace 50 typical road trailers, by carrying 300 cars at a time

WAREHOUSINGCHALLENGES 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.

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

SHIFTING TOWARDS A MORE BALANCED MULTI MODAL MIX

Parameter Type 2010 2016-17 20201) 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 7502) 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%

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

LEARNINGS FROM THE WORLDCOMBIROAD, 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 .

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 cityHelp improve safety and productivity and in reducing

congestion.

LEARNINGS FROM THE WORLD

THANK YOU