The road ahead for the Indian logistics industry looks brighter with several upcoming projects and initiatives undertaken by the government  Currently, logistics costs in India are much higher as compared to the developed nations of the world. The growth in commodities, manufacturing activities, retail sector, domestic and international trade has pushed up freight movement via roads, rail, air and ports. Road traffic, which stood at 2,466 million tones (mt) in 2007, is expected to grow to about 3,700 mt by 2013. Rail freight has grown from 666.51 mt in 2006 to about 727.75 mt in 2007, which is likely to touch 1,100 mt by 2012. Therefore, the pressure on the logistics sector is mounting for which logistics infrastructure needs to be ramped up rapidly. On the other hand, owing to increase in logistics activities, carbon emissions have increased significantly. This has led to increasing demand for reduction of carbon emissions. So, it is time to think about ‘greener’ and cost-effective ways of freight movement.
Need to use inland waterways While we talk about green transport, waterways happen to be the cheapest and greenest mode of transport. But utilisation of inland waterways in India is still at the nascent stage. Developed countries like the UK have adapted to the multimodal form of material and public transport. They make optimum use of railways and waterways wherever possible, to reduce logistics costs as well as carbon footprints.
In India, about 95% foreign trade by volume and 70% by value moves through ports. But, when it comes to domestic trade, the volumes are negligible when compared to road and rail freight. India boasts of a wide network of inland waterways comprising canals, rivers, backwaters etc. Besides these, possibilities of using coastal shipping should also be explored.
If the Sethu Samudram project comes alive, goods can be transported easily through coastal shipping. The prospective use of these ports for efficient intermodal transport is possible through four lane road connectivity of these ports with all national highways as well as deployment of proper facilities for faster loading and unloading of cargoes. As major ports alone will require over Rs 36,000 crore of private investments by March 2012, it is essential to undertake all possible measures to encourage private sector investment in the shipping sector.
The vital logistics parameters such as infrastructure, international shipments, logistics competency and timeliness if not addressed in the right manner will directly result in escalated costs related to transportation and distribution as well as high inventory expenditure. Therefore, these parameters should be improved for making the Logistical Performance Index (LPI) at par with the international standards.
With the much awaited Goods and Service Tax (GST) on its way to being implemented, it is believed that once introduced it will create a common tax structure across the country, which will give a fillip to the country’s GDP growth.
The logistics sector has made significant improvement and is set to get revolutionised with new reforms and increasing investments. The prospective benefits of coastal shipping and multi modal form of transport should be considered by logistics players. The future of Indian logistics lies in the effective utilisation of the available assets in the country.
R Chandramouli, senior counselor, CII Institute of Logistics, Chennai |
