In order to expedite movement of goods, the country needs to develop logistics infrastructure and upgrade road, rail and waterways network The plight of the country owing to inadequate logistics infrastructure has been a hot topic of debate since a long time. Logistics activities in India have taken a beating due to abysmal conditions of roads, poor rail connectivity to ports and underdevelopment of inland waterways. With freight movement likely to go up in coming days, industry people opine that the country needs to invest heavily to upgrade its existing logistics infrastructure. Management consulting firm McKinsey in a recently released report has stated that the country requires investments worth around US$500 billion in the next 10 years to bring about considerable improvements in the logistics infrastructure.
 In fact, just when the Union Budget 2010-11 was round the corner, a survey was conducted by Kale Consultants, a leading solutions provider to airline, logistics and travel industry, which showed that majority of the respondents felt that investment in infrastructure is required to expedite movement of goods.Factors impeding infrastructure development
According to Ranjan Paul, finance head of Rolex Logistics Pvt Ltd, a small-sized logistics firm in Bengaluru, “One of the major bottlenecks in the path to development of logistics infrastructure is land acquisition problems, which delay several projects. Land acquisition norms need to be more transparent so that infrastructure projects, to facilitate the growth of the sector, are not held back. At the same time, it is important to rope in more private players in order to hasten infrastructural development.”
It is also believed that with the entry of foreign players, competition in India’s logistics sector is expected to intensify. In order to retain the existing clientele, it is absolutely vital to meet stiff deadlines, which is only possible when the country has a sound transportation network. In this context, Vishal Malik, managing director of Safeocean E-Logistics Pvt Ltd, a mid-sized logistics service provider in Ludhiana, says, “Increase in industrial production will put tremendous pressure on rail and road transportation and with logistics operators getting more consignments post-recession, it is vital to aid them with superior infrastructural facilities.”
Mr Malik also highlighted the manner in which perishable items such as fruits and vegetables get wasted due to absence of adequate cold storage facilities. According to a study conducted by the Federation of Indian Chambers of Commerce and Industry, around 30-35% of the country’s fruits and vegetables are wasted due to inadequate cold storage facilities. Therefore, it is imperative to establish adequate cold chains as well as develop modern warehouses to facilitate bulk storage of goods.
Inadequate infrastructure increasing operational costs
Analysts also opine that inadequate infrastructural facility is taking a toll on the profit margins of logistics operators, which is increasing their operational costs significantly. With increase in fuel prices, a weak infrastructure will only add to the woes of logistics operators and will further affect their business. However, there is some ray of hope with the government taking steps to develop dedicated freight corridors in the country, which is expected to crucial play role in facilitating fast movement of goods across the nation.
Arup Choudhury
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