In the past few decades, the role of ports has transformed from being just a transit point to a customs clearance and a delivery point. In this regard, connectivity plays a critical role.
Though a number of initiatives have been taken to improve connectivity from the hinterland to ports, especially in the past five-six years, it still remains the biggest cause for concern for the logistics sector as a whole, and ports in particular.
India is the only country that has a very large number of inland container depots (ICDs) and container freight stations (CFSs) for handling container cargo. Movement of cargo to and from ICDs and CFSs lead to a significant increase in time and cost. Meanwhile, export and import imbalances, especially for containers, have a huge impact on transport costs. This imbalance leads to repositioning of empty containers that has to be taken into account in the total transport cost.
Several key ports such as Krishnapatnam and Dhamra have come up on the east coast and handle significant cargo volumes. However, rail connectivity to these ports needs to be improved.
The Ministry of Railways (MoR) and the Ministry of Shipping (MoS) are taking a number of measures to improve connectivity to ports, reduce dwell time and ensure on-time delivery.
A few important connectivity projects have picked up pace. For instance, in February 2019, the foundation stone for the 362 km Indore-Nardana-Dhule-Malegaon-Manmad railway line project was laid. The line will pass through the Delhi-Mumbai industrial corridor nodes of Igatpuri, Nashik, Sinnar and Malegaon; Pune and Khed; and Dhule and Nardana. It is expected to reduce the distance from Mumbai/Pune to key central locations by 171 km, resulting in lower logistics costs.
Indian Port Rail and Ropeway Corporation Limited (IPRCL) is implementing connectivity projects at a number of major ports such as Kandla in Gujarat and Kolkata in West Bengal. It is also undertaking connectivity works at non-major ports such as Chhara in Gujarat and Dhamra in Odisha.
Once the MoR’s flagship dedicated freight corridor (DFC) project comes up, the dynamics of container cargo movement to and from the hinterland is likely to change. There will be an economic impulse to consolidate the container business, either through operational means or through mergers and acquisitions, so that cargo is not distributed in small packets across major cargo centres.
Also, the development of multimodal logistics parks is under way. These serve as a one-point solution for freight aggregation and distribution, multimodal transportation, storage and warehousing, and value-added services.
The direct port delivery (DPD) scheme, launched by the MoS as a measure for ease of doing business at ports, will also affect movement of cargo to the hinterland. The fragmentation of ICD/CFS facilities is expected to reduce. Consolidation will pick up pace, and this, in turn, will impact movement of cargo in the years to come. Besides DPD, increased focus on inland water transport and coastal shipping will also change how connectivity is perceived in the country. Coastal shipping is only one leg in the entire multimodal transport chain that has to necessarily include land modes of transport. Cargo has to be transported from its inland origin to the port of loading and again from the port of discharge to the inland destination by road or rail. For coastal shipping to be viable, the multimodal chain as a whole needs to be cost effective vis-à-vis unimodal road or rail transport. Often first- and last-mile connectivity is much more expensive than the coastal freight even though it covers only a short distance.
Going forward, early completion of the DFC is crucial for improving connectivity. Project commissioning has already missed a few deadlines, leading to a more than fourfold increase in cost. Besides this, feeder routes to the DFC need to be put in place to reap the full potential of the project. Further, connectivity to east coast ports needs to be improved. Unless the government ensures that there are transit points to the east coast ports from the northern hinterland as in the case with western coast ports, the potential of the eastern side cannot be adequately exploited.
Based on a panel discussion among K. Sathianathan, Managing Director, Distribution Logistics Infrastructure; Arvind Bhatnagar, Advisor, Transport, IPRCL; and Sandeep Mehta, Senior Vice President, CEO Office, Adani Logistics, at a recent India Infrastructure conference