The government is implementing a multimodal logistics system for the seamless movement of cargo and people through various modes of transport. This approach is especially relevant given India’s focus on reducing overall logistics costs. By connecting ports to a strategic multimodal network, trade connectivity and efficiency can be improved. Currently, almost 71 per cent of cargo in India is transported by road, while only 17-18 per cent is transported by rail, and the remaining by other modes of transport. This unequal distribution is a huge factor contributing to inefficiencies. However, the hub-and-spoke model, which simplifies the logistics by addressing the need for different modes of transport for long and short hauls, is gaining momentum. The aim is to make the logistics supply chain more effective and competitive. The government is also developing a unified logistics interface platform (ULIP) that can facilitate faster data integration and interchange between these modes. It focuses on reducing logistics costs and inefficiencies and integrating the operations of multimodal logistics parks (MMLPs). At the recent “Ports in India” conference organised by India Infrastructure, Adhendru Jain, chief executive officer – Rail and Inland Terminal, DP World Subcontinent, discussed the role of ports in connecting various modes of transport in the logistics network, the critical value-added services being adopted in the sector and the future opportunities in multimodal logistics. Edited excerpts…
Ports as points of convergence
Ports serve as convergence points where goods and services come together and cargo is moved between different modes of transport or transported to an exchange point. The connectivity of ports to MMLPs significantly enhances the supply chain efficiency. However, in logistics, the movement of partially loaded containers or the movement of empty containers and trailers with low visibility of movement often leads to high inefficiency. For example, a truck that comes to a port with an export container usually leaves empty or waits to find an alternative load before picking up an import container. The issue could be addressed by implementing a logistics platform that provides private operators with a clear visibility of the transporters associated with ports. Operators would be informed about the pickup when they dropped off an export box, which would help reduce imbalances due to empty movements and result in significant cost savings. Ports can also serve as critical enablers in the multimodal logistics chain. They can help connect first and last-mile movements at container port terminals by utilising incoming and outgoing trailers. This reduces empty movements while delivering savings to end-users. Several government initiatives, including the implementation of direct port delivery (DPD) along with policy reforms, also help reduce trade costs. DPD, which is a flagship initiative of the Central Board of Indirect Taxes and Customs, is replicated at container freight station (CFS)-based ports in India and has changed the cargo clearance process. It facilitates consignments by giving “out of charge” status directly from the terminal premises, thereby eliminating the need for containers to be transported to CFSs for completing customs formalities. Furthermore, ports with multimodal facilities can act as distribution points for traders, serving as a meeting point for the export-import of cargo as well as domestic cargo for traders.
“Ports serve as convergence points where goods and services come together and cargo is moved between different modes of transport or transported to an exchange point.”
Value-added services
Many value-added services such as vertical supply chain consolidation and new-age digital tools and automation help in eliminating bottlenecks in logistics. Through these services, ports are going beyond just container and cargo handling or providing cold storage for perishable goods. The prominence of free trade warehousing zones with last-mile and first mile solutions is also picking up. For instance, DP World has started the construction of free trade warehousing zones adjoining some of its ports and terminals such as the Nhava Sheva Business Park Free Trade Zone in Mumbai. It is also planning to launch warehousing zones in Chennai and Cochin. These would help in combining logistics and value addition for goods in a single location while simplifying documentation and customs processes for traders and manufacturers of export and import goods. Around 65 different value-added services can be provided in these zones, which will help reduce the logistics cost by eliminating the need to handle and transport goods for different value-adding processes.
Other key value-added services are digital tools and automation, which enhance efficiencies and connectivity. DPD employs integrated databases to facilitate seamless clearances for certain commodities on arrival at the port. This allows customers to take delivery directly from the port to their factories and warehouses. Despite this benefit, DPD’s access to customers has been ineffective and limited due to a lack of visibility. When the container arrives at the port, customers have to deal with multiple parties to ensure that once the container is discharged from the vessel, it moves within the free period provided by the shipping line. The integration of information at ports with respect to this movement and end-mile connectivity will further facilitate streamlined trading opportunities.
“Ports serve as convergence points where goods and services come together and cargo is moved between different modes of transport or transported to an exchange point.”
Future opportunities
The major challenge of multimodal logistics is planning capacity to accommodate maximum volumes and peak transactions of cargo while ensuring optimal capacity utilisation during lean periods. The uncertainty of achieving the peak value with low visibility of cargo movement makes the planning of resources difficult for traders. If they know when a truck will arrive at the port from a manufacturing cluster, they can plan the loading accordingly. A unified booking portal can inform the trader about congestion on the roads. It can also inform about the availability of capacity at ports to better plan the cargo movement. Moreover, efficient planning of cargo inventory by the shipping line can be achieved with the awareness of surplus goods at one location compared to another through a unified portal. Such a system could capture real-time information using cloud-based services. This should not be limited to the internal supply chain of businesses but to the entire MMLP ecosystem, including all modes of transport, namely, roads, railways, waterways, free trade warehousing zones, warehouses, and coastal trade. This would need the harmonisation of a data structures into a single interface. All the information systems in the supply chain will use the same set of standardised data, infrastructure and attributes that they can interpret in a common way. As a result, the exchanged data can be automatically processed to achieve the intended business objectives.
This unification of the end-to-end logistics network would demand more public-private collaborations in the future. These collaborations can enhance operational efficiencies by developing the digital logistics ecosystem along different value chains. The logistics sector has a huge potential, and is expected to grow at a compound annual growth rate (CAGR) of 10.5 per cent. Moreover, the unified logistics integrated platform (ULIP) under the National Logistics Policy has been conceptualised to provide a single-window logistics platform for end-to-end visibility through assimilation of almost 24 different systems. Digital interventions will prompt productivity while adhering to delivery timelines, providing real-time tracking of vehicles, and optimising warehouse management. The onboarding of private entities on to the platform will bring transparency to freight movement, verification, authentication and visibility. This can make Indian logistics a lot more competitive on the global platform.
As a future measure, standardisation of the framework for interoperability would be a key success factor. A more flexible and interoperable way of standardising business semantics is required for information exchange throughout supply chains. By creating standard business data exchange structures, all import-export and transit-related regulatory requirements will be met and redundant data and duplications in the processes will be eliminated. Furthermore, a nodal authority is crucial for regulating the standards framework across the MMLPs to ensure standardisation in all exchanged information, and proper and timely recording of data.