7 CONCLUSIONS

This summary is concluded with a few observations about Freight Villages in

general:

No One Model: Many logistics centres were planned as freight villages from the
beginning, shows the possibility of evolving into a Freight village by adding
components of the concept such as intermodal terminals and supporting services.
Furthermore, some areas that offer freight village components on nearby sites such
as the Dallas Intermodal Terminal could eventually be considered Freight Villages
in an unconventional sense of the concept.

Public Support is Important: Public sector support of freight villages and other
logistics centres is an important factor in a project’s success. This support can take
many forms, from public private partnerships to purely public initiatives. In many
cases of privately developed Freight villages, the public sector has provided
indirect assistance through infrastructure development, land discounts, and tax
incentives. For urban consolidation and distribution elements to succeed, public
support appears important. Past successes have been accomplished through direct
subsidization of urban distribution schemes and supported by a number of indirect
initiatives such as road tolls. However, private interest in these programs has been
shown to wane without continued public support to offset the real and perceived
additional costs for actors.

Private Sector Support is Fundamental: It has been found in general that

privately oriented freight villages have performed better than their public
counterparts and that public facilities tend to suffer from a lack of investment from
private sector actors. As such, ensuring a high level of initial and continual private
sector support is crucial for the success of any freight village project.
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Private Sector Risk: Though support from the private sector is fundamental to the
performance and success of freight village developments, private actors are
unlikely to invest in any project that does not meet their criteria for profit
generation. Because subsidies for the operations of freight villages are generally
lower in India compared to countries in the Asian continent, the minimum
threshold for private sector interest is higher. The nature of such a threshold can be
expressed through a list of preliminary critical needs for freight village
development in India to ensure a competitive entry into the marketplace.

Public Sector Risk: Freight villages and other publicly sponsored logistics centres
may not achieve their goals due to the market imperatives of attracting firms and
selling land. Furthermore, a Freight village risks requiring significant, long-term
public subsidization unless interest from private sector players exists to take part in
the project.

Market saturation is possible through the overextended development of logistics

centres by over-eager public sector actors. This scenario is less likely in India due
to the tighter margins of major rail actors who would require high freight volumes.
All public sector investments in freight villages and other logistics centres needs to
be weighed against the very real risk of underperformance in the freight and
logistics marketplace.

Attracting Compatible Firms: The realization of clustering and synergistic

relationships between firms is a main goal of freight village development.
However, the selection of firms to locate within a freight village must be done in
accordance with their potential to cooperate. Some firms locate within a freight
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village and do not participate in any type of cooperation among firms or
infrastructure. Furthermore, the management corporations of more publicly
oriented freight villages may be under pressure to sell land to any firm that is
interested, irrespective of that firm's business focus. Firms sited from incompatible
sectors have little chance at achieving vertical or horizontal synergies. Overcoming
these challenges requires a suitable governance structure representing a mix of
public and private interests and proactive management of the facility.

Freight Villages as Generators of Business and Economic Development: While

some may perceive freight villages as a promoter of intermodal transportation, the
broader conceptualization of a freight village as an intermodal platform on which
companies can generate business is more desirable from an economic development
perspective. Furthermore, developing a freight village that hosts an array of
services that are integrated into the community presents a more promising solution
for promoting economic development than would a freight village focused solely
on improving freight and logistics. It is not clear that freight villages, particularly
the logistics-oriented variety, are significant job creators since increased
productivity and synergies are often jobs-neutral at best.

Synergies: The whole can be greater than the sum of the parts. Clustering can
promote synergies and economies of scale that create a multiplier effect for other
firms in the facility and on the periphery. Co- locating major freight generators
within a freight village can reduce intermediate moves, but the final delivery of
goods to stores and end customers is still likely to be done overwhelmingly by
road transportation. Accordingly, there is the urban consolidation and distribution
aspect of a freight village that seeks to increase the efficiency of urban goods
movements.

Modal Shift: By offering high quality connections to intermodal infrastructure,

Freight villages can provide a platform to promote more efficient and cost-
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effective intermodal transportation options. Furthermore, these improvements can
achieve a ‘network multiplier effect’ by having more freight villages offering
similar features at both ends of the supply chain. Freight villages can also improve
the competitiveness of intermodal transportation at lower distances. This is
accomplished by eliminating intermediate moves through the co-location of firms
within a single cluster and producing higher volumes of freight by housing a
number of freight generators on site.

Benefits for Smaller Enterprises: Small and Medium Enterprises (SMEs) stand
to benefit from freight village development due to the potential for synergies and
opportunities across a number of business areas. This can include joint investments
in infrastructure, shared knowledge, and the ability to participate in opportunities
to generate economies of scale, such as grouping shipments into larger block sizes
with other firms or making use of the intermodal capacity of large freight
generators to purchase cheaper blocks on intermodal shipments.

The Big Picture: In contemplating Freight villages, the big picture needs to be
carefully considered. A freight village is a complex and large undertaking where
the elements of a compelling vision, master planning, financing, land assembly,
extensive public and private co-operation and good timing have to come together
all at once. There needs to be a strong latent or forecast demand to drive activity at
the freight village and there needs to be a high comfort level that the large amounts
of land required will be getting put to their highest and best use. The presence of
an intermodal facility is one strong indication that a freight village development is
such a use. Meanwhile, goods movement cannot be considered in isolation when
issues such as residential sprawl and associated congestion effects threaten to
undermine progress on the goods movement front.

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118
 Appendix 1 - Checklist of existing Warehousing and Logistics projects in Europe and USA

General Characteristics Mode Freight Flows

On site Estimated
WAREHOUSING/ Estimated
Size Transport / Sea/ Interim Total
S.NO LOGISTICS Employees Comments Road Rail Air Interim Rail
(Acres) Logistics Water Road Traffic
PROJECT Traffic
Firms Traffic

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Appendix 2 - Checklist to the developer (DMIC) - and check whether the
existing proposals of Warehousing and Logistics satisfy the key functions of
a Freight Village
Key Functions of Freight Village
  On site   Container Freight   E-commerce
manufacturing/ Station
commercial firms
  Warehousing and   Distribution   Host/Facilitate 3-
leasing services 4PL Activities
  Cargo handling   International cargo   Industry integration
transfer
      Cargo division    

Intermodal Facilities
  Rail lines/ Rail   Container terminal   Rail link to port
sidings
  Seaport   Combined terminal   Rail terminal

  Airport   Rail link to nearby   Transshipment/

airport Transload facilities
           

Transport Services
  International   Load/unload   Final transportation
Logistics ships/trains/trucks to destination
  Domestic Logistics   Roll-on/Roll-off   JIT Logistics
infrastructure
  Aviation Services   Cross-    
docking/merge-in-
transit
Traditional Logistics Services
  Distribution   Warehousing   Basic container

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 handling
  Freight Forwarding   Warehouse leasing   Storage

New Logistics services

  Transhipment   Air cargo ground   Cargo
handling deconsolidation fo
shipping
  Container depot   Local distribution/   Fresh produce
(load, unload, Long distance express parcels
inspect, clean) shipping
Value added Logistics services
  Free/Foreign Trade   Wrapping   Surveying
zone
  Barcoding   Assembly/   Topping up of
reassembly cargo
  Online tracking   Postponement /   Performance
delayed assembly analysis
  Quality assurance   Palletizing   Allocation
and control
  Picking   Processing   Procurement

  Packaging and   Customs clearance   Management of

repackaging custom returns
  Pick and pack   Management of   Facilitate electronic
customs information flows
requirements between customers
  Labelling   Sampling    

Additional Value-added services

  Supply chain   Supplier -managed   Call centre
management inventory management
  Temperature   Vendor-managed   Commissioning
controlled inventory

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 environments
  Security   Finished goods   24 - hour
environments inventory access/extended
hours
  Hazardous materials   Stock    
services replenishment
  Raw material   Production line    
management management
Additional Features
  New Land for   Washing facilities   Workforce
development recruitment/training
  Repair garages   Research and    
development
facilities
Public Services
  Hospital/medical   Road/Traffic   Public weigh
centre information bridge
  School   Customs office    

  Post Office   Public    

transportation
Private Services
  Residential   Restaurant/   Consulting services
development Cafeteria
  Commercial   Recreation/   Accountants
development entertainment
  Office space   Courier   Fitness centre

  Insurance office   Conference/   Showers

Exhibition hall
  Bank   Meeting rooms   Bar/Pub

  Supermarket   Gas station   Internet/fax

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 services
  Hotel   Forwarding agents   Day-care

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