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Multimodal Logistics Hub

& their Future Potential in


India

SPJIMR
Agenda

qIn tro d u ctio n


qS ig n ifica n ce o f Lo g istics
qD iffe re n t m o d a ls o f Lo g istics
qM u ltim o d a lLo g istics H isto ry
qG lo b a lPe rsp e ctive
qIn d ia n p e rsp e ctive
qV a lu e A d d e d S e rvice s & G o vt
p o licie s
qR o a d b lo cks to su cce ss
qR o a d A h e a d
Era of Globalization

qWorld undergoing significant


developments.
qIncrease in the trade across
the nations

Efficient Logistics
becomes key for
Globalization
Source to Destination Logistics
flow
S ta tistics
qTransport dependence : If
transport cost doubles,
0.5 % points dip in
economic growth
qToday approximately 95%
of worldwide general
cargo movement is in
containers.
qContainership of 12,000
TEUs are presently
operating and 15,000 TEUs
are on the drawing board.
qWorld Container Throughput
•Zero in 1965 to
225.3 mn moves
in 2000
•More than
doubled by
2010
Indian Logistics Sector (1/2)
qIm p re ssive ra te o f 8 % to 1 0 % sin ce 2 0 0 2 to u ch in g re ve n u e s o f $ 1 0 0 . 1
b illio n in 2 0 0 7 - 0 8
qIn d ia ra n ke d 4 7 th amongst 150 countries in terms of logistics
p e rfo rm a n ce d u rin g th e ye a r a s w e ll a s its fu tu re p o te n tia l-World Bank's
Global Logistics Report ‘10
qExpected to grow annually at rate of 15 to 20 %, reaching revenues of
$385 bn by 2015
qNearly 94% of the logistics & distribution requirement is dominated by a
large no. of small fleet owners (5-10 trucks) and these account for 80%
of the revenues. Source:Datamonitor 2007)
Indian Logistics Sector (2/2)
Picture of inefficiency :
qAverage time taken to clear import and export cargo at ports is about
19 days in India, against three to four days in Singapore.
FICCI-Ernst & Young (E&Y)
qAs compared to the European countries, rail transportation in India is
almost 3 . 5 times more expensive and the average transit time by road
is three times higher.
qLogistics costs, which includes transportation, warehousing, packaging,
holding and inventory accounts for nearly 13% of India’s GDP which is
very high when compared to developed countries such as Japan and USA.
(Cushman & Wakefield 2008)
Key demand variables
The future of the Indian logistics and warehousing industry is
currently governed by three key factors:  
qBurgeoning domestic demand Emergence of organized retail:
§Increase in foreign trade:
§India becoming a manufacturing hub
qReducing logistics costs
§From multiple taxes to a simplified tax regime:
qImprovement in infrastructure
Transition of modals in
logistics
Uni - modal transport
qRoad, train, Flight, Ship- Individual
qMany service providers
qNo synchronisation
qHighly inefficient

Multimodal Transport :
“The door-to-door movement of goods under the
responsibility of a single transport operator known
as a Multimodal Transport Operator (MTO) on one
transport document”
“MT is a chain that interconnects different links or
modes of transport -air, sea, and land- into one
complete process that ensures an efficient and cost-
effective door-to-door transport”

Characteristics :
qIn tandem with containerization
qCost effective & More efficient
qHigh Information exchange (TCMS)
Multi-modal Logistics
The development of a Anticipated characteristics
global multimodal hub qGood connections to the
strategy requires a strong neighbouring regional markets
focus on the development of qDevelopment of infrastructure
a single mega-infrastructure qFree zones in the inner country,
incorporating a world class close to the relevant
integrated airport and port consumption
zone qProduction markets

Various modals
involved
qDeep-Sea shipping
qFeeder shipping
qBarges
qAir transportation
qDrayage and shuttle
services
qLocal road delivery
Multi-modal Logistics: History

Multimodal Transport Law


1973: Commercial community created a set of MT rules under the ICC
banner.
1980: Multimodal Transport Convention singed - but received little
support.
1990: Commercial parties joined with UNCTAD and introduced the
UNCTAD/ ICC
Rules for Multimodal Transport Documents, which replaced the 1973
Rules.
- FIATA/ FBL
- BIMCO COMBIDOC is now commonly used in commercial practice
- Indian Law on Multimodal Transport
- United Nations Commission on International Trade Law (UNCITRAL)
Draft Convention (IMMTA Working Group)
Multi-modal Logistics: Global
perspective
Global Trends favoring growth
qGlobal logistic industry
valued at US$320 billion ,
growing at 3-10% per year
qIncreasing preference for
integrated SCM outsourcing
models , co-ordination of
flow of goods , information
, funds
qProjected SCM outsourcing
growth rate -15% in Asia
compared to 7% in Europe
and 10% in North America
qAsian shippers have
outsourced only 2.5% of
their logistics
Opportunities & Competition
qCurrent hubs in Europe are Rotterdam and Hamburg for sea
freight and London , Amsterdam , and Frankfurt air
freight
qSighting huge opportunities in future on account of its
location advantage Middle East is making huge investment
in multimodal hubs.
qEg. Panalpina opened 45000 sqft hub adjacent to the new Al
Maktoum International Airport and the Jebel Ali seaport
between Dubai city centre and Abu Dhabi
qCountries like Singapore , Taiwan , Malaysia ,
Hong Kong , Thailand and Philippines are
positioning themselves to be logistics hub
Multi-modal Logistics: Update
Panalpina Open Dubai
Multimodal Logistics Hub

q45,000 square feet office


space
qHuge multipurpose logistics
operating area
Comparison of diff. Modes of
Transport
Road Rail Water Air
ADVA •Network of 3.3 mn km •Spread over 81,500 •Cheapest mode of •Fastest mode of
NTAG – 2nd largest globally km, carries 25% of transport transport
ES •Accounts for 55% of total freight
total freight movement •Low transportation
•Wide reach cost as compared to
•Easy accessibility to road
small markets

DIS •High cost of •Bulk commodities •Poor state of •Low freight


ADVA transportation account for 90% of inland movement
NTAG •National Highways total freight revenues waterways in the •87% of total

ES account for only 2% of •Inflexibility to reach country freight traffic


the total network but deep interiors •High turnover being handled by
carries 40% of total time airports in metro
freight cities
Key Developments - India’s Transport
Infrastructure
Dedicated Freight Corridor
Dedicated Freight Corridor
Features Western Corridor Eastern Corridor
Route JNPT – Ahmedabad – Dankuni – Gomoh –
Description Palanpur – Kanpur – Ludhiana
Route Tughlakabad/Dadri
1483 km 1806 km
Kilometer
Speeds 100 kmph 100 kmph
Traction Electrified (2x25 KV Electrified (2x25 KV
Axle loads AC)
25 ton AC)
25 ton
Traffic (2021- 128 million tons (264 144 Million tons (160
22) trains) trains)
projections
Feeder routes 1516 km 3071 km
Total Cost Rs. 26,124 crore Rs. 23,500 crore
Multi-modal logistics
hubs/parks (MMLP)
A multimodal logistics park is a facility which provides a wide
range of logistics
services like
qIntegrated and accessible by multiple modes (rail, road,
maritime, air)
qComprising container terminals, bulk/break- bulk cargo
terminals, warehouses,
q3rd Party Logistics (3PL) players
qInland Container Depots (ICD)/Container Freight Stations(CFS),
banking, packaging, office space and facilities for
manufacturing,
qParking, mechanized handling, inter-modal transfers,
sorting/grading, cold chain.
qAggregation/disaggregation to handle domestic and EXIM freight.
A typical layout of a MML Park
(Source: CII 2009)
Elaborating on major entities
Third Party Logistics ( 3PL )
Third party logistics is a supply chain practice where one or more logistics
function is contracted to a third party organization and not carried out
internally.

Public - Private Partnerships ( PPP ) generally refers to a government


service or
public business which is generally funded, managed and/or operated through
private
Partnerships.
1.Design-Build (DB)
2.Design-Build-Maintain (DBM)
3.Design-Build-Operate (DBO)/ (BTO)
4.Design-Build-Operate-Maintain (DBOM)
5. Build-Own-Operate-Transfer (BOOT)
6.Service Contract:
7.Management Contract:
8.Concession
9.Divestiture
Containerization - 1
C o n ta in e r – B ox th a t m a ke s th e w o rld g o ro u n d ! !
C o n ta in e r m a rke t g ro w in g 3 tim e s fa ste r th a n th e
e co n o m y
S ta n d a rd size s o f 2 0 ’ a n d 4 0 ’ le n g th , 8 ’ b re a d th a n d
8 . 5 / 9 . 5 h e ig h t
Containerization - 2
Internal Container Depot ( ICD )
qInterface between connecting modes of
transportation
qTotal package to handle export &import
containers and general cargo flows
between road, rail and waterways in a
cost effective manner with intermediate
services
qContainer repair and cleaning facilities
qCustoms - Examination of cargo and duty
assessment for exports and verification
of integrity of the material in the
case of imports

Container Freight Station ( CFS )


Port facility for loading and
unloading containerized cargo to and
from ships
Revenue sources of MMH
The MMH developer will earn revenues from the following
q•Rail terminal/ access charges
q•Rental Charges for the space
q• Rental charges of the use of Warehousing
facilities/ office space and other facilities
q•Terminal handling charges for the use of handling
q• Miscellaneous earnings - advertisement, leasing/
rental and VAS
Value Added Services
qICT, Software support, Packaging, bar-coding, security systems etc
qTesting and Quality Control Facilities
qCatchment areas expected to develop in to major manufacturing zones.
qTesting and quality control equipments and manpower
qPostponement in logistic systems are generally of three types
§Space postponement
§Time postponement
§Form postponement
qTraining facilities for the industries, Repair Centre
qFumigation- Major VAS at developed logistic parks such as Singapore ,
Rotterdam
qBanking
Development stages of MMH
Major Steps
Government policies
THE MULTIMODAL TRANSPORTATION OF GOODS ACT , 1993

“The central government has been giving impetus to the sector


through a number of initiatives such as allowing 100% FDI, eliminating
CST, introducing VAT, encouraging public private partnership (PPP), and
100% income tax exemption for port development projects. A research in
this area has forecasted the Indian logistics industry to be valued at
nearly $385 billion with nearly 12% in the organized sector by the
year 2015”
VAPI- MultiModal Logistics Hub
q3 tier industrial town
qIn Valsad district of Gujarat.
qSurrounded by two UTs - Daman
& Dadra-Nagar Haveli which are
high Industrial density
setups
qClose proximity to the
districts of Nasik, Thane,
Navsari: Source of additional
traffic for the logistics
park
qMajor Industries: Chemical ,
textiles, electronics and
cables, paper products,
pharmaceutical, plastics,
electrical goods, engineering
items, FMCG, marble, plastic, oil
and lubricant producing
facilities
VAPI- MultiModal Logistics Hub
qProject to be executed under Public Private
Partnership
qCommercial developer to construct and maintain
the logistics facility for an agreed period
with the partnership of the Indian Railways
and/or the state governments.
qPresents a business opportunity for commercial
developers and logistics companies
qProject is partially funded by the Japanese
Infrastructure Bank

Existing rail based logistics service providers : 1) Adani,


Patli, Near Gurgaon
2.) The Gateway Rail Terminal, Ludhiana 3.) CGM Logistics Park, Dadri,
CFS/ICD6
4.) Concor, ICD Dadri 5.)Arshiya Distripark, UP
Roadblocks to growth
Roadblocks to growth
Way ahead

q Multimodal logistics hubs have a huge


potential owing to exponential growth in
logistics sector .
q Technological innovations in transport modes,
operations and communications, coupled
with expanded services would ensure safe
and efficient transport.
q Support from authorities will ensure removal
of roadblocks and smooth operations .
References

1. http://www.immtajordan.org/uploads/Multimodal_Transport_and_Logistic
2. http://www.business-standard.com/india/news/logistics-firms-eye-multi-m
3. http://www.domain-b.com/companies/companies_I/Indian_Railways/2009
4. http://r0.unctad.org/en/subsites/multimod/pdfs/industryEn.pdf
5. www.ustda.gov/program/sectors/USTDASectorBrief_Transportation.pdf
6.