The much-anticipated National Logistics Policy (NLP) emphasised the need to expedite digital transformation in India’s supply chain industry. An in-depth analysis of the key announcements will help understand how they will impact the state of logistics in India.
Reducing Logistics Cost To Boost Competitiveness
Logistics costs account for 13-14 per cent of India’s GDP. The NLP aims to reduce this cost to 8 per cent over a period. When overall logistics expenses are low, the Indian goods will be available at competitive prices in the global market, making it lucrative for buyers. Achieving the proposed figures largely depends on choosing the most cost-effective mode of transport, which is yet to be seen with time.
In an exclusive conversation with BW, Dhruv Agrawal, COO & Co-founder, Shipsy stated, “In India, the cost to carry one metric tonne of goods per kilometer by air is Rs. 18 per km; by road, it is Rs. 3.6; by waterways/pipelines, it is close to Rs. 2; and rail is Rs. 1.6. The figures echo why it makes sense to ship a sizeable portion of goods in India by rail. But this is not the case. More than 60 per cent of India’s freight is transported using roads. Having said that, rail has its limitations. These include a lack of real-time visibility over goods, frequent delays due to unprecedented halts, and the risk of theft. Moreover, due to the lack of direct connectivity to warehouses, rail is still considered majorly for mid-mile operations. A focus on building technology-powered strategies to boost multimodal transportation usage and build multimodal transportation parks will address these challenges and reduce logistics costs.”
The NLP envisions moving 50-55 per cent of freight by rail, 25-30 per cent by road, and 20-25 per cent by waterways for maximum efficiency. Ensuring real-time visibility of multimodal freight operations will play a critical role in responding to risks and emergencies, reducing costs, and eliminating ETA SLA breaches.
Leveraging Digitisation To Enhance Collaboration & Decision-Making
Indian logistics industry consists of 20 government agencies, 40 partner agencies, 37 export promotion councils, 36 logistics services, 168 container freight stations, 500 certifications, and over 10,000 commodities pertaining to railways, shipping, ministry of civil aviation, customs, warehousing, manufacturing, ports, and many others, added Agrawal. Currently, getting goods to move from one state to another, from a logistics mode to a different mode, or a warehouse to warehouse requires dozens of approvals. Since all these agencies work in silos, the entire process becomes extremely tedious. For instance, manual customs clearance processes are time-consuming and leave room for errors and data inaccuracies. This becomes a barrier to seamless cross-border logistics.
Here the integrated digital system for logistics services (IDS), Unified Logistics Interface Platform (ULIP), and PM’s Gati Shakti National Master Plan will play a critical role in addressing these challenges. The platform will act as a single entity collaborating with all the above stakeholders to manage, track, and offer their services. It will enable a shipper with end-to-end management of goods movement connecting him or her to multiple service providers such as 3Pls, warehouses, and others depending on his requirements and also render insights on the cost-effectiveness of each service. “If smart logistics management tools power such a platform, then it will open a gateway to better collaboration, automated negotiations, and reduced costs by seamlessly connecting with multiple vendors for the same service,” explained Agrawal.
Further Reducing Vessel TAT At Ports
The PM, in his address, highlighted that the turnaround time of ships at ports was brought down to 26 hours from 44 hours. This is critical in ensuring faster movement of goods, container availability, and averting congestion at ports due to high loading-unloading time.
Embracing real-time container tracking solutions can further optimise the process. Logistics stakeholders can gain insights on container ETAs, reduce the risk of incidental costs via proactive alerts and facilitate on-time pickups. A global Fortune 100 exporter is saving up to 80 per cent in detention and demurrage costs and ensuring a five days faster plan to ship time using real-time visibility and logistics automation.
Since the policy favors a tech-first ecosystem, it will create secure coordination and boost stakeholders’ confidence. When this happens, the Indian logistics sector will realise its true potential, unleashing a plethora of opportunities and benefits for stakeholders, catapulting India as one of the leaders in the global logistics markets.
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