Experts focus on lower logistics costs

The Indian Railways, which has presented a Rs 2,51,000 crore proposal to the Planning Commission, will meet 30 per cent of the funding requirements from its internal accruals.

"We will resort to market borrowing to meet 29 per cent of expenditure", V N Mathur, member-traffic of the Railway Board told mediapersons on the sidelines of a logistics seminar organised by CII.

The remaining funding may come from the government.

External commercial borrowings could be another option if needed.

The Japan Bank for International Cooperation, which was keen on the Delhi-Mumbai and Delhi-Howrah freight corridors, would like the feasibility study completed by October this year. The two freight corridors would cost Rs 28,000 crore.

Mathur said logistics parks would come up on the Delhi-Mumbai corridor as logistics parks and warehouses would help cut logistics costs.

Referring to the Warehousing Corporation set up by the Indian Railways, Mathur said that warehousing enabled streamlining logistics processes.

In India, 48 per cent of the logistics budget was spent on transportation but the sector needed funds to overcome capacity constraints and perhaps adopt the PPP model for better port connectivity. Speaking on the occasion, S Hajara, chairman and managing director of Shipping Corporation of India, called for integration of different modes of transport and greater private sector participation in infrastructure development of ports, for development of multimodal transportation and use of larger vessels to reduce logistics costs.

Indian logistics costs were almost double the global average.

Though a survey conducted by the United Nations Conference on Trade and Development revealed that 17 out of 25 major routes in the world used vessels with capacity larger than 9000 TEU (20-foot equivalent units),

the level of containerisation in India was very low at about 45-48 per cent as against 65-75 per cent in comparable developing countries.

According to the National Maritime Development Programme (NMDP), Indian container traffic was growing at 18 per cent per annum between 2003-04 and 2013-14, with major ports having 72 per cent share. Mathur too highlighted the need to "containerise" at a much faster pace for "modernising the supply chain" to deliver to customers more favourably.

Hajara said reduced freight costs for imports would bring down landed costs of goods while integration of modes of transport would optimise supply chain costs.

S K Mohapatra, CEO of Dhamra Port Ltd, called for reinforcing the inland waterways favourably by building deep ports and tariff rationalisation to upgrade logistics and supply chain management.