<b>Rajeev Kher & Pritam Banerjee:</b> Towards integrated logistics facilitation

Prime Minister Modi’s “Make in India” initiative can help India’s greater integration into global value chains through an exponential increase in trade and investment. Such integration would require transformational reforms in the area of trade facilitation. 

Trade facilitation is much more than administrative reforms to reduce the paper trail and create greater transparency. These are important objectives, and credit must be given to the current government for expedited implementation of Customs single-window and other key reforms in the administrative process. But Customs is just one leg of the entire logistics process that supports connectivity to global value-chains. Trade facilitation needs to address infrastructure and regulatory bottlenecks all along the chain of transport, port and airport gateways, freight movement in the Railways, and ancillary services that make up the overall logistics solution for trading across borders.

A key challenge is to first establish a holistic framework that can identify the key elements of these activities in the logistics chain, and find an effective way to monitor their performance. A related challenge is to find a governance structure to analyse this granular data, identify problems at the operational level, and implement solutions. Since the responsibility for the operational issues in the logistics chain are spread over several line ministries and departments, the institutional leadership for such reforms cannot be left to an individual line ministry, but should come from the very top. This would require the development of a robust mechanism for real-time monitoring of ground-level operational and regulatory performance of India’s key ports, airports, freight movement by the Railways, internal container depots, land customs stations, and ancillary facilities such as container freight stations (CFS) near ports, free trade warehousing zones, and major bonded warehouses. 

Fortunately, developments in big data, especially techniques now available for easy quantification of visual data, and falling costs of technology offer a solution for this task. All secure customs facilities could be fitted with CCTV cameras that monitor throughput of cargo in and out of such facilities, providing real-time tracking of effective “dwell time” in customs locations, and incidence of actual physical inspections being undertaken by officials on the ground, as opposed to published numbers of facilitated cargo generated by the customs electronic system. Similarly, technology-based tracking systems could be put in place to observe port efficiency through parameters related to waiting times for ships at berths and in queues to enter ports, and time taken for piloting ships. Similar principles could be put in place for monitoring the efficiency of airports. Visualisation data through the use of cameras could provide critical information on efficiency on the use of cranes, RoRo operations, and operations at terminals and CFS at ports or at airports. 

The next step in establishing a system of real-time data collection and analysis would be to put in place an “autonomous” data collection infrastructure and an institutional framework. This would require creating port and airport community systems that report operational parameters (e.g. waiting time for ships or idling time of aircraft at parking bays due to congestion) and productivity parameters (e.g. number of crane- and man-hours per tonne of cargo or average time taken for ground handling operations at airports). In addition, data available with Customs relating to the time taken for cargo clearance — from the point the data was filed with the Customs to the time it was released formally by the Customs — would be a part of the matrix.

This system-reported data would be supplemented and validated by visual data collection using CCTV cameras and drone cameras where applicable, and appropriate quantification techniques to convert visual data to numbers would need to be put in place. Further validation could be provided by running GPS- or RFID-based trackers on selected random sample containers (for ocean freight) and unit load devices for air-cargo that puts an electronic time stamp after every activity in the logistics chain is completed.

Logistics operators already have a large number of detailed parameters called Key Performance Indicators or KPIs for every stage of the logistics process, focusing on both operational parameters (based on time-related efficiency) and productivity parameters (based on resource use-related efficiency). A large number of the KPIs could be adopted into this monitoring matrix. Having access to this real-time data base would allow policymakers to identify key micro-level “pain points” at specific ports/airports, analyse redundancy levels in processes and the quality of implementation at the ground level, and understand the varying degrees of operational efficiency and service quality at port and airport terminals.  

The fact-based trade and logistics facilitation reforms that this would allow would help India quickly achieve its goal of “Top 20” in rankings relating to doing business across borders. The fact that “things are being observed” would in itself bring in a level of awareness and efficiency at the ground level. Such “fact based” reporting would also provide a reality check on some of the low “rankings” that India seems to have obtained in many global publications.   
 

Rajeev Kher is Member, Competition Appellate Tribunal. Pritam Banerjee is Senior Director, Deutsche Post DHL, South Asia. The views are personal