Changing landscape of logistics in India with Multimodal logistics parks

Abstract

Logistics costs in India account for a higher proportion of total value of goods compared to other developed countries. According to the Ministry of Road Transportation and Highways (MoRTH), it was around 13-14% in 2015 while for other developed countries it was approximately 7-8%.Another indicator of higher logistics cost is the difference in road freight cost per ton per kilometre. For India, the cost is around INR 1.9 per ton per km (almost double that of the cost incurred in the US). Lower speed of freight movement also increases the freight cost. In India, the average speed of freight movement, according to MoRTH, is around 25-30 kmph which is around 60-70% lower than that of the US. Thus, overall logistics efficiency in India is affected due to multi-party coordination delays and infrastructure challenges. To address this challenge, India is developing Multimodal Logistics Parks (MMLPs) along with other initiatives. MMLP refers to a freight-handling facility encompassing a minimum area of 100 acres (40.5 hectares), with various modes of transport access, and comprising mechanized warehouses, specialized storage solutions such as cold storage, facilities for mechanized material handling and inter-modal transfer container terminals, and bulk and break-bulk cargo terminals (Concept Note- LEEP, n.d.). It is a type of Logistics Park where various value-added services are rendered in addition to rail/road-based transportation. The purpose of MMLP is to reduce coordination among different parties during transfer of cargo from one mode to another.