The Federation of Indian Exporters
Organisation has urged the government to implement long and mid-term strategies
to ensure simultaneous flow of cargo from the Ports to manufacturing or
consuming centres to end the chronic unidirectional cargo flow one of the key
contributors to increased Logistics cost hampering the competiveness of our
Addressing the One day conclave
titled Cargo connexions 2019 at Coimbatore last week the past president of the
FIEO Dr M Rafeeque Ahmed said majority of the Industrial clusters in India have
EXIM imbalance resulting in unidirectional cargo flow.
This leads to an overall increase in
the cost of transportation, since freight operators are trying to recover the
fixed cost involved in returning without any load. This issue need to be address by implementing
various long and mid-term strategies to have simultaneous flow of cargo.
As compared to leading maritime
nations, EXIM containers in India travel a distance of 700-1,000 km between
production centres and ports as compared to 150-300 km in leading maritime
This leads to an increase in Logistics
cost thereby impacting the overall competitiveness of the nation. The Port
based industrialization model offers economies of scale by means of a large
This also helps in achieving
reduction of logistics cost and time for movement of EXIM and domestic cargo
thereby leading to enhancement of global competitiveness of Indian
manufacturing and maritime sector. It is estimated that one day of delay in
goods shipment leads to 0.8 per cent increase in overall cost while a week’s
delay may lead to addition of five to six percent in overall cost of goods
For India’s manufacturing sector to
be relevant in a highly integrated global market where MNCs operate across the
world by taking advantage of the local efficiencies, it is imperative that the
products manufactured in the country are globally competitive.
In a globally
competitive scenario, Operational and Logistics efficiency determines the
location and movement of goods. Freight and logistics networks are realigning
according to the location of production and consumption activities, creating
the hub-and-spoke models that are needed to improve freight and logistics
While Major ports in Maharashtra,
Gujarat, Orissa and West Bengal are increasingly congested, the utilization of
Southern ports have remained very low except Ennore Port, indicating potential
for attracting more cargo as well as scope for Economic Development in the
hinterland they serve.
The Southern part of India
consisting of Andhra Pradesh, Karnataka, Kerala, Tamil Nadu and Telangana
states; contributes 29 per cent to India’s GDP as of 2016-17 Tamil Nadu is the
highest contributor of GDP amongst the South India states followed by Andhra
Pradesh and Telangana region combined.
The South India Coast is served by
six Major ports. The Ennore port in Tamil Nadu is the first corporatized Major
Port of India. Besides these, Vallarpadam, Kattupalli, Krishnapatnam,
Gangavaram and Kakinada are the emerging Non-Major ports in the region.
The cities like, Tirupur, Coimbatore,
Erode, Madurai and Trichy are mainly depending onTuticorin port. Products like
Textiles, Readymade, Cotton, Yarn, Engineering products and agro and allied
products etc., are being exported from these cities. Apart from exports, as the
cotton and textile, Metal, etc., inputs for the major inbound traffic to this
highly industrialised area of Tamil Nadu, are major attraction for logistics
sector is tremendous pressure on the existing roads of the state.
Hence there is an urgent need for
providing necessary infrastructure and linkages for Coastal Shipping which also
help the industry to reduce logistic costs. Coastal shipping plays an important
role in the development of the domestic industry and trade due to its
environment-friendly, cost effective and fuel-efficient services. It is highly
relevant for India, since the country has a long peninsular coastline. However,
coastal shipping accounts for hardly 7 percent of the overall cargo movement in
India which is significantly low compared to other maritime nations.
With emergence of manufacturing hubs in
India under “Make In India” Programme, there would be requirement of efficient
multi-modal logistics network connecting ports to manufacturing as well as
Port modernization is another important
aspect to be targeted to debottleneck congested ports and augment cargo
handling capacities of existing ports. Inadequate port connectivity is another
issue which results in port congestion as well as increased logistics cost and
transit time for shippers. India’s logistics cost of 19 per cent of its GDP
against 10-15 per cent of other leading maritime nations is a key concern to be
The National Highways accounting for
2 per cent of road network carry 40 per cent of road traffic. Last Mile Connectivity Infrastructure such as
approach roads and rail sidings are not sufficient to meet the growing demand
of cargo. This is resulting in higher transit time for the cargo. For example,
Chennai, the largest container handling port on the east coast, lacks dedicated
access roads resulting in severe traffic congestion and delays.
is essential for improving the competitiveness of the logistics sector in
India. Freight logistics, comprising of transportation, warehousing and
value-added services (VAS) spanning across road, rail, sea, and air, is an
enabler and a catalyst for economic growth. The improvement in India’s rank
from 54 to 35 on the World Bank-driven Logistics Performance Index, and in the
Ease of Doing Business rankings, show that the country is heading in the right
direction. However, there is still need for focused action.
Leading maritime nations in the world
have already leveraged their coastline for economic development of the nation.
For instance, Port of Rotterdam contributes to 3 per cent of Netherland’s GDP
while Port of Houston supports 9% of the jobs in the state of Texas. China is
another example of port based logistic developed which helped industries
tremendously. I am sure that various initiatives of the Govt. including Sagar Mala project will help the country to
grow leap and bounce.
India is one of the fastest growing
economies in the world. The International Monetary Fund (IMF) has estimated
that India would retain the status of fastest growing economy in the coming years
also. The Government of India’s flagship programmes targeted towards critical
infrastructure creation in terms of ports, roads and rail lines through
initiatives such as “Sagarmala”, “Dedicated Freight Corridors”; boosting
manufacturing output through “Make in India” programme and providing for
requisite skilling of personnel to complement manufacturing sector under “Skill
India” are expected to fuel this growth further.
As per the
Economic Survey 2017-18, India’s logistics industry which is worth around USD
160 billion is likely to touch USD 215 billion in the next two years. The
sector provides employment to more than 22 million people has grown at a
compound annual growth rate (CAGR) of 7.8 per cent during the last five years
and will grow at a CAGR of 10.5 per cent over the next 5 years.
In terms of
Improving India’s Global Linkages, in 2017, India’s logistics performance
improved from 54 to 35 under World Bank Logistics Performance Index (LPI). The
government expects the Indian logistics sector to grow to $360 billion by 2032
from the current $115 billion.
Dr Ahmed had a word of appreciation for the Customs
Department which have undertaken lot of structural changes in the recent past
helping the country to score higher is easy on doing business. Single
Window Interface for Facilitating Trade (SWIFT), AEO, DPD, e-Seals RFID based
cargo tracking system, etc have been introduced very efficiently within very
short span of time and I would like to congratulate Chief Commissioner and his
team of officers for taking all pro-active steps towards facilitating the
FIEO is partnering
with Govt of India for pushing various reforms and policies towards improvement
of logistic sector and to focus on the need for coordinated infrastructure
development in the multi-modal logistics sector and to attract global
investments. I am sure that today’s program will be focus on potentials of this
sector for overall growth of this region and lay road map for efficient
infrastructure for supporting dynamic manufacturing sectors of this region.