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If India Is To Become A Top Destination For Ease Of Doing Business: Efficiency In Integrated Multi-Modal Logistics Will Have To Lead The Way
The central government promises to promote the ‘ease of doing business’, and several initiatives have been taken to make India a profitable investment destination and the manufacturing hub of the world
Photo Credit : http://www.affairscloud.com/
Rising exports coupled with an increase in government spending resulted in India gaining an expected growth rate of more than 7% in the current fiscal year, as per the latest Global Economic Prospects by World Bank. The country also earned a spot in the top 100 countries of World Bank’s Ease of Doing Business index. These make for a strong case of India’s growth potential and more can be done to catalyse that spurt, taking into account the vital role logistics plays.
The central government promises to promote the ‘ease of doing business’, and several initiatives have been taken to make India a profitable investment destination and the manufacturing hub of the world. However, as per a report released in July 2017 by the Ministry of Road Transport and Highways, the logistical cost for the total value of goods in India amounts to 14%, compared to just 6-8% in other developed nations. High costs remain one of the most significant concerns and are in need of long-term solutions. Also, support from State governments ensuring road connectivity to Multi-Modal Logistics Parks (MMLPs) will go a long way in achieving synergised logistics services.
For a ‘system’ to run with efficacy, it is imperative that it evolves with time. A significant hurdle faced in the construction of new Inland Container Depots (ICDs) is the lack of definition in time. Introducing time brackets for customs to notify of new ICDs would be a step in the right direction.
To reduce costs incurred, logistical service providers must optimise their resources, and in turn, it could help improve turnaround time – which enhances service and customer experience. The logistics sector relies on railways, however, until priority is given to container EXIM trains connecting to ports, time management in container movement remains unwarranted.
Inventory management and container tracking being digitised have limited the need for physical intervention. Mobile and desktop platforms as tools enable real-time container tracking – resulting in overall improvement and efficiency. While the optimum number of ICDs in a hinterland is yet to be defined, being able to stay connected with our facilities provides quality control over our services.
Models for partnering
Experienced banking brands collaborating with new age tech-start-ups provide a lesson for us. Logistical companies need to be seen as more than just logistics service providers and more as business partners. With the rapid expansion and growth the industry is witnessing, it is imperative that third-party logistics (3PL) and fourth party logistics (4PL) models become the norm. Along with outsourcing the entire logistics operations, 3PL and 4PL models also provide financial planning and more, allowing their customers – or business partners – to focus on their core operations. Echoing this philosophy, customs staff costs should be waived off for ICD Developers, as it ultimately increases transaction cost for customers.
The sector as a whole will need to operate in Integrated Logistics and Manufacturing Zones (ILMZs), combining rail, road and port infrastructures. Manufacturing setups need to be included to ensure smooth operations in container management and movement. The impact of this is sure to spill into and enhance the entire economic zone of the country as well.
Technology will play an important role as well. Big data analytics and the like will assist in predictive analysis and the use of robotics in cargo monitoring and warehouse management. As the use of machine learning and artificial intelligence (AI) increases, it will provide better efficiency and customer value creation.
For India is to become an integral commercial hub for the world, container logistics will have to play a vital role.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.