India Logistics Infrastructure 1. 2.

INDIA LOGISITCS INFRASTRUCTURE & LOGISTICS SCENERIO by Rajeev K Chopra Presented at Seminar on India At Bangkok in February 2008 Organized by Department Of Export Promotion, Thailand

o
3. 4.

INDIA - Logistics Infrastructure & Logistics Industry Scenario Geography Of India Gati HO CHENNAI India s Advantage

o o o o o o o o o o o
5.

One of the fastest growing economies of the world. One quarter of the world s youth live in India. 54% of the Indian population is less than 25 years of age. 2 nd largest English speaking workforce. Focus on Higher Education. Second largest pool of technically qualified knowledge workers. IPR laws in place. There are more IT engineers in Bangalore (150,000) than in Silicon Valley (120,000). GE, Microsoft, IBM, Cisco, Intel, GM, Astra Zeneca, Motorola etc. , All have their R&D Centres here. India s Advantage Strong GDP growth Economic liberalisation and relaxed FDI norms Growth in Retail, Agri, Pharma, Automobile, FMCG, Textile sectors . Opportunity to reduce logistics cost. Infrastructure development. Investment in logistics by Companies. Change in tax laws VAT/CST. Industry moving toward outsourcing logistics Moving toward shift to organised players India s Economy & Logistics Industry India s GDP is USD 750 billion and would touch USD 1.4 trillion in the next two decades (as per Goldman Sach). Currently it is 10 th largest economy Logistics Spend is currently 13% compared to 8.7% of US . Enough Scope to reduce the Logistics Spend which would require growth of 3PLs and 4PLs and improvement in Infrastructure 23% 51% Service 17% 28% Manufacturing 60% 21% Agriculture Work Force Employment Contributio n to GDP

o o o o o o o o o
6.

7. 8. 9.

Logistics Industry - Dynamics Elements of Logistics cost Road Network Current Status

o o o o o o o o o o o o
10.

Road Network has grown 8 fold (1950 - 2004) to 3.31 Million Kms. National Highways form only 2% of the network, but carry 40% of the total traffic Only 2-3 % of NH & SH are 4 lane, 15% are single lane 85% of passenger and 70% of Freight Moves through Road. Commercial vehicles ply on an average 300 km per day, compared to 600-700 km in developed nations. National Highway Development Project (NHDP), US $13 billion, 1998-2007 . Four/six laning of the highway connecting Bombay, Delhi, Calcutta and Chennai ( Golden Quadrilateral ) 5846 KMS North-South and East-West corridors (NS-EW), Kashmir to Kanyakumari and Silchar to Porbandar. 7300 KMS Target Completion date is December 07 National Highways Plan & Current Status Road Network Current Status Delhi Kolkatta Chennai Mumbai

o o o o o o o o o o o
11.

o o o o o o o o o o o

Out of 65,569 Km of National Highways, about 25,000 Km are under severe strain due to High volume of traffic. Slow speeds, traffic congestion, high wear and tear of vehicles are some of the problems Estimated loss due to lack of an efficient highway system Rs. 20,000 cr./Year. Once completed ,the Golden Quadrilateral will result in a saving of Rs.8000 cr./Year ( as per world bank report) Estimated Savings On completion Road Network Current Status contd..

12.

o o o       o o   o o o o
13.

Lost share to Road in freight movement Rail Traffic Expected to touch 624 mn tonnes up from 473.5 million in 2000-01 68% Revenue of Railway comes from Freight 89% of its freight is commodities like coal, fertilizers, cement, petroleum products, food grain, finished steel, iron ore and raw mater ial to steel plants High Density Network (HDN) connecting Bombay, Delhi, Calcutta and Chennai Carries 65% of the total rail freight traffic and 55% of passenger traffic Container movement is done through CONCOR (1.7Mn TEU) Till recently ICD was monopoly of CONCOR. Recently has been privatized Railways Largest Network in Asia Sea Ports Current Status

o o o o o o o o
14.

Vast coastline of 7,517 kms 12 major ports and 184 other ports (minor and intermediate) 95% of Foreign trade by volume & 75% by value. Tonnage handled increased 16 fold (in last 50 years) to 453 million Tonnes Port- Hinterland connectivity - a major issue Airports Current Status Tonnage handled increased 16 fold (in last 50 years) 255, 665 Tons of Domestic & 616,317 Tons of International cargo handled in 2003-04 For Cargo, India follows Open Sky Policy The four metro Airports handle 70% of the Air cargo Traffic Congestion? Privatization of Airports Most of the domestic air cargo movement takes place in passenger planes Scope of Freighter Setting up of NHAI Setting Up of IRMP ( Integrated Railways Modernization Plan) Privatization of ICD Proposal of setting up a NMDP (National Maritime Development Programme) for improving Port Infrastructure. Capacity Expansion of Delhi/ Mumbai Airport; Set ting up of International Airports at Bangalore/ Hyderabad. Most Infrastructure projects are through Public - Private partnership. 100% FDI Allowed for Port, Greenfield Airports, Road . Initiative taken by Government will usher in a more efficient and cost competitive Logistics Service Market Government Initiatives

o o o o o o o o o o o o o
15.

16.

Logistics In India Current Logistics services and challanges Piecemeal outsourcing No industry focus

Segmentation would be the next key thing! Improving

capability and experience Improving lev el of supply chain expertise Unorganised players Govt. Policies -Consider logistics as Industry. Infrastructure, no urgency Transportation High fragmentation (87 % of trucks with owners having 10 trucks or less) Complex value chains with many interm ediaries (Shipper - Transporter - Broker - Financier - Truck Driver / Owner) Lack of focus on time -sensitivities Poor utilization of assets 17.

o    o   o 
18.

Warehousing Fragmentation amongst small C & F agents Primitive storage & material handling practices in most warehouses New systems and material handling equipment suppliers establishing base Information Management Low data connectivity across plants, warehouses, transporters and supply chain partners New entrants with Logistics systems and equipment now est ablishing service offerings. Changes in VAT regulations will unleash massive savings opportunity Changes in VAT regulations will trigger massive consolidation process in number of warehouses, releasing a massive savings po tential. Increase in trend for outsourcing of Logistics Function. International Logistics players now expanding their base in India Service providers are investing heavily in creating infrastructure to bring efficiency in operations Service Providers efficient infrastructure has direct co -relation in reducing the customer s cost Current Logistics Industry Scenario Current Logistics Industry Scenario contd Planning, Procurement Inventory Management, Distribution and Packaging, Transportation, Warehousing Logistics

Logistics In India

o o o o o o
19.

Consultative + Compliance Compliance Regulatory Bonded, Distribution Solutions Express/ Trucking Transportation Inventory Man agement, Stock and fulfillment Space Provider Warehousing GPS/ GIS/ Dynamic Routing Track and Trace Docket Tracking Future Today Services