Prem Kishan Gupta is Chairman & MD of Gateway Distriparks Ltd and Gateway Rail Freight Limited, which are the market leaders of container based logistics through container freight stations next to ports, inland container depots, and transportation through own fleet of trains and trailers. He is also Chairman of Snowman Logistics, which is India’s largest cold chain company which does temperature controlled storage and distribution of food and pharmaceutical products. He has also been running his newsprint business, Newsprint Trading & Sales Corporation since 1978, and represents internationally reputed newsprint manufacturers from various regions including the United States of America, Canada, and Europe.
As you are all aware, the current pandemic struck when we all least expected it. Not that we ever expected something as devastating as this. To save human life, the Government of India (GOI), like all other countries, announced restrictions with only essential movement allowed. The logistics sector was deemed as an essential service, and it has played a vital role for the nation in these difficult times. Despite the additional burden on the industry, the logistics sector has been on the forefront ever since the start of the unprecedented coronavirus crisis. While there was a sharp fall in volumes due to restrictions on production of non-essential goods, the logistics industry worked with energy and dedication and absorbed a lot of the costs in order to provide uninterrupted services for essential goods and provide a means of buffer for industries that had to close shop during the lockdowns, all while protecting its staff and workers.
Two major forces that has helped logistics industry to overcome the ripple effect from the lockdown is major manufacturing hubs unpausing production, and the increase in domestic consumption in all categories. These powers have set off a ripple effect along the supply chain, affecting several sectors, mostly for automotive, textiles, electronics, food and pharma. Exports in particular have shown a tremendous growth and are continuing to show a rising trend. Organisations have realized that while the time period and extent of the COVID-19 impact are uncertain, and the consequences will continue to be felt even after the spread of the virus is contained, with appropriate supply chain management they can alleviate their risk enormously. With this, the demand has surged for a solution driven approach wherein the complete logistics cycle of the customer is taken care of through multi modal transportation and by deploying technology for increasing the efficiency and transparency of the supply chain.
While it is true that the logistics industry was successful enough in navigating through the challenges of lockdown, it also highlighted how the sector is undergoing a paradigm shift from road to rail for transportation of cargo in bulk. India had been lagging in this aspect as compared to other countries, even though containerisation is increasing significantly. However, this is changing fast with the availability of high-quality infrastructure being developed across the country, such as port terminals, dedicated freight corridors, inland container depots, warehouses, cold storage and many other logistics facilities being developed both by the public and private sector.
Currently, only 17.5 percent is through rail, whereas globally the trend is for a much higher rail share, being a more efficient mode of transportation both in terms of cost as well as carbon footprint. Hence, there is a large scope in India for cargo volumes to be transported by rail which also helps the manufacturing industry to grow at a faster pace. According to a statement given by Sudhendu J Sinha, Advisor (Transport and Electric Mobility), NITI Aayog, “Efficient freight transport will also play an essential role in realising the benefits of existing government initiatives such as Make in India, Aatmanirbhar Bharat, and Digital India.” The GOI recognizes this issue and hence has allocated 2.3 lakh crore for transport infrastructure in 2021. 7400 infrastructure projects are in the pipeline and out of that a significant number is for rail transport. The GOI has also initiated development of dedicated freight corridor (DFC) projects for more efficient freight movement, allowing for longer, faster and heavier trains.
Another reason why logistical development is being given so much importance is because of its growth expectations predicted by several experts. For example, the national cold chain sector is expected to grow at over 20% CAGR by 2025. This is due to the change from conventional cold storage to modern facilities with multiple temperature ranges. These estimates are based on the sector’s performance over the past few months, where in spite of the post-Covid monetary obstacles the organised cold chain segment has seen significant growth in country-wide impression. Modern cold storage facilities have helped the nation by providing both food and pharmaceutical storage and deliveries at this crucial time throughout the pandemic.
According to a recent report by NITI Aayog and Rocky Mountain Institute (RMI), India can save Rs 3.11 lakh crore worth of fuel by 2050 and reduce 10 gigatonnes of carbon dioxide by 2030 by deploying a clean and cost-effective mode of goods transportation. Moreover, India can reduce cost of logistics to 4 percent of the country’s GDP as opposed to 13 percent today. The report also offered a few recommendations which include the rail network’s capacity, promoting intermodal transport and improving warehousing and trucking practices. All these recommendations aim to meet the increasing demand for a smooth and effective logistical infrastructure, but in a sustainable way by using modern logistics infrastructure and by taking advantage of India’s strong rail network.