The future of Logistics and SupplyChain In India

#Reforms #Investments #Infrastructure #Technology #Transformation
The Government in the last few months took some bold decisions to implement the GST (One nation, one market) reforms, announcing Infrastructure status for Logistics sector liberalizing FDI investments and further committing investments in the infrastructure , railways, road, ports and waterways. All these decisions will have far reaching impact on this sector and spur growth. Ambitious programmes like “ Make in India” will force rethink on the existing supply Chain network.

Bharatmala is one of the biggest highway construction projects in India in history.It is the second largest highways construction project in the country since NHDP, under which almost 50,000 km or highway roads were targeted across the country. Bharatmala will look to improve connectivity particularly on economic corridors, border areas and far flung areas with an aim of quicker movement of cargo and boosting exports.

It includes economic corridors of around 9,000 km, inter-corridor and feeder routes of around 6,000 km, 5,000 km roads under the National Corridors Efficiency Program, border and international connectivity roads of around 2,000 km, coastal and port connectivity roads of around 2,000 km, expressways of around 800 km and 10,000 km of NHDP roads. The total length in phase 1 comes to around 34,800 km.

Bharatmala project has started in Gujarat and Rajasthan, followed by Punjab and subsequently traversing the Himalayan belt through Jammu and Kashmir, Himachal Pradesh, Uttarakhand, parts of Uttar Pradesh, Bihar, West Bengal, Sikkim, Assam, Arunachal Pradesh, Manipur (next to the Indo-Burmese border) and then to Mizoram. Northeastern states have been given special focus in the project and international trade is a key aspect as well

The Sagarmala project a critical government initiative focusses on modernising existing ports, and will develop new ones at Paradip Outer Harbor (Odhisha state), Cuddalore/Sirkazhi (Tamil Nadu state), Belikeri (Karnataka state), Enayam (Tamil Nadu state), and Vizhinjam (Kerala state). Cumulatively, these ports will manage almost 100 percent more trade volume by 2025.

DP World (Dubai) signed onto a US$3 billion (Rs 195 billion) joint investment platform with India’s ‘National Investment and Infrastructure Fund’ to construct several sea as well as river ports, among other logistics projects.

The Delhi-Mumbai Industrial Corridor and Development Corporation (DMICDC) has awarded companies over US$2.3 billion (Rs 150 billion) in contracts for the development of multimodal logistics hubs or parks in Maharashtra, Gujarat, and the National Capital Region (NCR). Further they are in the process of granting another US$1.5 billion (Rs 102 billion) in contract packages for construction of the same in the states of Uttar Pradesh and Haryana.

The proposed hubs in Maharashtra, Gujarat, and the NCR will provide end-to-end supply chain services, such as small processing facilities (grading and packaging) and final delivery and transport services.

Plans to improve regional connectivity through road, rail, and inland waterways are already ongoing. India’s 2018 budget saw the highest fiscal allocation for infrastructure spend, at about US$95 billion (Rs 6 trillion).

The National Highway Authority of India has a bidding process underway for companies to invest in highways across India. Dubai based investment firms have already bid close to US$9 billion (Rs 585 billion) for nine highways. This also drives in increase in accountability for the upkeep of these roads and will reduce road travel times.

Freight corridors: The country’s freight corridors, covering 15 states all over India, are set to be complete by December 2019. Currently, a train carrying cargo travels at the rate of 25 kmph; on these railway lines, trains will be able to reach speeds between 70 and 100 kmph, and will carry double the quantity of cargo. The Nhava Sheva – Indore Private Railway corridor is one such project which will reduce the time and bring huge reduction in Logistics cost.

Warehousing and Storage:
India allowed 100 percent FDI in the development and maintenance of warehousing and storage facilities. Under the Free Trade Warehousing Zone (FTWZ) Scheme, there are several designated zones in India reserved for warehouse development. Panvel near Mumbai, Khurja near New Delhi, and Sri City in Chennai, are some of the designated FTWZs. The connectivity of these zones with major railways, roads, airways, and ports is well established. Incentives such as duty free import of building materials and equipment for these zones are attracting investments to this sector.

As in every sector Technology is making a paradigm shift and causing disruption within the Supply Chain and Logistics sector in India as well. Large Logistics players in India who have been acquainted and using Order Management systems, SAP, ERP or Transportation Management Systems (TMS), Warehouse Management systems (WMS) are now experiencing newer technology frontiers like IOT (internet of things), Cloud computing, Big Data and Data Analytics, Blockchain, Machine Learning and Artificial Intelligence.

These technologies are being unleashed and juxtaposed within Logistics framework deriving much needed transparency, tracking, efficiency, speed in deliveries and cost economics.

Technologies like machine learning and artificial intelligence applied to data analytics can deliver dynamic routing, optimization and other efficiencies. Through these technologies, companies can get real-time data and ensure optimal first mile, middlemile and last mile connectivity.

Automation is helping in reshaping the workforce. Some of the logistics companies are labour intensive but they are becoming partially automated, removing obstacles in documentation, loading, unloading and adjusting routes.

IoT is improving supply chain transparency, safety and efficiency. Adoption of Big data analytics, will improve customer experience and operational efficiency. The companies will be able to have better control on inventory and improve predictive analytics. These tools identifies variations, patterns, correlate to offer actionable insights

Data analytics in Transportation is being used to enhance reliability, route optimisation, last mile delivery optimisation, optimal vehicle utilisation and saving on fuel costs.

Data Analytics in Warehousing is being tested with a combination of IOT practises to harness in operational efficiencies, productivity, inventory optimisation, demand planning and scheduling helping firms to get significant benefits.

Some companies are also adopting blockchain technologies for contracting, to enhance supply chain security etc. Also some e-commerce companies have ventured into adopting robotics in their warehousing and also experimenting with drones.

ValueShipr has been connecting Transporters with Cargo-owners on its multimodal Logistics Technology platform with a combination of technologies like Cloud, IOT, ML and Automation delivering value to stakeholders.

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