Logistics parks for INR 30,000 cr to aid cargo flow, cut costs

The government has prepared a road map for setting up 15 multi-modal logistics parks around major cities, which have a share of about 40% of country’s freight movement by road.

With an estimated investment of INR 30,000 crore, the project aims to make transport of cargo faster, reduce cost and improve the supply chain, key for taming inflation.

In a concept note titled ‘Logistics Efficiency Enhancement Programme’, the road transport ministry has identified Delhi-NCR, Mumbai, north and south Gujarat, Hyderabad, south and north Punjab, Vijayawada, Kochi and Chennai as some of the major transport nodes for this project in the first phase. This is part of a study funded by the World Bank.

1467005377pointpark-bratislava-1Logistics parks, act as hubs for freight movement enabling cargo aggregation and distribution.

Freight from production area will be shipped to nearby logistics parks where it will be aggregated and transported to a logistics park near the consumption zone on a larger vehicle.

Freight arriving at the destination logistics park will be disaggregated and distributed to the consumption zones inside the city, according to the government paper.

World Bank senior transport specialist Rajesh Rohtagi said that “It’s a welcome move. But we have also suggested the ministry to focus on low hanging fruits such as simplifying of documentations, connecting all major transport hubs. Road, shipping, rail and aviation ministries have to work together.”

Logistic costs in India are higher at 13-14% of the value of goods against 7-8% in developed countries. This is due to several inefficiencies including smaller and inefficient trucks resulting in lower average speed – 25-30 kmph, which is 50-60% less as compared to the US.

While in states like Gujarat and Rajasthan it is 37-40 kmph, in Odisha and West Bengal it is only 18-20 kmph, the report says. It’s estimated that the transport costs would fall by about 10% and pollution will also be less. According to estimates, CO2 emission may reduce by 12% and even congestion will be less by about 20% on these 15 nodes.

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