Multimodal transportation policy needs to address infra requirements

Integration of multimodal transportation system is crucial

As part of the Avvashya Group, Allcargo Logistics is an integrated logistics multinational, headquartered in India. Allcargo is one of India’s largest logistics companies in the private sector which operates across 90 plus countries through 200 plus offices globally. Its services comprise global Multimodal Transport Operations (NVOCC, LCL & FCL), pan India CFS/ICD operations, Project and Engineering Solutions (Project Logistics & Equipment Hiring Solutions), Ship Owning & Chartering and Contract Logistics services.
Adarsh Hegde, Executive Director, Allcargo Logistics Limited told Sandeep Menezes that integration of a multi-modal transportation system will make India more reachable, accessible, affordable and productive.

Excerpts from the interview:

Adarsh Hegde

Adarsh Hegde

Around 80 per cent of Allcargo’s revenues are from the multimodal transport operations or MTO. Going forward, how do you foresee the MTO segment evolving nationwide?

Across each business we have seen growth in volumes and profits. In MTO, our volumes have grown 17 per cent year-on-year while in CFS a growth of 10 per cent year-on-year. In P&E business as well, revenues and profits have grown and we are seeing a pick up in order execution, improved asset utilization and increased enquires on ground. From an industry perspective MTO will be a major segment for global trade as well as trade from and to India. With India’s economy expected to perform above 6 per cent growth rate, MRO will benefit immensely from the faster pace of economic growth.

There were recent reports about the Railways finalizing an integrated multi-modal transportations system. How will this impact the segment?

India’s economy is very unique in terms of its demographic spread, cities and towns which are growing as well as consumption markers which are wide spread across the country. Thus to truly leverage the opportunity of growth and benefit from policies and infrastructure India needs integration of not only infrastructure but also collaboration between entities such as roads, rail, ports, state, center, public and private players. This is the only way we can unlock the huge market we also talk about. Thus integration of a multimodal transportation system will make India more reachable, accessible, affordable and productive. This in turn will benefit every segment of the logistics industry to serve new business opportunities including MTO, CFS, Coastal Shipping and others.

Shipping and Road Transport Minister, Nitin Gadkari recently announced that the central government was working on a new multimodal transport policy. Do you have any suggestions?

The policy needs to be inclusive of suggestions from both private as well as public stakeholders. Multimodal Transportation policy needs to address the infrastructure requirements especially connectivity of roads and rail to our existing and new ports. Entry and exit of EXIM cargo from ports across India if provided with seamless road, rail & coastal shipping connectivity, will tremendously reduce India’s cost of doing business parameter, thus making our economy more efficient and cost competitive.

Integration of multimodal transportation system is crucial

Integration of multimodal transportation system is crucial

What is the current size of project logistics industry in India? Tell us about the estimated future growth scenario of the industry?

With renewed focus on make in India, attracting global investment into India and infrastructure development, the growth of project logistics business was never more positive. From its single digit it has the potential to grow into double digits. The current size is limited to investment in mega large projects and movements. As the economy picks up into a faster gear the potential of the industry is a multi-billion dollar opportunity in coming years.

Currently India faces a need for at least another 123 million tonnes of warehousing (including cold storage capacities) capacity. How can this huge shortfall be met? Tell us about the role of private participation in this initiative?

This challenge in very unique to India given our demographic spread and clusters growth. Thus is also the biggest opportunity. With more seamless taxation regime, more coordination between state and center for economic growth, the need for professional warehousing will also increase exponentially. The way to capitalize on the opportunity is to work on a PPP basis wherein public as well as private players come together to establish the foundations of the industry. Also technology and innovation of infrastructure will also play a bigger role, as it will reduce the dependency on financial requirements and optimize investments. Private enterprises with adequate support from government in terms of tax sops, investment assistance and single window clearance can meet this requirement faster than government, given its shorter decision making window.

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