A holistic view

INTERVIEW: SUDHIR S RANGNEKAR

, President, Association of Multimodal Transporters of India (AMTOI). The government should take a holistic view while regulating the logistics industry with minimum procedural requirements in shipping, for instance, says Rangnekar "� who is also director of the Shipping Corporation of India (SCI).

What are your views on the future of the road transport sector?

Road transport plays a very a crucial role in economic growth. More and more companies are opting for a road network when it comes to short-hauls of 250 km to 300 km. Road transportation is easy for them as it offers door-to-door delivery. But when it comes to long-haul beyond 300 km, companies choose the rail network though it involves road movement to a certain extent. However, there should be concerted efforts to divert more cargo to move by rail. Huge investment is flowing towards logistics industry including road and rail.

But there is a contrasting phenomenon. While 50 per cent of the total capital investment in the logistics industry is in the rail, only 30 per cent of total cargo is carried by this mode of transportation. Interestingly, while only 30 per cent of the total capital investment is flowing to road sector, over 50 per cent of cargo is moving by road network. Railways is an expensive mode of transportation in India. Studies show moving cargo by rail is costing 7.9 cent per kilo metre per tonne in India while it is as low as 2 cent per kilo metre per tonne in Canada. Indian railways is over 3.5 times costlier than developing countries. This was possible because of economies of scale enjoyed by those countries supported by better management, IT system and technology.

What potential doest the sector hold?

India has a bright future in cargo generation. Availability of better road and rail networks will also lead to an increase in exports of agricultural commodities. The shipping sector too is set to witness a revolution. More cargo will move via sea with an amendment to existing India-Pakistan Protocol of 1975 and maritime negotiations between the India-European Union. The trade between India and Pakistan is bound double or three times following amendment of Protocol 1975.

What are the expectations from the government to improve this sector?

With trade is all set to get a facelift with above developements, the government must take efforts to spread the flow of the cargo across the country. Currently, over 70 per cent of the container movement is confined to western region and remaining on east and southern region. Authorities should not allow the western region to get unduly loaded and must ensure diversion of cargoes to other ports of east coast. Analysts say India with one billion people is only handling 4.6 million twenty foot equivalent units (TEUs) while a port of Singapore and Hong Kong alone handle 20 to 22 million TEUs. India can handle 50 million TEUs in next ten years in the wake of tremendous growth in country's trade.

How mature is the logistics outsourcing phenomenon with regard to Indian companies?

Logistics outsourcing is gaining momentum. Overseas companies are increasingly outsourcing core activities to India. They are outsourcing operations such as chartering, repairs, research & development and fleet management.

"There should be concerted efforts to divert more cargo to move by rail"

Sudhir S Rangnekar
President, Association of Multimodal Transporters of India