Multimodal Logistics Parks

In June 2016, the Ministry of Road Transport and Highways had released a concept note titled Logistics Efficiency Enhancement Program (LEEP) which primarily seeks to set up 15 Multimodal Logistics Parks to boost multimodal transport in India. The relevance of multimodal logistic parks stems from the fact that when we shift from one mode of transport to another, there is time loss and wastage in handling.

key points from the note are as follows:

Logistics Cost

Currently, the logistics cost in India are about 13-14% higher in comparison to developed countries. The major factors responsible for higher logistics cost include

  • unfavourable inter-modal mix (road transport carries 60% of freight, despite rail transport being cheaper than roads on a per ton per km basis)
  • inefficient fleet mix (smaller inefficient trucks)
  • under-developed material handling infrastructure (unorganised warehouses) increasing supply chain costs
  • procedural complexities (toll collections, inter-state freight movement, etc.) leading to about 15% loss of time on freight routes.

The proposed 15 Multimodal Logistics Parks

The concept note has proposed 15 multi-modal logistics parksworth Rs.32,853 crore in seven states viz. Maharashtra, Punjab, Gujarat, Rajasthan, Tamil Nadu, Karnataka and Telangana to improve freight movement across the country. These would cover about 40% of the total road freight movement in the country. The major functions of these parks would be as follows:

  • To act as hubs for freight movement enabling freight aggregation and distribution
  • Connectivity with road and rail and other modes of transport to promote multi-modal freight transportation
  • Provision of modern mechanized warehousing space to satisfy requirements of different commodity groups.

The key expected advantages from these parks include: reduction in transportation costs by 10% for top 15 nodes;  reduction in pollution {because it will facilitate transportation on bigger and efficient trucks}; reduction in congestion and warehousing cost by moving warehouses outside of cities where traffic movement is easy and rentals are low.

Implementation

As per the note, the transport ministry will form a multi-modal company (MMC) to manage the development of logistic parks. This company will have representation from National Highways Authority of India (NHAI), Indian Railways, Airports Authority of India (AAI), Inland Waterways Authority of India (IWAI) and Indian Ports Association (IPA). It will also enter into partnerships with other government entities such as Dedicated Freight Corridor Corp. of India, Delhi Mumbai Industrial Corridor Development Corp. and Container Corporation of India Ltd.

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