EY proposes four-pronged strategy to strengthen India’s logistics sector

Global consulting firm EY has proposed a four-pronged strategy to boost India’s logistics sector: adopting advanced technologies and exploring new business models; Accelerating infrastructure development; focus on sustainable logistics; and arouse the interest of investors and investors.

India’s freight transport is heavily weighted towards road transport, which moves 66 percent of freight (in tonne-kilometres).

This is followed by rail (31 percent), shipping (3 percent) and air (1 percent). The sector continues to witness inequalities in freight transport by mode of transport and is working to resolve this obstacle.

Political, economic, digital and infrastructure barriers exist in the country’s ports, shipping and logistics industries, wrote Neville M. Dumasia, national head, advanced manufacturing, mobility and infrastructure, EY India, in an article on the website of the company.

While the level of adoption of technology-enabled solutions like blockchain, big data, cloud computing, and digital twins is relatively low in India, the government has rolled out several digital solutions like ICEGATE and e-logs that reduce inefficiencies, improve transparency, and make goods movement faster it in the article.

The government has launched several programs such as GatiShakti, Bharatmala and Sagarmala aimed at building new infrastructure. Measures are also being taken to attract private capital and implement administrative reforms to streamline infrastructure investment planning and implementation, she noted.

In terms of sustainability, the sector aligns with national and global regulations for sustainable practices and takes steps to comply with leading global benchmarks such as the Existing Ship Energy Efficiency Index, Carbon Intensity Assessment and Emissions Trading Scheme.

At the political level, the lack of time-bound land acquisitions combined with various land acquisition regulations and permits resulted in a delay of almost 850 government-completed projects until December last year. The lack of a dedicated policy for the qualification of employees in the logistics sector is also a major obstacle.

Effective implementation of the national logistics directive requires close coordination between the central and state governments, the EY article said.

The involvement of multiple actors and intermediaries results in multiple cargo exchanges, resulting in cost escalation and inefficiency. Unorganized actors opt for work instead of technology for cost reasons in logistics. Different export and import goods lead to a general discrepancy between the types of containers used.

The lack of a database to map the goods being moved makes data-based policymaking difficult, and existing digital solutions do not yet offer end-to-end visibility, the article says.

The company’s logistics infrastructure operates in silos, which discourages connecting it to the country’s logistics infrastructure. The development of logistic parks can encourage the transition to the hub and spoke model, but these are capital intensive.

Shallow drafts in Indian ports limit the arrival of larger vessels, and the lack of modern equipment and procedures increases vessels’ turnaround times, he added.

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