Wednesday, December 28, 2016

INTEGRATED TRANSPORT MODEL FOR DOMESTIC LCL SHIPMENTS


1. Introduction

One of the challenges Indian coastal shipping faces is the non-availability of return cargo. Cargo consolidation or LCL (Less than Container Load) shipments could be a viable and economic solution for the cargo flow imbalance currently plaguing the sector. Consolidation is the process of combining various small parcels into one unit in order to realize lower transportation rates. This system is effectively utilized by the customers in the international container shipping sector.

The domestic consolidated cargo sector is currently been monopolized by the road traffic.   A combination network of ‘Road-Rail-Coastal Shipping-Road’ could be effectively used to provide an economic and efficient door-to-door transportation solution for domestic LCL traffic. Intermodal logistics has tremendous potential to increase supply chain efficiencies of the country.

2. Suggested procedure for domestic LCL shipment

At the place of origin (eg.Delhi ), the individual parcels of cargo could be collected from the customers by truck/van and brought to a CFS / warehouse for consolidation. The stuffed containers could then move to the gateway port (eg, Mundra, Pipavav) by way of rail /or road and to be shifted to the coastal ship for the long leg haul to the destination port (eg, Cochin ,Tuticorin) . The process could be reversed at the port of destination and at the final place of delivery (eg , Kollam , Thirunelveli). 

 

Fig:1

Integrated Transport Model for LCL Containers

However, an expected bottle neck in this process would be the first/last mile connectivity and consolidation /break bulk of cargo.  And the suggested solution to this issue is a logistics system based on milk-run concept which is explained here under.

2.1  Model for First and Last Mile Connectivity  

A Milk Run in logistics is a round trip that facilitates both distribution and collection at the same time. By making frequent stops, a truck can pick up many types of materials originating from several suppliers and drop off goods destined for various customers, all in the same run. This allows direct pick-ups and drop-offs to be planned more frequently, without having to wait for full truckloads.   This method is successfully implemented in many industries for accelerating the flow of products between various production processes by planning truck routes in such a way that they collect and deliver materials for many different processes at once.  





Fig:2 
The Milk Run Concept in Logistics
 

2.2 Procedure for Milk-Run

The procedure for this concept in logistics consists of fixing

-          Proper route and schedule

-          weight and volume of parcels collected/distributed at both ends

-          delivery frequency, time slots, maximum number of customers included etc.

While setting the procedure, priorities must be given to the customer needs rather than the operator’s comfort. To begin with, the Multimodal Transport Operators (MTO) could work out a joint operation with the locally available distributers such as courier services, newspaper distributors, packaged food distributers etc for the collection and distribution of parcels. This could be advantageous for both the parties.  Once sufficient volume is build up, the MTO can set up his own system.

For the visibility and traceability of the supply chain a one stop-shop, such as a single electronic window, which integrates the administrative processes, timetables and invoices etc covering the whole intermodal chain, should be established to make it more customer friendly.

3. Suggested Pilot Study

Kerala, being a consumer state, depends on other states for meeting with most of its day to day requirements for all kinds of commodities. These commodities are presently moved by road.  A pilot study could be carried out by networking the existing non- major ports which are fairly connected with road, rail and inland waterways.

A short summary of goods moved in to/from Kerala is given here under.

a. Food Items : Kerala consumes large volumes of  rice , wheat, atta, biscuits, chocolates, ground nuts, soft drinks, edible oil, mineral water, liquor and beer, branded food items, milk powder etc and at present it is being moved by road. There is scope for exploring the possibility of these commodities being moved by coastal shipping in LCL mode.

b. White Goods: These products include items such as refrigerators, computers, plastic goods, bicycles, TV/VCD / DVD players, fancy goods, gifts articles, glassware, kitchen products, motor vehicles, telephone, washing machines and related spares / equipment. These goods get moved mainly from Delhi, Noida / Gurgaon, NCR, Maharashtra, Gujarat and Tamilnadu region and are currently being moved by road.

c. Vegetable and Fruits: Vegetables like potato, onion, garlic are mainly procured from Maharashtra. Approximately Kerala consumes onion, potato and garlic together around 1 lakh tons per day. These are also moved by road currently.

d. Industrial Goods: Goods like spares, parts for automobiles, chemicals, polymers and acids, packing cases, bags, etc. are mainly procured from Tamil Nadu, Karnataka and Gujarat and is getting moved by road.

e. Other General Goods: These goods include paints, medicines, polythene, pipes and fittings, books, tins, cables, generators, glass surgical equipment etc are procured from Tamil Nadu, Karnataka, Maharashtra, Goa, and Gujarat. These are being moved by road.

f. Spices, Cashew, Coconut, Coir, And Natural Rubber:  These are the products moving out of Kerala to other states and are also moved mainly by road at present.These products have major domestic markets in Tamil Nadu, Andhra Pradesh, West Bengal, Delhi and NCR. These are also potential cargo for the LCL business.

As per estimates, around 20,000 trucks bring goods into and another 2000 are carrying goods from Kerala every day.  These commodities which are presently moved by road could be consolidated and stuffed in containers and moved by coastal shipping wherever possible.  

4.  Create awareness to promote mode shift

There is absolutely no doubt that an automatic shift from road to water transport system will not be possible. Generally, the shippers’ transport mode choice depends mainly on benefits of transport services such as cost, frequency, reliability, flexibility etc . The reasons for shippers to switch modes/operations have not been effectively demonstrated or communicated to them.  Coastal shipping could be considered by shippers as a viable option only if it is proven through high-visibility demonstration projects and studies.

Awareness needs to be created among users on the benefits of coastal shipping as well as integrated multi-modal service models.  Customer Support centres should be opened at all ports, ICD/CFS and at economic clusters jointly by state maritime boards / IWAI/ INSA etc to create awareness among the shipping community and also to clarify their doubts and support them with required information.

Awareness programmes should be organised to promote coastal shipping sector and also to familiarize with the latest customs /port procedures with an overall objective of promoting intermodal solutions. The facilities of local Steamer Agents and Custom House Agents’ Associations should be utilised for organizing periodical trainings /conferences and troubleshooting workshops. Also, success stories in this sector should be advertised. 

Intermodal logistics has tremendous potential to increase supply chain efficiencies of the country. The right policy incentives from the government and business interests from the private sector should work hand in hand to spur growth in this sector. The Central and State Governments’ innovative initiatives to promote coastal shipping also expected to promote inter-modality into a competitive and economically viable reality.

 

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