Railway Corridor At Multi-modal Logistics Park (MMLP)
Posted by: G R Rajagopalan
Designation: Associate
Date: May 21, 2024
Multi-modal Logistics Parks (MMLPs) represent a significant government initiative in India aimed at enhancing the logistics sector by reducing freight costs, time in transit, and storage expenses, improving consignment safety through tracking / traceability and reliability whilst reducing GHG emissions and other environmental impacts.
These MMLPs will include inland container terminals for inter-modal transfers enabling and encouraging a shift towards integrated modal transport (logistics). Improving the railway’s offering to containers and more general cargos will boost earnings, diversify revenue sources, and reduce dependency on bulk and passengers.
Containers (more exactly unitization) streamlines the transport process, making it more efficient and cost-effective by using standard (ISO) containers able to carry 15-30t of many different types of cargo. The containers and their cargo can be lifted as a unit when loading, at every change of transport mode and when unloaded at their destination. This reduces handling costs (labour) and saves time.
Railways environmental sustainability through energy-efficient transport. But they currently hold less than 10% of the domestic container transport market and around 30% of the export-import (EXIM) container transport market. Plenty of room for growth.
The government is driving the market share of rail transported containers with various initiatives including establishing MMLPs across India.
The drive for growth has challenges. The government-owned company, CONCOR, dominates the market for rail transported containers. This crowds the private sector out of the market through applying the benefits of being a dominant user to gain unfair competitive advantage. Private container train operators face India’s complex land acquisition processes, high capital investment requirements and difficult rail access negotiations as they try to establish terminals and services. This adds to the strong competition MMLPs and rail services face from road transport with greater convenience. Pricing and customer conversion to rail transport of containers is not straight forward!
- Cost Efficiency: Reduces freight costs, storage expenses, and labor costs.
- Environmental Benefits: Promotes energy-efficient rail transport, lowering pollution.
- Enhanced Tracking: Improves consignment tracking and traceability.
- Reduced damage: Better security and more protection from the elements.
- Economic Diversification: More diverse revenue sources for Indian Railways.
- Operational Efficiency: Streamlines transportation with standardized containers for easy handling and transfer.
- Diverse Transport Options: Facilitates the transport of various goods through multiple modes (road, rail, ship, air).
- Government Support: Various schemes and exemptions encourage the establishment of MMLPs.
Cons:
- Market Dominance: CONCOR’s dominance limits private sector opportunities and provide stiff competition.
- High Capital Investment: Significant financial requirements for private operators to acquire rolling stock and infrastructure.
- Land Acquisition: Complex and time-consuming process for establishing terminals with rail connectivity.
- Competition with Road Transport: Challenges in pricing and convincing customers to shift from road to rail transport.
- Limited Market Share: Railways currently have a small share in domestic container transport, indicating the need for substantial growth efforts.
