Multi-Modal Logistics Parks (MMLPs) is a logistic programme by the government to develop Multi-Modal Logistics Parks across different logistics centres in the country. The initiative is led by National Highways Logistics Management Limited under Ministry of Road Transport and Highways (MoRTH) and the National Highways Authority of India (NHAI).
These MMLPs will be developed in a hub-and-spoke model (a hub-and-spoke network connects every location through a single intermediary location called a hub) to improve the country’s freight logistics sector. MMLP development is expected to give tremendous benefits to the transportation sector. These include lower overall freight costs, reduced warehousing costs, reduced vehicular pollution and congestion, enhanced tracking and traceability of transport consignments etc. All these are possible in multiple ways-through infrastructural, procedural, and information technology interventions. Accessional facilities like storage, warehousing solutions, value-added services like Custom clearances and IT services are also be provided in the MMLPs.
Design of Multi-Modal Logistics Parks (MMLPs)
The Cabinet Committee on Economic Affairs (CCEA) on October, 2017 had authorised MoRT&H to develop 35 Multi Model Logistics Parks (MMLP) across the country. These 35 MMLPs being implemented by MoRTH are to be developed under Public Private Partnership (PPP) on Design, Build, Finance, Operate and Transfer (DBFOT) mode.
The National Highways and Logistics Management (NHLML), which is a special purpose vehicle (SPV) and fully owned by the National Highways Authority of India (NHAI), plans to construct majority of the proposed MMPLs in public private partnership (PPP) mode. The parks will have 50:50 funding model.
There are 35 multi-modal logistics parks planned across the country with a capital allocation of Rs 50,000 crore. The 35 proposed MMLPs are at:
Nagpur, Chennai, Bangalore, Indore, Mumbai, Hyderabad, Coimbatore, Pune, Surat, Sangrur, Delhi-NCR, North Gujarat, Jaipur, Kolkata, Ambala, Jagatsinghpur, Nashik, Kota, Panaji, Hisar, Visakhapatnam, Bhopal, Sundargarh, Bhatinda, Solan, Rajkot, Raipur, Jammu, Kandla, Cochin, North Punjab , Vijayawada, Patna, Valsad and Guwahati.
Need for the MMLPs
According to the Asian Development Bank (ADB), India’s Logistics sector is having high cost and lower efficiency compared to other countries. This has reduced the overall efficiency in the economy and increased the cost structure of all commodities. Compared to other countries road freights in India are higher, while the average speed of freight vehicles is about 50%–60% lower. Following factors adversely affects freight movement in India according to the ADB.
- Skewed modal transportation mix. In India, 60% of freight moves by road, which is significantly larger than in many developed economies. Coastal movement and inland waterways are at a nascent stage. Rail transport is marginal, in spite of being 45% cheaper per ton–km than road, due to adverse pricing and rake booking practices and lack of intermodal facilities to enable easy transfer.
- Underdeveloped material handling infrastructure. Warehousing landscape is highly unorganized with the presence of a large number of small, private, and unorganized warehouses, providing little or no value-added services. The economies of scale associated with integrated and large warehousing facilities or multimodal logistical parks (MMLPs) is not available to all participants in the value chain, including the small and medium enterprises.
- Inefficient fleet mix. Small and inefficient trucks with gross vehicle weight rating of 16–25 metric tons (MT) (compared to 26–39.9 MT trucks dominant in the People’s Republic of China), have lower payloads. Freight cost for a 9 MT truck at `3.56 per ton–km is 2.5 times that for a 40 MT truck. Absence of logistics hubs to act as zones for freight consolidation and disaggregation results in higher point-to-point freight movement on lower sized vehicles, compared to more efficient line haul freight.
- Outdated/inefficient service model. Efficiency is also compromised as many firms try to compete through the factor advantage of low wages which have led to hiring poorly skilled personnel thereby eschewing investments in information technology and equipment technology, and consequently sacrificing productivity gains and service quality.
- Fragmented institutional and governance structure. Different parts of the logistics value chain currently are being managed by different ministries including Road Transport and Highways, Shipping, Railways, Civil Aviation, Commerce and Industry, Finance, Home Affairs, and Department of Posts. In addition, a large number of government agencies including Central Drug Standard Control Organization, Food Safety and Standards Authority of India, and Plant and Animal Quarantine Certification Service provide relevant trade clearances and impact the value chain. Globally, leading countries that have achieved efficiency in logistics, like Germany, Japan, the Republic of Korea, and Malaysia, follow a completely integrated approach towards logistics, and the government provides coordinated oversight to the entire logistics value chain.
Benefits of MMLPs
According to the Asian Development Bank (ADB), development of MMLPs at strategic locations is envisaged as a key policy measure to rationalize cost of logistics in India and improve its competitiveness.
The development of MMLPs at strategic locations in different regions can help in developing the supply chain in a more quick and cross functional way. The MMLPs can provide:
(i) infrastructure for enabling seamless multimodal freight transfer;
(ii) mechanized warehouses and specialized storage solutions including cold storage;
(iii) mechanized material handling and intermodal transfer container terminals, and bulk and break-bulk cargo terminals;
(iv) value-added services such as customs clearance, bonded storage yards, quarantine zones, testing facilities, and warehousing management services; and
(v) late-stage manufacturing activities such as kitting and final assembly, grading, sorting, labelling, and packaging activities, reworking, and returns management.
Furthermore, MMLPs could improve the utilization and performance of inland container depots (ICDs) and container freight stations.