Predictions 2022: Dedicated freight corridor game changer for logistics

The logistics industry in India has sailed through tough times in the past two years. The supply chain disruptions brought about severe changes in the sector with companies accepting the changes and adapting to the new ecosystem to tide the testing times. However, as businesses normalise, the sector is set to undergo a transformative shift as it gears up to the operationalisation of dedicated freight corridors (DFC) across western and eastern geographies. The government is also planning four other DFCs connecting north-south, east-south, south-south, and east-west considering the cost advantage and efficiencies it would provide to the logistics industry.

While the western DFC is partly operational with APM Terminals Pipavav being the first port connected to it, the remaining part of the corridor is expected to be operational by the end of 2022. The modal shift to rail from the road due to the DFC will offer higher speed, higher volume, and long haul freight transportation in less time. This will also bring about a significant reduction in greenhouse gas emissions for the industry, thereby contributing to decarbonisation of the overall sector and economy. The year 2022 will mark this shift from road to rail mode as the government aims to increase the share of rail mix in overall transport to 45% by 2030 from around 26% currently.

The government of India’s focus on infrastructure development including better connectivity to ports would provide a major boost to freight movement in the country. Though the government has put National Infrastructure Pipeline (NIP) in place to strengthen the country’s infrastructure, the road infrastructure requires substantial investment to improve the last mile connectivity. DFC and better road infrastructure to port, both are likely to reduce travel time and move higher load safely and quickly, thereby reducing the overall logistics cost.

The port sector is also awaiting Draft Indian Ports Bill 2021 and The Major Port Authorities Bill 2021 that seeks to transform the overall management of ports in India. This will offer autonomy to the ports to manage it independently along with fixing tariffs without the intervention of the state government. I believe both these bills will pave way for private investment in the port sector and scale up coastal infrastructure that would support the government’s ‘Atmanirbhar’ and ‘Gatishakti’ projects. For a country with little over 7,500 km of coastal belt, it is worthwhile to develop coastal zones to ensure the growth of a port-based ecosystem and improvement in the livelihoods of people living around the port.

Supporting the various initiatives of the government like National Logistics Policy and National Infrastructure Pipeline, I believe the private investment will also come into the development of multi-modal logistics parks and SEZs. All these private and public investments will strengthen the country’s supply chain and make the freight movement environment-friendly. While the country will see a marked improvement in infrastructure over the next few years, I believe the paradigm shift in the logistics sector will not be at the cost of environmental damage, rather it would be more balanced, inclusive, and sustainable.

Apart from infrastructure development, another factor that would bring about transformative change in the logistics industry is digitisation through the adoption of technology. The digitisation will also improve productivity and efficiency of the sector as well as in reducing the turnaround time of vessels in Indian waters. With the adoption of the internet of things and artificial intelligence across the value chain now happening at a faster pace, the digitisation of the sector looks well within reach. A customer would be happier to know where his/her cargo is in real-time to plan his further manufacturing or processing.

The pace of implementation of digitisation and infrastructure development needs to be hastened to ensure sustainable growth in the near future. As the country aspires to become the third-largest economy in the world by 2030, the significance of a seamless functioning domestic and international logistics ecosystem is a prerequisite.