Logistics encompasses all facets of goods transportation. It forms the silent force behind the seamless flow of trade, connecting producers and consumers, both domestically and internationally. Logistics activities span routing, pickup and packing operations, inventory tracking during transit, consignment deliveries, and quality control. The efficiency of logistics holds the potential to reduce operational costs, optimise supply chains, and offer Indian exporters a competitive advantage in global markets.
At a broader level, the sector contributes to 13-14% of India's overall GDP and has been steadily evolving. Recent data paints an encouraging picture of growth, exemplified by India's improved score in the 2023 United ENASCAP Global Survey on Digital and Sustainable Trade Facilitation—rising from 78.5% in 2019 to an impressive 93.5%. This leap signifies the growing importance of the logistics sector on the global stage.
Furthermore, a staggering 95% of India's trade volume and 70% of its value are transported by sea. Efficient logistics management lies at the heart of these operations, relying on a seamless network of carriers, freight forwarders, and transport operations. It serves as the primary cog in the elaborate system that ensures the smooth functioning of our ports.
Logistics efficiency: A catalyst for future ports
India boasts over 200 ports and a sprawling coastline spanning more than 7,500 kilometres. This strategic geographical advantage, coupled with improved logistics efficiency, has led to impressive growth in port traffic. The growth rate has been steady, with a Compound Annual Growth Rate (CAGR) of 2.47% from 2016-17 to 2020-21. However, this is just the beginning. The Ministry of Ports, Shipping & Waterways' year-end review for 2022 envisions a cargo volume surge between 1.7 to 2 times its current level by 2030. In 2022, India's major ports handled a record-breaking volume of 795 million metric tonnes of cargo, thanks to a robust logistics framework that keeps maritime trade booming.
Moreover, streamlining supply chains helps mitigate port congestion using techniques like diversified shipping routes, alternative ports, advanced forecasting tools, and data analytics. This seamless flow of multiple transport systems, all working cohesively, has become a key requirement for today's ports, such as Paradip in Odisha or the Jawaharlal Nehru Port Trust (JNPT), India's largest container port in Mumbai. With improved terminal efficiency and reduced vessel waiting times, these ports exemplify success stories in logistics optimization, setting new records in cargo handling.
A port-led development paradigm
Initiatives like the Sagarmala Program and the Maritime India Vision 2030 symbolise our nation's commitment to port-led development. These programs leverage our extensive coastline and river network to propel economic growth, with logistics again at the heart of these efforts.
Logistics is a vast ocean, and even within export-import (EXIM), it's huge. The primary vision of the Sagarmala program is to reduce logistics costs for EXIM and domestic trade with minimal infrastructure investment. The result is evident when we consider the capacity of major ports. Till 2014, this capacity stood at a mere 800 million tonnes per annum (MTPA). However, thanks to initiatives like Sagarmala, this figure has surged to an impressive 1,560 MTPA today. This has only been possible due to government-driven legislative changes that promote quality ports infrastructure.
For instance, the concept of Smart Ports, a game-changing measure introduced by the government, is revolutionising India's role in world trade today. These ports use advanced technologies to optimise space, time, resources, and environmental sustainability. The port of the future is expected to be 100% electric, emissions-free, and highly efficient in handling goods, and Indian ports are already embracing this approach by building a robust network infrastructure capable of managing vast amounts of data.
Unleashing a new era
As a leading logistics company, we see tremendous opportunity in the Major Port Authorities (MPA) Act, which paves the way for strategic privatisation of major ports, offering terminals, marine services, and other operations to the private sector. This shift is ushering in a new era of efficiency and competitiveness, aligning our ports with global standards. Our area of interest has always been the major ports, and terminals within major ports, ideally — the brownfield ports within major ports. The National Monetization Pipeline (NMP), with plans to privatise 30 projects by 2025-26, fills us with a lot of hope for a bright future.
India's ports are on the cusp of a maritime boom. Efficiencies in logistics, streamlined supply chains, public-private partnerships, and the integration of technology are paving the way for this new era of global maritime standards for India. The ongoing efforts of the government are simply a testament to India's readiness for the maritime challenges that lie ahead. I am confident that the upcoming Global Maritime India Summit (GMIS) 2023 will further catalyse investment, taking our maritime sector to new heights. The journey has just begun, and the destination is one of prosperity and promise.
—The author, Dhruv Kotak, is Managing Director, JM Baxi. The views expressed are personal.
(Edited by : C H Unnikrishnan)
First Published: Oct 16, 2023 8:56 AM IST
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