Last Saturday, Prime Minister Narendra Modi announced the National Logistics Policy (NLP). In simple terms, logistics is the organising and movement of goods multimodally from the point of origination to the point of consumption. It spans the obtaining of raw material and parts, production-related movement and delivery to consumers directly or via intermediaries.
Logistics costs in Europe are 11-12% of GDP, 10% in the US and less in China, and 13-14% in India. A detailed analysis has been initiated by GoI to create a framework for periodic future measurements. Systematic improvements can progressively enhance speed, cut waste, reduce costs and increase our competitiveness. Typically, ocean freight involves longer delivery periods, is multimodal, meant for large volumes and is the most environment-friendly. Air freight is much faster, with firmer timelines and enhanced security levels. Both are good for international haulage.
Road freight is ideal for door-to-door goods transport nationally, but has size and weight restrictions. Trains can haul tens of wagons, are less affected by the vagaries of weather and are good for long- distance deliveries. Statista's per metric tonne km cost estimates are ₹18 for air freight, ₹3.60 for road freight, ₹2 for waterways and ₹1.60 for rail freight.
About 95% of India's merchandise trade by volume passes through seaports. But the average turnaround time at our major ports at 2.5 days lags the global average of 1-2 days. Private and government ports are now being ranked on several parameters like logistics time, demurrage costs and unloading time. This is encouraging rapid digitalisation, including document automation, mobile apps, radio frequency identification (RFID) usage and online payments.
According to the World Economic Forum, 85 million packages and documents are delivered around the world every single day. Disrupting logistics with digital innovations could unlock $4 trillion of value. During the pandemic, how Amazon anticipated events, executed with precision and outmanoeuvred competitors offers a lot of lessons on how to unlock this value.
Read more at: https://economictimes.indiatimes.com/opinion/et-commentary/national-logistics-policy-the-intentions-are-right-but-will-execution-be/articleshow/94310366.cms