BUILDING TRANSPORT

CONNECTIVITY

21 February, 2018

BARRIERS TO TRADE AND

LOGISTICS

High Logistics costs relative to developed nations

High freight transit times

Extreme variability in transit times and speed

Several inefficient procedures and onerous documentation

Missing critical infrastructure – last mile and warehouses

Poor service orientation of public institutions

Sub-optimal logistics performance

Unbalanced modal share

HOW TO TRANSLATE MACRO-LEVEL

UNDERSTANDING OF ISSUES INTO

SOLUTIONS THAT IMPROVE LOGISTICS

AND REDUCE LOGISTICS COSTS?

1. Need detailed and disaggregated

analysis of freight flows to engage

with key stakeholders

2. Identify bottlenecks and focus on

specific corridors and practical

solutions which are based on evidence

3. Develop detailed understanding of

clusters of industries and logistics of

key freight

LOGISTIC EFFICIENCY ENHANCEMENT PROGRAM (NHAI TA)

Program Objectives

Logistics

Efficiency

Enhancement

Logistics Improvement

Enablers

Infrastructural improvement

Intermodal freight enablement

Procedural complexity reduction

Freight cost reduction

Freight time reduction

Tracking & Traceability

improvement

Multimodal Logistics park development

Economic Corridor Network development

Enabling Seamless Interstate Movement

Electronic Toll Collection deployment

Key solution areas

• Reduce emissions and improve fuel efficiency and cost of transportation by

– Incentivizing replacement of sub-scale and inefficient vehicles

– Scrapping surrendered old vehicles

Voluntary

Vehicle Fleet

Modernization

BBIN Corridor Development

ROOT CAUSE OF POOR LOGISTIC PERFORMANCE (LEEP)

5

SPECIFIC CORRIDORS AND PRACTICAL

SOLUTIONS

DEMAND IS HIGH, ACCORDING TO ALL

INDICATORS

Total tons of 4.6 billion

Total tonkm of 3.1 trillion

GDP of $2.3 trillion

$0.8 GDP per tonkm

Average road transport rate of

approximately $0.05 per tonkm

Average rail transport rate of

approximately $0.024 per tonkm

But significant opportunities exist for efficient supply

FLOWS IS A RESULT OF ECONOMIC

STRUCTURE

Extraction

(Mining &

Agriculture)

(Primary)

Beneficiation

(Manufacturing)

(Secondary)

Consumption

(Private

households)

Mining: Compete

globally (efficient

conveyor belts)

Agriculture: Rural

access

Industry: Efficient

connection of

large production

facilities

Distribution:

Efficient

connection of

distribution

facilities

PrimarySecondar

yTertiary

Logistics Challenges

Services

(Energy, construction, trade, transport, professional, community)

(Tertiary)

Economic Sectors of Activity

SEGMENTED FREIGHT OF INDIA – MILLION

TONS

Exports

ExtractionIntermediate

ManufacturingConsumption

Final Manufacturing

Domestic

Imports

57

1 328

295

34 55

429

1 512 861

76

THE CASE OF EASTERN CORRIDOR

NW1 project

(Jal Marg Vikas)

Kolkata port complex

and adjoining ports –

critical to

performance of the

Eastern corridor

Hinterland Connections by

road, feeder operations and

link to customers and supply

chain

Challenges:

1. Maximize utilization of the Dedicated Freight Corridor

2. Maximize utilization of National Waterway 1

3. Improve connectivity and capacity of Kolkata port

4. Relief truck congestion in Kolkata port area and city

5. Support development of Haldia Port

6. Create options for connectivity for new ports that may be

developed

7. Support logistics industry development

Eastern

Dedicated Freight

Corridor project

(EDFC)

Supply & Demand

Warehouses

Freight flows

NW1

EDFC

Legend

Eastern Corridor

Eastern Corridor savings potential of US$3 billion

38%

13%

1%

19%

24%

5%

-

500

1,000

1,500

2,000

2,500

Dedicated freight corridor Logistics hub and dedicated link

US$

Mill

ion

s

Rail corridor High density city link High density port link

New rail corridor freight New road freight using new link City logistics improvement

EDFC can save US$1.1

billion for freight that

originates and Ends on

the corridor

The real potential is the additional

US$1.9 billion that can be saved

with a well designed logistics hub

and port connectivity and city

logistics

Only 38% of EDFC potential will be achieved

without additional interventions and

investments

0

2

4

6

8

10

12

Accidents Emissions Noise Congestion Land use Policing

Ra

nd

bil

lio

n

Externality costs

Transport costs

EXTERNALITY COSTS IN SOUTH AFRICA

EXTERNALITY COSTS IN SOUTH AFRICA

– RATES PER MODE

0

1

2

3

4

5

Emissions Accidents Congestion Noise Landway Policing

Ce

nt

pe

r to

nn

0k

m

Road Rail

Road Rail

The full results of internalising South Africa’s freight

externalities

0

20

40

60

80

100

120

140

160

180

Current Rail-friendly freight switch torail

The typical FMCG long distance supply chain has

natural “catchment” areas...

DC DC

M R

M R

DC DC

M R

M R

DC DC

M R

M R

...and logistics hubs should form

DC DC

M R

M R

DC DC

M R

M R

DC DC

M R

M R

Te

rmin

al T

erm

ina

l

Natural Logistics Hub Natural Logistics Hub