1

Multimodal

Transport

System In India Sustainability Model

March 2020

www.grusandgrade.com

Ravi Soni | Sunil Patil

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Disclaimer

This document does not claim that every theory and

model to be original. The key interpretations, logical

designs, critical approach and interpretations based

on derivatives, findings expressed herein are those

of the student(s) and do not necessarily reflect the

views of any individual, organization or institution.

The purpose of this note is purely academic and for

creating interest in the academic/intellectual

community for further research and innovation in the

area of Logistics & Distribution Management for

sustainable development of the sector.

Rights and Permission

The authors/ researchers of this project report hold

the copyright for the entire scope of work. Copying

and/or transmitting portions may be violation of the

copyright laws.

Acknowledgements

This report has been prepared by

group of Students from IIM Indore to

identify the core concepts and

develop models for sustainable

agricultural development programs,

policies and methodologies.

We thank Prof. Krishnan Natarajan

for his guidance, support and

encouragement for building up the

concepts and the contents of this

research paper.

We also thank the entire team of

librarians in IIM Indore for providing

us the research documents and

helping us zeroing the search process

for timely completion of the report.

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Table of Contents Abbreviations .......................................................................................................................................... 5

Multimodal Transport System (MTS) | An Overview ............................................................................. 7

Global Perspective : European Case Analysis ........................................................................................ 8

Transport System in India | Critical Evaluation .................................................................................... 10

Road Transport ................................................................................................................................. 12

Railways ............................................................................................................................................ 14

Waterways : Shipping ....................................................................................................................... 16

Airways .............................................................................................................................................. 18

Economic Growth of India |Multimodal Transport .......................................................................... 19

Transport Infrastructure Growth In India : An Economic Perspective .............................................. 20

Multimodal Transport in India : A basic perspective ........................................................................ 21

Multimode Transport System & Sustainable Growth Study : System Approach.................................. 23

Energy Consumption : Mathematical Decomposition ...................................................................... 24

Multimodal Transport in India : A Low Carbon Model for the policy Makers ................................. 27

Technological Innovations as enablers : Multimodal Transport Revolution ........................................ 29

MTS | Pricing Strategy .......................................................................................................................... 32

Multimodal Transport System : Legal Framework ................................................................................ 36

Challenges and Constraints ................................................................................................................... 38

Key Recommendation .......................................................................................................................... 40

Bibliography .......................................................................................................................................... 41

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Abbreviations

AI : Artificial Intelligence

DFC : Dedicate Freight Corridor

EG is Economic Growth

GCF : Gross Domestic Capital Formation

GLTIH : Growth Led Transport Infrastructure Hypothesis

KDS : Kolkata Dock System

IEA : International Energy Agency

LPN : Logistic Performance Index

MTS : Multimodal Transport System

MTO : Multimodal Transport Operator

NPP : National Perspective Plan

OECD : Organization for Economic Co-operation and Development

RFID : Radio Frequency Identification

PACS : Port Control System : Multimodal Transport System

TILGH : Transport Infrastructure Led Growth Hypothesis

TINF : Total Transport Infrastructure

MTS : Multimodal Transport System

MTS : Multimodal Transport System

MTS : Multimodal Transport System

MTS : Multimodal Transport System

MTS : Multimodal Transport System

UNIDROIT : International Institute for the Unification of Private Law

3 PL : Third Party Logistics Provider

UNCTAD : United Nation Conference on Trade and Development

VECM : Vector Error Correction Model

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Abbreviations

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Multimodal Transport System (MTS) | An

Overview

A Multimodal Transport System uses a combination of more

than one mode of transport and integrates the scope and

viability of simultaneous use of various inter-linked network of

distribution and logistics channels. Thus, use of at least two or

more modes of transportation which enhances the overall

efficiency of distribution channel can be briefly termed as

Multimodal Transport System

An efficient and sustainable model which uses various channels

of transportation for efficient allocation and use of resources.

This helps not only to reduce the lead time for delivery of goods

and services but also encompasses financial and cost efficiency,

on time delivery, warehouse and storage efficiency, information

and communication flow as well as environmental protection

(by reduced use of energy and fuel). The model also helps to

contains risk of damages, wastage and pilferages.

A simple elucidation of use of multimodal transport system can

be explained in the following diagram:

What is Multimodal Transport System

An integrated transport, logistics

& distribution strategy that

involves more than one or

different modes of

transportation briefly describes

Multimodal Transport System.

“ Movement of goods in

one and the same

loading unit* or road

vehicle, which uses

successively two or more

modes of transport

without handling the

goods themselves in

changing modes” [UN

CEC ]

*Loading Units : Containers, Swap

Bodies, Cranable Semi-Trailers

Key Features

Customer Order

Warehouse

Load to truck

Lead to Rail

Wagon & unload

to railroad car

Use rail service Lead to Cargo Plane

Reload

truck

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Global Perspective : European Case

Analysis

As per the research

report of Norbert

Wagner published in

Scientific Journal of

Logistics, the

Multimodal transport

system uses makes

optimal use of all

channels of

transportation can

ideally contribute to

increase in level of

efficiency and

attractiveness of the overall transport system. This will

ease the burden of all logistical solutions from road

infrastructure and build in additional capacity in water, rail

and air network.

Intermodal Markets can be classified into two broad

categories :

1. Seaborne trade : Pre-On Carriage From-To Seaport

Hinterland

2. Continental intermodal : Unaccompanied craneable

semi-trailers

and swap

bodies

Seaborne Container Transport : Economies of Scale and

Multimodality

Sovereign data across various countries in Europe indicate

that the container traffic has reached a relatively maturity

stage. Still there are scope for organic growth and with the

innovation in technology and integration of multimodal

network, the scalability has been studied in the present

report on the basis of the following recommendations :

Few Facts

➢ Freight transport (by volume in

ton-km) will grow up to 150-230

% by 2050.

➢ EU policy Aim : By 2030 shift 30%

by 2030 and 50% by 20250 of

road freight to other modes such

as Waterways or Railways

➢ At present the share of road

transport in land freight

transport in EU is approximately

70%

Source : Scientific Journal of Logistics

Innovation is the key

The model innovations required

development of multimodal transport

in Europe include :

A. Multimodal transport in ocean

carriers in maritime hinterland

transportation

B. Innovation in technology related

to handling of non-craneable

logistics

C. Development of dedicated

freight corridors for long distance

intermodal transport within the

TEN-T network and Europe Asia

corridor

Intermodal Transport in Europe

MULTIMODAL TRANSPORT IS A ‘LEGAL

TERM’ AND IS USED FOR ‘DOOR TO

DOOR MOVEMENT OF GOODS UNDER

THE RESPONSIBILITY OF A SINGLE

TRANSPORT OPERATOR KNOWN AS

MUTIMODAL TRANSPORT OPERATIOR

(MTO) ON ONE TRANSPORT

DOCUMENT.

[UNCTAD, 2014]

“Containerization is a sea battle,

fought and won ashore”

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Hinterland hubs & dry ports

Establish hinterland terminals and hubs which act as centres

for sorting, consolidation and distribution of containers and

railcars.

Hinterland distribution centres

The share of ports in logistics and distribution channel is very

high. This burden can be shifted to hinterlands, thus reducing

the burden on ports, decongesting the roads and making

inventory flow smooth.

Make sea carrier a realty in multimodal transport network

Integrate the land leg and provide a full packaged service.

o Integration of vessels owning ocean carriers and sell

container over capacity

o Multivariant 3 PL ( Third Party Logistic Provider)

o Reduce imbalance in container flow and logistics

o Invest into hinterland system development which is pre-

condition for developing a robust multimodal transport

system.

Technological innovations and interventions

Semi-Trailers dominate with more than 66% of transport

volume, but less than 2% of these are equipped with vertical

handlers and robotic cranes.

There is a vast scope for development of material handling

and automated crane in Semi-Trailer segment. Though many

technological thought process has done research in the

segment, but none has gone beyond pilot test stage.

Provision for multimodal

transport document came

into force in 1992

[UNCATD 1992]. These

documents are the FIATA

Bill of Lading or the

MULTIDOC 95.

This document serve as a

document of title and are

bankable in documentary

credit as per UCPDC 600.

Plaza Logestica

Zaragoza

The logistical park in the

outskirts of Zaragoza,

Spain with a total surface

area of 12,826,898 sq m

and an initial investment

of over € 170 million,

PLAZA is the largest

logistical park in Europe.

It acts as a hub for

multimodal transport

network in Europe.

MULTIMODAL TRANSPORT DOC.

On account of increase in transportation and logistics cost

supplemented by a pressure to reduce greenhouse gases

(fuel efficacy increase) technological innovation in rail

transport becomes imperative.

An innovation in IOT, ICT, AI, Digitalization, Blockchain,

Augmented Realty is thus the need of hour for developing

a sustainable multimodal transport network.

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Transport System in India |

Critical Evaluation

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Road Transport

India has one of the largest road network

of more than 5.8 million KM. This network

is responsible for 64.5% of transport of

goods and more than 90% of the passenger

traffic. With the improvement in

connectivity in rural area and development

of improved infrastructure in roads, the

volume per Sq. km of roads has increased

rapidly.

Investment in Road Transport Infrastructure

Total investment in the sector increased from USD 7.43 billion in year 2014-15 to USD 22.73 billion in

year 2018-19. As per the data released by

Department of Industrial Policy and Promotion,

construction development projects resulted in

inflow of USD 25.12 billion through FDI route. In

March 2019, NHAI projects worth USD 15.99 billion

were inaugurated.

The Government through a series of initiatives, is

working on policies to attract significant investor

interest. It is estimated that by 2022 a total of

22,000 km of national highway will be completed.

Few interesting facts

➢ A total of 65,000 km of roads and highways are to be constructed under Bharatmala

Pariyojana.

➢ As of November 2019, there were 9,242 PPP projects in India, of which 2,864 were related to

roads and bridges.

➢ The construction of national highway per day increased to 26.9 kms per day in FY18 from

11.6 kms per day in FY14.

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Railways

Indian Railways is among the world’s

largest rail network with a total route

length of 1,23,236 km transports 3 million

tons (MT) of freight daily and

approximately 3 million passenger travel

daily on it.

Main benefits of transportation through

railways include :

a. Cost efficiency

b. Less fuel/energy consumption

c. Mass transportation and time reduction due to dedicated network.

IR’s revenue increased at a CAGR of 6.2% during FY 2018-19 to USD 27.13 billion in FY 2019. Fregith

revenue grew at CAGR of 4030% during the same period. IR is among the top 20 exporters, and its

exports has grown at a CAGR of 31.51% during last ten years. The estimated exports during the year

2019 was USD 635 million.

The total FDI inflow during last ten years ( 2010-

18) has been USD 997.24 million.

Over a period of next five years, IR market will be

world’s third largest and will account for more

than 10% of the global market.

As per the projection’s the freight traffic via the

Dedicated Freight Corridors (DFCs) will increase

at a CAGR of 5.4% to 182 MT in FY 2021-22.

Dedicated Freight Corridor Corp. of India Ltd (DFCCIL), is already building the first two freight

corridors—Eastern Freight Corridor from Ludhiana to Dankuni (1,856km) and Western Freight

Corridor from Dadri to Jawaharlal Nehru Port (1,504km)—at a total cost of Rs 81,000 crore (US$ 11.59

billion).

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Waterways : Shipping

As per Ministry of Shipping, GOI

approximately 95% of the country’s

trading by volume and 70% by value is

done through maritime transport.

India has 12 major ports and 205 minor

and intermediate ports. Under National

Perspective Plan (NPP) for Sagarmala,

six more ports will be developed. While

we have a cost line of 7517 km, the full

potential of this wide cost line is yet to be explored fully. The GOI has allowed 100% FDI under

automatic route for port and harbour construction and maintenance projects. There is also a provision

of 10 year tax holiday to the enterprise who develop ports, inland waterways and ports.

The cargo traffic at major ports in the country during FY 2019 was 669.05 MT and in the current year

till Nov 2019 it was 463.07 MT. The major ports had a capacity of 1514.09 MT per annum. As per the

GOI’s Maritime Agenda 2010-20, the total

capacity build up of 3130 MT has been

targeted for FY 2020.

The sector witnessed three major M&A deals

in 2017 for USD 29 million. GOI plans to

develop ten costal economic regions as part

of revival strategy of Sagarmala Project.

During the year 2019, National Waterway-2

(cargo on Brahmaputra in NE India) was

initiated. Technological upgradation such as implantation of RFID based Port Control System (PACS) at

Kolkata Dock System has been initiated.

In March 2018, a revised Model Concession Agreement (MCA) was approved to make port projects

more investor-friendly and make investment climate in the sector more attractive.

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Airways

Though the civil aviation industry in India

has been identified as one of the fastest

growing industries of the world, the

sector has its own challenges. The capital

intensive industry operates on razor thin

operating margin. Any inefficient

management or service quality leads to

downfall of the industry, leading to

resource constraints. The sector has seen

two major bankruptcies (Jet &

Kingfisher), while the state run Air India is

also witnessing its gradual demise.

Despite these challenges and setback, the Indian Aviation market is growing steeply and is expected

to overtake UK to become worlds third largest air passenger market by 2024.

The sector has rich potential for investment and as per DIIP, FDI inflow in the country’s air sector

reached USD 1904.07 million between April

2010 and June 2019. The Govt has 100 percent

FDI under automatic route in scheduled air

transport service. FDI over 49% require

Government approval.

The GOI is planning to invest USD 1.83 billion

for development of airport infrastructure

along with navigation services by 2026.

• As per the Union Budget 2019-20, government will promote aircraft financing and leasing

activities to make India's aviation market self-reliant.

• In February 2019, the Government of India sanctioned the development of a new greenfield

airport in Hirasar, Gujarat, with an estimated investment of Rs 1,405 crore (US$ 194.73

million).

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Economic Growth of India |Multimodal Transport

The sustainability of growth and development of Indian economy can be facilitated by development

of integrated and robust transportation network. A multimodal solution for developing an integrated

and sustainable infrastructure network is not only the sufficient but also a necessary condition for a

progressive India.

The key benefits of developing a sustainable multimodal transport network in India are:

1. Increase in production, distribution and logistical capability. GDP & Employment growth.

2. Reduces time, improves allocation of resources and helps in increased ROI.

3. Changes aggregate demand (called the infrastructure effect)

4. Saves cost, improves fuel consumption, reduces energy consumption.

5. Helps in creating less carbon footprint, reduces green-house gas emission. A sustainable

model.

6. Targets universal education and healthcare

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Transport Infrastructure Growth In India : An Economic Perspective

The above nexus indicates that the transport infrastructure and economic growth are deeply

interlinked.

Two different hypothesis thus exists for building

up relationship between economic growth and transportation infrastructure development :

Hypothesis 1 : TILGH

Transport Infrastructure Led Growth Hypothesis

Hypothesis 2 : GLTIH

Growth Led Transport Infrastructure Hypothesis

As per the Keynesian economic model, the state needs to pay the toll for infusing economic

development, thus make investment to create demand. India witnessed demand led development

model post liberalization (1991 onwards). In the present paper we have tried to capture the effect of

rail and road infrastructure development to understand the economic growth.

In order to analyse the interrelation

between Transport infrastructure and

economic growth, the following function

has been used :

EG = f ( TINF, GCF)

Where, EG is Economic Growth

TINF : Total Transport Infrastructure

GCF : Gross Domestic Capital Formation

(GDP has been used as a proxy for

economic growth for analysis)

A mathematical prognosis based on

Granger Casualty test (VECM approach) which has not been elaborated in the present work (beyond

the scope of present paper) indicates that there exists a bidirectional causality between road

infrastructure and economic growth and vice versa.

Demand Driven Growth

ECONOMIC EXPANSION IS THE REAL

REAON FOR GROWTH OF TRASPORT

INFRASTRUCTURE

DEMAND PULLS TRASNPORTAION

GROWTH

Supply Driven Growth

DUE TO INVESTMENT IN

INFRASTRUCTURE OF TRASNPORT

SYSTEM, ECONOMIC DEVELOPMENT IS

GETTIGN AUGMENTED

INVESTMENT PUSHES ECONOMIC

GROWTH

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Multimodal Transport in India : A basic perspective

End to End delivery of goods and services in a county like

India with huge geographic and demographic divide is a

humongous job.

Multimodal transport service in India can shape its own

perspective for different service providers of the county.

Majority of report and logistic firms in India are family

owned or small dis-integrated players.

This acts as a major challenge and dissuading factor for

creating a robust and efficient multimodal transport

network.

Development of an integrated multimodal infrastructure

requires huge capital investment as well as coherent and

transparent policy initiative.

In 1960’s Indian Railways played a crucial role in

promoting multimodal transport in India.

Standardized ISO containers began to be used 1970

onwards and in 1981 the first ISO container was moved.

In 1988 CONCOR was established as an offshoot of IR

Multimodal Transport Act was passed in 1993 by Indian

Parliament to establish a standardization in the sector.

Director General of Shipping was identified as the

competent authority.

This act paved way for Multimodal Transport Operators

(MTO)

IT has been the major enabler in this sector. Use of RIFD,

E-Way Bill, GPS Tracking, Robotics, Analytics and AI,

Blockchain, IoT, ICT and Augmented Glass has been the

new generation technological revolutions transforming

multimodal transport infrastructure.

Complete supply chain and documentation process has

been revolutionized due to integration of technology.

Completion of dedicated freight corridors (DFCs) will

enhance the share of rail freight in the country from the

current 30% to around 60-70%

Private players have been given licence to own their

freight trains. This will reduce monopoly of CONCOR

while improving the infrastructure due to private

investment.

NE India has taken a lead in development of MMT

Infrastructure in India.

In Varanasi, a freight

village is being developed

along the river to enhance

the potential of Eastern

DFC and to augment traffic

capacity along the National

Waterway 1. Inland

waterways cargo

movement has already

started from NW-1 by

PepsiCo, Dabur, Emami,

IFFCO from Kolkata to

Varanasi where a freight

village is being developed

to connect it to the

eastern DFC

TOP 15 Logistics Firms in

India

1. Indian Railways

2. House of Patels

3. VRL Group

4. TCI

5. CCIL

6. Gati Ltd.

7. Ghage Patil Transport

8. Logistics Post

9. Eastern Cargo Carriers

10. ABC India Ltd

11. Aegis Group

12. Allcargo Logistics

13. DTDC

14. Safeexpress

15. Global Vectra Helicorp

STORIES

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Multimode Transport System & Sustainable Growth Study : System

Approach

In order to understand the major constraints and need for development of multimodal transport

network, we have tried to draw a system archetype diagram for a system’s approach view :

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The system’s approach in the diagram above indicates that though there

are positive reinforcing loops created by robust

development of infrastructure thereby promising

the growth needed for growing needs and

demand of an ever increasing population, in

the hindsight it is constrained by a multiple of

factors such as policy delays, infrastructural

bottlenecks, disintegrated players, high

consumption of energy and fuel and carbon

emission. These have adverse effect on sustainability.

In order to overcome the challenges, a system’s approach is needed. This implies that a concerted

effort of all the stakeholder’s such as Government, General Population, Investors, Industrialist,

NGOs, World Organizations etc need to act simultaneously to build a robust multi modal transport

system.

The development of a robust infrastructure can help India save more than 10% of its cost of logistics

and thus boost the exports by more than 5-6% annually due to cost differentiation from transport

system itself.

Energy Consumption : Mathematical Decomposition

We have tried to formulate a mathematical model keeping in view the following objectives:

➢ To determine cause for the change in

energy consumption in transport

sector in India.

➢ To understand pattern of energy

consumption and their causes for

change.

Changes in energy consumption (increase)

attributed to :

1. Growth in Transport Volume (increase

2. Structural change or modal

3. Energy Intensity (decline)

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India is a low carbon county, but the growth engine are fast accelerating which means demand led

growth in transport infrastructure. While growth is not only a sufficient but also a necessary condition

for feeding the mouth of more than 1.2 billion population and give them a basic standard of living, the

huge dependence on limited resources are fuelling unsustainable growth model.

Thus, the need of the hour is to frame policies

to develop model that are environmentally

sustainable.

The major problem faced by India is high

volume of road transport vis-à-vis

benchmarked countries. The Indian policy

needs to focus on developing a robust and

integrated Multimodal Transport System.

In order to over inefficacy, consumer behaviour

needs to be changed. It thus implies in the pure

economic terms, the utility function of the consumers needs to be radically changed to develop a

sustainable consumer class.

We are the 3rd largest CO2 emitter after US and China and as per International Energy Agency (IEA) we

account for almost 5% of the global carbon emission. IEA states that China & India increased their

emission from road transport by a factor of four and three respectively since 2000.

Transport sector in India is responsible for 10% of total energy consumption. India has witnessed a

growth story of about 7% in last one decade. This has led to inequitable growth of wealth. This is

against the sustainable growth objectives of PPP ( People, Planet & Profit)

In order to understand the energy consumption by transportation sector we have analysed the

mathematical decomposition as accounted in the research paper of Piyush Tiwari & Manish Gulati

published in journal www.elsevier.com

Mathematical model that decomposes the

passenger and freight transport energy

consumption changes into three factors :

1. Change in transport volume

2. Change in transportation energy

intensity

3. Structural changes to examine the trend

and importance of each factor in

contributing the growth of energy

consumption by these transport segments.

Source : International Energy Agency

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Mathematical calculation for changes in transportation energy consumption for passenger and

Fright transportation :

E = total energy use in passenger transport or Freight transport measured in PJ

P = total volume, measured in passenger-km or tonne-km as appropriate

I = vector of modal energy intensities with elements [Ei/Pi]

S = vector of structural (mix) coefficients, or mode shares, with elements [Pi/P]

Where,

𝐸 = ∑𝐸𝑖

𝐸𝑖 is the energy consumption by mode i of transport

The energy intensity of mode i ( i.e. the ratio of energy consumption to transport volume) is :

𝐼𝑖 =𝐸𝑖

𝑃𝑖

For passenger or freight transport, a change in

modal transport energy consumption between a

base period (t =0) and a later period (t = n) can be

algebraically stated as :

𝛿𝐸 = ∑𝐸𝑖𝑛 − ∑𝐸𝑖0 ………. Eq A

= ∑𝑃𝑖𝑛𝐼𝑖𝑛 − ∑𝑃𝑖0𝐼𝑖𝑜

= ∑𝐼𝑖𝑛𝑃𝑛�̂�𝑖𝑛 − ∑𝐼𝑖𝑂𝑃0�̂�𝑖0……………….Eq B

Where

Sit = Pit / Pt

Eq A above representing 𝛿𝐸 is a function of three variables i.e total transport volume (Pt), energy

intensity of individual mode of transport (Iit) and the structural parameter, or the share of individual

mode in total transport volume (Sit). Applying total differential formula, Eq B can be decomposed as

follows :

𝛿𝐸 = 𝑃𝑛∑𝐼𝑖𝑛�̂�𝑖𝑛 − 𝑃0∑𝐼𝑖𝑂�̂�𝑖0

= (Pn-P0) ∑𝐼𝑖𝑂�̂�𝑖0 ( transport volume effect) + P0 ∑(𝐼𝑖𝑛 − 𝐼𝑖0) 𝑆𝑖0 energy intensity effect + P0

∑(𝑆𝑖𝑛 − 𝑆𝑖0)𝐼𝑖0 Structural effect + interaction terms (R ) ……. Eq C

Thus any change in energy consumption is sum total of transport volume effect, energy intensity effect,

structural effect and relative interaction term.

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The interaction term can be further broken into

four combinational product terms of three

variables. The same is has not been incorporated

in the present scope of research. However, these

are joint effect of transport volume and energy

intensity, joint effect of transport volume and

structure, joint effect of energy intensity and

structure and joint effect of all three variables.

Based on the above it can be inferred that

introduction of an efficient multimodal transport

system can reduce energy consumption substantially due to overall reduction in transport volume, energy

intensity, structural positivity and interaction between these variables.

Multimodal Transport in India : A Low Carbon Model for the policy Makers

Overdependence on Road Transport leads to increased consumption of fuel especially oil. The

increasing burden on fossil oil consumption is a concern because of three major factors :

a. Energy Security

b. Local Environment

c. Climate Change

Burgeoning cities, growth in urbanization and change in standard of living has contributed further to

environmental pollution and congestions. The increased use of fossil oil contributes substantially to

CO2 emission which is a against the Millennium Development Goal for Sustainability set by UN. The

Government’s thrust to achieve climate goals through sustainability approach can be fulfilled by

development of Multimodal

Transport System. A

mathematical decomposition

in previous section gives

quantitative proof of how a

multimodal transport system

can help reduce energy

consumption.

Media Reports

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Technological Enablers in

Multimodal Transport System

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Technological Innovations as enablers : Multimodal Transport

Revolution

Role of Information Communication

Technology in development of Multimodal

Transport System is omnipotent. However,

the uptake of ICT in development of

multimodal transport in Europe as well as

in India is slow.

ICT functions as a nervous

system in logistics and supply

chain management. Quick,

fast, efficient and reliable flow of

information on real time basis can be a

game changer in developing a modern

sustainable multimodal transport network system and infrastructure. Real time accessibility, quick and

efficient exchange of information and flexibility to react to dynamic flow of information in a responsive

and time bound manner is the key next generation logistical solutions.

In an Multimodal Transport System, the Multimodal Transport Operator is primarily responsible for

performance of entire haulage contract from shipment to destination. The destination can be within

the boundaries of same county or an international location which involves custom clearances. The

figure T-1 below illustrates international transportation process :

The communication between all the intermediaries has got to be fast, accurate, timely for efficient

movement of goods to destination. The role of ICT is thus non-trivial and indispensable for an

efficient network design.

Generation of e-Challans for faster movement of invoices, lorry receipts, shipment

documents, bill of lading etc. This improves efficient delivery of goods and service,

improves quality check as well as reduces hassles to all parties involved in the

transaction.

Figure T 1

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Blockchain technological application in intermodal transport system can be the

next generation game changer. This will induce reliability, appropriateness and

trust ability of real time data transmission for super-fast information flow and

decision taking matrix generation.

Augmented Realty Glass is another technological revolution that will redefine the

way logistics are staked, loaded and transported. This will reduce warehouse

searching time and cost, damages and pilferage loss as well as timely delivery of

orders.

Artificial Intelligence through it’s predictive and prescriptive analogies can

determine demand and supply forecast, inventory movement vs container

availability, pre & post shipment transportation gap analysis etc. This technology can

be extensively used to create a harmonious inter-relationship between various

modes of transport. Space availability, dock availability.

Internet of Things (IoT) can be used to track inventory, suppliers and buyers stocks, in

transit inventory tracking mechanism, GAP analysis and foundation for logistical

connectivity on real time basis.

Cloud Technology will help in accessibility of data on multiple platform and vendors

through one source. This improve data transferability while maintaining security and

confidentiality.

Apart from these innovative new age technological interventions, a container door-to door transport

chain is conducted through the use of advanced technology, Supply Chain ERMs, CRMs and cloud

technology.

ICT Application Key Benefits Application Example

Freight Resource Management Systems and application

• Operational efficiency

• Reduced empty runs

• Improved utilization of resource

• Customer satisfaction

Intra-Company Resource Management System ( COREM)

Terminal & Port Information & Communication System and application

• Reduced loading, unloading time

• Interface between modes of transport

• Reduced operating cost

Automatic Equipment Identification for monitoring (INTERPORT)

Freight & Fleet tracking and management system and application

• Operators ability to monitor improves

• Positive utility of available infra resource

• Improves security and safety

Intermodal Fleet and Cargo-Monitoring System (MULTITRACK)

Integrated operational information exchange /platform/portal

• One shop marketplace

• Custom authority check integration

E-Commerce system : Booking, scheduling, brokerage, payment, invoice etc (DOLPHINS)

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MTS

PRICING STRATEGIES

32

MTS | Pricing Strategy

The existing traffic systems in the

economics of transport service pose

severe theoretical and empirical

limitations in realistic applications. The

main reason for this is that the present

system link travel cost functions, which do

not accurately describe the intra-day

traffic dynamics and relate them to urban-

scale network characteristics in a way that

is computationally tractable and

consistent with the physical properties of

traffic. This failure constrains the ability of

economic models to support efficient

development of a network of multimodal

traffic management and weaken

congestion externalities

Most of studies on the congestion in the

traffic with regard to treatment of

congestion dynamics (utilized traffic

models), most of the aforementioned

studies assume a steady-state have shown

that the traffic condition or demand-type of

capacity-supply functions, models ignore

the fact that the level of congestion is not a

memory-less function of demand at a given

time, but dependent on the history of the

system, i.e. the same demand profile can

influence differently the system if this was

uncongested or congested at the current

state . Further with regard to the

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application of the pricing schemes, pricing based on individual links is extremely difficult to implement

in practice, and it is computationally complex for large-scale networks.

So, while designing the pricing for

multimodal transport the balancing the gain

of all users have rarely been studied, with

respect to multimodal transport the other

alternative modes are not taken into

account in most approaches.

Integration of multimodality consideration

in pricing is challenging and reserves further

attention.

While the classical approaches focus on the

link- or corridor-level of application, existing

pricing schemes for macroscopic

(large-scale) level have similar ambiguity.

To develop efficient pricing schemes that allow higher user acceptance, we consider the following

objectives in our current work.

(i) Integrate the behavioural adaptation of the users during pricing

(ii) Promote a multimodal solution combined with pricing, to maximize the efficiency of

pricing

(iii) Recognize the heterogeneous effect of pricing on users, to design pricing strategies with

equity.

(iv) Use value-of-time based pricing rates or redistributing toll revenue to improve public

transport service, can significantly enlarge the efficiency of the pricing and the

sustainability of urban mobility. In particular, we reveal that considering the effect of

pricing on multimodal mobility improves remarkably the system performance, which has

not been studied thoroughly.

(v) Development of Transport pricing exchange, which will help in disseminating the

information about the transport and logistic pricing

(vi) Motivation for Public Private Partnership in the Multimodal Transport System

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Further we need to also understand the following when deciding the Pricing for multimodal transport

• How pricing rates should be adjusted when

congestion conditions change due to user’s

behavioural changes?

• What are the impacts of different types of

incentive programs for using public

transport (PT) on the performance of

congestion pricing? The studies have

highlighted that in spite of the vast studies

in pricing, field assessments are quite

limited and this is one of important reasons

of user acceptability for multimodal

transport.

• The type of incentives to other modes of

transport (e.g. return a fraction of the tolls paid to users that switched to public transport

mode) can make such policies more attractive for real cases.

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2020

36

Multimodal Transport System : Legal Framework

International Institute for the Unification of Private Law

(UNIDROIT) in 1930 first tried to formulate legal regime for

multimodal transport. These were mostly theoretical

concepts rather than practical models. The term Multimodal

was first officially introduced by UN’s Multimodal Transport

Convention in 1980.

A legal recognition to Multimodal Transport System was

however, given by UNCTAD / ICC in 1992 with introduction

of Multimodal Transport Rules. In India, initially there was

no uniform rule for this segment. The Multimodal Transport

Act, 1993 (the “Act”) enacted on 16th October 1992 provides

for registration of a person as multi-modal transport

operator.

After incorporation of the “Act”, Multi-Modal

transportation can only be carried out by a person

registered as Multimodal Transport Operator. This model

reduces the cost of an exporter and enhanced competitive

advantage.

The “Act” was amended in 2002 to simplify the procedures. Section 4 of the act states that “ any

person may apply for registration to the competent authority to carry on or commence the business of

multimodal transportation”.

The Director General of Shipping has been identified as the nodal officer and competent authority to

perform the functions of the Act.

This is a progressive act and has borrowed few ideas from Carriers Act and UN Convention on

Multimodal Transport of Goods held in Geneva in 1980.

( Annexure 1 : Draft copy of Draft National Logistics Policy)

FDI Limits

Industry Type

Entry Route

% of FDI allowed

Logistic Services

Automatic 100

Courier Services

FIPB 100

Storage and Warehousing including warehousing of agricultural products with cold storage

Automatic 100

Transport and Transport support service

Automatic 100

Ports and Harbors

Automatic 100

Air transport services

Automatic 100

37

Challenges and constraints

38

Challenges and Constraints As per World Bank Logistics Performance Index Report, all is not well as India slipped in the league

from 35th position to 44th position in year 2018. Logistics is a $3.4 trillion industry globally and a robust

channel of transport supported by infrastructure, technology & innovation in multimodal transport

can substantially reduce cost and increase competitive advantage for exports.

The logistics performance index (LPI) is the weighted index of the country scores on the six key

dimensions :

1. Efficiency of the clearance process (i.e; speed, simplicity and predictability of formalities) by

border control agencies, including customs.

2. Quality of trade and transport related infrastructure (e.g., ports, railroads, roads, information

technology).

3. Ease of arranging competitively priced shipments

4. Competence and quality of logistics services (e.g., transport operators, customs brokers).

5. Ability to track and trace consignments.

6. Timeliness of shipments in reaching destination within the scheduled or expected delivery

time.

The county faces multi-variant challenges in all the six parameters discussed above. The bureaucratic

hurdles supplemented with non-congruous legal framework are major roadblocks that are a

hinderance to efficient model development .

Apart from these challenges, the policy implementation, corruption and multiple state laws apart from

central laws are key challenges.

The sector also lacks appropriate investments as thee mega projects are capital intensive with long

gestation period for being a profitable institution.

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40

Key Recommendation

A. Investment Environment

• Design robust routes for demand-responsive transport system

• Initiate policy guidelines to allow hundred percent foreign direct investment through

automatic route

• Improve Ease of doing business for Multimodal transport operators

• Establish regulatory bodies in the segment to mitigate buyer supplier conflicts

B. Infrastructure Development

• Develop SEZs for MMT Hubs

• Robust Road, Rail & Port infrastructure for multi-factor transport network.

• Build up dry ports, inland ports, logistical hubs to decongest ports and supplement

movement of goods through various models of transportation.

c. Technological Development

• Technological interventions and innovation in the sector for efficiency

• Incentivise investment in technology, research & development activities

• Set up MML data and logistic centres

• Introduce industry 4.0 interventions

d. Environmental protection for sustainability

• Improve fuel economy through MMTS

• Reduce CO2 emission by reducing burden on roads and transport cargos through rail or

water.

e. Policy framework

• Make a coherent state and central law for all clearances. Custom checks, inter state

border checks ets needs to be made more transparent

• Simplification of laws and rules

• Decomposing bureaucratic hurdles

41

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