Short Sea Ro-Ro Shipping –A smarter solution to India’s Logistics needs

Wallenius Wilhelmsen Logistics

Naresh Kundlas, WWL India

09 - 01- 2015

Agenda 1. Increase in Production of Finished Vehicles within

India

2. Challenges in Domestic Movement of Cargoes

3. Seeing the whole picture and developing solutions

Distribution of Finished Vehicle Logistics in India

Auto production in India is expected to grow with 10% per year and reach 4 million units in 2016

Distribution of finished vehicle logistics in India

4

Source: Society of Indian Auto manufacturers (SIAM) website

Development passenger vehicle production, 2006-2016F

Million units

In million units Actual Production

10%

CAGR

1.31.5

1.8 1.8

2.4

33.1

3.23.1

3.3

4

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

2005- 06 2006- 07 2007- 08 2008- 09 2009- 10 2010- 11 2011- 12 2012- 13 2013- 14 2014- 15 2015- 16

Passenger Vehicles

Mumbai

ChennaiEnnore

Mundra

Delhi

Pune

Kandla

Mangalore

vishakapattinam

Paradip

Haldia, Calcutta

Production of commercial vehicles will pick up with investment in Mining and renewal of urban transport

Distribution of finished vehicle logistics in India

Production of commercial vehicles, 2006-2016

Source: Society of Indian Auto manufacturers (SIAM) website

Actual Production in million units

The resumption of mining

and infrastructure

spending should lead to

improvement in this

segment

0.39

0.520.55

0.42

0.57

0.76

0.93

0.83

0.7

0.770.83

0.91

0

0.2

0.4

0.6

0.8

1

1.2

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

2013-14

2014-15

2015-16

2016-17

6.72

%CAGR

9 – 10% CAGR

Expecte

d

5

Present Domestic Movement of Cargoes

Majority of the Finished vehicles are transported by Road

97% of Finished Vehicles are transported by road on

Over length carriers. This creates congestion, High CO2

Emissions and is not sustainable.

Dedicated Freight Corridor by Rail- Delhi to Mumbai

and Delhi to Kolkata expected only in 2018-19.

No Visibility on DFC Delhi to Chennai and West to

South.

There are Private initiatives to invest in Rail and

increase Share However very minimal.

Present Domestic movement of cargoes

Present Domestic movement of Cargoes

8

Effect of Increase of Trips

CO2 emissions increase by 40 % Congestion on Roads

Increase Accidents on Roads- Increase Fuel Usage17% ( 23800) of total Deaths caused

by trucks/ trailers.As per Open Government data platform statistics

9

Seeing the whole picture and developing solutions

Prime Minister Vision

India may be facing a serious trucking capacity shortage

Number of cars transported by road will

grow significantly from 2013-14 to 2016-17.

Rail will be increasing, but volumes will still be small compared to road.

Finished Vehicle distribution in India

10

+20.92%

2 936 539

2016-17 130 583

2 503 685

3 067 122

2 428 574

2 565 943

2 866 469

120 910

2 745 559

2015-16

2014-15

2 678 943

113 000

75 1112013-14

Passenger Vehicles Sold By rail By road

(Source: SIAM and WWL predictions and calculations)

19 000

19 00046%

28 028

2013-14

17 959 19 000

48%

20 075

1 075

9 028

2014-15 2016-17

19 000

2015-16

8 247

26 206

Assume an avg. Reduction

in truck capacity of 22%

Approx. 1041

«truck years» lost

in refurbishment

Shortage Available (Estimate)

Seeing the whole picture and developing solutions

Seeing the whole picture and developing solutions

12

Update on promotion of Coastal Shipping

9 cargoes are highlighted for encouraging

coastal solutions. Auto mobiles and CV are

included. We are pushing for Construction

Equipment

•The 25% import duty has been waived till

May 2015. We are pushing for this to go.

•We are seeking a solution that allows the line

to transport T/S and export cargo on same

vessel for sustainability.

•Reduce port costs (Wharfage and Vessel

related costs) to encourage coastal shipping

•Factories are away from ports so first mile

and last mile distance / costs are high

•Port connectivity is poor so turnaround time

is high for trailers – this needs to be

addressed through connected supply chain

•GST implementation expected in 2016

Cost Comparison

Seeing the whole picture and developing solutions

13

Total Logistics Cost comparison= Vessel cost +Wharfage+ First Mile + Last Mile

Delhi NCR Region

Delhi NCR Region

Chennai Nellore Guntur Pondichery Madurai

Road 15136 14630 13831 14221 14634

Rail 15136 14630 13831 14221 14634

Coastal 18209 20083 21770 20027 20454

Difference 3073 5453 7939 5806 5820

Chennai Region

Chennai Region

Rajkot Baroda Ahmedabad Jaipur Delhi

Road 13073 12412 11737 13167 14912

Rail 13073 12412 11737 13167 14912

Coastal 12833 14219 13533 17145 18248

Difference -239 1807 1796 3978 3336

Cost comparison – If No return coastal Cargo

Seeing the whole picture and developing solutions

14

Total Logistics Cost comparison= Vessel cost +Wharfage+ First Mile + Last Mile

Delhi NCR Region

Delhi NCR Region

Chennai Nellore Guntur Pondichery Madurai

Road 0 0 0 0 0

Rail 0 0 0 0 0

Coastal 0 0 0 0 0

Difference 0 0 0 0 0

Chennai Region

Chennai Region

Rajkot Baroda Ahmedabad Jaipur Delhi

Road 13073 12412 11737 13167 14912

Rail 13073 12412 11737 13167 14912

Coastal 19628 21014 20328 23940 25043

Difference 6556 8602 8591 10773 10131

Conclusions

Cost Comparison of Rail, Road and Coastal shipping

15

To start a coastal service we need OEM commitments for volume and Government

commitment for creating the right eco system to make coastal shipping sustainable

We need to give the government our wish list to achieve our objectives

Combination of Road / Rail / Coastal will reduce carbon emissions and capacity / cost

constraints in the near term.

Thank you