What actually is the National Logistics policy?
Why did it arise a situation where a national policy had to be drafted or implemented on the country’s logistics arena.
Possibly a number of drawbacks were present at the current system through which the logistics sector of India functioned. India being a big country and still developing itself to be a major developed economy, so it is quite obvious that India doesn’t have a well developed infrastructure.
Thus here in this article to will try to cover the numerous aspects that led India to draft and implement a major change in the logistics field, a game changer, as it has also been referred as – The National Logistics Policy 2022.
Circumstances leading to the formulation of the National Logistics Policy
The backbone of logistics are handled by three different modes. They are :
Now if we make a comparison regarding the cost of transport per metric ton, per kilometer, the most costly mode is by air, and the cheapest means being Rail, which costs roughly around 2 rupees per metric ton, per kilometer.
If we study this comparison, it will look very obvious to us that the major share of goods transport in India must be done by rail. But the reality is not exactly as it looks like.
More then 70 % of the goods in India are transported by the roadways, while only around over 15 % of the goods are transported by the railways.
Reasons why Railways is not the major mode of transportation of goods in India
There are several reasons as to why railways do not play a major role for transportation of goods in India. Here are some critical reasons below.
Even though India is a country with very large rail network. Yet the infrastructure for goods transportation is not very efficient or developed. There are many loopholes in the system in which it functions. The trains are simply not enough to meet the demands of this huge country.
Another factor is that there are no separate dedicated rail routes for transportation of goods. The goods as well as the passenger trains ply on the same route. Thus the priority is given to passenger trains for India being the second most populous country in the world.
Here arises huge delays in goods trains as it functions on a second priority on the routes where passenger express trains are most often given the pass at the cost of halting the train carrying goods in every other train station.
Another major reason is that in goods transportation by railways there are always trucks involved in both end, when it is to be transported, as well as delivery to warehouses. Sometimes there is no trucking facilities as required. Moreover safety and security of the goods is also an issue.
Numerous problems even in transportation of goods by roadways
In India most of the trucks run only 50 % of the number of days in a month. Again when a truck carries goods from point A to point B. There is usually a delay a two to five days to back a full load back from point B to point A.
There are cases very often when the very truck has to come empty from point B to point A.
Due to all this issues in the logistics sector and the negative impact it is having in the economy and also the delay which costs India’s huge and ever growing consumer market, also with an aim to reduce logistics costs the Government of India, on 17th of September 2022 announced the National logistics Policy along with the Unified Logistics Interface.
What is the National Logistics Policy?
It is a policy for the modernization and digitization of the logistics sector of India, wherein a complex network of logistics supply both for national and international trade or in other words transportation of goods will be made simpler, most cost efficient and quicker.
To understand the policy let us use an example of 4 cities, i,e. City A, City B and City C and City D. In today’s scenario a truck goes from :
- City A to City B
- City A to City C and
- City A to City D
Similarly we have another truck going from :
- City B to City A
- City B to City C and
- City B to City D.
So in order to have a logistic connection between 4 cities, there is a requirement of 8 trucks at a time. The problem in this system is that when a truck goes from City A to City D, there is no guarantee that the very truck will a load to carry back from City D to City A. The same case is with the other cities as well.
Hence now we see a hub model of logistics policy coming into play. Now instead of a truck going from City A to all other four cities, one city for example City B will be made the logistics hub to transport the goods to all other cities. Now one truck will be sent from City A to the hub City B, carrying goods for all other cities, City B, City C and City D.
It will be the same for other cities as well. So in this model when as Truck A, Truck C and Truck D reaches City B (The logistics hub), goods for the respective will be again loaded in the trucks of City A, City C and City D to carry back to their respective cities which they came from without going to three different cities.
This is a very simplified manner for the understanding of the National Logistics Policy. While in reality it is going to be on a very huge scale, not forgetting the international aspect that it will have.
To manage this logistics policy, will require a very well efficient and sofisticated and highly digitized hub as the role of the hub will be huge in this policy.
For the proper management, coordination, optimization along with digitization, so here we now have what is called the Integrated Digital System for Logistics Services and the Unified Logistics Interfaced Platform.
All the stakeholders accountable in this policy will come under one umbrella for better management and coordination.
This is what a model of National Logistics policy looks like. It is to be noted that, this is a very simplified form for better understanding.
Frequently Asked Questions :
When was the National Logistics Policy introduced?
The Government of India, on 17th of September 2022 announced the National logistics Policy along with the Unified Logistics Interface.
What is the main purpose of the National Logistics Policy?
The main aim of the National Logistics Policy is to reduce the costs in logistics of the country and also to reduce the delay in services.
What are the major modes of goods and logistics transportation in India?
Airways, Waterways, Roadways and Railways are the main modes of goods transportation in India. Out of which the roadways hold the major share in logistics support.
Through this article, we have tried to explain National Logistics policy and also the circumstances that let to the introduction of the National Logistics Policy in a layman’s language with micro simplified examples. This has been done for readers understanding. If not the National Logistics Policy is a very broad aspect.
There are also several challenges like digitization and high level of coordination on the part of the hubs, that has to be achieved so that the policy becomes a success, for the purpose is to reduce the logistics cost of the country which in turn will benefit the entire nation as a whole.