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National logistics policy and Unified logistics interface, just like UPI will revolutionize the payment industry of India. This policy is expected to make the entire logistics industry of India including road, rail and airways efficient. After implementing this policy our logistics cost will decrease, our international trade will increase and the country will take a step toward becoming independent.
The Government is intended to build a platform that will eventually become a make-my-trip app for logistics and to some extent Ola for porters in which all stakeholders can manage and track their services. If you are a business owner, entering the start and end data in the app, will show you efficient ways to deliver your product that include all modes of transporting in the ULIP (Unified Logistics Interface Platform).
Current hurdles in India's logistics policy
Transportation being a critical pillar of our economy it’s been a nightmare for Indian businesses. Cost of transporting one metric ton of goods in India are:
₹ 18 per metric ton per km by air
₹ 3.6 per metric ton per km by road
₹ 2 per metric ton per km by water and pipeline
₹ 1.6 per metric ton per km by rail
Why large chunks of goods is transported by rail? Only 71% is done by road and 17.5% is done by rail and a small percentage is done by waterways. Why? That’s because we don’t have enough rails or trains to cater to the demand for the number of goods being transported in India. Both passenger and goods train in India runs on the same track with passenger train being given more preference over goods train, hence the delays.
When shipping by rail the business needs to opt for multimodal transport for first-mile and last-mile connectivity. The business has to shift the product from the factory to the train by truck to load and unload it.
Currently, the logistics sector of India has 20 government agencies, 37 export promotion councils and 500 certifications to be followed. Business owners spend more time getting certification than shipping or producing the product itself. This is why most companies opt for road transport. Opting for road transport has its own set of problems. They are over-dependent, the road facilities in India are subpar and many trucks run empty loads just to get to their home location. Truck drivers lose 15%-20% of their profit to the agent before the final payment comes through.
To connect 5 major cities (Mumbai, Hyderabad, Bangalore, Chennai and Kochi) a business needs on average more than 8 trucks and it’s not guaranteed that truck will have a load to carry back and this called point to point model.
A 5-ton truck going from Mumbai to Hyderabad, Bangalore, Chennai and Kochi
A 10-ton truck going from Kochi to Mumbai, Hyderabad, Bangalore and Chennai
How can the National Logistics Platform fix these problems?
Hub and spoke model
Instead of sending trucks to multiple cities, one of the cities will be a hub to transport goods to all other cities and these trucks will go back to their respective location fully loaded. Due to this only 5 trucks are required instead of 20 trucks to transport goods to 5 cities and the cost of transport would reduce to a large extent. Execution of such a system requires an extreme level of coordination, management and cutting-edge logistics solutions.
Each truck comes from a different distance to the hub so their time of arrival will not be the same, thus goods should be kept in a warehouse which requires a sophisticated algorithm to match the shipments with trucks in the most efficient manner possible. This digitalization process should be simple enough for the truck driver to understand and for business to track their shipments.
What is the end game for the NLP?
Reduce logistics costs from 14% of GDP to less than 9%.
This policy is to benefit the unorganised sector by better coordinating their logistics. By providing an advanced platform, companies can now compete with giants like Amazon and Flipkart.
The policy is set to provide 24/7 services to all businesses in six lakh villages.
Well written 💪