Transportation Infrastructure

In the movement of raw materials or products from place of production to the place of consumption, transportation is the most important component of the logistical system. It serves two purposes, one is product movement and the other is in-transit product storage. Movement of the product can be achieved through various modes, such as road, rail, air, and sea, subject to the availability of and access to the infrastructure. The other function of transportation, that is in-transit storage, is not cost-effective for a longer period. The guiding principle for choosing the transportation mode is, the least cost per unit weight/volume of the product moved over the unit distance. However, selection of a particular mode is dependent on the availability of transportation infrastructure in the region.

In India, 65 per cent of the total domestics cargo movement is done through road; followed by rails, which contributes to the extent of 35 per cent; balance shared by inland water, air and sea. Table 8.1 indicates the cargo handled through each mode.

1. Road

Road transportation is one of the promising means for agricultural and industrial advancement of the country. It is suitable for short and medium distances where other means are unable to reach. It provides door-to-door service, which is not possible with other means. Road transporta­tion provides the basic infrastructure to bring trade and commerce from remote rural areas to urban area or vice-versa and brings far off villages into the mainstream of national life ensur­ing connectivity. With manifold growth in industrial and agricultural activities and output, road transportation has assumed greater importance due to the growing demand for making the right product available at the place of consumption itself. Today road transportation is occupying pre­dominant position in the transport network in the country. Road transportation offers a number of advantages such as:

  • Door-to-door service
  • Flexibility
  • Reliability
  • Reaching remote places
  • Speed

As regards the trucking industry in the country, it is predominantly in the unorganized private sector and bulk of truck operators are single truck owners. The operators face many irritants, such as levy of multi-point octroi and traffic police checks, which impede the free flow of the goods traffic. Currently, 7.0 million trucks are plying on Indian roads. The Indian road conditions not being good, the average distance travelled by a truck is 250-300 kilometres per day as against 550-600 kilometres by their counterparts in developed countries. The average operating cost of the Indian truck is INR 17 per kilometre. Major domestic cargo traffic in the country is moved on national and state highways spreading over 34,850 and 1,37,120 kilometres, respectively. The national highways carry nearly 40 per cent of the total road traffic in India. Of the total national highways, 2 per cent are of four lanes, 34 per cent two lanes and 64 per cent single lane. The share of national and state highways in total roads in the country is 1.42 and 5.56 per cent respectively, which is grossly inadequate. However, India is better placed in per capita road availability amongst Brazil, Indonesia, China and Hungary. The road index computed by Cooper and Lybrand is as follows: India 0.58, Brazil 0.47, Indonesia 0.47, Hungary 0.41, China 0.29, and Mexico 0.27.

2. Railways

Railways are the principal carriers of men and material and play a major role in country’s trade and commerce activities. It is the main source of supplying essential commodities, transporting them through length and breath of the country. Across the world, railways have played an important role in industrialization and development of the nations. It has been the primary means for movement of raw material and the finished goods. All the countries have heavily relied on railways in the ini­tial stages of industrialization and development.

Indian Railways (IR) is operating through a network of 6896 railway stations across 63320 kilo­metres of route length with the route density of 138 kilometre per 1000 m2 of area. Of this 49800 kilometre is covered by broad gauge lines, which account for 85 per cent cargo movement by rail. The goods movement is done through 2,53,186 wagons having the total carrying capacity of 10.6 million tonnes. IR’s 96 per cent cargo consists of bulk items such as coal, iron ore, cement, fertilizers, raw materials for steel plants, finished steel products and petroleum. Bulk cargo is transported through railways because of cost advantage over other modes. In 2008-09, Indian railways handled 833.4 million tonnes of freight traffic on the above network. Figure 8.1 shows the contribution of various items in total cargo handled by railways in the year 2008-09.

To take care of both the increased domestic and international trade, IR introduced the con­tainer service and goods trains to carry the box containers way back in 1967. Today IR is handling two million tonnes equivalent units (TEU) of box container traffic. To increase the share of rail traffic, IR is tying up with national road carriers to provide door-to-door service to their strategic clients. The Konkan Railways has introduced a unique scheme of transporting a truck fully loaded with cargo to the destination. This will save precious fuel, which otherwise would have been used by a number of trucks carrying the trainload of cargo. This way, road traffic may be relieved to some extent and air pollution by those trucks will be curtailed.

3. Sea

The shipping industry is divided into several parts such as:

  • Liner service
  • Tramp shipping
  • Industrial services
  • Tanker operations

The shipping fleet across the world comprises tankers, dry bulk carriers, container ships and special vessels. The tanker fleet accounts for 33 per cent of the total fleet, while dry bulk carriers contribute 32 per cent of the total in terms of million gross registered tonnes (GRT).

India has 55 shipping companies, of which 19 are exclusively in coastal trade, 29 in overseas trade, while the remaining are in both. Indian shipping has very high dependence on interna­tional trade, with 95 per cent of overseas cargo by volume and 77 per cent by value moving by sea. Crude oil, oil products, iron ores, coal, food grains and steel are some major products transported through sea.

In shipping, India ranks 6th in Asia and 15th in world merchant shipping trade. At present, the Indian shipping industry comprises 510 ships, of which 240 are overseas fleet and 270 are coastal ships including 70 offshore support vessels and about 25 supply vessels for offshore service and 12 dredges. The Indian shipping companies (SCI and Essar) are slowly moving from ‘carrying business’ to become a complete sea logistics solution providers, thereby maximizing shareholders’ wealth through focus on energy (oil) transportation business and moving upward in value chain by providing one stop integrated logistics solution and value addition by providing their client web- based logistics solutions.

In India, 11 major ports handle 95 per cent of international trade and 85 per cent of domestic sea trade. Indian ports handled around 272 million tonnes of both domestic and international cargo in 2000-01 through 11 major and 117 small ports. This sector will continue to play a major role in the Indian economy as India’s export is likely to grow by 15 per cent and imports by 14 per cent. There will be major imports of Petroleum Oil and Lubricants (POL), Liquified Natural Gas (LNG), and Liquified Petroleum Gas (LPG) in the near future and these will require better storage and handling facilities at the Indian ports (Figure 8.2).

4. Air

Compared to all other modes of transport, air transport is less hazardous in nature. Air trans­portation is a costly affair and it is used only for highly perishable commodities and items, whose life is short and value is high. Even though the cargo handled by air is growing at a rate of 15-16 per cent, it is insignificant as compared to cargo handled by other modes of transportation.

The air cargo traffic is handled by eight international airports, 87 domestic airports and 28 civil­ian airports (shared with defence forces). After the domestic air services were liberalized in 1994, there was sudden increase in the number of air transport operators to seven scheduled private operators and 22 non-scheduled operators for passenger and cargo movement. Within two years of post liberalization phase, the market share of private operators went up to 40 per cent. How­ever, the private operators could not sustain the competition and cost pressures. Subsequently, majority of the private operators closed their operations. The air cargo traffic is concentrated around the gateway airports such as Mumbai, Chennai, Delhi, Kolkatta and Bangalore. These airports handle 87 per cent of air cargo traffic in India. Due to prospects of increase in air cargo traffic in India, the government is inviting private participation in air transportation and the related infrastructure (airports) to take care of growing passenger and cargo traffic in future.

5. Inland Water Transportation

Inland water transportation (IWT) is an eco-friendly transportation mode. IWT can play a sig­nificant role in augmenting the country’s transportation infrastructure. India has a potential of 1,45,000 kilometres of IWT infrastructure comprising rivers, lakes and channel. It has recently started receiving attention from the government. IWT in many western countries has already emerged as an alternative mode of transportation. Cargo movement through IWT in India is mea­gre one per cent as against 10-12 per cent in UK, Europe and China.

With the globalization of Indian economy and implementation of WTO directives in India, there will be greater movement of goods to and fro. This will create heavy pressure on already burdened transportation system of rail and road in India. There is a limit to the expansion of road capacity because of limited availability of land, high input cost and environmental con­siderations. IWT is cost-effective as compared to road and rail infrastructure. A kilometre of highway construction costs INR 6 crores, while more than 100 kilometres waterways can be developed at the same cost at the current rate. As per the estimates, for every one rupee spent for IWT development, the corresponding cost for development of roadways and railways would be INR 2 and INR 5, respectively. In case of energy conservation, the ratio would be 1.5 and 4, respectively.

There are some hazardous commodities, which should not be allowed for transportation on road. In view of the above constraints and advantages, the development of IWT has become relevant in today’s context. The major advantage of IWT is doubling of load capacities for a small increase in depth and thereby providing flexibility and cost elasticity, which does not exist in other mode of transportation. Besides lower fuel consumption and construction cost, IWT has the advantage of suffering minimum human loss against the very frequent accidents occurring in case of road and railways.

6. Pipelines

Pipeline as a mode of transportation which was first developed in 1870 by Samuel Van Syckel for transporting petroleum. Twenty years later, Standard Oil Company changed the face of transpor­tation. Though petroleum was the first product transported in this manner, the pipeline became useful for several other commodities such as coal in slurry form, iron ore fines in slurry form, chemicals, natural gas etc. The basic advantage of pipeline is that it reduces the operational cost, though the initial investment is high. In India, pipeline is used for oil transportation by all public and private sector petroleum refineries. For iron ore transportation, it is used by the Kudremukh Iron Ore Project to transport slurried iron ore fines over 67 kilometres distance along the difficult Western Ghats.

Pipeline is an eco-friendly transportation mode. The cost of moving oil by rail or road con­tinues to rise over the years; however, pipeline heads towards downtrends. The transportation cost of moving oil is INR 1.15 per tonne per kilometre on a new pipeline, while it is INR 0.87 on a depreciated pipeline. At the current rate, transportation of oil by road costs INR 2.50 per tonne per kilometre and INR 2.00 per tonne per kilometre by rail. Although laying of pipeline costs INR 15 millions per kilometre, yet the lower operational costs make up for the initial higher investment.

Currently, 27 per cent of the petroleum products (petrol, kerosene and diesel) are moved by pipelines of 6350 kilometres length in India; while in the United States 59 per cent is moved via 180 pipelines and another 35 per cent via barges along Pacific and Atlantic coast. Presently in India, pipelines move 58.7 million tonnes of oil per annum, which is expected to rise to 80 million tonnes by the year 2010.

7. Ropeways

In India more than 16 per cent of the geographical area is hilly. Communication to such areas is a problem because of the long circuitous routes. The transportation of goods and essential commodi­ties to the hilly areas is sometimes important because of their strategic location from the defence point of view. In view of oil shortages, ropeways can prove to be more economical and faster than road transport, particularly in hilly areas. The ropeways have the following advantages:

  • Ropeways cause least damages to the ecology
  • Inaccessible hilly areas can be reached with shortest distance
  • Other modes of transportation are uneconomical
  • Bulk material can be moved faster over short distance

This mode of transport is used in hilly areas in Sikkim, Meghalaya, Mizoram, Himachal Pradesh and Uttar Pradesh. Currently 175 kilometres of ropeways are in use in the above territories for transportation of both materials and human beings.

Source: Sople V.V (2013), Logistics Management, Pearson Education India; Third edition.

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