All major ports to get LDB services 

All major ports to get LDB services 

Context:

The Logistics Data Bank’s (LDB) services will soon be extended to all major ports in India.

Introduction:

• The discussions in this regard have begun between the Government and the Indian Port Association (IPA).
• The IPA is the apex body for India’s major ports under the shipping ministry’s supervisory control.
• Till now, the LDB project covered only the India’s western logistics corridor.
• The Delhi Mumbai Industrial Corridor Development Corporation Logistics Data Services Ltd.(DLDSL) provides, container tracking services to around 70% of the container traffic in India.
• Indian cost to export is double as compared to Malaysia, Singapore, and China etc.

Objectives of LDB Project:

• The LDB project’s objective is to ensure greater efficiency in the country’s logistics sector through the use of information technology.
• To boost foreign trade: The LDB project was unveiled in July 2016 as an important ‘ease of doing business’ initiative to boost the country’s foreign trade and bring about greater transparency.
• It helps in reducing the overall lead time of container movement, besides bringing down transaction costs that consignees and shippers incur.

Functions:

• As part of the LDB project, each container is attached to a Radio Frequency Identification Tag (RFID) tag and tracked through RFID readers.
• This, in turn, helps importers and exporters to track their goods in transit.
• About 4.93 million containers have been tagged and de-tagged under the project.
• The project is implemented through a Special Purpose Vehicle called Delhi Mumbai Industrial Corridor Development Corporation Logistics Data Services Ltd.(DLDSL)- jointly owned by the Delhi Mumbai Industrial Corridor(DMIC) Trust and Japanese IT services major NEC Corporation.

Advantages of LDB project:

• The LDB project covers “the entire movement through rail or road till the Inland Container Depot and Container Freight Station”.
• The services include providing users the ‘average delivery time’ as well as notifications through SMS and email.
• The project also provides other services such as ‘congestion and bottleneck analysis’ as well as ‘performance bench-marking’ that aids the users to pinpoint supply chain inefficiencies, and in turn help improve the system.
• The project will help in cutting down the overall lead time of container movement as well as reduced transaction costs that consignee and shippers incur
• It is billed as a major ‘ease of doing business’ initiative aimed at boosting India’s foreign trade and ensuring greater transparency.
• The service integrates information available with the agencies across the supply chain to provide detailed, real-time information within a single window.
• The services include providing users the ‘average delivery time’ as well as notification through SMS and email
• LDB will generate visibility for containers during their transition.
• The visibility would bring in more transparency and open up competition among each logistics operators to provide better services to end-customers i.e. export/import related companies.
• Competitive environment would help reducing lead-time and transaction cost for export/import process

Background:

• On July1, 2016, the LDB project was launched at the Jawaharlal Nehru Port, Mumbai.
• From May this year, its operations expanded to the container terminals at Adani Port Special Economic Zone, Mundra and Adani Hazira port, both in Gujarat.
• Initial discussions on the LDB project were held in May 2012.
• Talks were held on a regulatory framework from the Directorate General of Foreign Trade (DGFT) to ensure that all logistics players share data to make the project viable.
• Later on, meetings were held between the DGFT, the shipping ministry and other stakeholders including the Tariff Authority for Major Ports regarding the regulatory framework on Mandatory User Charges (MUC) as well.
• In November 2014, TAMP passed an order for levy o f MUC for the project.

Logistics Sector in India:

• The logistics sector broadly comprises the road transport sector (consisting of unorganized small businesses, trucking, fleets and large transport companies), the storage and warehousing sector and finally third-party logistics (3PL).
• Logistic industry in India is evolving rapidly, it is the interplay of infrastructure, technology, and new types of service providers, which defines whether the logistic industry is able to help its customers reduce their costs in logic sector or provide effective services.

Challenges faced by the logistics industry in India:

• Inadequate logistics infrastructure has an effect of creating bottlenecks in the growth of an economy.
• The logistics management regimen has the capability of overcoming the disadvantages of the infrastructure in the short run while providing cutting edge competitiveness in the long term.
• Higher transaction cost in logistics is one of the major issues for India.
• Leading to poor workforce planning and operations not being streamlined eventually causing delays in the container movement.
• The most serious challenge faced by the logistic industry today is insufficient integration of transport networks, information technology, and warehousing and distribution facilities.
• Regulations exist at a number of different tiers, is imposed by national, regional and local authorities.
• The regulations differ from city to city, hindering the creation of national networks.
• The disorganized nature of the logistic sector in India, its perception as a manpower-heavy industry and lack of adequate training institutions has led to a shortfall in skilled management and client service personnel.
• There is a lack of IT standard, equipment and poor system of integration.
• Poor facilities and management are the reason for high levels of loss, damage and containers, but it is also partly down to lack of training.

Government initiatives:

• The government’s ambitious Sagar Mala project would transform the logistic sector and change the lives of those living along the 7,500 km coastline in the country.
• The industry anticipates more schemes under Make in India, Skill India, and Digital India initiatives, which would help in the boost of the upstream and downstream economic activities.
• The Road Ministry has initiated a project for the development of Multimodal Logistic Parks at 15 identified locations at a cost of about Rs 30,000 crore, about one-third of which would be for land acquisition.
• Another major development in the infrastructure sector is the enactment of the law on inland waterways, and the declared intention to promote cargo movement on these waterways.
• The Central government has reiterated its commitment to promote coastal shipping. The Foreign Trade Policy 2015-2020 consolidated and/or modified several schemes and simplified the procedures for export.

Conclusion:

Logistics is regarded as the backbone of the economy, providing efficient and cost effective flow of goods on which other commercial sector depends. Therefore, there is urgent need for reduction in logistics costs in order to increase the international competitiveness and to promote the expansion of export. Focus has to be on research in process excellence which can help to eliminate inefficiencies and bring Indian logistics on part with global practices.