The GDP and the overall economy of a country depend on various factors, including land, labour, capital and entrepreneurship. Transportation is a critical sub-factor tying all the above, and plays a critical role in a nation’s economic growth or decline. On these lines, a systematic network in the form of multimodal logistics parks is crucial.
Multimodal Logistics Parks (MMLPs) as a concept and practice has been rapidly adopted across the globe in the past few years. To completely understand MMLPs, we must first start with a few basics.
What is Multimodal Transportation?
For freight, multimodal transport refers to the conveyance of goods to their final destination using two or more suitable transport means. The transportation is under a single contract but involves different modes, whether land or maritime. The goal is to reduce transit costs and delivery lead times.
What are Logistics Parks?
A logistics park is an industrial area specifically designed for storage, management, distribution and transportation of various goods. In addition, companies operating from logistics parks often use them to assemble, package, process or do light manufacturing of products.
What are Multimodal Logistics Parks?
Multimodal Logistics Parks (MMLPs) is a key policy initiative of the Government of India, led by National Highways Logistics Management Limited under the Ministry of Road Transport and Highways (MoRTH) and the National Highways Authority of India (NHAI), to develop Multi-Modal Logistics Parks.
Their development follows a hub-and-spoke model to improve the country’s freight logistics sector. The goals are to lower overall freight costs and time, reduce warehousing costs, cut down vehicular pollution and congestion, and improve the tracking and traceability of consignments through infrastructural, procedural, and information technology interventions.
Why are Multimodal Logistics Parks Important?
The logistics sector is poised to grow by roughly 1.2 times the level of national GDP growth until 2032, by which time it is expected to generate $360 billion in value-add, up from $115 billion now.
Logistics is an important part of the economy in any country, allowing the movement of resources along supply chains to consumption centres. Freight logistics comprising transport, warehousing, and value-added services for transit by road, rail, inland water, sea, and air, drive trade and are a catalyst to economic growth.
MMLPs have Five Key Functions:
- Freight aggregation and distribution
- Multi-Modal freight transport
- Integrated storage and warehousing
- Information technology support, and
- Value-added services
India’s First Multimodal Logistics Park in Assam
Union Minister for Road Transport and Highways, Shri Nitin Gadkari laid the foundation stone of India’s first multimodal logistics park in Jogighopa, Assam on 20th October 2020. The total cost for the project is US$ 407 million. With this MMLP, the Government aims to provide direct and indirect employment to the youth to the tune of 2 million+ jobs in Northeast India.
The Assam MMLP aims to reduce trade costs by 10% and carry a cargo capacity of 13 million metric tonnes. Spread over an area of 317 acres, it shall have all facilities like warehouses, cold storage, yard facility, petrol pump, parking, lodging, and so on.
As of July 2021, 35 MMLPs have been identified by MoRTH. Among them, those in Bangalore, Chennai, Guwahati and Nagpur are under implementation while the rest are in pre-planning stages.
Time to Bring in More Investments into Multimodal Logistics Parks
The implementation of MMLPs at strategic locations in India will bring down India’s logistics costs and help boost the national economy. Effective steps are already being taken by the Government of India toward this vision, such as notifying ‘logistics’ as one of the key infrastructure sectors in 2017.
Whilst this remains in the foresight of the government initiatives in India, the Government may still want to consider a few operational challenges such as the lack of a single-window clearance system for faster approvals and implementation.
Moving on, as Government policies and actions shape the logistics sector, it is time to actively boost investments into the sector through liberalized regulations, welcoming development, and meaningful partnerships.